1. ANNUAL MEETING – 20 JUN 2014

2. Agenda Introduction Overview Investment Administration Finance Actuarial Session 1 – 2013/14 Review Session 2 LGPS 2015

3. Lynn Brown Executive Director of Financial Services & Depute Chief Executive Glasgow City Council Overview

4. A Year in Pensions

5. The Randolph

6. This just in…

7. Are You Ready? On your marks… Get set…

8. Richard Keery Investment Manager Investments

9.  Investment performance Current investment strategy Investment performance - 1 st April 2013 to 31 st March 2014 Investment performance – longer term Business plan objectives 2014-2015  New Opportunities Portfolio  Responsible investment

10. Investment strategy Long term strategic benchmark Quoted equity65% Private equity7.5% Property12.5% Bonds15% 100%

11. Manager Structure 2014 Baillie Gifford Lazard Oldfield Veritas JP Morgan Henderson Genesis Pantheon Partners PIMCO DTZ Multi-Asset Passive Global Equity Specialist Mandates

12. Strategic allocation: Asset Class October 2013: £680m transfer L&G market cap L&G RAFI t t

13. S&P 500 Index - 2013/14

14. Investment performance 2013/2014 %

15. Returns by asset class Asset class2012/13 % 2013/14 % UK equity17.310.3 Overseas equity17.16.6 Private equity17.77.1 UK corporate12.21.4 UK gilts5.2-2.6 UK Index linked11.8-4.4 Property4.413.1 Total Fund14.57.0

16. Equity manager performance Investment managerPortfolio % Benchmark % +/- % Legal & General7.67.30.3 Baillie Gifford3.52.70.7 Lazard3.36.2-2.7 Oldfield Partners8.26.22.0 Veritas13.06.26.5 Henderson27.332.3-3.7 JP Morgan18.111.95.6 Genesis-10.7-9.2-1.7

17. Manager performance: Other asset classes Investment managerPortfolio % Benchmark % +/- % Pimco0.5 0.0 Partners Group5.88.8-2.8 Pantheon6.88.8-1.9 DTZ15.611.23.9 Partners Group Global Real Estate 2.014.0-10.5

18. Investment performance: 5 and 10 years %

19. Business plan objectives 2014/2015  Complete review of investment strategy and structure based on asset liability modelling and the 2014 actuarial valuation  Complete tender for responsible investment overlay service

20. Summary  Despite a period of uncertainty in markets earlier in the year, the Fund generated a strong return.  Performance across asset classes and managers was mixed, but overall the Fund increased in value to its highest ever level, £13.9 billion.  Longer term performance continues to be positive with the Fund ahead of its peer group benchmark and actuarial target.

21. Investments  Investment performance Current investment strategy Investment performance - 1 st April 2013 to 31 st March 2014 Investment performance – longer term Business plan objectives 2014-2015  New Opportunities Portfolio  Responsible investment

22. George Finnie Investment Manager New Opportunities Portfolio

23.  Background  Investment process  Opportunities  Investments Approved in 2013/14  Outlook for 2014/15 New Opportunities Portfolio

24.  Established in 2009 (Revised in March 2013)  Opportunistic focus on attractive alternative assets  Portfolio limit set at 3% of total Fund value (currently £415million)  Four new investments approved in year to 31 March 2014 with total commitments of £139.5m  Total commitments at 31 March 2014 of £199.5m, of which £32m drawn at that date New Opportunities Portfolio Background

25. New Opportunities Portfolio Commitment by Sector

26.  First review by Investment Manager  Monthly WIP meetings with Head/CIO to identify best opportunities  Initial due diligence on opportunities  Board Meeting with Executive Director of Financial Services  Sounding Board Meeting  Representative Forum  Strathclyde Pension Fund Committee  Final due diligence and legals New Opportunities Portfolio Investment Process

27. New Opportunities Portfolio Opportunities by Sector

28. New Opportunities Portfolio Pensions Infrastructure Platform  Part of an initiative to create an infrastructure fund for UK institutional pension funds  SPF one of five founder investors – Commitment £50 million  Investment in established secondary infrastructure assets i.e. no construction risk  Established deal flow in place - £17m drawn down since March 2014  First distribution of income already received

29.  Established to invest in property opportunities within the Strathclyde area – Commitment of £50 million  Opportunistic focus on lot sizes less than £10m  Managed by Ediston Real Estate  Six potential opportunities currently under review, with a mix of industrial, retail and office properties  First transaction expected to conclude in Q3 2014 New Opportunities Portfolio Clydebuilt Fund

30.  Fund is focussed on primary investments in UK Infrastructure projects – SPF Commitment of £32 million  Fund builds and maintains infrastructure assets to operate specific services  Sectors include hospitals, waste management facilities, roads projects and social housing upgrades  Around 78% of fund now committed to projects  Southmead Hospital completed New Opportunities Portfolio Aberdeen UK Infrastructure Fund

34. New Opportunities Portfolio SEP Environmental Capital Fund  Investment in a fund with two business streams  Acquisition of existing connections business from a utility – immediately income producing  Investment in a number of small-scale renewables opportunities such as energy efficiency schemes, district heating schemes etc.  Completion expected by August 2014, with immediate income stream from connections business

35. Outlook for 2014/15 Four commitments have since been approved at June 2014 Committee: 1. Albion Community Power 2. Iona Capital Partners 3. Resonance Wind Energy 4. Healthcare Royalty Partners Strong and diverse pipeline of opportunities Distribution levels from portfolio continue to increase

36. Responsible Investment Richard Keery Investment Manager

37. Responsible Investment  Corporate Governance – voting  44,043 resolutions at 3,957 company meetings  99% of total votes lodged (100% UK)  90% of votes in support of management 2013/14 Total UK & Overseas No ofNo. of No ofVotes NotProxies meetingsAGM'sEGM'sResolutionsForAgainstAbstentionsVoted*LodgedNot Lodged Baillie Gifford928661,2691,17646344893 Genesis165114511,9961,8351263231650 Henderson217166511,9281,855481872161 JP Morgan404368363,2862,67649661083977 Lazard11510961,6461,494848601141 Legal & General2,7232,35836531,03527,8902,98915602,7230 Oldfield Partners212012722482400210 Schroders (No 3 Fund)184171132,5302,27070718316816 Veritas3630681 000360 Total3,9573,42253544,04339,5253,8832304053,92928 90%9%1% 99%1% 37

38.  Executive Remuneration  4,135 resolutions relating to remuneration  678 remuneration resolutions opposed  Lafarge, Fiat, Citigroup, Dupont, Exxon Mobil, AstraZeneca, Heineken, Credit Suisse, Ryanair  Management proposals rejected  Afren - exceptional bonus awards  Oracle - quantum of awards to CEO  BATM - poor disclosure, excessive CFO bonus and structure of share option scheme  City of London Inv. Group - excessive termination payments to directors  Consultation/engagement on remuneration  Royal Dutch Shell, Massmart, Sberbank, Barrick Gold, Standard Chartered Bank, Renault 38 Responsible Investment

39.  2013/14 Engagement topics  Executive remuneration  Supply chain policies and management  Oil & Gas operations in the Niger Delta  Offshore deep-water Oil & Gas operations in Nigeria  Labour standards within China  UK Working Group on Collective Engagement  Controversial security contracts in the occupied territories  Copper mining in Zambia  Green House Gas emissions  Black Economic Empowerment (BEE) regulations in South Africa  Welfare and sustainability in the Cocoa industry  Living Wage  Russian Federation’s Code of Corporate Governance  Real Estate Energy Performance Certificates  Protection of endangered species  Human Rights  Shale gas exploration in the UK  Health & safety and technology  Fossil fuel to renewables  Supply chain, opportunities and challenges  Bauxite mining in India  Oil and gas exploration and extraction in the Arctic  EU Shareholder Rights Directive  Japanese Stewardship code  UN Convention on the Rights of the Child  Fire & Building safety in Bangladesh garment industry 39 Responsible Investment

40.  The ‘Living Wage’  ShareAction ‘JustPay!’ campaign  Embed Living Wage standards in the UK's private sector, beginning with the biggest companies on the London Stock Exchange  "We've found that paying the Living Wage is a smart business move as increasing wages has reduced staff turnover and absenteeism, whilst productivity and professionalism have subsequently increased.“ - Guy Stallard - Director of Facilities, KPMG Europe  “It makes the business easier to run. Our rota has become easier, it's easier to recruit, our staff aren't as tired because some of them haven't had to look for second or third jobs, they work harder, they are more enthusiastic..." Hilary Jones - Ethics Director, Lush Retail 40

41.  Collaborative letter to the F.T.  Collaborative letters to constituent companies of the FTSE100  66 companies contacted in 2012/13  18 companies confirmed as Living Wage employers  Anglo American, Barclays, Pearson, Aviva, Arm Holdings, GKN, Standard Chartered Bank, RSA Insurance Grp, Centrica, Standard Life, ITV, Unilever, Old Mutual, Prudential, Resolution, Royal Dutch Shell, Legal & General and HSBC  33 companies in on-going discussions 41 Responsible Investment

42. Bangladesh garment industry Tazreen Fashions fire 2012 - 110 garment workers killed en Fashions fire in 2012. 110 garment workers killed. 42 Responsible Investment

43. Rana Plaza building collapse 2013 – 1,129 garment workers killed 43

44.  Bangladesh garment industry  $20 billion industry, 80% of export economy  5,600 factories  4 million workers  85% women  86 to 92-hour weeks  Average wage 21 to 25 cents per hour 44 Responsible Investment

45.  What does this have to do with us ?  PRI – SPF Responsible Investment Policy “As institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognise that applying these Principles may better align investors with broader objectives of society.” 45 Responsible Investment Principle 2 - We will be active owners and incorporate ESG issues into our ownership policies and practices. Principle 5 - We will work together to enhance our effectiveness in implementing the Principles.

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47.  November 2013, GES Engagement Day in Stockholm  Hennes & Mauritz AB (H&M) “By 2018, all our strategic suppliers in Bangladesh should have pay structures in place to enable worker to receive a fair living wage.”  750 factories 850 000 workers, 60% of H&M products 47 “By 2014, implement Fair Wage Method in 3 Model Factories, and evaluate outcome to be able to scale up to a larger part of strategic suppliers.” "H&M will encourage governments to engage in a process to identify a living wage level, set a legal minimum wage accordingly and review wages annually thereafter." Responsible Investment

48. Accord on Fire and Building Safety in Bangladesh June 2013 - A global coalition of over 200 institutional investors representing $2 trillion issued a public call for apparel brands and retailers to endorse the Accord on Fire and Building Safety in Bangladesh. An independent, legally binding agreement between brands and trade unions designed to work towards a safe and healthy Bangladeshi Ready- Made Garment Industry. Signed by over 170 international brands and retailers, two international trade unions, and eight Bangladesh trade unions. Four international NGOs are witnesses to the agreement. The International Labour Organisation (ILO) acts as the independent chair. 48 Responsible Investment

49. 49 Accord on Fire and Building Safety in Bangladesh  – a five year legally binding agreement between brands and trade unions to enable a safe working environment in the Bangladeshi garment industry.  – an independent inspections program enabled by factory owners and brands, in which workers and trade unions are involved.  – a reporting system of transparent publication of all inspection reports and Corrective Action Plans.  – a commitment by the industry to ensuring remediation measures are completed.  – an extensive training and worker empowerment program.  – the installation of health and safety committees in all Accord factories. Responsible Investment

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51.  Structural inspections  Viyallatex Ltd, Gazipur, Bangladesh (December 2013) “Permit drawings show a 7 storied building 2 additional floors have been built (extension occupies 10% roof area).” 51 Responsible Investment

52.  Structural inspections 52 Cracks on beams detected Viyallatex Ltd, Gazipur, Bangladesh (December 2013) Responsible Investment

53.  Structural inspections  Grameen Knitware, Dhaka, Bangladesh (November 2013)  “Storage Building at East face of main building – structural system does not match construction documentation.” Sag in Support Beams observed 53 Responsible Investment

54.  Fire & Safety Inspections  Dragon Sweater, Dhaka, Bangladesh (January 2014) “Locked egress door, Level 16 finishing room.” “Rear exit stair, obstructed access to street.” 54 Responsible Investment

55.  Fire & Safety Inspections  Dragon Sweater, Dhaka, Bangladesh (January 2014) “Exit stair obstructed, discharge path through storage area.” 55 Responsible Investment

56.  How are we doing?  ShareAction survey - 5 th out the top 24 pension funds in the UK and second highest of the LGPS surveyed. “The Strathclyde Pension Fund is to be commended for its substantial commitment to RI, as evidenced through its detailed policies and practice.”  Global Child Forum Leaders Summit at the Royal Palace in Stockholm by invitation of H.M. the King and H.M. the Queen of Sweden 56 Responsible Investment