Chicago Teachers Pension Fund

Transcription

1 March 31, 2015 Chicago Teachers Pension Fund Private Equity Performance Report Callan Associates Inc. prepared the following report utilizing secondary data from statements provided by the plan trustee and/or custodian, the client, general partners in the client s private equity portfolio and Thomson Reuters. This report may also contain returns and valuations from outside sources as directed by the client. Callan assumes no responsibility for the accuracy of these valuations or return methodologies. Callan disclaims responsibility, financial or otherwise for the accuracy or completeness of this report. Copyright 2014 by Callan Associates.

2 Chicago Teachers Pension Fund Private Equity Performance Report Table of Contents Total Portfolio Total Portfolio Profile, Financial Performance and Diversification 1 Individual Manager Profiles and Financial Performance Developed Manager Program Adams Street Partners 3 Pantheon Ventures 4 HarbourVest Partners 5 Mesirow Financial Private Equity 6 Emerging Manager Program Muller & Monroe 7 Hispania 8 Pharos 9 Palladium 10 ICV 11 SynCom 12 Manager Vehicle-Level Performance 13 Individual Manager Diversification Table 15 Appendix Terms and Glossary 16 Callan Associates Disclosure Statement 19 Knowledge. Experience. Integrity.

3 CTPF Total Portfolio Private Equity Allocation Overview: CTPF s Private Equity Portfolio was initiated in 1996 and currently utilizes 10 managers across approximately 50 individual investment vehicles. Five of the firms are fund-of-funds providers and five are direct partnership managers. CTPF s private equity portfolio also consists of two program mandates or initiatives: 1) a developed manager program that focuses on established managers that invest globally, and 2) an emerging manager program that targets minority and women-owned business enterprise managers and developing managers in Illinois and the Midwest region. CTPF has a well-developed, mature portfolio that is highly diversified. In this report, the Total Private Equity Portfolio is reviewed followed by reviews of the individual managers. Fundof-funds managers are listed first followed by direct partnership managers. Within each category the managers are listed chronologically by initial year of investment. The last two pages of this report provide individual vehiclelevel performance and individual manager diversification, respectively. Financial Performance Overview: The table below summarizes the changes in the CTPF total private equity portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional performance detail. CTPF Total Portfolio 3/31/ /31/2014 CTPF Quarter CTPF Reporting Metrics Total Portfolio Change Total Portfolio Vintage ears # Total Partnerships 2, ,236 # Active Partnerships 2, ,055 # Liquidated Partnerships # Portfolio Companies 17, ,504 Committed 811,533,676 14,632, ,901,270 Paid-in 619,312,367 10,555, ,756,822 Uncalled 193,290,120 4,076, ,213,258 % Paid-In 76% 0% 76% Distributed 608,974,884 18,668, ,306,459 Net Asset Value 311,548,376-5,737, ,285,941 Total Value 920,523,260 12,930, ,592,400 DPI RVPI TVPI IRR n/a n/a n/a Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 5.9% $ Unrealized Appreciation/(Depreciation) -16,293,110 % Unrealized Appreciation/(Depreciation) -5.1% $Total Valuation Change 2,375,315 %Total Valuation Change 0.7% Note: Total portfolio financial figures represent cash flows through the reporting quarter-end. The valuations represent a majority of NAVs from the reporting quarter (current values) with a minority of values from the prior quarter (lagged values). Portfolio Diversification: The following page shows three tables that summarize the total portfolio diversification by strategy, geography and industry. The CTPF portfolio is well diversified by all measures. The Total Portfolio diversification percentages are also summarized in the Individual Manager Diversification Table on the last page of this report. Knowledge. Experience. Integrity. 1

4 Total Portfolio Diversification Special Situations 0% Mezzanine 4% Distressed 1% CTPF s Total Private Equity Portfolio is welldiversified by strategy as measured by net asset value at the partnership-level. VC/Grow th 35% All key strategy sectors are included: venture capital, buyout, special situations, mezzanine debt and distressed debt. Buyout 60% Buyouts is the largest holding but is well diversified by across small, middle-market, large and mega funds. Total Portfolio Geographic Diversification Rest of World 5% Pacific Basin 7% Europe 17% West/ Pacific NW 24% North Atlantic 13% S West/ Rockies 9% Mid-Atlantic 5% South East 7% Mid-West 12% CTPF s Total Private Equity Portfolio is welldiversified by geography, as measured at the portfolio company-level. The Mid-West has a strong representation and there is a good balance in all other US regions. The U.S./Non-U.S. split is in line with institutional portfolios with the largest non-u.s. sector being developed Europe. Total Portfolio Industry Diversification Softw are/ Internet 14% Other 11% Media/ Telecom 7% Utilities/ Energy 7% Health Care 14% Basic Industry 10% Business/ Fin Svcs 12% Consumer/ Retail 16% Computer Hardw are/ Electronics 10% CTPF s Total Private Equity Portfolio is welldiversified by industry, as measured at the portfolio company-level. The largest categories approximate 20% and represent a diversity of sectors. The portfolio has a good balance of growth sectors (computers, internet, health care) and stable, mature industries (basic industries, consumer). Knowledge. Experience. Integrity. 2

5 Adams Street Partners Adams Street Partners (ASP) has managed assets for CTPF since The firm is an independent, 100% employee-owned firm. The firm was started in 1972 as the private equity division of Brinson Partners, which was subsequently purchased by UBS. ASP became independent in ASP is a large global private equity manager with over 110 employees. The firm is headquartered in Chicago with additional offices located in Palo Alto, London and Singapore. ASP s Global Program product, in which CTPF participates, offers four distinct vehicles with the following strategies and approximate weightings: 1) U.S. partnerships (50%); 2) international developed markets partnerships (30%); 3) international emerging markets partnerships (10%); and, 4) U.S. direct co-investments (10%). Financial Performance Overview: The table below summarizes the changes in the CTPF ASP portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Adams Street Partners 3/31/ /31/2014 ASP Total Quarter ASP Total Reporting Metrics Program Change Program Vintage ears # Total Partnerships 1, ,632 # Active Partnerships 1, ,513 # Liquidated Partnerships Committed 273,295, ,295,218 Paid-in 175,976,845 7,032, ,944,345 Uncalled 97,486,969-7,032, ,519,469 % Paid-In 64% 3% 62% Distributed 155,626,232 5,028, ,598,036 Net Asset Value 107,887,104 2,293, ,593,473 Total Value 263,513,336 7,321, ,191,509 DPI RVPI TVPI IRR 9.12% -0.14% 9.26% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 4.8% $ Unrealized Appreciation/(Depreciation) -4,738,869 % Unrealized Appreciation/(Depreciation) -4.5% $Total Valuation Change 289,327 %Total Valuation Change 0.3% Note: ASP States that the financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. ASP s reported IRR is Gross of ASP management fees. Benchmark: Global, All Private Equity Portfolio Diversification: ASP s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s ASP portfolio is mature, spanning more than 15 years of commitments across more than 25 vehicles. The ASP portfolio broadly diversified across all key private equity investment strategies: buyouts, venture capital, mezzanine, special situations and distressed debt. The portfolio is global in nature. The portfolio has a majority of U.S. partnerships and companies. The international exposure in the portfolio is meaningful consisting of primarily of developed Europe, but also covering the Pacific Basin and emerging markets. The portfolio is broadly diversified by industry with the largest industry categories approximating 20%, but most being smaller. Knowledge. Experience. Integrity. 3

6 Pantheon Ventures Pantheon Ventures (PV) has managed assets for CTPF since PV is a subsidiary of Affiliated Manager Group (AMG). The firm was started in 1982 as the private equity division of GT Management, subsequently became independent in 1988, become a subsidiary of Russell Investments in 2004 and was sold to PV management and AMG in PV is a large global private equity manager with over 150 employees. The firm is headquartered in London with additional offices located in San Francisco, New ork and Hong Kong. CTPF has invested six vehicles across four of PV s products: 1) U.S. II and U.S. IV are vehicles investing in a diversified strategy mix of U.S. domiciled partnerships; 2) Europe II and Europe IV are vehicles investing in a diversity of European private equity funds (primarily buyouts); 3) Asia V focuses on partnerships across the Pacific Basin, and 4) Pantheon s Annual Global Program focuses on a global portfolio diversified by manager, stage, geography, vintage year, and industry. Financial Performance Overview: The table below summarizes the changes in the CTPF PV portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Pantheon - USD Converted 3/31/ /31/2014 Pantheon Quarter Pantheon Reporting Metrics Total Program Change Total Program Vintage ears , # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 117,238,458 14,632, ,606,052 Paid-in 94,699, ,337 94,039,118 Uncalled 22,539,003 13,972,069 8,566,934 % Paid-In 81% -11% 92% Distributed 117,645, , ,869,546 Net Asset Value 22,449, ,880 22,887,067 Total Value 140,094, , ,756,613 DPI RVPI TVPI IRR 7.71% -0.07% 7.78% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 3.4% $ Unrealized Appreciation/(Depreciation) -1,098,217 % Unrealized Appreciation/(Depreciation) -4.8% $Total Valuation Change -322,532 %Total Valuation Change -1.4% Note: PV s financial figures represent cash flows through the reporting quarter-end. The valuations represent a majority of NAVs from the reporting quarter (current values) with a minority of values from the prior quarter (lagged values). Benchmark: Global, All Private Equity Portfolio Diversification: PV s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s PV portfolio is relatively mature spanning more than 12 years of commitments across six vehicles. The PV portfolio is broadly diversified across all key private equity investment strategies: buyouts, venture capital, mezzanine, special situations and distressed debt. By geography, 70% of commitments are with the two U.S. vehicles, 25% with the two Europe vehicles and 5% in the Asia-focused vehicle. The global program reflects similar diversification. The portfolio is broadly diversified by industry with the largest industry categories approximating 20%, but most being smaller. Knowledge. Experience. Integrity. 4

7 HarbourVest Partners HarbourVest Partners (HVP) has managed assets for CTPF since HVP is an independent, 100% employee-owned firm. The firm was started in 1982 as the private equity division of Hancock Insurance and subsequently became independent in HVP is a large global private equity manager with over 230 employees. The firm is headquartered in Boston with additional offices located in London, Hong Kong, and Tokyo. The four HVP products in which CTPF has invested are: 1) Buyout VI, a vehicle investing primarily in middlemarket and large buyout partnerships, 2) Partnerships VI, a vehicle investing primarily in venture capital partnerships, but which also includes a modest amount of small buyout partnerships, 3) Dover VIII, a vehicle investing in secondary purchases of private equity partnerships, and 4) HIPEP VII, a vehicle focused on international investing, primarily in Europe, Asia Pacific, and Emerging Markets. Financial Performance Overview: The table below summarizes the changes in the CTPF HVP portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. HarbourVest Partners 3/31/ /31/2014 HVP Total Quarter HVP Total Reporting Metrics Program Change Program Vintage ears , , # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 136,000, ,000,000 Paid-in 105,800,000 1,560, ,240,000 Uncalled 30,200,000-1,560,000 31,760,000 % Paid-In 78% 1% 77% Distributed 140,802,993 2,082, ,720,127 Net Asset Value 28,140, ,211 28,511,295 Total Value 168,943,077 1,711, ,231,422 DPI RVPI TVPI IRR 8.80% 0.00% 8.80% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 7.3% $ Unrealized Appreciation/(Depreciation) -1,931,211 % Unrealized Appreciation/(Depreciation) -6.8% $Total Valuation Change 151,655 %Total Valuation Change 0.5% Note: HVP states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: US, All Venture Capital and All Buyouts Portfolio Diversification: HVP s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s investments in the 2006 HVP Partnerships VI (venture capital) and Buyouts VI fund-of-funds are mature and liquidating. CTPF s investment in the vintage 2012 Dover VIII secondary fund and the 2014 HIPEP VII international fund are investing. The original HVP commitments were allocation 40% to the venture capital partnership and 60% to the buyout partnership. The initial vehicles focused predominantly on U.S. partnerships and the secondary and international funds provide broader global exposure. The portfolio is broadly diversified by industry with the largest industry categories approximating 20%, but most being smaller. Knowledge. Experience. Integrity. 5

8 Mesirow Financial Private Equity Mesirow Financial Private Equity (MPE) is the private equity division of Mesirow Financial an independent, 100% employee-owned diversified financial services. MPE was started in 1982 to manage direct private equity partnerships and began a fund-of-funds product in MPE is a boutique in character focusing primarily on U.S. and European partnerships. MPE has over 40 employees including dedicated support personnel. The private equity team is located in Mesirow Financial s Chicago headquarters. CTPF has invested in seven vehicles across both of MPE s products as follows: 1) the four fund-of-funds vehicles invest in a diversified strategy mix of U.S. domiciled partnerships, with a moderate exposure to Western European partnerships; and 2) three co-investment funds that make select direct company investment alongside institutional private equity partnerships (primarily those invested in by the MPE fund-of-funds vehicles). Financial Performance Overview: The table below summarizes the changes in the CTPF MPE portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Mesirow Financial 3/31/ /31/2014 MFPE Total Quarter MFPE Total Reporting Metrics Program Change Program Vintage ears # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 170,000, ,000,000 Paid-in 157,350, , ,750,000 Uncalled 12,650, ,000 13,250,000 % Paid-In 93% 0% 92% Distributed 148,980,463 9,928, ,051,866 Net Asset Value 96,257,692-7,247, ,505,449 Total Value 245,238,155 2,680, ,557,315 DPI RVPI TVPI IRR 8.70% 0.00% 8.70% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 9.6% $ Unrealized Appreciation/(Depreciation) -7,847,757 % Unrealized Appreciation/(Depreciation) -7.6% $Total Valuation Change 2,080,840 %Total Valuation Change 2.0% Note: MPE states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: Global, All Private Equity Portfolio Diversification: MPE s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s MPE portfolio is a mature spanning more than 12 years of commitments across seven vehicles. The MPE portfolio broadly diversified across all key private equity investment strategies. By geography, commitments are focused primarily on U.S. domiciled partnerships, with approximately 25% target to European partnerships. MPE may selectively expand into Asian partnerships in the future. The portfolio is broadly diversified by industry with the largest industry categories approximating 20%, but most being smaller. Knowledge. Experience. Integrity. 6

9 Muller & Monroe Muller & Monroe (M 2 ) is a minority-owned business enterprise that was formed in The boutique private equity firm is located in Chicago and has nine professionals with additional support staff. The firm has two fund-offunds products. One fund focuses on minority/women-led managers and mid-west based/mid-west focused managers. The second fund represents M 2 s core strategy of investing in smaller/newer lower middle market fund managers. CTPF has invested in both products. Financial Performance Overview: The table below summarizes the changes in the CTPF M2 portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Muller & Monroe 3/31/ /31/2014 M2 Quarter M2 Reporting Metrics Total Progarm Change Total Program Vintage ears # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 35,000, ,000,000 Paid-in 30,195,550 39,544 30,156,006 Uncalled 4,804,450-39,544 4,843,994 % Paid-In 86% 0% 86% Distributed 16,994, ,083 16,222,861 Net Asset Value 16,895, ,137 17,521,880 Total Value 33,890, ,946 33,744,741 DPI RVPI TVPI IRR 2.39% 0.00% 2.39% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 4th 4th % Cash Distribution ield (Principal and Gain) 4.4% $ Unrealized Appreciation/(Depreciation) -665,681 % Unrealized Appreciation/(Depreciation) -3.8% $Total Valuation Change 106,402 %Total Valuation Change 0.6% Note: M2 states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: US, All Venture Capital and All Buyouts Portfolio Diversification: M2 s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s M 2 portfolio is maturing, with the MWBE/Mid-west vehicle committing from and the second lower middle market vehicle committing from The M 2 portfolios are predominantly small buyoutoriented with modest exposures in venture capital and debt-related partnerships. Geographically, the partnerships are all U.S. domiciled. Company exposure is national, but with a majority exposure in the Mid-West and Central states regions due to the geographic restrictions in the first fund. The portfolio has broad industry exposure with slightly larger concentrations than the global developed manager program products. Knowledge. Experience. Integrity. 7

10 Hispania Capital Partners Hispania is a minority-owned business enterprise that was formed in The boutique firm is located in Chicago and has seven professionals with additional support staff. Hispania manages direct investment partnerships (not fund-of-funds). The firm demographically targets companies that are strategically targeting the U.S. Hispanic market for growth and/or are Hispanic-owned or managed. Hispania makes growth equity or buyout investments in lower-middle market companies in the U.S. and Puerto Rico. Hispania focuses on the business services, consumer products, education and health care services industry sectors. CTPF has invested in two Hispania partnerships. Financial Performance Overview: The table below summarizes the changes in the CTPF Hispania portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Hispania I & II 3/31/ /31/2014 Hispania Quarter Hispania Reporting Metrics Total Program Change Total Program Vintage ears 2003 & & 2009 # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 15,000, ,000,000 Paid-in 13,162, ,162,894 Uncalled 1,837, ,837,106 % Paid-In 88% 0% 88% Distributed 8,865, ,865,493 Net Asset Value 7,368,604-14,644 7,383,248 Total Value 16,234,097-14,644 16,248,741 DPI RVPI TVPI IRR 5.94% -0.19% 6.13% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 4th 4th % Cash Distribution ield (Principal and Gain) 0.0% $ Unrealized Appreciation/(Depreciation) -14,644 % Unrealized Appreciation/(Depreciation) -0.2% $Total Valuation Change -14,644 %Total Valuation Change -0.2% Note: Hispania s financial figures represent cash flows and capital account information through the reporting quarter-end. Benchmark: US, All Buyouts Portfolio Diversification: Hispania s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. Regarding CTPF s investments, Hispania s first 2003 fund is mature, and the second 2009 fund is developing. The majority of the capital has gone to growth equity, with a small portion in control buyouts. Geographically, the portfolio is concentrated in the U.S. East and Mid-West. Industry exposure is primarily business services and consumer/retail. Knowledge. Experience. Integrity. 8

11 Pharos Capital Group Pharos is a minority-owned business enterprise that was formed in The boutique firm is headquartered in Dallas, with offices in Nashville and Baltimore. Pharos has 13 professionals with additional support staff. Pharos manages direct investment partnerships (not fund-of-funds). The firm targets companies in underserved markets that have less competition and lower pricing by employing ethnic demographic and geographic considerations. Pharos focuses on later-stage equity fundings for internal growth, acquisitions, leveraged buyouts, management buyouts, or recapitalizations across industry sectors, with particular emphasis on healthcare, business services, and technology. Financial Performance Overview: The table below summarizes the changes in the CTPF Pharos portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail Pharos II-A & III 3/31/ /31/2014 Pharos Quarter Pharos Reporting Metrics Total Program Change Total Program Vintage ears 2005 & & 2013 # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 22,500, ,500,000 Paid-in 10,725, ,000 10,425,000 Uncalled 11,775, ,000 12,075,000 % Paid-In 48% 1% 46% Distributed 4,126,255 79,177 4,047,078 Net Asset Value 10,241,327-90,585 10,331,912 Total Value 14,367,582-11,408 14,378,990 DPI 0.38 (0.00) 0.39 RVPI TVPI IRR 8.41% -0.60% 9.01% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 2nd 2nd % Cash Distribution ield (Principal and Gain) 0.8% $ Unrealized Appreciation/(Depreciation) -390,585 % Unrealized Appreciation/(Depreciation) -3.8% $Total Valuation Change -311,408 %Total Valuation Change -3.0% Note: Pharos s financial figures represent cash flows and capital account information through the reporting quarter-end. Benchmark: US, All Buyouts Portfolio Diversification: Pharos s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s 2005 investment in Pharos II-A is mature and the 2013 investment in Pharos III is investing. The majority of the capital has gone to growth equity, with a smaller portion in control buyouts. Geographically, the portfolio is predominantly in the Mid-west, followed by the South East with representations nationally. Health care and business services are the largest industry categories. Knowledge. Experience. Integrity. 9

12 Palladium Equity Partners Palladium is a minority-owned business enterprise that was formed in The boutique firm is headquartered in New ork, with an office in Los Angeles. Palladium has 17 professionals with additional support staff. Palladium manages direct investment partnerships (not fund-of-funds). The firm has a particular focus investing in companies that are well-positioned to capitalize on the fast-growing U.S. Hispanic market. Palladium provides equity capital to companies seeking to grow, restructure or provide liquidity for shareholders. Industries targeted include business services, financial services, consumer/retail, food/restaurants, healthcare, manufacturing, and media. Financial Performance Overview: The table below summarizes the changes in the CTPF Palladium portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. Palladium III & IV 3/31/ /31/2014 Palladium Quarter Palladium Reporting Metrics Total Program Change Total Program Vintage ears 2005 & & 2012 # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 17,500, ,500,000 Paid-in 11,126, ,458 10,893,004 Uncalled 7,202, ,457 7,435,585 % Paid-In 59% 1% 58% Distributed 9,954,558 1,821 9,952,737 Net Asset Value 8,700, ,585 8,430,314 Total Value 18,655, ,406 18,383,051 DPI RVPI TVPI IRR 13.85% -0.25% 14.10% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 1st 1st % Cash Distribution ield (Principal and Gain) 0.0% $ Unrealized Appreciation/(Depreciation) 37,127 % Unrealized Appreciation/(Depreciation) 0.4% $Total Valuation Change 38,948 %Total Valuation Change 0.5% Note: Palladium states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: US, All Buyouts Portfolio Diversification: Palladium s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s 2005 Palladium investment is mature. All of the capital has been invested in buyout transactions. The portfolio companies are all in the U.S. and are geographically diverse. Business/financial services and health care are the two largest industry categories. Knowledge. Experience. Integrity. 10

13 ICV Partners ICV is a minority business enterprise that was formed in 1998 as Inner City Ventures. The firm has offices in New ork and Atlanta. ICV has 13 professionals with additional support staff. ICV manages direct investment partnerships (not fund-of-funds). The firm values ethnic diversity and emphasizes investments where it can build MBEs of scale. ICV focuses on corporate divestitures and management buyouts, family successions and recapitalizations seeking to invest equity of 45% to 55% of the transaction value. Industry specialties include manufacturing, consumer goods and services, business services, food and beverage, commercial services, and health care. Financial Performance Overview: The table below summarizes the changes in the CTPF ICV portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. ICV II & III 3/31/ /31/2014 ICV Quarter ICV Reporting Metrics Total Program Change Total Program Vintage ears 2006 & /2013 # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 17,500, ,500,000 Paid-in 12,931, ,616 12,830,093 Uncalled 4,639, ,616 4,741,532 % Paid-In 73% 1% 73% Distributed 5,978, ,978,715 Net Asset Value 10,982, ,504 10,485,750 Total Value 16,960, ,504 16,464,465 DPI RVPI TVPI IRR 9.82% 0.29% 9.53% Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 3rd 3rd % Cash Distribution ield (Principal and Gain) 0.0% $ Unrealized Appreciation/(Depreciation) 394,888 % Unrealized Appreciation/(Depreciation) 3.8% $Total Valuation Change 394,888 %Total Valuation Change 3.8% Note: ICV states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: US, All Buyouts Portfolio Diversification: ICV s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s 2005 ICV investment is developing. The majority of the capital has gone to growth equity. Geographically, the portfolio is predominantly in the Mid-Atlantic, followed by the Mid-West and Central states. The industry sectors include business services and consumer/retail. Knowledge. Experience. Integrity. 11

14 SynCom Venture Partners Syndicated Communications Inc. (SynCom) was formed in 1977 with a mission to diversify the ownership of media in the United States. Today SynCom is a minority-owned business enterprise that focuses on venture capital investments of $5 to $15 million in companies along their growth curves. The boutique firm is located in Silver Springs, MD, and has 13 professionals with additional support staff. SynCom manages direct investment partnerships (not fund-of-funds). The firm seeks to support entrepreneurship within underserved communities. SynCom targets primarily early-stage investments in next-generation rapidly growing companies in the digital media, mobile technology, and web based services sectors. Financial Performance Overview: The table below summarizes the changes in the CTPF SynCom portfolio during the recent quarter and represents the aggregated cash flows and valuation information of all the underlying vehicles. See Manager Vehicle-Level Performance on the second to last page of this report for additional manager performance detail. SynCom V 3/31/ /31/2014 SynCom Quarter SynCom Reporting Metrics Ventures V Change Ventures V Vintage ears # Total Partnerships # Active Partnerships # Liquidated Partnerships Committed 7,500, ,500,000 Paid-in 7,344,452 28,090 7,316,362 Uncalled 155,548-28, ,638 % Paid-In 98% 0% 98% Distributed Net Asset Value 2,625,482-10,071 2,635,553 Total Value 2,625,482-10,071 2,635,553 DPI RVPI TVPI IRR % 0.54% % Benchmark TVPIs (Combined Vs): Thomson/Cambridge All PE 1st Quartile Thomson/Cambridge All PE Median Quartile Ranking 4th 4th % Cash Distribution ield (Principal and Gain) 0.0% $ Unrealized Appreciation/(Depreciation) -38,161 % Unrealized Appreciation/(Depreciation) -1.4% $Total Valuation Change -38,161 %Total Valuation Change -1.4% Note: SynCom states that financial figures represent cash flows and valuations (NAVs) through the reporting quarter-end. Benchmark: US, All Venture Capital Portfolio Diversification: SynCom s diversification percentages as of quarter-end are shown in the Individual Manager Diversification Table on the last page of this report. CTPF s 2006 Syncom investment is maturing. All of the capital has gone to venture capital investments. The portfolio is geographically diverse within the U.S. with the largest weighting in the West. The portfolio is entirely composed on investments in the media/communications and software/internet industry sectors. Knowledge. Experience. Integrity. 12

15 CTPF - PRIVATE EQUIT VEHICLE HOLDINGS March 31, 2015 Private Equity - Manager Detail Portfolio V Committed Paid-In Uncalled % PI Distributed NAV DPI RVPI TVPI IRR Developed Manager Program BPF Trust ,988,363 4,869, ,078 98% 9,080, , % BPF Trust ,587,574 9,408, ,153 98% 13,245, , % BPF Trust ,628,095 23,546,436 1,081,659 96% 34,917,413 4,683, % BPF Trust ,668,854 33,071,211 1,597,643 95% 48,525,680 9,895, % BPF Non-US Trust ,422,332 13,958, ,936 97% 22,916,678 3,431, % ASP US Fund ,000,000 6,646, ,500 95% 4,783,715 4,673, % ASP Non-US Fund ,000,000 2,851, ,500 95% 1,995,307 1,658, % ASP Non-US Secondary ,000,000 4,491, ,500 86% 1,686,995 3,853, % ASP US Fund ,000,000 4,141, ,000 83% 2,856,386 3,743, % ASP Non-US Fund ,000,000 10,577,000 3,423,000 76% 2,624,617 10,456, % ASP Direct Fund ,000, ,500 79,500 92% 449,920 1,325, % ASP Co-Invest II ,000,000 8,455,000 1,545,000 85% 5,695,349 10,936, % ASP US Fund ,000,000 5,570,000 4,430,000 56% 1,447,470 6,598, % ASP Developed Non-US ,000,000 3,255,000 2,745,000 54% 577,213 2,944, % ASP Emerging Non-US ,000,000 1,188, ,000 59% - 1,391, % ASP Direct Fund ,000,000 1,844, ,000 92% 275,078 2,338, % ASP US Fund ,000,000 4,875,000 5,125,000 49% 889,786 5,507, % ASP Developed Non-US ,000,000 3,024,000 2,976,000 50% 618,914 2,613, % ASP Emerging Non-US ,000,000 1,127, ,000 56% 69,821 1,258, % ASP Direct Fund ,000,000 1,644, ,000 82% 129,873 2,241, % ASP Global Secondary ,000,000 13,221,000 16,779,000 44% 2,513,745 10,850, % ASP Global Fund ,000,000 6,208,500 8,791,500 41% 252,307 6,289, % ASP Global Fund ,000,000 7,175,000 17,825,000 29% 74,055 6,990, % ASP Global Fund ,000,000 3,530,000 16,470,000 18% - 3,425, % Co-Investment Fund III ,000, ,000 9,621,000 4% - 327, % (3) Total ASP 273,295, ,976,845 97,486,969 64% 155,626, ,887, % 26 Pantheon USA III ,000,000 33,250,000 1,750,000 95% 35,735,000 2,504, % 27 Pantheon USA IV ,000,000 32,375,000 2,625,000 93% 45,500,002 8,137, % 28 Pantheon Europe II (in USD) ,623,073 17,757, ,262 95% 31,730,250 1,593, % 29 Pantheon Asia V ,000,000 4,285, ,000 86% 2,110,000 4,094, % 30 Pantheon Europe VI (In USD) ,615,385 6,806,644 1,808,741 79% 2,569,979 5,924, % 31 Pantheon Global Annual Series ,000, ,000 14,775,000 2% - 194, NM Total Pantheon (USD Converted) 117,238,458 94,699,455 22,539,003 81% 117,645,231 22,449, % 32 HVP Partnerships ,000,000 39,200, ,000 98% 42,833,813 7,837, % 33 HVP Buyouts ,000,000 57,300,000 2,700,000 96% 95,590,584 10,444, % 34 HVP Dover VIII ,000,000 8,000,000 8,000,000 50% 2,378,596 8,518, % 35 HVP HIPEP VII ,000,000 1,300,000 18,700,000 7% - 1,340, NM Total HVP 136,000, ,800,000 30,200,000 78% 140,802,993 28,140, % 36 Mesirow Partnerships I ,000,000 40,000, % 43,736,744 3,363, % 37 Mesirow Partnerships II ,000,000 45,000, % 65,428,987 22,344, % 38 Mesirow Partnerships IV ,000,000 17,200,000 2,800,000 86% 7,903,007 17,792, % 39 Mesirow Partnerships V ,000,000 11,800,000 8,200,000 59% 2,103,949 15,357, % 40 Mesirow Capital Ptnrs VIII ,000,000 5,000, % 10,106,955 5, % 41 Mesirow Capital Ptnrs IX ,000,000 9,550, ,000 96% 2,422,640 4,347, % 42 Mesirow Capital Ptnrs X ,000,000 28,800,000 1,200,000 96% 17,278,181 33,046, % Total Mesirow 170,000, ,350,000 12,650,000 93% 148,980,463 96,257, % Total Developed Manager Program 696,533, ,826, ,875,972 77% 563,054, ,734, n/a Knowledge. Experience. Integrity. 13

16 CTPF - PRIVATE EQUIT VEHICLE HOLDINGS March 31, 2015 Private Equity - Manager Detail Portfolio V Committed Paid-In Uncalled % PI Distributed NAV DPI RVPI TVPI IRR Emerging Manager Program 43 M2 Illinois ,000,000 20,969,248 4,030,752 84% 10,187,563 10,761, % 44 M2 PEFOF (Developing) ,000,000 9,226, ,698 92% 6,807,381 6,134, % Total Muller & Monroe 35,000,000 30,195,550 4,804,450 86% 16,994,944 16,895, % 45 Hispania I ,000,000 5,000, % 916, N/A 46 Hispania II ,000,000 8,162,894 1,837,106 82% 7,948,993 7,368, % Total Hispania 15,000,000 13,162,894 1,837,106 88% 8,865,493 7,368, % 47 Pharos II-A ,500,000 7,425,000 75,000 99% 4,036,466 7,678, % 48 Pharos III ,000,000 3,300,000 11,700,000 22% 89,789 2,562, N/A Total Pharos 22,500,000 10,725,000 11,775,000 48% 4,126,255 10,241, % 49 Paladium III ,500,000 7,960, ,539 95% 9,877,294 5,362, % 50 Paladium IV ,000,000 3,166,411 6,833,589 32% 77,264 3,338, % Total Palladium 17,500,000 11,126,462 7,202,128 59% 9,954,558 8,700, % 51 ICV II ,500,000 7,163, ,698 96% 5,950,703 5,680, % 52 ICV III ,000,000 5,768,407 4,303,218 57% 28,012 5,302, % Total ICV 17,500,000 12,931,709 4,639,916 73% 5,978,715 10,982, % 53 SynCom V ,500,000 7,344, ,548 98% - 2,625, % Total Emerging Manager Program 115,000,000 85,486,067 30,414,148 74% 45,919,965 56,814, n/a Total Private Equity 811,533, ,312, ,290,120 76% 608,974, ,548, n/a Note: The financial figures represent cash flows through the reporting quarter-end. The valuations represent a majority of NAVs from the reporting quarter (current values) with a minority of values from the prior quarter (lagged values). Knowledge. Experience. Integrity. 14

17 Private Equity Portfolio Diversification 03/31/15 ASP HVP MPE PV M2 Hispania Pharos Palladium ICV SynCom Total Strategy Venture/Growth 32% 27% 42% 33% 29% 68% 73% 2% 0% 100% 35% Buyout 61% 72% 54% 53% 66% 32% 27% 98% 100% 0% 60% Special Situations 0% 0% 0% 4% 0% 0% 0% 0% 0% 0% 0% Mezzanine 7% 1% 3% 0% 5% 0% 0% 0% 0% 0% 4% Distressed 0% 0% 1% 10% 0% 0% 0% 0% 0% 0% 1% Total Portfolio 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Geography by Underlying Portfolio Company Exposure Total # Companies 8,106 2,676 4,685 1, ,029 North Atlantic 8% 7% 22% 4% 18% 0% 17% 10% 13% 23% 13% Mid-Atlantic 4% 21% 0% 8% 7% 11% 13% 0% 0% 8% 5% South East 4% 8% 6% 8% 10% 0% 20% 20% 27% 0% 7% Mid-West 9% 9% 8% 7% 27% 33% 45% 10% 16% 8% 12% South West/Rockies 9% 8% 7% 0% 12% 29% 0% 20% 20% 23% 9% West/Pacific Northwest 19% 16% 34% 19% 22% 27% 5% 40% 24% 38% 24% Total US 53% 69% 77% 46% 97% 100% 100% 100% 100% 100% 70% Europe 27% 18% 13% 31% 0% 0% 0% 0% 0% 0% 17% Pacific Basin 12% 7% 2% 22% 0% 0% 0% 0% 0% 0% 7% Rest of World 8% 6% 8% 1% 3% 0% 0% 0% 0% 0% 6% Total International 47% 31% 23% 54% 3% 0% 0% 0% 0% 0% 30% Total Portfolio 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Industry by Underlying Portfolio Company Exposure Total # Companies 8,106 2,676 4,685 1, ,029 Basic Industry 6% 5% 16% 17% 19% 0% 0% 20% 0% 0% 10% Business/Financial Services 14% 11% 12% 6% 0% 0% 36% 40% 0% 0% 12% Computer Hardware/Electronics 24% 0% 0% 5% 5% 0% 29% 0% 0% 0% 10% Consumer/Retail 13% 18% 12% 29% 31% 22% 0% 20% 15% 0% 16% Health Care (incl Biotech/Devices) 14% 20% 9% 18% 3% 46% 19% 10% 27% 0% 14% Media/Telecom 7% 9% 8% 1% 8% 0% 4% 10% 0% 69% 7% Other 14% 15% 1% 0% 32% 32% 12% 0% 38% 0% 11% Software/Internet 0% 22% 32% 20% 0% 0% 0% 0% 20% 31% 14% Utilities/Energy 8% 0% 10% 4% 3% 0% 0% 0% 0% 0% 7% Total Portfolio 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Information approximates exposures based on manager provided percentage figures. The percentages were multiplied by CTPF s individual capital accounts. Any cash has been apportioned across the exposures according to the percentage weightings. Knowledge. Experience. Integrity. 15

18 Appendix Terms and Glossary Private Equity: Refers to companies that are not quoted on the stock exchange. Investments are typically illiquid in nature. Ownership consists a of limited partnership interest. Vintage ear: The year in which a private equity fund makes its first investment. Commitment: The amount of a limited partner s obligation to a private equity fund. Capital Contribution: The amount of capital called or drawn down by the general partner for an investment and also fees and expenses. Capital contributed is also referred to as paid-in capital and represents the amount of capital paid-into underlying investments, or companies. Recycling/Reinvestment and Recallable Cash Flows: Private equity vehicles are usually characterized by the prohibition (unless stipulated by agreement) to reinvest proceeds or allow redemptions. This means that unless otherwise agreed to, private equity funds must distribute proceeds from investments to limited partners and cannot reinvest that capital. In some cases, distributions are recallable, that is, after the fund distributes proceeds to its investors, it can draw down the same capital again, which makes it possible for the fund to draw capital in excess of its total committed capital. Distributions include both recallable and non-recallable distributions. This means that a recallable distribution must be treated as an actual distribution and, if and when that distribution is called again, it must be treated as additional paid-in capital but must not reduce unfunded commitments or change cumulative committed capital. It should be noted that recallable distributions have an impact on the metric calculations. For example, this recallable feature means that cumulative paid-in capital can be higher than cumulative committed capital. It also means that, all other things being equal, the DPI, RVPI, and TVPI multiples will be lower for funds with recallable distributions as the denominator will be increased. It also means that the PIC multiple (paid-in capital to cumulative committed capital) will be higher for funds with recallable distributions, all other things being equal. (Source: GIPS Guidance Statement on Private Equity, January 2011) Distribution: Are the returns of cash or securities that an investor in a private equity fund receives. Market Value: Represents the carrying value of the investments. Market value is commonly referred to as the NAV, or net asset value. Internal Rate of Return (IRR): Is the CFA Institute GIPS approved methodology to calculate return performance of private equity investments. The IRR uses the sum of present value of cash drawdowns (money invested), the present value of distributions (money returned from investments) and the current value of unrealized investments and applies a discount. The IRR is a dollar weighted calculation and accounts for the timing and size of flows, while the TWR seeks to mitigate the timing effects of the associated flows. Pooled IRR: Is an IRR calculation that treats the ThomsonONE database as a single portfolio. The initial database flow represents the total market value of the ThomsonONE database (if any) and the database is then adjusted for periodic flows thereafter. J Curve Effect: Is a common phenomenon associated with a developing private equity program. The actual curve is realized by plotting the return generated by a private equity fund against time (from inception to termination). In the early years of a developing program the payment of management fees out of drawn down notices does not produce an equivalent book value. Consequently, a private equity fund will initially show a negative return. For more detailed information on the J-Curve Effect ask to see Callan s Whitepaper on the topic. Knowledge. Experience. Integrity. 16

19 Major Components of Private Equity Venture Capital Seed Capital An initial state of a company s growth characterized by a founding management team, business plan development, prototype development, and beta testing. Series A first round of institutional investment capital Series B second round of institutional investment capital Series C third round of institutional investment capital (Source: VCExperts) Early Stage A state of a company that typically has completed its seed stage and has a founding or core senior management team, has proven its concept or completed its beta test, has minimal revenues, and no positive earnings or cash flows. (Source: VCExperts) Later Stage A fund investment strategy involving financing for the expansion of a company that is producing, shipping and increasing its sales volume. Later stage funds often provide the financing to help a company achieve critical mass in order to position its shareholders for an Exit Event, e.g., an IPO on strategic sale of the company. (Source: VCExperts) Buyouts / Corporate Finance Leveraged Buyout A takeover of a company, using a combination of equity and borrowed funds. Generally, the target company's assets act as the collateral for the loans taken out by the acquiring group. The acquiring group then repays the loan from the cash flow of the acquired company. For example, a group of investors may borrow funds, using the assets of the company as collateral, in order to take over a company. Or the management of the company may use this vehicle as a means to regain control of the company by converting a company from public to private. In most LBOs, public shareholders receive a premium to the market price of the shares. (Source: VCExperts) Management Buyout A private equity firm will often provide financing to enable current operating management to acquire or to buy at least 50 per cent of the business they manage. In return, the private equity firm usually receives a stake in the business. This is one of the least risky types of private equity investment because the company is already established and the managers running it know the business and the market it operates in extremely well. (Source: VCExperts) Allocation by Fund Size: Small Buyout ($0 to $1 billion) Medium Buyout ($1 billion to $3 billion) Large Buyout ($3 billion to $7 billion) Mega Buyout ($7 billion +) Mezzanine (subordinated debt): Is an investment strategy that involves providing capital or financing that is below the senior debt and above the equity in terms of liquidation priority. Mezzanine is analogous to private high yield debt and typically includes preferred stock and warrants. The majority of return is provided through coupon payments and equity sweeteners typically help to increase the returns. Mezzanine debt is typically structured as part of an LBO transaction. Distressed Debt: Corporate bonds of companies that have either filed for bankruptcy or appear likely to do so in the near future. The strategy of distressed debt firms involves first becoming a major creditor of the target company by snapping up the company's bonds at pennies on the dollar. This gives them the leverage they need to call most of the shots during either the reorganization, or the liquidation, of the company. In the event of a liquidation, distressed debt firms, by standing ahead of the equity holders in the line to be repaid, often recover all of their money, if not a healthy return on their investment. Usually, however, the more desirable outcome is a Knowledge. Experience. Integrity. 17