Water and Power Employees’ Retirement Plan (the “Plan ... · Institutional investors in the public market have long sought to incorporate environmental, social and governance

Water and Power Employees’ Retirement Plan (the “Plan”)Strategic and Tactical Plan

February 2019 | Confidential

Disclosure

This document is meant only to provide a broad overview for discussion purposes. All information provided here is subject to change. This document is for informationalpurposes only and does not constitute an offer to sell, a solicitation to buy, or a recommendation for any security, or as an offer to provide advisory or other services byStepStone Group LP, StepStone Group Real Assets LP, StepStone Group Real Estate LP, Swiss Capital Invest Holding (Dublin) Ltd, Swiss Capital Alternative Investments AG ortheir subsidiaries or affiliates (collectively, “StepStone”) in any jurisdiction in which such offer, solicitation, purchase or sale would be unlawful under the securities laws ofsuch jurisdiction. The information contained in this document should not be construed as financial or investment advice on any subject matter. StepStone expresslydisclaims all liability in respect to actions taken based on any or all of the information in this document.

This document is confidential and solely for the use of StepStone and the existing and potential clients of StepStone to whom it has been delivered, where permitted. Byaccepting delivery of this presentation, each recipient undertakes not to reproduce or distribute this presentation in whole or in part, nor to disclose any of its contents(except to its professional advisors), without the prior written consent of StepStone. While some information used in the presentation has been obtained from variouspublished and unpublished sources considered to be reliable, StepStone does not guarantee its accuracy or completeness and accepts no liability for any direct orconsequential losses arising from its use. Thus, all such information is subject to independent verification by prospective investors.

The presentation is being made based on the understanding that each recipient has sufficient knowledge and experience to evaluate the merits and risks of investing inprivate market products. All expressions of opinion are intended solely as general market commentary and do not constitute investment advice or a guarantee of returns.All expressions of opinion are as of the date of this document, are subject to change without notice and may differ from views held by other businesses of StepStone.

All valuations are based on current values calculated in accordance with StepStone’s Valuation Policies and may include both realized and unrealized investments. Due tothe inherent uncertainty of valuation, the stated value may differ significantly from the value that would have been used had a ready market existed for all of the portfolioinvestments, and the difference could be material. The long-term value of these investments may be lesser or greater than the valuations provided.

StepStone Group LP, its affiliates and employees are not in the business of providing tax, legal or accounting advice. Any tax-related statements contained in thesematerials are provided for illustration purposes only and cannot be relied upon for the purpose of avoiding tax penalties. Any taxpayer should seek advice based on thetaxpayer’s particular circumstances from an independent tax advisor.

Prospective investors should inform themselves and take appropriate advice as to any applicable legal requirements and any applicable taxation and exchange controlregulations in the countries of their citizenship, residence or domicile which might be relevant to the subscription, purchase, holding, exchange, redemption or disposal ofany investments. Each prospective investor is urged to discuss any prospective investment with its legal, tax and regulatory advisors in order to make an independentdetermination of the suitability and consequences of such an investment.

An investment involves a number of risks and there are conflicts of interest. Please refer to the risks and conflicts disclosed herein.

Each of StepStone Group LP, StepStone Group Real Assets LP and StepStone Group Real Estate LP is an investment adviser registered with the Securities and ExchangeCommission (“SEC”). StepStone Group Europe LLP is authorized and regulated by the Financial Conduct Authority, firm reference number 551580. Swiss Capital InvestHolding (Dublin) Ltd (“SCHIDL”) is an SEC Registered Investment Advisor and Swiss Capital Alternative Investments AG (“SCAI”) (together with SCHIDL, “Swiss Cap”) isregistered as a Relying Advisor with the SEC. Such registrations do not imply a certain level of skill or training and no inference to the contrary should be made.

All data is as of September 30, 2018 or latest available unless otherwise noted.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS. ACTUAL PERFORMANCE MAY VARY.

Confidential |

StepStone Team

Mr. Elio is a member of the private equity team, focusing on middle-market buyouts and secondary funds. He is also involved in various advisory and portfolio management activities. Prior to joining StepStone in 2014, Mr. Elio was a managing director at ILPA, where he led programs around research, standards and industry strategic priorities. Before that he was a partner and managing director at LP Capital Advisors where he led the firm’s Boston office and served as the lead consultant to North American and European institutional investors. Mr. Elio was the primary consultant for many of the firm’s largest clients including public and private pension plans committing more than US$5 billion annually.

2

Michael Elio – Partner

Mr. Kettnich a member of the private equity team, focusing on secondary investments. He is also involved in various portfolio management activities. Since StepStone’s inception, Mr. Kettnich has helped to build the Firm’s primary diligence and research platform, as well as its secondary investment business. He also spent time living in Beijing and London, where he focused on developing StepStone’s international business. Before joining StepStone in 2007, Mr. Kettnich was with PCG Capital Partners, the direct investment arm of Pacific Corporate Group, where he sourced and evaluated middle-market buyout and growth equity investments. Mr. Kettnich graduated summa cum laude with a BBA from the University of San Diego and is a CFA charterholder.

John Kettnich – Partner

Mr. True is a member of the private equity team, focusing on small-market buyouts and secondary funds. Prior to joining StepStone, Mr. True was an analyst at The Carlyle Group’s AlpInvest Partners where he sourced and performed due diligence on private equity funds focusing on North American GPs. Previously, Mr. True was an investment analyst at Cornell University Investment Office where he assisted in managing the university’s endowment and conducted and sourced due diligence on prospective managers. Mr. True received his BS in financial economics from Binghamton University. He is a CFA charterholder.

Jonathan True – Senior Associate

Executive Summary

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Strategic Objectives

• The Plan pursues investments in private equity (“PE”) assets as part of its strategic asset allocation in order to

• Increase the diversification of the Plan’s assets,

• Take advantage of the ability to accept illiquidity in exchange for a premium, and

• Reduce the volatility and help increase the risk-adjusted returns of the overall Plan.

• The Retirement Board seeks to invest with managers who have demonstrated the ability, or the potential, to outperform the publicmarket benchmark plus an illiquidity risk premium, net of fees and expenses.

• The Retirement Board expects that commitments to and investments in private equity assets will establish, maintain, and continually reinforce the presence as an attractive investor, and make both continuous use of and contributions to the best practices of investors in private equity.

• The Retirement Board will seek investments in which the General Partner demonstrates a commitment to standards of good conduct and transparency, including compliance with all Federal, State, local, and international laws, including, but not limited to, labor, anti-discrimination, environmental, and health and safety laws, and will reject investments that would pose reputational risk to the Plan or bring public or regulatory scrutiny other than that which is required by law or regulation to consummate an investment transaction.

4

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Aggregate Asset Allocation

The Plan has adopted a target allocation to private equity of 8.0% of the market value of the total assets

― The Retirement Fund began committing to the private markets in 2005. As of September 30, 2018, private equity represented approximately 4.6% of the Retirement Fund’s assets, excluding unfunded commitments

― The Health Fund began committing to private markets in 2008. As of September 30, 2018, private equity represented approximately 5.0% of the Health Fund’s assets, excluding unfunded commitments

• Depending on allocations to each private equity sub-sector, the rate at which the Plan progresses towards its 8.0% private equity exposure target may vary to a degree

• As a relatively young program, it will take a number of years before the full target allocation is reached

5

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Strategic and Pacing Plan Overview

• Strategic Plan: a long-term investment plan designed to achieve the Plan’s investment objectives

– The Plan’s staff has worked with StepStone Group (“StepStone”) to develop a pacing plan to prudently achieve and maintain a targeted asset allocation to the Plan’s private equity investment strategies over the short and medium-term (i.e., five year)

– The pacing plan includes portfolio construction objectives created to achieve appropriate diversification by strategy, geography, and manager

• Tactical Plan: tactical recommendations for potential allocation opportunities for calendar year 2019 that facilitate and align with the execution of the Strategic Plan

– The Plan’s staff and StepStone have developed a pipeline of near-term opportunities that will be leveraged to identify attractive fund investment opportunities for the annual plan

– Tactical Plan executes on the Strategic Plan within the context of the opportunities available, current market environment and any near-term priorities

6

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Strategic Recommendation

• Strategic Plan:

– Target US$400 million of annual private equity commitments in 2019 and increasing thereafter in order to smooth deployment pacing and achieve target of 8% exposure by fair market value (“FMV”) to private equity as a percentage of the Plan’s program assets.

• The Retirement Fund: Target US$350 million of annual private equity commitments in 2019. Target four to seven investments annually with an average investment size of US$85 million

• The Health Fund: Target US$50 million of annual private equity commitments in 2019. Target four to seven investments annually with an average investment size of US$12.5 million

– Increase geographic diversification by targeting commitments to fund managers with a European focus in order to achieve the long term target exposure to Europe, and selectively commit to other international regions, including Asia and Emerging Markets

– Underweight Venture Capital and Fund of Funds exposure through an increase in complementary late stage/growth capital commitments, which can be made directly and at scale

– Develop program to leverage co-investment opportunities generated from the Plan’s portfolio, providing improved net return potential

• Tactical Plan:

– Focus on deploying capital in funds with existing, high-quality Plan managers

– Continue to identify and commit to high-conviction Buyout funds

– Foreign currency risk exists and is considered before any commitment is made, but the impacts from fluctuations can offset each other over the long term

– Develop new manager relationships through commitments to Growth Equity, Europe-focused funds and Special Situations funds in order to diversify exposure across multiple Private Equity sectors

7

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ESG Considerations

Institutional investors in the public market have long sought to incorporate environmental, social and governance (“ESG”) considerations in both research and decision-making process. More recently the private markets have begun to adopt similar practices as evidenced by the growing number of private equity signatories to the UN PRI

• Some GPs and LPs are focusing on Environmental, Social and Governance (ESG)

• Adoption of ESG policies and meaningful integration of ESG consideration throughout the lifecycle of investments is only required by a few investors today

• Perceptions that ESG is just about reputation are shifting – more and more practitioners are finding real benefits

• Private Equity as an active shareholder will be a component in demonstrating ways to realize value from ESG

• Governance, which is a natural part of PE risk-management, continues to remain an area of focus

The Plan’s Existing Policy

• The Retirement Board invests for the long term in private equity funds that they expect will ultimately attain better investmentperformance by (among other things) operating their businesses with high ethical, social and legal standards

• Under the California Constitution and City of Los Angeles Charter, the duty to the Plan’s members comes first, requiring the Retirement Board to exercise a high degree of care, skill, prudence and diligence, and to diversify investments to avoid risk

8

Retirement Fund

Historical Portfolio Review

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Annual Commitment Analysis

11

• 2018 commitment activity was within target, with five new commitments totaling $320.5 million (by vintage year)

– Crestview Partners IV, L.P. ($63 million)– Harvest Partners VIII, L.P. ($85 million)– Industry Ventures Special Opportunities Fund III-A ($22.5

million) – Lexington Capital Partners IX, L.P. ($75 million)– Vista Equity Partners Fund VII, L.P. ($75 million)

• Annual pacing has increased but remains in line to continue desired exposure

– Liquidity concerns led to conservative pacing following the Global Financial Crisis

– Increased target allocation in 2015 was also a factor

NOTES: Includes commitments to funds which closed through December 31, 2018.

(US$ in millions)Historical Retirement Fund Commitment Activity

Vintage Year Partnerships Commitments2006 2 $602007 1 $202008 2 $502009 2 $462010 0 $02011 3 $552012 1 $252013 5 $1342014 2 $1002015 3 $1372016 4 $2752017 5 $2542018 5 $321

Total Program 35 $1,476

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12NOTES: Includes commitments to funds which closed through December 31, 2018. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Vintage 2018 funds have not called capital as of September 30, 2018.

Portfolio Status

• Since inception, the Retirement Fund has committed or approved US$1,476 million to 35 partnership investments across 17 managers, representing an average investment size of US$42 million per investment

• As the portfolio continues to mature, careful consideration is given to new relationships while evaluating the performance of existing relationships. StepStone seeks to build a long-term target portfolio of 30 to 35 active managers. Beyond that, there is a risk of over diversification and dilution of outperforming funds resulting in index-like returns

Performance

• As of September 30, 2018 (latest data available), the Retirement Fund has generated an inception-to-date net TVM of 1.3x

$60

$20

$50 $46

$0

$55

$25

$134

$100

$137

$275$254

$321

1.3x

1.6x 1.4x 1.4x

1.5x 1.4x 1.4x

1.6x

1.1x 1.1x 1.1x

0.0x

0.4x

0.8x

1.2x

1.6x

2.0x

$0

$50

$100

$150

$200

$250

$300

$350

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Commitments by Vintage YearUS$ in millions

Commitments Net TVM

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PE Portfolio Cash Flow Analysis

13

• The private equity portfolio has grown since its inception in 2005– Cumulative contributions reached US$719 million by September 2018 (and US$744 million by December 2018) – Cumulative distributions reached US$368 million by September 2018 (and US$403 million by December 2018) – Consistent with the step-up in commitments in 2013 and 2015, a material increase in capital deployment has

occurred over the past two calendar years– Distributions have also increased over prior years as the market has been strong for exits

($800)

($600)

($400)

($200)

$0

$200

$400

$600

$800

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3 2018

US$

in m

illio

ns

Retirement Fund Cumulative Cash Flows

Contributed Capital Distributed Capital NAV Net Cash Flow

NOTES: Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses.

Recommended Pacing Plan

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Overview: Commitment Pacing

15

• StepStone recommends the Retirement Fund target US$350 million in commitments for 2019– Target approximately US$85 million commitment per opportunity– Commitment target may scale up or down depending on opportunity set and availability of allocation

• Target four to seven partnerships during the year– Provides proper diversification across investment opportunities– Controls number of relationships– Opportunistically consider attractive exposures

• Continue to update pacing targets on an annual basis– Incorporate volatility of public markets and overall Plan growth– Update actual private equity cash flows and NAVs

(US$ in millions)2019 Investment Plan - Retirement Fund

ProjectionsCommitment Target $350Commitment Sizing $50-125

Number of Partnerships 4 - 7 Partnerships

NOTES: The opinions expressed herein reflect the current opinions of StepStone as of the date appearing in this material only. There can be no assurance that views and opinions expressed in this document will come to pass.

Confidential |

Pacing Analysis

16

• An annual pacing scenario analysis was conducted to:– Illustrate the projected movement in private equity FMV as a percentage of the Retirement Fund– Present different annual commitment pacing scenarios to vary the pace of private equity FMV exposure

• The analysis is based on the Retirement Fund’s financial information as of December 31, 2018. The first new commitment is assumed to bemade in 2019

• The pacing plan will be annually reviewed and updated with recommendations and assumptions reassessed based on the Plan’s overalltargets as well as the general market environment

• At the base case commitment level of US$350 million from 2019-2023, the Retirement Fund is projected to reach its 8.0% target by 2021

NOTES: There can be no assurance that actual scenario will be similar to the model set forth on this slide or that the investment will achieve its investment objectives or avoid substantial losses. Scenario patterns will vary depending on the activities of the underlying investment. This is a simplified example, and may not represent the actual scenario of the investment. Please let us know if you want to see a scenario analysis based on assumptions other than those we have used for this analysis.

$321$350 $350 $350 $350 $350

4.9%

6.3%

7.4%

8.1%8.3% 8.3%

8.2% 8.1% 8.0% 8.0% 8.0%

$0

$100

$200

$300

$400

$500

$600

$700

$800

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

$ in

mill

ions

% o

f Tot

al P

ortfo

lio V

alue

Pacing Plan and FMV Exposure % Projection

Annual Commitments PE FMV % of Total Target PE FMV %

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Pacing Plan – FMV Exposure Projection

17

• StepStone sensitized the Retirement Fund private equity FMV exposure for multiple deployment levels versus the proposed pacinglevel of US$350 million per year

– Increasing commitments from the base case commitment level by US$50 million per year would allow the Retirement Fund toreach the targeted 8% FMV private equity exposure half a year earlier (2020)

– Increasing commitments from the base case commitment level by US$100 million per year would allow the Retirement Fund toreach the targeted 8% FMV private equity exposure a year earlier (2020)

4.9%

6.3%

7.4%

8.1%8.3% 8.3% 8.2% 8.1% 8.0% 8.0% 8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

PE FMV as a % of Total Portfolio Assets($ in millions)

+ $150m/year

+ $100m/year

+ $50m/year

StepStone Recommendation

- $50m/year

- $100m/year

- $150m/year


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Pacing Plan – Cash Flow Projection

18

• Based on the base case assumptions, StepStone projected the anticipated capital calls (cash outflows), distributions (cash inflows), and netcash flows to the Retirement Fund

• As the Retirement Fund made significant recent commitments but limited allocations prior to 2016, capital calls are projected to exceeddistributions in the initial projection years as recent vintage funds drawdown capital to make investments

• The estimated net cash flow becomes positive in 2023 as distributions from new commitments begin outpacing contributions

NOTES: There can be no assurance that actual cash flows will be similar to the model set forth on this slide or that the investment will achieve its investment objectives or avoid substantial losses. Cash flow patterns will vary depending on the activities of the underlying investment. This is a simplified example, and may not represent the actual performance the investment. Please let us know if you want to see a cash flow analysis based on assumptions other than those we have used for this analysis.

$118.6 $171.1

$231.2 $299.0

$371.4 $451.1

$516.2 $575.0

$631.5 $678.3

($358.1) ($361.1) ($358.2) ($357.1) ($353.0)($409.2)

($466.7)($534.4)

($586.8) ($620.7)

($240)($190)

($127)($58)

$18 $42 $50 $41 $45 $58

($750)

($500)

($250)

$0

$250

$500

$750

($750)

($500)

($250)

$0

$250

$500

$750

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Retirement Fund Cash Flow Projection(US$ in millions)

Distributions Capital Calls Net Cash Flow

Health Fund

Historical Portfolio Review

Confidential |


21

• 2018 commitment activity was within target, with five new commitments totaling $61.5 million (by vintage year)

– Crestview Partners IV, L.P. ($12 million)– Harvest Partners VIII, L.P. ($15 million)– Industry Ventures Special Opportunities Fund III-A ($4.5

million)– Lexington Capital Partners IX, L.P. ($15 million)– Vista Equity Partners Fund VII, L.P. ($15 million)

• Annual pacing has increased but remains in line to continue desired exposure

– Liquidity concerns led to conservative pacing following the Global Financial Crisis

– Increased target allocation in 2015 was also a factor

NOTES: Includes commitments to funds which closed through December 31, 2018.

(US$ in millions)Historical Health Fund Commitment Activity

Vintage Year Partnerships Commitments2008 1 $52009 2 $82010 0 $02011 4 $182012 1 $52013 4 $212014 3 $232015 2 $202016 4 $552017 5 $512018 5 $62

Total Program 31 $267

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22NOTES: Includes commitments to funds which closed through December 31, 2018. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Vintage 2018 funds have not called capital as of September 30, 2018.

Portfolio Status

• Since inception, the Health Fund has committed or approved US$267 million to 31 partnership investments across 15 managers, representing an average investment size of US$9 million per investment

• As the portfolio continues to mature, careful consideration is given to new relationships while evaluating the performance of existing relationships. StepStone seeks to build a long-term target portfolio of 30 to 35 active managers. Beyond that, there is a risk of over diversification and dilution of outperforming funds resulting in index-like returns

Performance

• As of September 30, 2018 (latest date available), the Health Fund has generated an inception-to-date net TVM of 1.3x

$5$8

$0

$18

$5

$21 $23$20

$55$51

$62

1.3x

1.4x 1.4x 1.4x 1.4x

1.6x

1.1x 1.1x

1.1x

0.0x

0.4x

0.8x

1.2x

1.6x

2.0x

$0

$10

$20

$30

$40

$50

$60

$70

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Commitments by Vintage YearUS$ in millions

Commitments Net TVM

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PE Portfolio Cash Flow Analysis

23

• The private equity portfolio has grown since its inception in 2005– Cumulative contributions reached US$119 million by September 30, 2018 (and US$124 million by December 2018)– Cumulative distributions reached US$48 million by September 30, 2018 (and US$54 million by December 2018)– Consistent with the step-up in commitments in 2013, a material increase in capital deployment has occurred over

the past two calendar years– Distributions have also increased over prior years as the market has been strong for exits

($150)

($100)

($50)

$0

$50

$100

$150

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q3 2018

US$

in m

illio

ns

Health Fund Cumulative Cash Flows

Contributed Capital Distributed Capital NAV Net Cash Flow

NOTES: Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses.

Recommended Pacing Plan

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Overview: Commitment Pacing

25

• StepStone recommends the Health Fund target US$50 million in commitments for 2019– Target approximately US$12.5 million commitment per opportunity– Commitment target may scale up or down depending on opportunity set and availability of allocation

• Target four to seven partnerships during the year– Provides proper diversification across investment opportunities– Controls number of relationships– Opportunistically consider attractive exposures

• Continue to update pacing targets on an annual basis– Incorporate volatility of public markets and overall Plan growth– Update actual private equity cash flows and NAVs

(US$ in millions)2019 Investment Plan - Health Fund

ProjectionsCommitment Target $50Commitment Sizing $5-20

Number of Partnerships 4 - 7 Partnerships

NOTES: The opinions expressed herein reflect the current opinions of StepStone as of the date appearing in this material only. There can be no assurance that views and opinions expressed in this document will come to pass.

Confidential |

Pacing Analysis

26

• An annual pacing scenario analysis was conducted to:– Illustrate the projected movement in private equity FMV as a percentage of the Health Fund– Present different annual commitment pacing scenarios to vary the pace of private equity FMV exposure

• The analysis is based on the Health Fund’s financial information as of December 31, 2018. The first new commitment is assumed to bemade in 2019

• The pacing plan will be annually reviewed and updated with recommendations and assumptions reassessed based on the Plan’s overalltargets as well as the general market environment

• At the base case commitment level of US$50 million from 2019-2020, the Health Fund is projected to reach its 8.0% target by 2021

$62

$50 $50$55

$65

$75

5.3%

6.9% 7.8%8.2% 8.2% 8.1% 8.0% 8.0% 8.1% 8.3%

8.0%

$0

$25

$50

$75

$100

$125

$150

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

$ in

mill

ions

% o

f Tot

al P

ortfo

lio V

alue

Pacing Plan and FMV Exposure % Projection

Annual Commitments PE FMV % of Total Target PE FMV %


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Pacing Plan – FMV Exposure Projection

27

• StepStone sensitized the Health Fund private equity FMV exposure for multiple deployment levels versus the proposed pacing level ofUS$50 million per year

– Increasing commitments from the base case commitment level by US$10 million per year would allow the Health Fund to reach thetargeted 8% FMV private equity exposure approximately six months earlier (2020)

– Increasing commitments from the base case commitment level by US$20 million per year would allow the Health Fund toconsistently exceed the targeted 8% FMV private equity exposure starting in 2020

5.3%

6.9%

7.8%8.2% 8.2% 8.1% 8.0% 8.0% 8.1% 8.3% 8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

PE FMV as a % of Total Portfolio Assets($ in millions)

+ $30m/year

+ $20m/year

+ $10m/year

StepStone Recommendation

- $10m/year

- $20m/year

- $30m/year


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Pacing Plan – Cash Flow Projection

28

• Based on the base case assumptions, StepStone projected the anticipated capital calls (cash outflows), distributions (cash inflows), and netcash flows to the Health Fund

• As the Health Fund made significant recent commitments but limited allocations prior to 2016, capital calls are projected to exceeddistributions in the initial projection years as recent vintage funds drawdown capital to make investments

• Net cash flow becomes positive in 2023 as distributions from new commitments begin outpacing contributions

$22.2 $33.1

$44.9 $57.1

$67.9 $79.3

$87.6 $97.0

$108.1 $118.2

($66.3) ($62.1) ($58.6) ($59.6) ($63.1)($75.6)

($86.3)($97.6)

($110.6)

($89.7)

($44)($29)

($14)($2) $5 $4 $1 ($1) ($2)

$29

($150)

($100)

($50)

$0

$50

$100

$150

($150)

($100)

($50)

$0

$50

$100

$150

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Health Fund Cash Flow Projection(US$ in millions)

Distributions Capital Calls Net Cash Flow

NOTES: There can be no assurance that actual cash flows will be similar to the model set forth on this slide or that the investment will achieve its investment objectives or avoid substantial losses. Cash flow patterns will vary depending on the activities of the underlying investment. This is a simplified example, and may not represent the actual performance the investment. Please let us know if you want to see a cash flow analysis based on assumptions other than those we have used for this analysis.

Recommended Long Term Strategic Plan

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Strategic Planning

30

High Priority Medium Priority Low Priority

Note: The opinions expressed herein reflect the current opinions of StepStone as of the date appearing in this material only. There can be no assurance that views and opinions expressed in this document will come to pass.

• Near term opportunities will target North American Buyout, select European opportunities and Restructuring/Distressedsituations.

2019 Tactical Plan

Sector

Sub-Sector

Geography

Buyouts

Global$6bn+

Americas

Europe

Asia & RoW

Large/ Medium

$1-6bn

Americas

Europe

Asia & RoW

Small<$1bn

Americas

Europe

Asia & RoW

Venture

Early

Americas

Europe

Asia & RoW

Middle

Americas

Europe

Asia & RoW

Late/Growth

Americas

Europe

Asia & RoW

Rest./Distressed

Restructuring/

Distressed

Americas

Europe

Asia & RoW

Secondaries

Secondaries

Americas

Europe

Asia & RoW

Co-Investments

Co-Investments

Americas

Europe

Asia & RoW

Current Return

/Mezzanine

Mezzanine

Americas

Europe

Asia & RoW

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Recommended Portfolio Construction

31

Allocation by sector based on target private equity commitments of US$400 million for 2019:

NOTE: Private equity fundraising data from 2009-2018, per Burgiss PrivateiQ. Portfolio Exposure as of September 30, 2018 or latest available. The opinions expressed herein reflect the current opinions of StepStone as of the date appearing in this material only. There can be no assurance that views and opinions expressed in this document will come to pass.

• Continue to invest in the Buyout sector as it is the largest sector in the private equity market• StepStone believes an allocation to Restructuring/Distressed can be prudent given strong manager selection and importance of hybrid

strategies during economic uncertainty.• Co-Investments can offer additional exposure to a manager on a lower fee basis

(US$ in millions)Sector Portfolio Exposure Market CY 2019 Target

Actual Long Term Target PE Fundraising Activity Target Commitments Target Funds / Deals Target Size / FundBuyout 70% 60-70% 64% Up to $300 2-4 Up to $125Secondaries 5% 5-15% 7% Up to $75 0-1 Up to $75Growth Equity/Venture 15% 10-20% 15% Up to $125 0-2 Up to $100Mezzanine 5% 0-5% 5% - - -Restructuring/Distressed 5% 10-20% 8% Up to $150 1-3 Up to $100Co-investments 0% 0-5% 0% Up to $25 0-1 Up to $25Total 100% 100% 100% $400 4-7

Confidential |

Recommended Portfolio Construction (cont’d)

32

NOTE: Private equity fundraising data from 2009-2018, per Burgiss PrivateiQ. 2018 GDP (est.) as provided by the IMF. PE Deal Activity based on Thomson One deal activity from 2009-2018. Secondary Funds and Fund of Funds market values are removed from the geographic exposure for the Plan. Portfolio Exposure as of September 30, 2018 or latest available. The opinions expressed herein reflect the current opinions of StepStone as of the date appearing in this material only. There can be no assurance that views and opinions expressed in this document will come to pass.

• The Plan’s private equity geographic exposure is classified on an individual company basis by North America, Europe, and Asia / Rest ofWorld.

• StepStone proposes that the Plan have a long term target allocation of 65-85% North America, 15-25% Europe, and 0-10% to Asia / Rest ofWorld.

• The Plan can benefit from further diversification across geographies

Allocation by geography based on target private equity commitments of US$400 million for 2019:

(US$ in millions)Geography Market CY 2019 Target

Fund Level Company Level Long Term Target GDP PE Deal Activity PE Fundraising Activity Target CommitmentsGlobal 72% - - - - - Up to $150North America 28% 86% 65-85% 34% 57% 69% Up to $350Europe 0% 9% 15-25% 26% 14% 19% Up to $125Asia / Rest of World 0% 4% 0-10% 40% 30% 12% -Total 100% 100% 100% 100% 100% 100% $400

Portfolio Exposure

Confidential |

Industry FMV Exposure

33

The Plan’s private equity industry exposure is classified under the following categories: Consumer, Energy, Financials, Industrials,Information Technology (IT), Media/Telecom, and Healthcare

NOTE: S&P 1200 index as of November 2018. PE Deal Activity based on Thomson One data from 2009-2018. Secondary Funds and Fund of Funds market values are removed from the industry exposures for WPERP. Portfolio Exposure as of September 30, 2018 or latest available.

• Versus market benchmarks such as the S&P 1200 and PE Deal Activity:– The Plan’s private equity portfolio is overweight on Information Technology and Energy– While being underweight on Consumer, Financials, and Healthcare

19% 20%9%

10%10%

18%

18%7% 9%

14%

11%7%

16%

12%16%

16% 36% 39%

9%4%

1%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

S&P 1200 PE Deal Activity WPERP

Portfolio Company Market Value by GICS Sector

Consumer Energy/Utilities Financials Health Care Industrials/Materials IT Telecom

Telecom

IT

Industrials/Materials

Health Care

Financials

Energy/Utilities

Consumer

Market Overview

Confidential |

Market Overview – Public Markets

35

• Global public markets were impacted by trade tensions during the third quarter of 2018, while US markets hit record highs.Health Care, Industrials, and Telecomunications sectors for US equities rallied 14.5%, 10.0%, and 9.9% respectively. Althoughfundamentals are robust, US equities are not cheap and credit spreads have become perilously low.

– Returns for time periods greater than one year are annualized. During the quarter, US markets increased 7.7% followed byMSCI Europe up 0.4%. MSCI Asia and MSCI Emerging Markets decreased 0.2% and 2.0%, respectively.

(10%)

(5%)

0%

5%

10%

15%

20%

Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18

1-Year Global Public Indices Returns

S&P 500 MSCI Europe MSCI Asia MSCI EM MSCI ACWISource: Capital IQ

Regional Indices

3 Mo 1 Yr 3 Yr 5 Yr 10 Yr

MSCI Asia (0.2%) 2.9% 10.4% 4.5% 4.8%

MSCI Europe 0.4% (3.1%) 4.7% 0.9% 1.8%

MSCI EM (2.0%) (3.1%) 9.8% 1.2% 2.9%

MSCI ACWI 3.8% 7.7% 11.2% 6.5% 5.9%

S&P 500 7.2% 15.7% 14.9% 11.6% 9.6%

S&P 500 Total Return* 7.7% 17.9% 17.3% 13.9% 12.0%For the period ended September 30, 2018

*Includes reinvestment of dividends.

Source: Capital IQ

Confidential |

Market Overview – LBO Activity

36Source: S&P LBO Review

• During the third quarter of 2018, US LBO new loan issuance totaled US$48.3 billion, representing an increase of 39.6% fromthe prior quarter and an increase of 29.4% from the third quarter of 2017

Confidential |

Market Overview – LBO Activity

37

• The weighted average purchase price multiple for US LBO deals was 11.0x total enterprise value (“TEV”) to EBITDA in the thirdquarter, an increase from 9.8x in the prior quarter and above the 10-year average of 9.2x.

– Average debt multiples of large corporate US LBO loans increased quarter-over-quarter from 5.6x EBITDA to 5.9x EBITDA.

– Equity contributions for US LBOs increased from 41.2% to 43.5%.

9.1x

7.7x

8.5x8.8x 8.7x 8.8x

9.7x

10.3x10.0x

10.6x10.2x

9.8x

11.0x

42.6%

50.8%

43.8%

41.5%

39.4%

37.0%38.5%

42.4%43.2% 43.5%

39.6%41.2%

43.5%

20%

25%

30%

35%

40%

45%

50%

55%

0x

2x

4x

6x

8x

10x

12x

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18

Equity Contribution (% Total Purchase Price)Pu

rcha

se P

rice

Mul

tiple

s (TE

V/EB

ITDA

)

Purchase Price Multiples and Equity Contribution for U.S. LBOs

Purchase Price Multiples Equity Contribution %Source: S&P LBO Review

Confidential |

Market Overview – Private Equity Fundraising

38

• Global private equity fundraising totaled US$126.0 billion in the third quarter

– Private equity fundraising increased by 32.3% quarter-over-quarter and by 56.0% compared to the third quarter of 2017

– Buyout fundraising totaled US$79.0 billion, increasing 22.0% quarter-over-quarter and 16.9% compared to the third quarter of2017

$439.5

$134.4 $152.3

$259.8 $235.3

$306.0 $337.5

$311.1

$414.6

$488.7

$116.4

$95.2

$126.0

1,377

933

1,053

1,182

1,0941,028

1,172

1,019

1,136

1,053

272317 331

0

200

400

600

800

1,000

1,200

1,400

1,600

$0

$100

$200

$300

$400

$500

$600

$700

$800

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18

Num

ber of Funds

Amou

nt R

aise

d (U

S$ b

illio

ns)

US$ Raised EUR$ Raised Asia$ Raised ROW$ Raised # Funds Raised - All PE

Source: Thomson ONE

Regional Fundraising by Year – All Private Equity

Confidential |

Market Overview – Private Equity Investment Activity

39

• Private equity funds invested US$93.4 billion globally during the third quarter, representing a quarter-over-quarter decrease of3.5% and a 22.5% increase from the third quarter of 2017

– The average investment size during the quarter was US$28.7 million, an increase of 2.9% compared to the averageinvestment size of US$27.9 million in the second quarter

$162.6

$103.9

$151.1 $165.9

$142.3 $132.4

$220.7 $219.7 $227.7 $229.3

$67.3 $96.8 $93.4

13,656

9,862

12,231

13,318 13,40012,914

14,10814,998

14,228

13,245

3,435 3,476 3,260

$0

$25

$50

$75

$100

$125

$150

$175

$200

$225

$250

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18

Amou

nt In

vest

ed (U

S$ b

illio

ns)

Global US$ Invested # of DealsSource: Thomson ONE

Investment Activity - All Private Equity

Confidential |

Market Overview – IPO Activity

40

• In the third quarter, the number of private equity-backed IPOs decreased 33.3%, from 42 to 28, and the amount raiseddecreased 19.4%, from US$9.0 billion to US$7.3 billion, compared to the prior quarter

– The third quarter IPOs were comprised of 24 venture capital-backed IPOs that raised a total of US$5.5 billion and four IPOsfrom buyouts that raised US$1.7 billion

– The largest IPOs of the quarter were completed by Shanghai Xunmeng Information Technology Co., Ltd. (NASDAQ: PDD), aprovider of software services in China, which raised US$1.6 billion, and NEXTEV LIMITED (NYSE: NIO), a manufacturer ofelectric vehicles, e-powertrain, battery packs, and components in China, which raised US$1.2 billion, togetherrepresenting 38.1% of the total value for all IPOs in the quarter

$2.1 $7.7 $9.3

$17.4 $9.9

$32.3

$54.5

$12.1 $6.8 $9.6

$3.1 $4.2 $1.7 $0.8

$2.1 $8.7

$10.6 $21.4

$11.3

$17.1

$9.5

$3.8

$12.7

$5.1 $4.9 $5.5 $2.9

$9.8

$18.0

$28.0 $31.3

$43.6

$71.7

$21.6

$10.5

$22.3

$8.2 $9.0 $7.3

15

36

113

77 87

149205

111

6285

23

42

28

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

$100

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18

Amou

nt R

aise

d (U

S$ b

illio

ns)

IPO Activity by Strategy - All Private Equity

Buyout $ Raised Venture Capital $ Raised # IPO ExitsSource: Thomson ONE

Confidential |

Market Overview – M&A Activity

41

• The number of private equity-backed Mergers and Acquisitions (“M&A”) declined 16.3%, and the total value of M&A dealsdecreased 33.2% compared to the prior quarter

– In the third quarter, there were 507 private-equity backed M&A deals totaling US$142.6 billion

– The largest M&A deals of the quarter were the US$16.0 billion purchase of Flipkart Online Services Pvt. Ltd. by Walmart Inc.(NYSE: WMT) and the US$15.4 billion purchase of XL Group Ltd. by AXA SA (ENXTPA: CS)

$353.0 $295.6 $342.6

$454.2 $571.8 $575.5 $612.6

$840.6

$1,066.4

$717.8

$168.9 $213.5 $142.6

1,983

1,488

2,271

2,6052,753 2,748

3,1673,334

3,1243,052

665 606507

$0

$200

$400

$600

$800

$1,000

$1,200

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1Q18 2Q18 3Q18

Amount Raised (US$ billions) # M&A Exits

M&A Activity - All Private Equity

Deal

Val

ue (U

S$ b

illio

ns)

Source: Capital IQ

Appendix

Confidential |

Performance by Manager – Retirement Fund

43Note: Performance for funds less than two years (2016 and 2017 vintage funds) are not meaningful (“NM”) at this point in their term. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Performance is net of underlying partnership fees, but not net of StepStone Advisory fees.

(US$)Retirement Fund PortfolioAs of September 30, 2018

Manager / FundVintage

YearCommitted

CapitalMarket Value

Unfunded Commitment

Total Exposure TVM IRR

Adams Street Partners 125,000,000 27,528,538 97,500,000 125,028,538 NM NMAdams Street Global SMB WPERP Fund L.P. 2016 125,000,000 27,528,538 97,500,000 125,028,538 NM NM

Apollo Management 88,200,000 29,868,080 61,734,520 91,602,600 1.3x 13.9%Apollo Investment Fund VIII, L.P. 2013 34,000,000 30,270,397 7,534,520 37,804,917 1.3x 14.4%Apollo Investment Fund IX, L.P. 2017 54,200,000 (402,317) 54,200,000 53,797,683 NM NM

Ares Management 135,000,000 80,019,731 54,055,798 134,075,529 1.1x 4.6%Ares Corporate Opportunities Fund IV, L.P. 2012 25,000,000 23,476,975 4,593,341 28,070,316 1.4x 13.5%Ares Special Situations Fund IV, L.P. 2015 50,000,000 34,750,596 11,224,422 45,975,018 0.9x (6.2%)Ares Corporate Opportunities Fund V, L.P. 2016 60,000,000 21,792,160 38,238,035 60,030,195 NM NM

Audax Group 17,000,000 3,840,799 1,269,410 5,110,209 1.3x 9.0%Audax Mezzanine III, L.P. 2011 17,000,000 3,840,799 1,269,410 5,110,209 1.3x 9.0%

Blackstone Group 50,000,000 32,540,964 26,232,311 58,773,275 1.3x 12.5%Blackstone Tactical Opportunities Fund II 2015 50,000,000 32,540,964 26,232,311 58,773,275 1.3x 12.5%

Capital Dynamics Inc 20,000,000 5,483,033 4,750,000 10,233,033 1.6x 7.2%HRJ Special Opportunities II, L.P. 2007 20,000,000 5,483,033 4,750,000 10,233,033 1.6x 7.2%

Clayton, Dubilier & Rice 79,000,000 36,999,492 43,823,318 80,822,810 1.2x 16.7%Clayton, Dubilier & Rice Fund IX, L.P. 2013 25,000,000 21,703,170 4,745,349 26,448,519 1.4x 16.9%Clayton, Dubilier & Rice Fund X, L.P. 2017 54,000,000 15,296,322 39,077,969 54,374,291 NM NM

Crestview Partners 113,000,000 29,630,297 88,202,417 117,832,714 1.3x 14.5%Crestview Partners III, L.P. 2014 50,000,000 29,630,297 25,202,417 54,832,714 1.3x 14.5%Crestview Partners IV, L.P. 2018 63,000,000 - 63,000,000 63,000,000 NM NM

EnCap Investments 116,500,000 49,622,627 57,339,416 106,962,043 1.1x 7.4%EnCap Energy Capital Fund VIII, L.P. 2011 12,500,000 4,818,892 888,859 5,707,751 0.9x (1.8%)EnCap Energy Capital Fund IX, L.P. 2013 17,000,000 12,945,798 1,384,849 14,330,647 1.4x 15.8%EnCap Energy Capital Fund X, L.P. 2015 37,000,000 28,247,277 9,688,719 37,935,996 1.1x 10.4%EnCap Energy Capital Fund XI, L.P. 2017 50,000,000 3,610,660 45,376,989 48,987,649 NM NM

Fisher Lynch Capital 20,000,000 15,473,836 2,370,000 17,843,836 1.7x 9.6%Fisher Lynch Venture Partnership II, LP 2008 20,000,000 15,473,836 2,370,000 17,843,836 1.7x 9.6%

Confidential |

Performance by Manager – Retirement Fund

44NOTES: Includes commitments to funds which closed through December 31, 2018. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Performance is net of underlying partnership fees, but not net of StepStone Advisory fees.

(US$)Retirement Fund PortfolioAs of September 30, 2018


YearCommitted

CapitalMarket Value

Unfunded Commitment


Harvest Partners 115,000,000 17,610,948 98,779,627 116,390,575 NM NMHarvest Partners VII, L.P. 2016 30,000,000 17,610,948 13,779,627 31,390,575 NM NMHarvest Partners VIII, L.P. 2018 85,000,000 - 85,000,000 85,000,000 NM NM

Industry Ventures 60,000,000 10,788,337 52,500,000 63,288,337 NM NMIndustry Ventures Secondary VIII, L.P. 2017 37,500,000 10,788,337 30,000,000 40,788,337 NM NMIndustry Ventures Special Opportunities Fund III-A 2018 22,500,000 - 22,500,000 22,500,000 NM NM

Landmark Partners 100,000,000 32,284,427 14,996,308 47,280,735 1.3x 7.7%Landmark Equity Partners XIII, L.P. 2006 30,000,000 7,021,305 1,201,672 8,222,977 1.3x 5.3%Landmark Equity Partners XIV, L.P. 2008 30,000,000 7,133,017 1,037,065 8,170,082 1.3x 8.6%Landmark Equity Partners XV, L.P. 2013 40,000,000 18,130,105 12,757,571 30,887,676 1.3x 16.8%

Lexington Partners 135,000,000 13,232,169 81,411,291 94,643,460 1.5x 9.3%Lexington Capital Partners VI, L.P. 2006 30,000,000 3,620,424 490,410 4,110,834 1.4x 7.0%Lexington Capital Partners VII, L.P. 2009 30,000,000 9,611,745 5,920,881 15,532,626 1.6x 14.4%Lexington Capital Partners IX, L.P. 2018 75,000,000 - 75,000,000 75,000,000 NM NM

Oaktree Capital Management 16,000,000 7,956,686 1,761,267 9,717,953 1.2x 3.8%Oaktree Principal Fund V, L.P. 2009 16,000,000 7,956,686 1,761,267 9,717,953 1.2x 3.8%

Silver Lake Partners 76,000,000 35,473,585 42,882,921 78,356,506 1.4x 25.7%Silver Lake Partners IV, L.P. 2013 18,000,000 24,653,215 2,244,953 26,898,168 1.7x 27.6%Silver Lake Partners V, L.P. 2017 58,000,000 10,820,370 40,637,968 51,458,338 NM NM

Vista Equity Partners 210,000,000 156,635,704 101,007,085 257,642,789 1.6x 21.1%Vista Equity Partners Fund IV, L.P. 2011 25,000,000 23,053,573 4,156,062 27,209,635 2.0x 19.2%Vista Equity Partners Fund V, L.P. 2014 50,000,000 66,698,741 15,174,357 81,873,098 1.7x 24.1%Vista Equity Partners Fund VI, L.P. 2016 60,000,000 66,936,213 6,676,666 73,612,879 NM NMVista Equity Partners Fund VII, L.P. 2018 75,000,000 (52,823) 75,000,000 74,947,177 NM NM

Total Portfolio 1,475,700,000 584,989,253 830,615,689 1,415,604,942 1.3x 10.9%

Confidential |

Performance by Manager – Health Fund

45NOTE: Performance for funds less than two years (2016 and 2017 vintage funds) are not meaningful (“NM”) at this point in their term. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Performance is net of underlying partnership fees, but not net of StepStone Advisory fees.

(US$)Health Fund Portfolio

As of September 30, 2018


YearCommitted

CapitalMarket Value

Unfunded Commitment


Adams Street Partners 25,000,000 5,505,707 19,500,000 25,005,707 NM NMAdams Street Global SMB WPERP Fund L.P. 2016 25,000,000 5,505,707 19,500,000 25,005,707 NM NM

Apollo Management 16,900,000 5,260,925 12,229,620 17,490,545 1.3x 13.8%Apollo Investment Fund VIII, L.P. 2013 6,000,000 5,341,834 1,329,620 6,671,454 1.3x 14.4%Apollo Investment Fund IX, L.P. 2017 10,900,000 (80,909) 10,900,000 10,819,091 NM NM

Ares Management 27,000,000 16,003,952 10,811,160 26,815,112 1.1x 4.6%Ares Corporate Opportunities Fund IV, L.P. 2012 5,000,000 4,695,401 918,669 5,614,070 1.4x 13.5%Ares Special Situations Fund IV, L.P. 2015 10,000,000 6,950,119 2,244,884 9,195,003 0.9x (6.2%)Ares Corporate Opportunities Fund V, L.P. 2016 12,000,000 4,358,432 7,647,607 12,006,039 NM NM

Audax Group 3,000,000 677,786 224,016 901,802 1.3x 9.0%Audax Mezzanine III, L.P. 2011 3,000,000 677,786 224,016 901,802 1.3x 9.0%

Blackstone Group 10,000,000 6,508,193 5,246,462 11,754,655 1.3x 12.5%Blackstone Tactical Opportunities Fund II 2015 10,000,000 6,508,193 5,246,462 11,754,655 1.3x 12.5%

Clayton, Dubilier & Rice 16,000,000 7,456,549 8,909,394 16,365,943 1.2x 16.7%Clayton, Dubilier & Rice Fund IX, L.P. 2013 5,000,000 4,340,630 949,067 5,289,697 1.4x 16.9%Clayton, Dubilier & Rice Fund X, L.P. 2017 11,000,000 3,115,919 7,960,327 11,076,246 NM NM

Crestview Partners 22,000,000 5,926,054 17,040,486 22,966,540 1.3x 14.5%Crestview Partners III, L.P. 2014 10,000,000 5,926,054 5,040,486 10,966,540 1.3x 14.5%Crestview Partners IV, L.P. 2018 12,000,000 - 12,000,000 12,000,000 NM NM

EnCap Investments 22,500,000 9,314,543 11,330,553 20,645,096 1.1x 7.0%EnCap Energy Capital Fund VIII, L.P. 2011 2,500,000 963,778 177,770 1,141,548 0.9x (1.8%)EnCap Energy Capital Fund X, L.P. 2011 7,000,000 5,344,080 1,833,001 7,177,080 1.1x 10.4%EnCap Energy Capital Fund IX, L.P. 2014 3,000,000 2,284,553 244,385 2,528,938 1.4x 15.8%EnCap Energy Capital Fund XI, L.P. 2017 10,000,000 722,132 9,075,398 9,797,530 NM NM

Confidential |

Performance by Manager – Health Fund

46NOTES: Includes commitments to funds which closed through December 31, 2018. Past performance is not necessarily indicative of future results and there can be no assurance that the investment will achieve comparable results or avoid substantial losses. Performance is net of underlying partnership fees, but not net of StepStone Advisory fees.

(US$)Health Fund Portfolio

As of September 30, 2018


YearCommitted

CapitalMarket Value

Unfunded Commitment


Harvest Partners 21,000,000 3,522,188 17,755,926 21,278,114 NM NMHarvest Partners VII, L.P. 2016 6,000,000 3,522,188 2,755,926 6,278,114 NM NMHarvest Partners VIII, L.P. 2018 15,000,000 - 15,000,000 15,000,000 NM NM

Industry Ventures 12,000,000 2,157,668 10,500,000 12,657,668 NM NMIndustry Ventures Secondary VIII, L.P. 2017 7,500,000 2,157,668 6,000,000 8,157,668 NM NMIndustry Ventures Special Opportunities Fund III-A 2018 4,500,000 - 4,500,000 4,500,000 NM NM

Landmark Partners 12,000,000 4,361,605 2,405,413 6,767,018 1.3x 11.1%Landmark Equity Partners XIV, L.P. 2008 5,000,000 1,188,832 172,835 1,361,667 1.3x 8.6%Landmark Equity Partners XV, L.P. 2013 7,000,000 3,172,773 2,232,578 5,405,351 1.3x 16.8%

Lexington Partners 20,000,000 1,601,995 15,986,808 17,588,803 1.6x 14.1%Lexington Capital Partners VII, L.P. 2009 5,000,000 1,601,995 986,808 2,588,803 1.6x 14.1%Lexington Capital Partners IX, L.P. 2018 15,000,000 - 15,000,000 15,000,000 NM NM

Oaktree Capital Management 2,500,000 1,243,238 275,198 1,518,436 1.2x 3.8%Oaktree Principal Fund V, L.P. 2009 2,500,000 1,243,238 275,198 1,518,436 1.2x 3.8%

Silver Lake Partners 15,000,000 6,347,586 8,782,016 15,129,602 1.4x 25.2%Silver Lake Partners IV, L.P. 2013 3,000,000 4,108,892 374,158 4,483,050 1.7x 27.6%Silver Lake Partners V, L.P. 2017 12,000,000 2,238,694 8,407,858 10,646,552 NM NM

Vista Equity Partners 42,000,000 31,327,140 20,201,416 51,528,556 1.6x 21.3%Vista Equity Partners Fund IV, L.P. 2011 5,000,000 4,610,708 831,211 5,441,919 2.1x 19.7%Vista Equity Partners Fund V, L.P. 2014 10,000,000 13,339,754 3,034,872 16,374,626 1.7x 24.1%Vista Equity Partners Fund VI, L.P. 2016 12,000,000 13,387,244 1,335,333 14,722,577 NM NMVista Equity Partners Fund VII, L.P. 2018 15,000,000 (10,566) 15,000,000 14,989,434 NM NM

Total Portfolio 266,900,000 107,215,129 161,198,468 268,413,597 1.3x 13.6%

Confidential |

Pacing Model Inputs

• As part of the Strategic Plan, StepStone conducts a cash flow pacing analysis using a proprietary cash flow pacing model

• This model provides a guideline for annual commitment amounts by Private Equity Strategy based on the Plan’s objectives, deployment pacing parameters and the model’s projected cash flows

• StepStone’s proprietary cash flow model is based on cash flow profiles across five Private Equity Strategies (i.e., Buyout, Venture Capital, Mezzanine, Restructuring/Distressed, Secondaries), which have been developed through historic cash flow data across 25,000+ funds contained within StepStone’s proprietary SPI Database

• StepStone employs five independent variables as key inputs to project capital calls, distributions and net asset values (“NAV”):

– Private Equity Allocation (by Strategy)

– Expected Net Return

– J-Curve Factor

– Expected Drawdown Rates

– Partnership Term

• StepStone has inputted the Plan’s program details (e.g., overall program size, growth rate, private equity allocation goal, contributions, distributions, etc.) and details around the existing portfolio (e.g., investments, commitments, exposure, NAV, etc.) into the proprietary cash flow pacing model

– Based on these inputs, the model’s assumptions and StepStone’s proprietary cash flow profiles, the model will output cash flow projections that will determine guidance for annual commitment ranges

47

48Confidential |

Risks and Other Considerations

Risks Associated with Investments. Identifying attractive investment opportunities and the right underlying fund managers is difficult and involves a high degree ofuncertainty. There is no assurance that the investments will be profitable and there is a substantial risk that losses and expenses will exceed income and gains.

Restrictions on Transfer and Withdrawal; Illiquidity of Interests; Interests Not Registered. The investment is highly illiquid and subject to transfer restrictions and should onlybe acquired by an investor able to commit its funds for a significant period of time and to bear the risk inherent in such investment, with no certainty of return. Interests in theinvestment have not been and will not be registered under the laws of any jurisdiction. Investment has not been recommended by any securities commission or regulatoryauthority. Furthermore, the aforementioned authorities have not confirmed the accuracy or determined the adequacy of this document.

Limited Diversification of Investments. The investment opportunity does not have fixed guidelines for diversification and may make a limited number of investments.

Reliance on Third Parties. StepStone will require, and rely upon, the services of a variety of third parties, including but not limited to attorneys, accountants, brokers,custodians, consultants and other agents and failure by any of these third parties to perform their duties could have a material adverse effect on the investment.

Reliance on Managers. The investment will be highly dependent on the capabilities of the managers.

Risk Associated with Portfolio Companies. The environment in which the investors directly or indirectly invests will sometimes involve a high degree of business and financialrisk. StepStone generally will not seek control over the management of the portfolio companies in which investments are made, and the success of each investment generallywill depend on the ability and success of the management of the portfolio company.

Taxation. An investment involves numerous tax risks. Please consult with your independent tax advisor.

Conflicts of Interest. Conflicts of interest may arise between StepStone and investors. Certain potential conflicts of interest are described below; however, they are by nomeans exhaustive. There can be no assurance that any particular conflict of interest will be resolved in favor of an investor.

Allocation of Investment Opportunities. StepStone currently makes investments, and in the future will make investments, for separate accounts having overlappinginvestment objectives. In making investments for separate accounts, these accounts may be in competition for investment opportunities.

Existing Relationships. StepStone and its principals have long-term relationships with many private equity managers. StepStone clients may seek to invest in the pooledinvestment vehicles and/or the portfolio companies managed by those managers.

Carried Interest. In those instances where StepStone and/or the underlying portfolio fund managers receive carried interest over and above their basic management fees,receipt of carried interest could create an incentive for StepStone and the portfolio fund managers to make investments that are riskier or more speculative than wouldotherwise be the case. StepStone does not receive any carried interest with respect to advice provided to, or investments made on behalf, of its advisory clients.

Other Activities. Employees of StepStone are not required to devote all of their time to the investment and may spend a substantial portion of their time on matters other thanthe investment.

Material, Non-Public Information. From time to time, StepStone may come into possession of material, non-public information that would limit their ability to buy and sellinvestments.

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Documents

Water and Power Employees’ Retirement Plan (the “Plan ... · Institutional investors in the public market have long sought to incorporate environmental, social and governance