Private Equity Program Performance Report

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Los Angeles Department of Water and Power

Employees’ Retirement Plan

Private Equity Program

Performance Report

June 30, 2009

Prepared by: Pension Consulting Alliance, Inc. Presented: November 18, 2009

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Table of Contents Page

Program Overview 2

Private Market Overview 3

Evolution and Current Status of the Private Equity Program 6

Investment Performance 7

Portfolio Structure 9

Partnership Summaries 12

Summary 14

Appendix Tab A

Retirement Plan Tracking Schedule A-1 Fisher Lynch Venture Partnership II, LP A-2 HRJ Special Opportunities II (U.S.), LP A-3 Landmark Equity Partners XIII, LP A-4 Landmark Equity Partners XIV, LP A-5 Lexington Capital Partners VI, LP A-6 Oaktree Principal Fund V, LP A-7

Tab B Health Benefits Fund Overview B-1 Health Benefits Fund Tracking Schedule B-2

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Program Overview

The Los Angeles Department of Water and Power Employees’ Retirement, Disability and Death Benefit Plan (the “Plan”) Private Equity Program (the “Program") consists of both fund-of-funds and one direct partnership investment as of June 30, 2009. The Program is relatively young as the initial commitments to two secondary market fund-of-funds were made in 2006. As private equity partnerships are long-term investments that are invested over several years, the Program is expected to continue to grow and evolve over time.

Summary

As previously reported, Program performance was materially impacted by valuation declines as of year-end 2008 dampening since inception results. During the second quarter of 2009, the underlying partnerships called $3.7 million in contributions and made $0.3 million in distributions resulting in a net cash flow into the Program of $3.4 million, below the $6.9 net cash inflow during the first quarter of 2009. The net since inception internal rate of return (IRR) was minus (8.2%) as of June 30, 2009, improving from a minus (16.0%) IRR as of 3/31/09.

As of 6/30/09, the Program had $146 million in commitments across six partnerships. Program commitments have been allocated 62% to secondary market fund-of-funds, 27% to primary market fund-of-funds, and 11% to a direct partnership investment. As of the end of the second quarter of 2009, $73.9 million in capital had been drawn down, $11.3 million in distributions had been made, and the Program had a reported value of $54.9 million.

Portfolio Summary (as of 6/30/09)

Partnership Type ^Vintage_Year Age ^Committed_Capital ^Invested_Capital Distributed Capital

Reported Value

Since Inception

Net IRR

Peer Median

IRR¹ Lexington VI Secondary Fund-of-Funds 2006 3.0 yrs. $30 M $23.4 M $4.7 M $16.1 M (8.6%) (7.8%) Landmark XIII Secondary Fund-of-Funds 2006 2.6 yrs. $30 M $24.8 M $6.6 M $16.8 M (4.3%) (7.8%) HRJ SOF II Primary Fund-of-Funds 2008 1.3 yrs. $20 M $17.4 M $0.0 M $13.6 M NM* NM FL VC II Primary Fund-of-Funds 2008 1.2 yrs. $20 M $2.7 M $0.0 M $2.1 M NM* NM Landmark XIV Secondary Fund-of-Funds 2008 0.8 yrs. $30 M $3.3 M $0.0 M $3.3 M NM* NM Oaktree PF V Direct Partnership 2009 0.3 yrs. $16 M $2.4 M $0.0 M $3.1 M NM* NM

Total Program --- --- --- $146 M $73.9 M $11.3 M $54.9 M (8.2%)* ---

* investment activity is too early for meaningful results

The use of fund-of-funds has resulted in a highly diversified portfolio with exposure to more than 300 underlying private equity partnerships which have invested capital with in excess of 4,000 portfolio companies. Overall the Program is diversified across investment strategies, including buyouts (51%), special situations (31%), and venture capital (18%). Given the use of secondary market fund-of-funds, vintage year diversification has been increased with exposures to underlying partnerships dating back to 1988.

Approximately $73.9 million (51% of the Program’s committed capital) has been invested as of June 30, 2009. The Program’s reported value plus unfunded commitments ($72.1 million) represents an approximate allocation of 2.2% of the total Plan assets as of the end of the second quarter 2009. Given the unique cash flows of private equity partnerships, continued investment activity is required for the Plan to achieve its 5% target for private equity exposure over the long-term. A $30 million “re-up” commitment to Lexington Capital Partners VII was approved in May of 2009 bringing aggregate program commitments to $176 million. (Lexington Capital Partners VII has not begun investing capital as of November 1, 2009.)

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Private Equity Market Overview

Due in large part to the “denominator effect” (i.e., as the total value for a plan’s assets decreases in parallel with public market holdings the private equity valuation changes lag the public markets with the result that the private equity portfolio becomes a larger percentage of the shrinking portfolio) and continued investor uncertainty, fund raising continued to decline in the first half of 2009. During the first six months of 2009, buyout funds raised $28.7 billion in commitments, well below the $102.6 billion raised during the same time period in 2008. Venture capital commitments exhibited a 63% decline, raising $5.1 billion in the first half of 2009 compared to the $13.6 billion raised in the first six months of 2008. Secondary funds exhibited the only year-over-year increase raising $15.6 billion in 2009 compared to $3.3 billion through June of 2008. The distressed debt and mezzanine sectors also exhibited declines from the prior year as distressed debt raised $5.7 billion in commitments and mezzanine raised $1.3 billion, compared to $37.4 billion and $40.2 billion, respectively in 2008. In addition to becoming overweight to private equity, investors were also facing liquidity issues within other areas of their portfolio further reducing investor desires to commit/fund private equity investments.

0 50 100 150 200 250 300 350

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YTD 09

$ Billions

Commitments to U.S. Private Equity Partnerships

Buyouts Venture Mezzanine Other Fund-of-funds

The volume of U.S. buyout deals continued to decline in the first half of 2009, resulting

in only $8 billion in transaction value. This is well below the $75 billion in buyout activity

in the first half of 2008 and significantly below the $222 billion in transaction value

during the first six months of 2007. Despite the onset of the credit crunch in the

summer of 2007, a material slow down in buyout activity did not materialize until the first

quarter of 2008 with even fewer transactions in subsequent quarters. The fourth quarter

of 2008 was the first three-month period with less than $10 billion in disclosed deal

volume since the second quarter of 2002 with activity continuing to decline and remain

below $10 billion during the first two quarters of 2009.

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0 20 40 60 80 100 120 140 160

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Billions ($)

Disclosed U.S. Quarterly Deal Volume*

* total deal size (both equity and debt Source: Thomson Reuters Buyouts

Slower activity is expected to continue due to the lack of liquidity within capital markets.

The lack of available financing has resulted in fewer and smaller transactions being

completed. One area that has seen an increase in activity in this environment is

“corporate carve outs” (transactions resulting from companies spinning off non-core or

money-losing divisions). According to Buyouts, at least 14% of the deals closed in the

second quarter of 2009 were corporate carve outs compared to just 3% in the first

quarter of 2009 and 6% in calendar 2008.

Venture capital investment activity has also declined from recent highs. Approximately

$28.3 billion was invested across almost 3,800 companies during calendar year 2008.

In comparison, approximately 3,950 companies attracted $30.9 billion of venture capital

investment in the full calendar year of 2007, the highest level of deals since 2001

according to the MoneyTree Report by PricewaterhouseCoopers and the National

Venture Capital Association. Activity declines exhibited in the second half of 2008

continued with only $6.9 billion invested across 1,200 companies in the first six months

of 2009. Annualizing the 2009 activity to date, the full calendar year is likely to be

similar to investment levels last seen in the 1996 to 1997 time period when annual

investment levels ranged from $11 billion to $14 billion.

0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0

0 200 400 600 800 1,000 1,200

Q1 04

Q2 04

Q3 04

Q4 04

Q1 05

Q2 05

Q3 05

Q4 05

Q1 06

Q2 06

Q3 06

Q4 06

Q1 07

Q2 07

Q3 07

Q4 07

Q1 08

Q2 08

Q3 08

Q4 08

Q1 09

Q2 09

Billions ($)

# of transactions

Quarterly U.S. Venture Capital Deal Volume*

* only includes equity portion of deal value Source: MoneyTree, PCA analysis

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The impact of the global financial crisis finally intersected with the 90 day lag in accounting for the performance results of the private equity markets as year-end valuations exhibited significant declines. According to the Venture Economics' U.S. Private Equity Performance Index as of 6/30/09, private equity returns are now reflecting the dramatic declines exhibited by the public markets over the last year and a half. This is reflected in a negative (18.8%) return for all private equity for the twelve months ending 6/30/09. Longer-term results (10-year and 20- year periods) continue to be positive with investment segments also performing in-line with expectations as venture capital has outperformed buyouts over the latest 20-year period.

On an opportunity cost basis, private market returns have outperformed versus the public markets. Over all periods evaluated, the aggregate private equity return outperformed the public domestic equity markets (as represented by the Russell 3000) and the international equity markets (as represented by the MSCI EAFE). The domestic fixed income markets (as represented by the Lehman Brothers Aggregate) outperformed private equity over the latest one-year and three-year periods while private equity has outperformed over longer periods. In aggregate, private market results have performed as expected, providing excess performance over the long-term in addition to providing diversification benefits despite the more recent absolute declines.

Index 1 Year 3 Year 5 Year 10 Year 20 Year

All Private Equity -18.8% 1.1% 6.1% 6.1% 11.4%

Russell 3000 -26.6% -8.4% -1.8% -1.5% 7.8%

Russell 2000 -25.0% -9.9% -1.7% 2.4% 7.3%

MSCI EAFE -31.0% -7.5% 2.8% 1.6% 4.2%

LB Aggregate 6.1% 6.4% 5.0% 6.0% 7.1%

Public Market Performance Comparison, as of June 30, 2009

Source: Investment Technologies, Thomson Financial

Fund Type 1 Yr 3 Yr 5 Yr 10 Yr 20 Yr

Early Stage VC -19.2 0.1 3.2 14.4 23.2

Balanced VC -18.4 3.8 7.7 10.1 14.7

Later Stage VC -7.9 7.1 7.7 6.0 14.5

All Venture -16.4 2.8 5.7 9.9 17.2

Small Buyouts -13.1 1.6 6.6 4.2 11.9

Med Buyouts -10.7 6.1 11.6 7.2 11.1

Large Buyouts 14.3 3.8 7.2 5.4 10.8

Mega Buyouts -20.8 -1.6 5.0 4.3 7.7

All Buyouts -20.0 -0.3 5.9 4.7 9.1

Mezzanine -21.2 1.4 3.0 4.0 7.2

All Private Equity -18.8 1.1 6.1 6.1 11.4 Thomson Reuters' US Private Equity Performance Index*

as of June 30, 2009

The Private Equity Performance Index is based on the latest quarterly statistics from Thomson Reuters' Private Equity Performance Database analyzing cash flows and returns for over 1800 venture capital and private equity partnerships with a capitalization of $678 billion. Sources are financial documents and schedules from limited partners, investors, and general partners. All returns are calculated by Thomson Reuters from the underlying financial cash flows. Returns are net to investors after management fees and carried interest. Buyout funds sizes are defined as follows: Small: $0 - $250 million, Medium: $250 million - $500 million, Large: $500 million to $1 billion, Mega:

$1 billion+.

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Evolution and Current Status of the Private Equity Program

Program Evolution

After adopting the Private Equity Investment Policy in December of 2005, the Plan focused on selecting appropriate investments for inclusion in the portfolio. As discussed in the investment policy, private equity investments are expected to achieve attractive risk-adjusted returns and, by definition, possess a higher degree of risk with a higher return potential than traditional investments. Fund-of-fund vehicles, investing in both the primary market and secondary market, shall be emphasized to create a diversified private equity portfolio.

Program construction emphasizes the use of fund-of-funds to create a diversified private equity portfolio. Initial commitments to the Program focused on secondary market fund-of-funds, given their unique characteristics. Secondary market fund-of-funds purchase established private equity interests from existing limited partners providing several attractive benefits to investors making their initial commitments to the asset class. Benefits include: i) capital is rapidly deployed to a diversified portfolio of assets (including across prior vintage years); ii) positions are commonly purchased at a discount to net asset value; iii) risks associated with “blind pools” (a risk that is typically present in primary fund-of-funds as commitments have yet to be made to specific partnerships) is reduced as capital has already been invested; and iv) return of capital to investors is significantly accelerated as investments are made in mature holdings that are closer to achieving liquidity. Subsequent commitments have been made to primary market fund-of-funds targeting “special situations” (i.e. distressed strategies) and venture capital. The Program’s first commitment to a direct partnership investment (Oaktree Principal Fund V) began investing capital during the first quarter of 2009.

Current Status

As of 6/30/09, the Program had committed $146 million across two primary market fund-of- funds, three secondary market fund-of-funds, and one direct partnership. The Fund’s secondary fund-of-funds, which began investing in 2006, have drawn down $51.5 million in capital, distributed $11.3 million back to the Program, and had a reported value of $36.2 million. The near-term distributions back to the Program are representative of secondary market fund- of-funds that invest in mature private equity partnerships that are near the liquidity phase of their partnership life cycle. The Fund’s primary fund-of-funds began drawing capital in 2008 and have called $20.0 million in capital and had a reported value of $15.6 million. The direct partnership made its initial capital call during the first quarter of 2009, drawing down $2.4 million and had a reported value of $3.1 million as of mid-year 2009.

Fund Portfolio Summary (as of 6/30/09, $ in millions)

Secondary Fund-of-Funds

Primary Fund-of-Funds

Direct

Partnerships Total Portfolio

# of Partnerships 3 2 1 6

Capital Committed $90.0 M $40.0 M $16.0 M $146.0 M Capital Contributed $51.5 M $20.0 M $2.4 M $73.9 M Unfunded Commitment $38.5 M $20.0 M $13.6 M $72.1 M

Capital Distributed $11.3 M $0.0 M $0.0 M $11.3 M

Reported Value $36.2 M $15.6 M $3.1 M $54.9 M

As previously mentioned, subsequent to quarter end, an additional $30 million has been approved for a secondary market fund-of-funds which has not begun investment activities at the time of preparing this report.

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Investment Performance

This section examines the Program’s performance results from a variety of viewpoints, including: since inception internal rates of return, horizon IRR, contributions vs. reported values plus distributions, and current payback.

Performance: Since Inception IRR

As of 6/30/09, the Program’s since inception net IRR was minus (8.2%) representing an improvement from the minus (17.0%) net IRR reported as of year-end 2008. Initially committing to secondary market fund-of-funds that invest in mature holdings that can return capital relatively rapidly initially minimized the “j-curve”, but the funding of the primary market fund-of- funds in 2008 combined with valuation declines at year-end has resulted in negative performance results. Due to the immaturity of the Program results are less meaningful at this time and it is not unexpected for a newer program to be in negative territory.

The chart above represents the total Program’s net IRR at multiple points in time since the Program’s inception (June of 2006). The Program’s absolute return performance objective over the long-term is a 15% net of fees internal rate of return, since inception.

Performance: Horizon IRR

To compare performance across shorter time periods relative to policy benchmarks, PCA calculated customized “cash flow adjusted” benchmark returns. The actual cash flows (contributions and distributions) of WPERPS’ private equity portfolio are assumed to be invested in the policy benchmarks to arrive at a comparative performance measurement. As highlighted in the table below, the WPERP portfolio has outperformed the public market proxy (Russell 3000 Index plus 300 basis points) over all periods evaluated. The Portfolio also outperformed the Cambridge Custom Benchmark (the Cambridge Associates PE/VC Blended Index at an 85%/15% mix) over all periods evaluated on a cash flow adjusted basis.

Cash Flow Adjusted Benchmark Comparison: periods ending 6/30/09

One-Year Two-Year Three-Year Since Inception*

WPERP Portfolio (15.9%) (11.4%) (8.2%) (8.2%)

Russell 3000 Index + 300 bp (19.6%) (16.5%) (12.7%) (12.7%) Cambridge Custom Benchmark** (25.3%) (16.0%) (11.1%) (11.1)

*initial capital call made in June of 2006

**The Cambridge Custom Benchmark began in Q4 2006 with the Russell 3000 + 300 bp benchmark utilized for Q3 2006. Private Equity Program Performance

21.4%

-8.2% -16.0%

-17.0% 8.6%

-25% -15% -5% 5% 15% 25%

as of 12/31/06

as of 12/31/07

as of 12/31/08

as of 3/31/09

as of 6/30/09 Net IRR Since Inception

Net IRR

Long-Term Target Range

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Contributions vs. Reported Value plus Distributions

Another way to view a program’s progress is to examine the contributions, distributions, and reported value of a portfolio. Given the nature of private market investing, it is not uncommon for contributions to exceed distributions and reported value as investments are held at cost and management fees are assessed early in the partnership. The Program’s initial commitments had provided an attractive start as distributions combined with reported value of investments exceeded contributions through the calendar year 2007. However, funding of the primary market fund-of-funds and valuation declines at year-end resulted in an investment multiple below 1.0x. As of 6/30/09, the Program had an investment multiple of 0.9x. The following chart portrays the historical trend of these since-inception components.

Current Payback

An additional metric that PCA examines as a measure of private market progress is the payback. This measure highlights the amount of distributions made to the limited partners as a function of contributions. This measure is relatively high (at 15.3%) given the portfolio’s immaturity, but this is representative of secondary market fund-of-funds that return distributions back to investors more rapidly than traditional private equity partnerships. However, new commitments that are expected to have longer paybacks will decrease the payback as capital is drawn down, as is reflected in the decline in payback from 12/31/07. The decline of exit activity across the private equity industry slowed the expected distributions from the Program’s secondary market fund-of-funds, slowing the payback measure.

Payback

15.3% 15.5%

16.6% 18.3%

0.0% 1.5%

0% 25% 50% 75% 100% 125%

as of 6/30/06

as of 12/31/06

as of 12/31/07

as of 12/31/08

as of 3/31/09

as of 6/30/09 Since Inception

Cumulative Payback as % of Contibs.

Total Portfolio Payback % Return of Contributed Capital (100% payback)

Private Equity Portfolio

0.0 20.0 40.0 60.0 80.0 100.0

12/ 31^/2006

12/ 31^/2007

12/ 31^/2008

3/^31/ 200

9

6/^30/ 200

9

Millions ($)

Contributions Existing Private Portfolio Distributions as of

12/31/2006

as of 12/31/2007

as of 12/31/2008

as of 3/31/2009

as of 6/30/2009

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Performance Summary

As mentioned, the funding of the primary market fund-of-funds in 2008 combined with valuation declines at year-end has resulted in negative since inception performance results to date. Performance has improved over the first six months of 2009. The Program’s initial commitments to secondary market fund-of-funds had been performing well and had avoided the

“j-curve.” Despite significant declines, the Program has outperformed the public market proxy (Russell 3000 Index plus 300 basis points) over all periods evaluated on a cash flow adjusted basis.

Portfolio Structure

This section examines the Program’s portfolio structure and diversification from a variety of viewpoints, including: number of holdings, investment structures, sector exposures, and vintage year diversification.

Holdings Diversification

The Plan’s initial commitments to secondary market fund-of-funds are providing “core” exposures as they are highly diversified across partnerships and number of underlying holdings. As of 6/30/09, LEP XIII held interests in 138 partnerships and 1,384 underlying portfolio companies. LCP VI held interests in 222 partnerships representing more than 3,000 underlying portfolio companies. LEP XIV, which is still raising capital and had called only 11% of committed capital as of quarter-end, held interests in 13 partnerships and 220 underlying portfolio companies. HRJ SOF II is diversified across nine special situation partnerships while Fisher Lynch Venture Fund II has committed to 13 venture capital partnerships to date.

Investment Structure Exposures

As of 6/30/09, the Fund’s portfolio is invested across primary market fund-of-funds, secondary market fund-of-funds, and one direct partnership. Secondary market fund-of-funds represent the largest proportion of reported value at 66%, followed by primary market fund-of-funds at 28% while the direct partnership represents 6%.

Direct Partnerships

6%

Primary fund‐ of‐funds

28% Secondary

fund‐of‐funds 66%

Investment Structure Diversification: market value

Including unfunded commitments as of March 31, 2009, the total exposures (market value plus unfunded commitments) change slightly. Primary market fund-of-funds exposure remains at 28% while secondary market fund-of-funds decreases to 59% and the direct partnership increases to 13% of the total exposure.

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Direct Partnerships

13%

Primary fund‐ of‐funds

28% Secondary

fund‐of‐funds 59%

Investment Structure Diversification: total exposure

Segment Exposures

Based on reported value, the Plan’s portfolio is diversified across buyout (51%), special situations (31%), and venture capital (18%).

Buyout 51%

Special Situations

31%

Venture 18%

Sector Diversification: market value

These exposures are an aggregation of the underlying partnerships within the secondary market fund-of-funds as defined by each of the firms, while HRJ SOF II and Oaktree Principal Fund V are entirely categorized as special situations (i.e., distressed) and Fisher Lynch Venture Fund II as venture capital. Sector diversification is expected to be maintained as the Plan’s current partnerships continue to invest capital and additional primary market fund-of-funds are added to the Program and begin funding.

Vintage Year Diversification

In addition, the Program is diversified across vintage years. The oldest partnership’s vintage year is 1988 with meaningful exposures beginning in the 2000 vintage year due to the Plan’s commitment to secondary funds. Going forward, commitments are expected to continue to be diversified across vintage years to gain exposure to investments made at varying points of an economic cycle.

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Vintage Year Diversification

$0.0

$5.0

$10.0

$15.0

$20.0

$25.0

1988- 1998

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Reported Value ($M)

Reported Value

However in some secondary transactions where new investment vehicles are created, a specific vintage year (i.e. 2007) is applied even though the underlying partnerships are actually diversified across a broader spectrum of vintage years. This, in addition to the fact that all but one of HRJ SOF II’s partnerships have a 2007 vintage year, primarily accounts for the significant exposures to the 2007 vintage year. The Plan’s recent re-up commitments to Landmark Equity Partners and Lexington Capital Partners are expected to provide additional exposure to partnerships emphasizing the vintages in the 2003 to 2006 time period while the commitment to Oaktree Principal Fund V will provide exposure to the 2009 vintage year. As the Program matures and evolves there are expected to be variations in vintage year exposure, but the primary goal is to gain exposure across multiple years and the Program has successfully achieved this diversification to date.

Portfolio Structure Summary

As of June 30^th 2009, approximately 51% of the Plan’s committed capital had been invested and the Program has developed a diversified portfolio of underlying private equity investments. The secondary market commitments have provided the desired diversification benefits (including sector, manager, and particularly vintage year) to date and are expected to continue to provide these diversified exposures as the remaining commitments are drawn down and invested. These positions represent attractive core holdings that should allow the Plan to opportunistically commit capital to additional segments.

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Partnership Summaries

The Program’s underlying partnerships are at various stages of their respective investment cycles and longer-term results are expected to be impacted by varying factors. The following table and discussion is intended to provide additional insights into the progress and longer-term outlook for each of the underlying partnerships.

Partnership Status Update Partnership Sector Commitment

% Invested/ Returned

Investment

Multiple Progress Note

LCP VI Diversified $30 M 78%/20% 0.9x Significantly invested. Long-term results will be driven by the return of exit opportunities in the marketplace and the associated valuations achieved.

LEP XIII Diversified $30 M 83%/26% 0.9x Significantly invested. Long-term results will be driven by the return of exit opportunities in the marketplace and the associated valuations achieved.

SOF II Distressed $20 M 87%/0% 0.8x Significantly invested. Majority of capital was deployed prior to the economic downturn resulting in significant unrealized losses that have rebounded from recent lows. Long-term returns to be driven by managers’ ability to implement their respective distressed/ restructuring investment strategies.

FL II Venture $20 M 13%/0% 0.8x Early in the investment cycle. Capital has been committed to underlying partnerships that will draw down capital over multiple years. An extended “j-curve” is expected due to the focus on venture capital partnerships that invest in less mature companies. However, capital is being deployed in an attractive (i.e. low) valuation environment.

LEP XIV Diversified $30 M 11%/0% 1.0x Early in the investment cycle (also still raising capital). Deploying capital at an opportunistic time with larger purchase discounts expected. However, transactions have been slow as buyer/seller pricing is still out of equilibrium.

OPF V Distressed $16 M 15%/0% 1.3x Early in the investment cycle (also still raising capital). Opportunistic investment strategy given difficult market environment. Capital is expected to be deployed in a low valuation environment.

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Lexington Capital Partners VI, L.P. (LCP VI)

LCP VI is a secondary market fund-of-funds that began investing capital in 2006. As of mid- year 2009, LCP VI is 78% funded. LCP VI is a highly diversified portfolio of mature private equity holdings. The current decline in exit activity, combined with valuation declines as of year- end 2008, are dampening performance results from previous highs. Longer-term results will be impacted by the timing of exits and the valuation at exit. Given the highly diversified nature of the portfolio, ultimate results will be significantly impacted by the overall recovery of the private equity markets.

Landmark Equity Partners XIII, L.P. (LEP XIII)

LEP XIII is a secondary market fund-of-funds that began investing capital in 2006. As of mid- year 2009, LEP XIII is 83% funded. LEP XIII is a highly diversified portfolio of mature private equity holdings. The current decline in exit activity, combined with valuation declines as of year- end 2008, are dampening performance results from previous highs. Longer-term results will be impacted by the timing of exits and the valuation at exit. Given the highly diversified nature of the portfolio, ultimate results will be significantly impacted by the overall recovery of the private equity markets.

HRJ Capital Special Opportunities Fund II (SOF II)

SOF II is a primary market fund-of-funds focused on special situation (i.e. distressed strategies) that began investing capital in 2007. SOF II’s investment strategy is opportunistic given the current economic climate, but commitments were made prior to the economic downturn and capital was deployed in a higher valuation environment. SOF II is experiencing material unrealized declines, but has rebounded from recent lows. Long-term results of SOF II will be significantly impacted by the underlying partnerships ability to manage their investments through this difficult environment. The strategy and focus of the underlying investment strategies are well positioned to attractively manage the existing portfolio of assets.

HRJ Capital implemented an “over-commitment” strategy in the construction of its fund-of-funds and became overextended in 2008 with commitments to general partners significantly outweighing commitments from limited partners, as the fund raising environment became very difficult. This resulted in material organizational distress for HRJ Capital. On July 15, 2009, HRJ Capital sold specific assets of HRJ Capital to Capital Dynamics, a private equity manager headquartered in Switzerland. Capital Dynamics has taken over the administration of SOF II.

CD HRJ SO II GP L.P is the new General Partner post closing and an over-commitment status remains with SOF II which is currently being monitored on a monthly basis.

Fisher Lynch Venture Fund II (FL II)

FL II is a primary market fund-of-funds focused on the venture capital sector that began investing capital in 2008. FL II has committed capital to 13 underlying partnerships, but is only 13% drawn as of mid-year 2009. FL II is early in the fund’s life cycle and is investing capital in an attractive valuation environment and is expected to benefit from an economic recovery over the longer-term. Given the nature of venture capital investments that target immature portfolio companies, particularly through a fund-of-funds environment, FL II is expected to exhibit results in the “j-curve” for an extended period of time.

Landmark Equity Partners XIV, L.P. (LEP XIV)

LEP XIV is a secondary market fund-of-funds that began investing capital in 2008. As of mid- year 2009, LEP XIV is 11% funded and is still raising capital. LEP XIV is early in its investment cycle and is expected to be investing capital in a very opportunistic environment for secondary

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Oaktree Principal Fund V (OPF V)

OPF V is a direct partnership implementing a distressed debt-for-control investment strategy. The Fund began investment activities in early 2009 and is expected to benefit from the distressed economic environment. The Fund is still raising capital (target of $5 billion) but has drawn down 15% of the $1.1 billion in aggregate commitments as of mid-year 2009.

Summary

As of 6/30/09, six commitments totaling $146 million had been made, resulting in $73.9 million in contributed capital, $11.3 million distributed back to the Plan, and $54.9 million in reported value. Overall, the Program has generated a net since inception IRR of minus (8.2%) as of June 30, 2009. Valuation declines as of year-end 2008 eliminated the initial attractive results exhibited by the first two commitments to the secondary market. Approximately 51% of the Program’s committed capital has been called down as of June 30, 2009. The Program’s reported value ($54.9 million) plus unfunded commitments ($72.1 million) represents an approximate allocation of 2.2% of the total Plan as of 6/30/09. The Program’s emphasis on fund-of-funds, particularly secondary market fund-of-funds, has resulted in the formation of a highly diversified portfolio across investment strategy, manager, and vintage year.

The Program’s reported value plus unfunded commitments represents an approximate allocation of 2.2% of the total Plan assets as of the end of the second quarter 2009. Therefore, continued investment activity is required for the Plan to achieve its 5% target for private equity exposure over the long-term. It is a continuous process of reviewing opportunities in the marketplace to identify appropriate candidates for the Program. In 2009 to date, the Program has committed $46 million across two partnerships.

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Date of Total Actual Total Rpt. Value

As of: Investment Initial Age Capital Contribution Percent Remaining Distribution Reported Plus Net

6/30/2009 Group Focus Investment (Years) Committed to Date Invested Contribution to Date Value Rem. Contr. Multiple IRR

New Investments

Lexington Capital Partners VI Secondary Diversified Jun-06 3.0 30,000,000 23,421,892 78.1% 6,578,108 4,727,719 16,082,646 22,660,754 0.9x -8.6% Landmark Equity Partners XIII Secondary Diversified Nov-06 2.6 30,000,000 24,812,696 82.7% 5,187,304 6,561,829 16,757,300 21,944,604 0.9x -4.3%

HRJ Capital Special Opportunities II Primary Distressed Mar-08 1.3 20,000,000 17,350,000 86.8% 2,650,000 0 13,554,303 16,204,303 0.8x NM

Fisher Lynch Venture Fund II Primary Venture Capital May-08 1.2 20,000,000 2,650,000 13.3% 17,350,000 0 2,053,957 19,403,957 0.8x NM

Landmark Equity Partners XIV Secondary Diversified Sep-08 0.8 30,000,000 3,300,000 11.0% 26,700,000 0 3,342,044 30,042,044 1.0x NM

Oaktree Principal Fund V Direct Distressed Debt Feb-09 0.3 16,000,000 2,400,000 15.0% 13,600,000 0 3,116,295 16,716,295 1.3x NM

Total Portfolio 146,000,000 73,934,588 50.6% 72,065,412 11,289,548 54,906,545 126,971,957 0.9x -8.2% Established Portfolio* 30,000,000 23,421,892 78.1% 6,578,108 4,727,719 16,082,646 22,660,754 0.9x -8.6%

* over three years old

Alternative Inv. subtotals:

Primary Fund of Funds 40,000,000 20,000,000 50.0% 20,000,000 0 15,608,260 35,608,260 0.8x Secondary Fund of Funds 90,000,000 51,534,588 57.3% 38,465,412 11,289,548 36,181,990 74,647,402 0.9x Directs 16,000,000 2,400,000 15.0% 13,600,000 0 3,116,295 16,716,295 1.3x

% in Primary Fund of Funds 27% 27% 28% 0% 28% 28%

% in Secondary Fund of Funds 62% 70% 53% 100% 66% 59%

% in Directs 11% 3% 19% 0% 6% 13%

% in Private Equity 2.6% 1.3% 1.3% 1.0% 2.2%

Total Fund Value: $5,666,311,148 Long-Term Target 5.0% 5.0% 5.0% 5.0% 5.0%

difference in % -2.4% -3.7% -3.7% -4.0% -2.8%

difference in $ (137,315,557) (209,380,969) (211,250,145) (228,409,012) (156,343,600)

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Investment Strategy

Fisher Lynch Capital expects to invest in venture capital partnerships sponsored by 10 to 15 firms that intend on focusing on making venture capital investments primarily in information technology and life sciences companies. The targeted venture funds will be based, chiefly, in the U.S. The Fund endeavors to achieve

outstanding returns by adhering to the following objectives: investing with the leading private equity venture capital firms that have demonstrated historically successful investment performances, judicious diversification of the Fund’s portfolio, and by continuing the use of a rigorous investment process.

Investment Review Portfolio Profile

Reported Value $ 2,053,957 # of partnerships: 13

Distributions $ 0

Top 10 Portfolio Investments Vintage Focus

Amount Contributed $ 2,650,000

Original commitment $ 20,000,000 Lightspeed Venture Partners VIII, LP 2008 Venture Capital

Remaining to be invested $ 17,350,000 Redpoint Ventures III, LP 2006 Venture Capital

Age of fund (in years) 1.2 Austin Ventures X, LP 2008 Venture Capital

Internal rate of return to date NM Kleiner Perkins Caufield & Byers XII 2006 Venture Capital

Total Value Multiple 0.8X Versant Venture Capital IV, LP 2008 Venture Capital

Percent of capital returned 0% U.S. Venture Partners X, LP 2008 Venture Capital

Time to full payback (in years) no distribs. made Khosla Ventures III 2009 Venture Capital

KPCB Green Growth Fund 2008 Venture Capital

Fund Profile Kleiner Perkins Caufield & Byers XIII 2008 Venture Capital

LADWP Initial Investment May-08 Accel Growth Fund, LP 2008 Venture Capital

Target termination date May-20

General Partner Recent Activity:

Fysher Lynch GP II, LP Called $3.8 million in capital from investors in the second quarter of 2009

Investment strategy Primary (Venture)

Market Value of Partners Capital $ 8,397,735 Partners Capital in Cash $ 948,013 Total capital contributed $ 10,851,069 Total capital commitment target $ 125,000,000 General Partner's contribution (% tot.) 1.0%

LADWP % ownership 16.0%

Portfolio Cash Flows General Partner Compensation

Annual Mgmt. Fee:

1% of aggregate commitments during the investment period thereafter reduced at a rate of 10% per year

Distribution priority:

100% to LPs until return of contributed capital plus 8% preferred return 5% carried interest allocation after achieving 8% IRR

10% carried interest allocation after achieving 20% IRR

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000

Distributions Market Value Contributions

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The Fund will target a mix of special opportunities fund managers who have the expertise to pursue unique transactions during periods of instability and distress, as well as having the expertise to pursue more traditional buyout related private equity transactions during more stable periods or periods of growth. These transactions commonly include turnaround-oriented transactions and distressed investments.

Distributions $ 0

Original commitment $ 20,000,000 Wayzata Opportunities Fund II, LP 2007 Control/Opportunistic Remaining to be invested $ 2,650,000 Avenue Special Situations Fund V, LP 2007 Non-Control

Age of fund (in years) 1.3 Wexford Partners 11, LP 2007 Control/Hard Assets

Internal rate of return to date NM OCM Opportunities Fund VIIb, LP 2007 Non-Control

Total Value Multiple 0.8X Fortress V, LP 2007 Control/Hard Assets

Percent of capital returned 0% OCM Opportunities Fund VII, LP 2007 Non-Control

Time to full payback (in years) no distribs. made Fortress Co-Investment, LP 2007 Control/Hard Assets H.I.G Bayside Debt & LBO Fund II 2008 Control

Fund Profile Sun Capital Partners V, LP 2007 Control

LADWP Initial Investment Mar-08

Target termination date Dec-19

HRJ Special Opportunities II Management L.P. Commitment period has ended.

Investment strategy Primary (distressed) Funded $6.8 million during the first quarter of 2009 Market Value of Partners Capital $ 101,086,559

Partners Capital in Cash $ 764,632 On July 15, 2009, HRJ Capital, L.L.C. (“HRJ Capital”) closed the proposed transaction Total capital contributed $ 130,678,031 involving the sale of certain assets of HRJ Capital to Capital Dynamics Inc. (“Capital Total capital committed $ 150,637,500 Dynamics”). Capital Dynamics has taken over the management of the Partnership. General Partner's contribution (% tot.) 0.2% CD HRJ SO II GP L.P is the General Partner post closing.

Annual Mgmt. Fee:

0.9% of aggregate commitments

40% of management fees will be deferred during "over-commitment" status Distribution priority:

Initially, 100% to LPs. After return of contributions and a 10% preferred return, 100% to GP "catch-up" at 5%

Thereafter, 95% to LPs and 5% to GP

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000

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Landmark XIII is being formed to acquire interests in established private equity investments through secondary market transactions. The Partnership will assemble a diversified portfolio of private equity interests with the objectives of achieving superior returns at lower risk for this asset class and generating cash distributions to its partners beginning in the Partnership’s first year.

Distributions $ 6,561,829

Original commitment $ 30,000,000 Royalty Pharma US Partners I 1997 Expansion

Remaining to be invested $ 5,187,304 Landmark Acquisition Fund II, LLC 2007 Diversified

Age of fund (in years) 2.6 Landmark Portfolio Advisors Fund I, LLC 2006 Diversified

Internal rate of return to date -4.3% VCAF LP 2007 Diversified

Total Value Multiple 0.9X American Equity Capital II 2007 Diversified

Percent of capital returned 26% Parish Opportunities Fund, LP 2007 Diversified

Time to full payback (in years) 7.2 Liberty Partners II 2005 Buyout

Landmark Acquisition Korea 2007 Diversified

Fund Profile Hunt Ventures VI, LP 2004 Venture Capital

LADWP Initial Investment Nov-06 Vision Capital Partners VI, LP 2006 Venture Capital

Target termination date Nov-19

Landmark Partners XIII, LLC Called $16.2 million in capital from investors in the second quarter of 2009 Investment strategy Secondary Distributed $7.0 million back to investors during the second quarter of 2009 Market Value of Partners Capital $ 666,585,585

Partners Capital in Cash $ 6,863,185 Total capital contributed $ 986,565,993 Total capital committed $ 1,194,454,545 General Partner's contribution (% tot.) 1.0%

Annual Mgmt. Fee:

of aggregate commitments: 0.5% in year 1, 0.75% in year 2, and 1.0% years 3-7 1.0% of reported value thereafter.

Distribution priority:

100% to LPs for primary investments

After return of capital and 8% preferred return, 90% to LPs and 10% to GPs for secondaries

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000

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Landmark XIV is being formed to acquire interests in established private equity investments through secondary market transactions. The Partnership will assemble a diversified portfolio of private equity interests with the objectives of achieving superior returns at lower risk for this asset class and generating cash distributions to its partners beginning in the Partnership’s first year.

Distributions $ 0

Original commitment $ 30,000,000 MP Preferred Partners II 2008 Distressed Debt

Remaining to be invested $ 26,700,000 Vision Capital Advantage Fund 2008 Diversified

Age of fund (in years) 0.8 NCD Investors 2008 Diversifed

Internal rate of return to date NM Sevin Rosin Fund IX 2004 Venture Capital

Total Value Multiple 1.01X Hicks, Muse, Tate & Furst Latin America 1998 Buyout

Percent of capital returned 0% Sevin Rosin Fund VIII 2000 Venture Capital

Time to full payback (in years) too early to tell Sevin Rosin Fund VII 1999 Venture Capital

Hicks, Muse, Tate & Furst IV 1998 Buyout

Fund Profile Hicks, Muse, Tate & Furst III 1996 Buyout

LADWP Initial Investment Sep-08 Olympus Real Estate Fund II 1997 Real Estate

Target termination date Nov-19

Landmark Partners XIII, LLC Since inception on 8/12/08, the Fund has:

Investment strategy Secondary invested $129 million to underlying partnerships Market Value of Partners Capital $ 135,104,953

Partners Capital in Cash $ 27,190,316 Total capital contributed $ 134,322,221 Total capital committed $ 1,239,292,929 General Partner's contribution (% tot.) 1.0%

Annual Mgmt. Fee:

1.0% aggregate commitments during the first 4 years after final closing based on net invested capital through year 8, declining 10% per year thereafter Distribution priority:

After return of capital and 8% preferred return, 90% to LPs and 10% to GPs for secondaries

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000

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Lexington VI acquires interests in established leveraged buyout, venture capital and mezzanine funds, primarily in secondary transactions. The Partnership intends to assemble a diversified portfolio of private equity partnership interests with the expectation of achieving superior returns at a well-diversified level of risk while generating cash distributions beginning in the Partnership’s first year.

Distributions $ 4,727,719

Original commitment $ 30,000,000 American Capital Equity I, LLC 2006 Buyout

Remaining to be invested $ 6,578,108 KKR Private Equity Investors, L.P. 2006 Buyout

Age of fund (in years) 3.0 RBS Special Opportunities Fund, L.P. 2004 Diversified

Internal rate of return to date -8.6% Weston Presidio Capital IV 2000 Venture Capital

Total Value Multiple 0.9X ZM Private Equity Fund I, L.P. 2007 Diversified

Percent of capital returned 20% Lindsay Goldberg & Bessemer II, L.P. 2006 Buyout

Time to full payback (in years) 12.0 Lindsay Goldberg & Bessemer, L.P. 2002 Buyout

Bain Capital Fund VIII, L.P. 2004 Buyout

Fund Profile Vestar Capital Partners V, L.P. 2005 Buyout

LADWP Initial Investment Jun-06 KFN Co-Invest Holdings, L.P. 2005 Buyout

Target termination date Aug-15

Lexington Associates VI, LP Called $115.0 million in capital from investors in the second quarter of 2009 Investment strategy Secondary Distributed $15.0 million to investors during the second quarter of 2009 Market Value of Partners Capital $ 2,024,121,306

Partners Capital in Cash $ 16,296,650 Total capital contributed $ 2,922,754,452 Total capital committed $ 3,773,870,707 General Partner's contribution (% tot.) 1.0%

Annual Mgmt. Fee:

1.0% of commitments (0.5% of commitments to primaries) during the investment period. 0.85% of reported value thereafter (0.5% for primaries). Distribution priority:

After return of capital, 90% to LPs and 10% to GPs for secondaries

0 5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000