Appendix 3 – PME+ Methodology for Comparing Synthetic Private Equity Funds to Public Market Index

Appendix 3 PME+ Methodology Public Market Equivalent (“PME+”) is used to compare the net performance of each of the Sprout HC synthetic funds and NLV funds to the performance of a same size, hypothetical investment in a fund that tracked a public market index. The investments in the hypothetical public market index funds have identical cash inflow schedules and proportionately comparable cash outflow schedules. The cash outflow schedules are set so that the remaining equity value of the public equivalent fund is exactly equal to the remaining equity value of the benchmarked private equity fund at the end of the benchmarking period. The analysis is presented to illustrate the comparative returns a limited partner would have generated by investing in the hypothetical public market index fund at the same time and in the same amounts as had been invested in each of the NLV or Sprout (HC portion only) synthetic funds. The NLV or Sprout HC funds are presented as net, which includes the impact of management fees, expenses, and carried interest. The public market index funds do not have any impact of fees or carried interest. A more detailed description of the PME+ methodology used is available in: Rouvinez, Christophe. “Asset Class: Beating the Public Market.” Private Equity International. January 2003. 26-28 96 CONTROL NUMBER 257 - CONFIDENTIAL HOUSE_OVERSIGHT_024107