I. Due Diligence Process Review II. Portfolio Construction III. Manager Selection & Recommendations IV. Requested Board Action *Names used in this presentation are a shortened version that is used for ease of communication purposes throughout this document. The formal recommendations to the Board on the last page of this presentation reflect the full legal names of the investments.

2 Section I

3 2017 Staff Pacing Model $2,000 $1,926 $1,929 16% $1,865 $1,800 $1,709 14% $1,600 $1,465 12% $1,400 $1,198 10% $1,200

$1,000 8% $853 $800 6%

Value in US$ (Millions) $600 $511 4% % of TotalPlan Value $400 $235 2% $200 $450 $500 $525 $550 $575 $600 $635 $660 $675 $- 0% 2017 2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E Actual PE NAV Annual Commitment PE % of Plan Original Model Target % of Plan

Annual pacing plans are developed in the context of multiple year investment horizons. This is necessary because private capital investments deploy and return capital over time rather than all at once.

4 2018 Pacing Plan Progress

100%

90% March Providence Strategic Growth III, L.P. (PSG III) ($10mm) 80% Partners VIII, L.P. (PEP VIII) ($55mm) TSSP Adjacent Opportunities Partners (D), L.P. (TAO Contingent) ($50mm) The 2018 Private 70% TPG Opportunities Partners IV, L.P. (TPG TOP IV) ($50mm) Equity search process Foundry Group Next 2018, L.P. (Foundry) ($45MM) has culminated in 60% $210 million of closed 50% and/or recommended investments, in line 40% with the $500 mm 30% primary fund pacing % of Pacing Plan Utilized Plan of Pacing % model goal for the 20% year. 10%

0% Beg. Year Q1 Q2 Q3 End Year Time Buy-out Growth Equity Special Situations Unallocated

Search processes are approved in annual amounts. Progress will be

made throughout the year as opposed to all at once. 5 Section II

6 Private Equity Strategy Diversification by Commitment

Strategy considerations: Buy-out (40% to 75%) 2015: Overweight special situations 31.9% early for J-Curve mitigation, 43.0% Growth (10% to efficiency of capital deployment, 40%) and tactical opportunities. Special Situations (5% to 35%) 25.1% 2016: Focus on growth opportunity set and continue to add buy-out exposure. Private Equity Target Diversification 2017: Round out buy-out portfolio, 4.3% and opportunistically add to growth and credit. Buy-out (40% to 75%) Growth (10% to 2018: Continue to add high quality 40%) 30.5% 41.1% funds to the portfolio Special Situations opportunitstically (5% to 35%) Un-allocated 24.0%

7 Private Equity Manager Diversification by Commitment BO 1 BO 2 BO 3 BO 4 BO 5 BO 6 The overall goal remains identifying BO 7 BO 8 top quartile performers to partner BO 9 BO 10 with. BO 11 BO 12 GE 1 GE 2 Position sizing considerations: GE 3 GE 4 GE 5 SS 1 Continue to reduce the unallocated SS 2 SS 3 portion of the private equity SS 4 SS 5 portfolio while sensibly balancing the trade-off between diversification Private Equity Target Diversification by Manager and concentration. BO 1 BO 2 BO 3 BO 4 BO 5 BO 6 Areas of focus are enhancing BO 7 BO 8 manager diversification, and BO 9 BO 10 building strategic relationships BO 11 BO 12 where possible/appropriate. GE 1 GE 2 GE 3 GE 4 GE 5 SS 1 SS 2 SS 3 SS 4 SS 5 UA 8 TMRS is focused on taking a measured approach to global geographic diversification.

Private Equity Geographic Diversification by Private Equity Target Geographic Diversification Commitment 4.3%

20.3% U.S.A. U.S.A. 19.4% International International Un-Allocated

79.7%

76.3%

The Target Portfolio keeps a conservative stance on international exposure.

9 Section III

10 Manager Recommendations Executive Summary

Summary of Recommendations Recommended Recommended Strategy Target Return Terms (no greater than)* Manager/Fund Amount Fee: 2.0% of Committed Capital

PSG III Growth Equity 20%-25% Net IRR Carry: 20% Carry, 8% preferred $10 million Term: 10 yrs. plus extensions Fee: 1.5% of Committed Capital

PEP VIII Buy-Out 20% Net IRR Carry: 20% Carry, 8% preferred $55 million Term: 10 yrs. plus extensions Fee: 1.5% of Invested Capital

TAO Contingent Special Situations 15% Net IRR Carry: 18.5% Carry, 5% preferred $50 million Term: 6 yrs. plus extensions Fee: 1.75% of Committed Capital

TPG TOP IV Special Situations 15%-20% Net IRR Carry: 20% Carry, 8% preferred $50 million Term: 8 yrs. plus extensions Fee: 1.5% of Committed Capital

Foundry 25% Net IRR Carry: 15% until 2.0x, 20% thereafter $45million Term: 10 yrs. Total Approximate Recommended Investments/Commitments Up to $210 million Inclusive of the above recommendations, 2018 year to date total private equity recommendations approved will equal $210 (with the committed amount to be determined), within limits set forth in the 2018 Private Equity Pacing Model and the IPS.

11 Top Candidate Characteristics – PSG III $10 million Recommendation ($60 million prior commitment)

Providence Due Diligence Summary Providence Strategic Growth is an affiliate PSG III of the Providence Equity Partners Date of First TMRS Meeting platform, which oversees more than 2/02/2016 (Austin)

US$50 billion of AUM and is Dates of Subsequent Meetings headquartered in Providence, Rhode 3/22/2016 (GP Office) 6/28/2016 (Austin) Island. PSG targets growth equity 11/15/2016 (GP office) investments in Lower Middle Market 2/16/2017 (LPAC call) 4/15/2017 (Austin) technology‐enabled companies in North 6/13/2017 (Austin) America. PSG will make both majority and 11/7/2017 (GP Office) significant minority investments in Dates of Diligence Advancement ‘B’ Rating – 2/2/2016 breakeven or profitable companies with ‘A’ Rating – 3/28/2016 an emphasis on companies that have not ‘A’ Re-affirmed – 10/1/2017

taken prior institutional capital. The GP Date of Consultant Report will partner with founders and October, 2017 entrepreneurs to invest between US$5‐50 Legal Negotiation Initiated million in companies with revenues 9/22/2017 between US$5‐75 million. Comparable Strategies Reviewed 69 (Growth Equity) 17 (Software focused Growth)

Growth Meetings 131 manager meetings 12 Top Candidate Characteristics – PSG III $10 million Recommendation ($60 million prior commitment)

4.00 PSG Historical Return Bridge

Investment Case 3.60 0.28 • Strong performance and low loss 3.20 3.07 0.50 0.48 ratios – Funds I and II are solidly 2.80 0.25 2.37 top quartile in every measure 2.40 0.76 0.45 2.00 0.46 • Unique buy-and-build expertise in 1.60 0.56 growth equity 1.20

0.80 1.00 • Strong alignment of interests and 0.40

large GP commitment 0.00 Cost Revenue Margin Multiple Net Debt Gross Fees Incentive Net Growth Expansion Expansion Paydown Multiple Multiple • Leverage global brand with powerful sourcing engine – PSG benefits from Providence Issues to Consider sourcing team and back office • Largely young and unrealized fund I & II resources • Investment pace remains rapid • Fund size increase

13 Top Candidate Characteristics – PEP VIII $55 million Recommendation

Providence Due Diligence Summary Providence Equity Partners VIII ("PEP") is PEP VIII being formed to pursue growth-oriented Date of First TMRS Meeting and traditional investments in 2/02/2016 (Austin)

media, communications, education and Dates of Subsequent Meetings information services companies. The Firm 3/22/2016 (GP Office) 6/28/2016 (Austin) will focus on companies with recurring 2/2/2017 (Update call) revenues, attractive margin profiles and 4/4/2017 (Austin) 11/7/2017 (GP Office) defensible market positions, across North 2/13/2018 (Austin) America and Western Europe. PEP will Dates of Diligence Advancement target a diversified portfolio of 15 to 20 ‘B’ Rating – 2/2/2017 investments, and will seek opportunities ‘A’ Rating – 2/20/2018 in which the Fund can invest US$150 Date of Consultant Report March 2017 million to US$500 million per company, March, 2018 with enterprise values between US$500 Legal Negotiation Initiated million and US$2 billion. 2/21/2018

Comparable Strategies Reviewed 188 (Buyout) 24 (Large / Global Buyout)

Buyout Meetings 218 manager meetings 14 Top Candidate Characteristics – PEP VIII $55 million Recommendation

2.80 Providence Return Bridge

Investment Case 2.40 2.15 0.42 • Large and experienced team with 2.00 0.27 deep resources – over 350 0.12 0.11 1.70 0.91 investment professionals across 3 1.60 0.34

global offices 1.20

• Refocused strategy and strong 0.80 1.00 recent performance – 0.40 strengthened team, added resources and industry focus 0.00

• Fund size discipline – 50% decreased since Fund VI Issues to Consider • LP friendly terms and fees • Stumbles in funds V and VI • Higher historical loss ratios, but improved in VII • Platform asset aggregation

15 Top Candidate Characteristics – TAO Contingent $50 million Recommendation TSSP Due Diligence Summary TPG Sixth Street Partners (“TSSP” or the TAO Contingent “Firm”) is a San Francisco-based affiliate of Date of First TMRS Meeting 8/11/2015 (Austin) TPG, overseeing more than US$20 billion of total AUM as TPG’s primary investment Dates of Subsequent Meetings 8/18/2015 (Update call) platform for pursuing special situations and 9/17/2015 (Onsite) distressed investments across the credit cycle. 7/11/2016 (Onsite) 6/21/2017 (Update call) TAO Contingent is targeting a fund size of $3 1/24/2018 (Austin) billion and will invest in opportunities sourced 2/8/2018 (Update call)

across the TSSP platform, including TPG Dates of Diligence Advancement Opportunities Partners, TPG Specialty Lending ‘B’ Rating – 8/20/2015 ‘A’ Rating – 9/1/2015 and TPG Specialty Lending Europe funds. The ‘A’ Re-affirmed – 2/22/2018 Fund will invest ~60‐70% of its capital in opportunities that do not fit the mandates of Date of Consultant Report September, 2017 the other TSSP funds, including defensive yield, stressed and distressed non‐control Legal Negotiation Initiated 2/26/2018 opportunities. The Fund will seek to invest between US$15 million and US$300 million in Comparable Strategies Reviewed 132 (Total Special Situations) each transaction. 34 (Opportunistic Special Situations)

Special Situations 150 manager meetings

16 Top Candidate Characteristics – TAO Contingent $50 million Recommendation

TAO Contingent Pro-Forma Return Bridge 25.0%

Investment Case 20.3% 4.0% • Deep, cohesive team and sourcing 20.0% 1.0% 1.4% infrastructure – TSSP leverages a 15.6% 15.0% 6.0% large, tenured team fluent across 3.3% all credit markets 1.5% 10.0% 10.8% • Strong performance and low loss 5.0% ratios

0.0% • Opportunistic mandate and solid Cash OID / Par Equity Net Gross IRR Fees Incentive Net IRR Yield Fees Accretion Kicker / Credit structuring capability – unique PIK Loss contingent structure reduces fees and provides tactical ability to deploy into credit cycle Issues to Consider • Largely young and unrealized fund II & III • Favorable terms overall for higher • Low preferred return and high catch-up returning credit

17 Top Candidate Characteristics – TPG TOP IV $50 million Recommendation

TPG Sixth Street Partners (“TSSP” or the TPG Sixth Street Partners “Firm”) is a San Francisco-based affiliate of Due Diligence Summary TPG, overseeing more than US$20 billion of TPG TOP IV total AUM as TPG’s primary investment Date of First TMRS Meeting platform for pursuing special situations and 8/18/2015 (Austin) distressed investments across the credit cycle. Dates of Subsequent Meetings TPG Opportunities Partners IV (“TOP IV” or the 8/18/2015 (Austin) 9/17/2015 (GP Office) “Fund”) will have three main areas of focus: 7/11/2016 (GP Office) corporate dislocations, corporate distressed- 6/21/2017 (Call) 1/24/2018 (Austin) for-control, and asset special situations (i.e. 2/8/2018 (Call) Non—Performing Loans (NPL’s) containing Dates of Diligence Advancement small balance Commercial Real Estate (CRE), ‘B’ Rating – 8/20/2015 residential whole loans, or consumer loans). ‘A’ Rating – 2/22/2018 Though TSSP will be opportunistic in allocating Date of Consultant Report between these strategies, they expect the Fund 2/12/2018

to be 75% in the corporate-related distress, and Legal Negotiation Initiated 25% in asset special situations. The Firm March, 2018

manages assets in excess of $6.9 billion in the Comparable Strategy Meetings TOP series, and is targeting $3.0 billion for the Credit: 83 Fund. Distressed: 38

18 Top Candidate Characteristics – TPG TOP IV $50 million Recommendation

30.0% TOP Contingent Pro-Forma Return Bridge Investment Case 25.0% 22.0% • Strong historical performance 4.5% 1.5% with low loss ratios – 20.0% 17.0% 1.4% performance across prior funds is 7.0% top quartile, and 17% to 18% net 15.0% 3.6% 1.5% 10.0% 12.0% • Experienced team 5.0%

• Robust investment platform 0.0% Cash OID / Par Equity Net Gross IRR Fees Incentive Net IRR • Income-generating investment Yield Fees Accretion Kicker / Credit PIK Loss strategy – for a distressed fund, TOP produces a large amount of return from income helping to Issues to Consider mitigate risk, as 80% of the • Institutional focus portfolio is performing • Third-party ownership • Size of the current distress opportunity

19 Top Candidate Characteristics – Foundry $45 million Recommendation Foundry Group Due Diligence Summary Foundry Group was formed in 2007 by Foundry Group Next 2018 Brad Feld, Seth Levine, Ryan McIntyre and Date of First TMRS Meeting Jason Mendelson. The four founders had 1/19/2016 (Austin)

previously worked together since 2001 at Dates of Subsequent Meetings Mobius Venture Capital, and have since 3/1/2016 (GP Office) 11/14/2016 (Austin) added Lindel Eakman (2015), Chris 4/27/2017 (LPAC meeting) Moody (2017), and Jamey Sperans (2018) 9/6/2017 (Austin) 2/8/2018 (Call) to the partnership. To date, Foundry has 3/19/2018 (Austin) raised four early stage funds, (2007, 2010, Dates of Diligence Advancement 2013, and 2016), and two growth funds ‘B’ Rating – 1/19/2016 ‘A’ Rating – 3/1/2016 (2013 and 2016) to invest in both ‘A’ Re-affirmed – 2/21/2017 outperforming later stage opportunities Date of Consultant Report and micro VC funds. Foundry Group March, 2018 manages assets in excess of $1.7 billion in Legal Negotiation Initiated total. The Fund is targeting $750 million. March, 2018

Comparable Strategy Meetings Growth Equity: 95 Venture Capital: 29

20 Top Candidate Characteristics – Foundry $45 million Recommendation

FG Next 2018 Expected Allocation

Investment Case Early Stage • Partner 20% Strong performance across Funds strategies and low losses 30%

• Unique fund structure with access to their early stage deals, later- stage de-risked deals, and access- constrained venture managers – combination of exposures is excellent fit for TMRS’ portfolio Growth Stage 50% • Extremely strong brand and team – the Foundry team are widely regarded as venture industry Issues to Consider thought leaders • Young and unrealized predecessor funds • Two new partners added since close of prior fund • LP-friendly fees • Potential adverse selection bias • Increased capital flows into venture

21 Section IV

22 Approval of Recommendation

TMRS Staff and StepStone recommend that the Board of Trustees approve the selection of the following funds as detailed in the Board Communication Memo:

Recommendations:  Providence Strategic Growth III L.P. $10 million  Providence Equity Partners VIII L.P. $55 million  TSSP Adjacent Opportunities Partners (D), L.P. $50 million  TPG Opportunities Partners IV L.P. $50 million  Foundry Group Next 2018, L.P $45 million

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