Royal Borough of Kensington and Chelsea Pension Fund March 31, 2018 Quarterly Report Confidential Quarterly Report-Q1'18 Table of Contents Market Update 2 Summary 4 Diversification 5 Partnership Fund Program Executive Summary 8 Performance and Portfolio Highlights 9 Detailed Schedule of Investments 17 Notes and Footnotes 30 Adams Street Partners has provided this report (the “Report”) to the recipient on a confidential basis for purposes of monitoring the recipient’s Adams Street Partners investments. This Report contains highly confidential information, including trade secret information, that is proprietary to Adams Street Partners and/or underlying funds and/or portfolio investments. In accepting the Report, the recipient agrees that it will (i) not copy, reproduce or distribute the Report, in whole or in part, to any person or party (including any employee of the recipient other than an employee or other representative directly involved in evaluating the recipient’s investments with, or monitored by, Adams Street Partners) without the prior written consent of Adams Street Partners, (ii) keep permanently confidential all information not already public contained herein, and (iii) use the Report solely for the purpose set forth above. Numbers in this report are based on Adams Street Partners’ calculations and have not been reviewed or approved by the relevant general partners. Royal Borough of Kensington and Chelsea Pension Fund 1 Confidential Quarterly Report-Q1'18 Market Update we continue to seek liquidity where appropriate. While valuations remain below the The first three months of 2018 were characterized by increased volatility. Global extreme highs of mid-2015, significant fundraising from traditional venture firms and public equity markets softened after a strong start to the year, driven by investor non-traditional groups has kept private company pricing at robust levels. Our focus concerns about rising interest rates, inflation pressures, and escalating trade tensions remains on identifying and investing in the very best companies/teams where the between the U.S. and China. Performance results were modestly positive for private risk-adjusted return profile is attractive and we believe we have good downside markets overall in the first quarter. Fundraising activity remained strong by historical protection if markets turn more severely. standards, though below the elevated levels of last year. Deal activity experienced its most active first quarter since 2007, but there was a decrease in liquidity generation As always, Adams Street Partners appreciates the trust you place in our firm as we via M&A activity and IPO proceeds - a trend that subsequently reversed itself in the continue to employ a disciplined, integrated and long-term approach to investing in second quarter. private markets. This approach has guided our investment philosophy for more than 45 years and has proven successful in an ever-changing global economy. We look While aggregate unspent capital in existing funds, particularly large/mega buyout forward to a continuing dialogue on future private market opportunities across funds, remains high, the level of new fundraising in the first quarter slowed in geographies, strategies and subclasses. In the meantime, please don’t hesitate to comparison to the previous quarter. Both buyout and venture capital totals contact your Adams Street investor relations representative with any questions or experienced comparable declines in new funds raised. The number of buyout funds comments. with a final close in the first quarter reached a five-year low, though the approximately $50 billion in buyout capital raised is on par with both Q1 2017 and Q1 2016 levels and well above the five-year historical average. This is evidence of a continued trend of larger buyout funds being raised in the current environment as many GPs take advantage of the healthy fundraising climate. Similarly, the number of venture funds raised was down significantly in Q1 2018, relative to the first quarters of the past four years. Unlike in buyouts, the aggregate capital raised in venture also experienced a decline. Despite historically high valuations, the US small buyout market continues to provide attractive investment opportunities due to the depth of experienced managers and the numerous entrepreneur-owned companies in the US. So far this year, US small market managers have provided attractive exits by selling companies to larger sponsors as well as sponsor-backed strategic acquirers in search of growth. While high valuations have pushed up purchase price multiples, the use of leverage in these transactions remains modest compared to larger transactions. Economic indicators at the portfolio company level do not show any signs of a slowdown in the US economy, however our managers recognize we are likely late-cycle and are focused on investing in companies where their particular skill set can add the most value and endure an economic slowdown. On the growth equity front, Adams Street’s funds continue to be buoyed by the Source: Preqin strong deal flow and investment pace in Q1. Alongside our new investment activity, Royal Borough of Kensington and Chelsea Pension Fund 2 Confidential Quarterly Report-Q1'18 Market Update (Continued) Summary of New Investments (Q2'18) Primary Investments Co-Investments Index Growth Fund IV — Index Growth Fund IV is an opportunity to invest with a Mankind Pharma Ltd — Mankind Pharma is a leading domestically focused Indian leading venture franchise in Europe with a promising presence in the U.S. Index pharma company selling branded generics in the acute, chronic, semi-chronic, and Growth is a growth stage focused venture capital fund targeting technology OTC market segments. The Company operates one of the largest distribution companies with validated business models that are located in Europe, the US and networks in India with access to 75%+ of India’s doctors, with particularly high Israel. Index seeks to deploy $30-60 million per investment. The companies typically penetration in rural geographies. have a high growth profile, with the potential to achieve 50%+ annual growth over 5+ years. Direct Investments Nordic Capital CV1 — Nordic Capital CV1 is an opportunity to invest in a highly There were no new direct investments made on behalf of Royal Borough of experienced manager in the Nordic region with an impressive and stable track record Kensington and Chelsea Pension Fund's portfolio this quarter. both in the region and in the healthcare sector globally. Nordic Capital has consistently been a top performer in our portfolio and is one of our oldest non-U.S. relationships. Thoma Bravo XIII — Thoma Bravo XIII is an opportunity to invest with a stable and proven U.S. technology buyout firm with a top franchise in the space. Thoma Bravo XIII will continue its strategy of investing in the U.S. mid-to-large market application/infrastructure software and technology enabled services industries. Thoma Bravo drives value by partnering with management to identify cost reduction opportunities at closing (improving margins), investing in profitable growth initiatives (including reorganizing companies into profit centers, investing in and refocusing sales, instituting industry best practices), and completing add-on acquisitions. Secondary Investments There were no new secondary investments made on behalf of Royal Borough of Kensington and Chelsea Pension Fund's portfolio this quarter. Royal Borough of Kensington and Chelsea Pension Fund 3 Confidential Quarterly Report-Q1'18 Summary Client Level — Key Program Metrics Subscription Investment Amount Amount Market Value Distributions Total Value Gain Since Incep. Since Inception IRR Program Amount Commitments Drawn1 Undrawn2 (NAV)3 Received (D) (NAV + D) 3 Inception 3 Date Gross3, 4 Net3, 5 Partnership Fund Program $120,000,000 $118,547,392 $92,197,178 $28,876,900 $76,938,131 $71,335,014 $148,273,145 $56,075,967 Jan-07 14.73% 11.58% Grand Total $120,000,000 $118,547,392 $92,197,178 $28,876,900 $76,938,131 $71,335,014 $148,273,145 $56,075,967 Jan-07 14.73% 11.58% Client Level — Key Subscription Ratios Client Level — Q2'18 Activity Committed / Drawn / Drawn / Distributions / Market Value / Total Value / Grand Total Program Subscription Subscription2 Committed2 Drawn3 Drawn 3 Drawn3, 6 Transaction Type Amount Partnership Fund Program 99% 76% 77% 0.77x 0.83x 1.61x Subsequent Quarter Draws1 $2,064,416 Cumulative Draws1 $94,261,594 Grand Total 99% 76% 77% 0.77x 0.83x 1.61x Subsequent Quarter Distributions $2,398,380 Cumulative Distributions $73,733,394 Royal Borough of Kensington and Chelsea Pension Fund 4 Confidential Quarterly Report-Q1'18 Diversification The following pie charts depict total portfolio exposure, for all portfolios managed or otherwise monitored by Adams Street Partners in aggregate, by subclass and geography. Exposures are shown as a percentage of investment commitments and of market value. Partnership Subclass Partnership Geography Partnership Strategy Partnership Subclass Partnership Geography Partnership Portfolio Company Status Royal Borough of Kensington and Chelsea Pension Fund 5 Confidential Quarterly Report-Q1'18 Diversification (Continued) The following chart depicts the time diversification of partnership investment commitments and partnership investment performance, both by vintage year. Also on the chart, the commitment bars are shaded to indicate the portion of the partnership investments that have been committed to each program. Client Level —