CD PRIVATE EQUITY FUND II — Interim / Quarterly Report 2016

Jan 30, 2017

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US SELECT PRIVATE OPPORTUNITIES FUND II (FUND) QUARTERLY UPDATE FOR PERIOD ENDING 31 DECEMBER 2016

ASX: USG

Private investment market commentary

Following prolonged United States (U.S.) election uncertainty, the U.S. stock market rallied strongly into year-end on expectations that Donald Trump’s proposed economic policies will boost corporate earnings and the overall economy. While many experts had predicted a tumble for stocks in the wake of the election, the Dow Jones Industrial Average climbed approximately 8% between U.S. Election Day (8 November 2017) and 31 December 2016.

During Q4 2016, U.S. GDP came in at 1.9%. Overall, nonfarm payrolls in the U.S. increased by 135,000 in October and 204,000 in November. December came in at 156,000, below the market’s consensus expectation of 178,000. However, across the year U.S. employment growth remained healthy, with 2.2 million jobs added in 2016.

Private equity fundraising remained robust for the year. Preqin reported 807 funds closed globally during 2016, raising a combined US$345 billion (data as of 3 January 2017). As more data becomes available, Preqin notes these figures may rise as much as 10%, which would push the 2016 value beyond the post-financial crisis record of US$384 billion, set in 2014. Notably, the capital was weighted toward larger funds and the average fund size in 2016 reached a record US$476 million, surpassing the previous record of US$446 million for funds closed in 2007.

During 2016, private equity backed a total of 3,985 deals globally, similar to the total number of deals completed in 2015; however, the value of these deals at US$319 billion was significantly down from US$424 billion in 2015. Total deal value had been on the rise since 2009 until this year. In North America, 2,137 private equity deals, totalling $190 billion, were completed. By comparison, there were $255 billion of private equity backed deals in 2015, a marked decrease in value yearover-year. Globally, private equity backed exits in 2016 were also down over the prior year, with 1,682 deals worth $330 billion completed this year, compared with 1,859 worth $431 billion in 2015. In North America, there were 798 private equity backed exits worth $188 billion completed. Preqin did not break out this number by region for the prior year[1] .

During the fourth quarter, the Australian dollar (AUD) traded between 71.76 and 77.62, ending the year at 72.08 against the USD.

Notes: 1. Source: Preqin

Fund activity and portfolio

FUND UPDATE

The estimated unaudited net tangible asset value before withholding tax on unpaid distributions at 31 December 2016 was $2.23[1] per unit (30 September 2016 was $2.08[1 ] per unit).

US Select Private Opportunities Fund II, L.P. ( LP ) has committed US$98.0 million across twelve private investment funds, all focused on small-to-mid-market private investment opportunities.

At 31 December 2016, US$62.9 million (or 66.2% of total funds committed to the LP), had been called by the LP. The Fund’s proportionate share of this is approximately US$54.9 million (an 87.3% share).

During the quarter, the LP received eleven drawdown requests and one capital return for a total net consideration of US$1.4 million.

Notes:

1. Source: Walsh & Company Investments Limited. Historical performance is not a guarantee of the future performance of the Fund.

US SELECT PRIVATE OPPORTUNITIES FUND II | QUARTERLY INVESTMENT UPDATE | DECEMBER 2016

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SUMMARY OF THE UNDERLYING FUNDS AT 31 DECEMBER 2016

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UNDERLYING FUND INDUSTRY FOCUS LP COMMITMENT NET CAPITAL
TO UNDERLYING DRAWDOWN
FUNDS (US$ MILLION)
(US$ MILLION) [1]
Invests in lower middle-market
Blue Point Capital
engineering, industrial and $5.0 $1.9
Partners III, L.P.
distribution companies
Chicago Pacific Founders Invests in healthcare service
delivery and senior living $7.5 $2.7
Fund, L.P.
companies
DFW Capital Partners IV, Health care, business services and
$5.0 $4.2
L.P. industrial services
Buying and building leading
High Road Capital
companies at the smaller end of $7.5 $2.7
Partners Fund II, L.P.
the middle-market
Invests in lower middle-market
Main Post Growth Capital, growth companies in the
$7.5 $1.6
L.P. consumer, business services and
industrial growth sectors
Healthcare, consumer products
NMS Fund II, L.P. $6.5 $4.0
and specialised business services
Small market buyouts of
RFE Investment Partners
companies in market leading $8.0 $6.6
VIII, L.P.
positions
Invests in lower middle market
Source Staple Street Capital II, companies with operational,
Note 1: The Fund has an 85.5% interest in the LP. Cordish Private Ventures and US Select Private Opportunities Fund GP, LLC contributed the remaining amount based on their proportional $8.0 $1.1
shares. Numbers may not add due to rounding. L.P. balance sheet or process
complexities
Tengram Capital Partners Branded consumer product and
$10.0 $8.4
Gen2 Fund, L.P. retail sectors
Tower Arch Partners I, Invests in high-quality family and
$8.0 $3.2
L.P. entrepreneur-owned companies
Strategically viable, but under-
Trive Capital Fund I, L.P. resourced, middle-market $10.0 $6.6
companies
Invests in a direct portfolio
U.S. Select Direct Private of select private companies
$15.0 $11.5
Equity (US), L.P. alongside leading, specialist private
investment funds
$98.0 $54.5
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Notes:

1. The Fund has an 87.3% interest in the LP. Cordish Private Ventures and US Select Private Opportunities Fund II GP, LLC, contributed the remaining amount based on their proportional shares. Numbers may not add due to rounding.

US SELECT PRIVATE OPPORTUNITIES FUND II | QUARTERLY INVESTMENT UPDATE | DECEMBER 2016

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UNDERLYING FUND ACTIVITY

Blue Point Capital Partners III, L.P. Blue Point made an additional investment in Russell Food Equipment.

Chicago Pacific Founders Fund, L.P. Chicago Pacific Founders made additional investments in the Senior Living and Dental platforms.

DFW Capital Partners IV, L.P. DFW made an additional investment in Theraplay.

High Road Capital Partners Fund II, L.P. No material investment activity during quarter.

Main Post Growth Capital, L.P. No material investment activity during quarter.

NMS Fund II, L.P. No material investment activity during the quarter.

RFE Investment Partners VIII, L.P. RFE made additional investments in EnsembleIQ, PCX and Squan.

Staple Street Capital II, L.P. No material investment activity during quarter.

Tengram Capital Partners Gen2 Fund, L.P. Tengram made an additional investment in Tommie Copper. Tengram sold Laura Geller, distributing US$1,121,115 to the LP.

Tower Arch Partners I, L.P. Tower Arch made an additional investment in Enertech.

Trive Capital Fund I, L.P. No material investment activity during quarter.

US Select Direct Private Equity (US), L.P. No material investment activity during quarter.

US SELECT PRIVATE OPPORTUNITIES FUND II | QUARTERLY INVESTMENT UPDATE | DECEMBER 2016

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About the Fund

US Select Private Opportunities Fund II (Fund) was formed in February 2013 to invest in US Select Private Opportunities Fund II, L.P. (LP). The Fund invests in the LP in partnership with Cordish Private Ventures, LLC, the private investment arm of the Cordish family of Baltimore, Maryland, USA.

The Fund pursues a multi-manager strategy, investing as a limited partner in small-to-medium sized private investment funds in the United States, using the experience and relationships of the Cordish family in that market. The US Select Private Opportunities Fund Series represent unique vehicles for Australian retail investors to access attractive small, nimble US private investment funds that have historically outperformed their larger counterparts.

The underlying fund managers are focused on proven investment strategies in specialised areas. They pursue investments in operating businesses with proven revenues and operating profits, take a hands-on approach to their investments in those businesses and only utilise leverage judiciously.

Disclaimer

This Quarterly Update (Update) has been prepared by US Select Private Opportunities Fund II GP, LLC as Investment Manager of US Select Private Opportunities Fund II ( Fund ). An investment in the Fund is subject to various risks, many of which are beyond the control of the Investment Manager and the Fund. The past performance of the Fund is not a guarantee of the future performance of the Fund. This Update contains statements, opinions, projections, forecasts and other material (forward looking statements), based on various assumptions. Those assumptions may or may not prove to be correct. None of the Investment Manager and the Fund, their officers, employees, agents, analysts nor any other person named in this Update makes any representation as to the accuracy or likelihood of fulfilment of the forward looking statements or any of the assumptions upon which they are based. This Update may contain general advice. Any general advice provided has been prepared without taking into account your objectives, financial situation or needs. Before acting on the advice, you should consider the appropriateness of the advice with regard to your objectives, financial situation and needs, and consider obtaining advice from a financial advisor. You should obtain a copy of the relevant PDS or offer document before making any decisions to purchase the product.

US SELECT PRIVATE OPPORTUNITIES FUND II | QUARTERLY INVESTMENT UPDATE | DECEMBER 2016

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