There are three industry benchmarks that MEPT uses to measure Fund-level performance and property-level performance: Russell/Mellon Equal Weighted Universe of Commingled Open-End Real Estate Funds; NCREIF Property Index; and NCREIF Open-End Index. Out of the three, the Russell/Mellon Equal Weighted Universe of Commingled Open-end Real Estate Funds offers the most appropriate benchmark for evaluating performance.

The Russell/Mellon Equal Weighted Universe of Commingled Open-End Real Estate Funds is comprised of fund level performance from approximately 15 open-end real estate funds with a total combined market value of over $30 billion. The Russell/Mellon Universe is a composite of fund level performance for open-end real estate fund contributors. As a result, the Russell Universe factors in the impact of variations between funds in regard to cash levels, assets under development, leverage, and management fees. Additionally, the Universe is made up of only open-end funds that like MEPT generally value their properties each quarter and account for changes in market conditions and activity at in the property value. So, the Russell/Mellon Universe offers an appropriate benchmark for evaluating, on a quarter by quarter performance basis, portfolios of properties that are valued at similar frequencies (and at the same point in time). The Russell/Universe cannot be analyzed beyond the Fund-level performance, so property type or geographic region return comparisons are not available. Since open-end funds in the Russell Universe have different strategies, the funds may perform well at different times in the real estate/economic cycle. It, therefore, makes sense to look at long term comparisons of the Russell/Universe because the performance of the varying fund strategies can be tested throughout all stages of the real estate cycle.

Another commonly used real estate benchmark, the NCREIF Property Index (NPI), is composed of approximately 4,000 institutional grade, operating properties valued at over $136 billion, and designed to measure return characteristics of core properties on an unleveraged basis. The return data for the NPI can be analyzed by sector and region, as well as subsectors and sub-regions. The return data is also available on a historic basis and can be used for complex analysis. Since the NPI is derived from property level performance, it does not measure the effect of cash, leverage or management fees on returns, nor does it take into consideration differences in property valuation frequency in the Index. When benchmarked against MEPT's property level returns (operating real estate only), the NPI does provide an apples to apples, or real estate to real estate, comparison of performance.

NCREIF has developed a sub-index, the NCREIF Open-End Index (OPI), comprised of only those properties in the NPI owned by open-end funds. MEPT is monitoring the new index, but believes that the sub-index may offer an even more applicable benchmark than the NPI to measure the performance of MEPT's real estate, since it would allow the comparison of properties that are more frequently valued than those in the NPI. The most relevant comparison would be the performance of MEPT's operating real estate portfolio to the performance of the OPI. Furthermore, NCREIF has recently released an open-end Fund level index which we are closely monitoring.

MEPT's long-term returns have consistently outpaced the benchmarks. A dollar invested in MEPT in 1982 at the Fund's inception has significantly outgrown that same investment in the NCREIF Property Index, NCREIF Open-End Index, or Russell/Mellon Equal Weighted Universe of Commingled Open-End Real Estate Funds.