Siguler Guff's investment approach is focused on identifying market inefficiencies and creating efficient solutions to capture them. In the case of our direct investment activities, we are one of the largest, and oldest, firms actively making investments in the inefficient and opportunistic markets of Russia and the former Soviet Republics. Additionally, we raised a fund to buy loans from the RTC in the early 1990s and were an early pioneer in the venture lending & leasing business where we have co-managed a series of successful funds starting in 1994.

More recently, Siguler Guff has been a leader in the development of highly value-added and specialized fund of funds that target market inefficiencies with private equity and allow our investors to allocate capital tactically to focused strategies. Our Distressed Opportunities Fund II, L.P. is the successor to our first, successful fund launched in 2002. We raised approximately $600 million of capital in Fund I and have invested with 13 managers across a broad range of strategies. Performance has been solid, with every manager performing above or in line with our expectations, with a large portion of the portfolio in private equity style investments held at cost. In anticipation of another large buying opportunity for distressed managers, we decided to raise a second fund in 2005 and expect to hold the final closing in September, 2006.

We believe the "small" buyout market offers another area of great inefficiency and has a variety of appealing characteristics, including substantial deal flow, less competitive transactions, lower purchase multiples, and significant value creation potential. Moreover, small buyout funds offer powerfully effective alignment of interests between general and limited partners. Top managers in the small buyout market are able consistently to identify and acquire leading small companies (sub $100 million enterprise value) at very attractive purchase price multiples of generally between 4x-6x cash flow providing strong downside return protection of approximately 20%. Through active oversight and management the better private equity firms in this space are able to add significant value to their portfolio companies as they build corporate infrastructure, professionalize the business and execute growth strategies. To capture this market opportunity Siguler Guff has created the Small Buyout Opportunities Fund L.P. to build a well diversified portfolio of twelve to fifteen "best of class" funds that offer unique competitive advantages and strong potential for superior risk-adjusted returns. We launched the fund in 2006 with a target of $300 million in capital commitments and expect to hold our first close in the 3rd quarter of 2006.

Finally, the Siguler Guff BRIC Opportunities Fund ("BRIC") closed on March 31, 2006 with $610 million in capital. This Fund was created to focus on the large and dynamic markets of Brazil, Russia, India and China, with a particular emphasis on China and India. These four economies have enormous untapped potential and share little in common with the usual perception of emerging markets, by virtue of their critical mass, growth rates, domestic demand, deal flow, management pool, education systems, relative political stability and developed domestic capital markets. Due to the incredible growth rates of the BRIC economies, their combined GDP is predicted to overtake the combined GDP of the major developed economies of the US, Western Europe, and Japan in the next 40 years or less. As successful pioneers in one of the BRIC economies (Russia), we feel we have invaluable experience as direct private equity investors, which can help us evaluate and select the "best of class" managers in each of the BRIC economies. Thus far, we have invested in 13 Funds and have had several liquidity events of such a magnitude to insure the BRIC Fund will have no j-curve. We were the first organization to identify and create a private equity Fund specifically dedicated to the "BRIC" theme.

Whether focused on distressed, small buyouts or the BRIC markets, each Siguler Guff Fund seeks to be a leader in its respective market niche. Each strategy is staffed independently and takes advantage of our long history as direct investors to add value well beyond the research and selection of managers. We believe each Fund represents a very efficient and diversified solution for our investors to capture the high absolute returns available in these market opportunities. Each of our funds has in the past received support from organizations who typically only consider investing directly in Funds. They are attracted to our funds for a variety of reasons one of which is our transparency and willingness to serve as an extension of their staff in researching each segment of the market where we have deep expertise. We currently work with 120+ institutional investors, including prominent U.S. corporate retirement plans; endowment and foundation programs, as well as several public pension systems.