Montrose Capricorn Finance Fund Suspension Update, June 2009

Given the uncertainties of making predictions in the worst global recession since the 1930, we would be surprised if the Finance Fund experienced a total capital loss.

The underlying funds are audited and therefore need to comply with accounting standards and FASB 157 in particular. This requires assets of the underlying funds to be valued at “fair value” and we are seeing the impact of this on 2008 year end values and the first few months of this year. With markets very illiquid fair value has required a number of funds to write down assets, even if they are performing. However the actual recovery value could well be much higher. In one case a fund wrote down assets by around 25% at year end but expects a 100% recovery.

On estimates it is very difficult for underlying funds to establish market value when assets are not trading and there is no liquidity. Consequently many funds are providing estimates of performance which will then become market values once markets start to function normally and liquidity returns. Assets can then be sold or follow on finance obtained.

We are preparing a quarterly analysis of the Finance Fund which will be distributed at the end of this month. It will contain information such as estimated liquidity projections and portfolio construction with comment on the underlying funds.

The global economic crisis has impacted on all of the underlying funds in the Finance Fund and loan reserves and write offs continue to be made. We will be sending out a quarterly update later this month which will cover this in as much detail as possible as well as providing comment on a fund by fund basis.

The fund is not currently liquid and we will be including liquidity projections in the quarterly update.

Management fees continue to be charged. These are necessary to ensure, inter alia, that the necessary resources can be allocated to recouping capital for all investors as soon as possible

We trust this is of assistance but please let us know if you would like any further information or set up a conference call.

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