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Dear Investor,

As we set out in more detail in our Quarterly Report to investors for the quarter ended March 31,
we believe that we are at an extraordinary juncture in markets and in the prospects for trading
and investing. In the normal course, we are continuing to see, and deploy capital into, a variety
of situations involving activism, mostly in equities. We also have been working our way through
a number of distressed securities situations, notably in the energy area. As a result, we have
gradually called the bulk of our sixth capital commitment facility (the Sixth Commitment),
leaving a little over $1 billion uncalled at this point.

Despite the outward appearance in all major markets of low volatility, tight spreads, high and
stable equity prices, and super-low (albeit off their historical extremes) interest rates, we think
that eight-plus years of radical monetary easing in the developed countries has created a world of
manipulated (by governments) and false prices. We believe that markets may be in a situation
somewhat akin to a coiled spring. We dont know exactly what factor, event or combination of
actions could release the possible pent-up revaluation of markets, but we think that there has
never been a larger (and more undeserved) spirit of financial market complacency in our

The nature of modern markets is that rich opportunity sets seem to be ephemeral, providing
surprising volatility, bargains and dislocations for only brief periods of time before governments,
aware of the politically destructive effects of extreme volatility, rally to take stern actions to keep
the balls up in the air. Lamentably, these actions rarely take the form of real solutions to the
problems of too much leverage in the financial system, unpayable governmental obligations, and
inadequate policies to optimize employment, growth and freedom. Such solutions are left for
another day, decade or never, for all these government officials seem to care, so long as short-
term asset-price stability is restored.

As you know, the investment solution to the challenges we are describing is to have dry powder
available for that possibly large opportunity set that could emerge when investor confidence is
impaired, recent correlations and assumptions dont work, and prices are changing rapidly (and
in the wrong direction). The experience of the last couple of years also suggests that even in
the absence of extreme volatility, the mix of activities that Elliott pursues is likely to provide a
flow of attractive new opportunities. In our experience, it is frustrating and unproductive to go
out to talk to potential investors during a financial market meltdown. This knowledge, of course,
is the reason for the instituting of our capital commitment format. At the current time, we are
raising a large commitment (our Seventh) because we think that the opportunity set that may
emerge from a sudden change in the basic assumptions of investors could be very large indeed.