The contents of this pamphlet are confidential, and the delivery of this pamphlet and its contents do not constitute an offer of securities in any existing or to-be-formed issuer or a solicitation of an offer to purchase any such securities by any person. Offers of securities will only be made by delivery of a Confidential Private Placement Memorandum.

Presentation to Fresno County Employees’ Retirement Association

December 7, 2005

INTRODUCTION TO LONE STAR FUNDS

Lone Star Funds (“Lone Star”) is a global investment firm that acquires financial and real estate assets including secured and corporate unsecured debt and financially-oriented operating companies. Since the establishment of its first fund in 1995, the principals of Lone Star have organized private equity funds totaling more than $13.3 billion of capital that has been invested globally through Lone Star’s worldwide network of affiliate offices.

LONE STAR GLOBAL NETWORKAffiliate offices are located in Japan, Korea, Taiwan, the US, England, Ireland, Belgium, Luxembourg, Germany and Bermuda.

LONE STAR ORGANIZATION CHART

John P. Grayken(London)

Ellis Short(Tokyo)

Paul PatelAsia Pacific Origination

(Taipei)

Paul YooKorea Origination

(Seoul)

W. Randall WorkJapan Origination

(Tokyo)

Bruno ScherrerEurope Origination

(London)

David M. WestN. America Origination

(Dallas)

Louis PalettaInvestor Relations

(Dallas)

LONE STAR FUND IV OVERVIEW

Lone Star Fund IV, comprised of Lone Star Fund IV (U.S.), L.P. and Lone Star Fund IV (Bermuda), L.P. (collectively, the “Partnerships”) were established by the Principals in December 2001 to continue their involvement in investment activities with respect to secured and unsecured non-performing loans, high leverage debt financing, and real estate-related debt and equity investments. Such activities were previously conducted through Lone Star Fund III, Lone Star Fund II and Lone Star Opportunity Fund, L.P. The Partnerships, which to date have closed or committed approximately $3.9 billion of the $4.2. billion of combined capital commitments, have invested in a broad range of direct debt and equity investments in secured and unsecured non-performing loans, high leverage debt financing and real estate-related assets, portfolios, joint ventures and operating companies using transaction structures and deal sizes similar to those previously consummated by investment funds in which the Principals had a significant participation. The objective of the Partnerships is to achieve at least a 25% investment level compounded annual rate of return on invested capital (“IRR”) over an estimated 2 – 5 year holding period for each investment.  

John P. Grayken, who previously formed and managed Lone Star Fund III, Lone Star Fund II and Lone Star Opportunity Fund, L.P, has the ultimate management control of the General Partner of the Partnership. Mr. Grayken, along with other key individuals, comprise the principals (“Principals”) of Lone Star Partners IV, L.P., the common general partner of the Partnerships. Day-to-day management of the assets acquired by the Partnership is provided by Hudson Advisors, L.L.C. (“Hudson”), a 1,000-person asset management company headquartered in Dallas, with affiliate offices in Japan, South Korea, Taiwan, the United Kingdom, France, Germany, and Mexico.

Hudson Advisors handles substantially all the management, restructuring, and servicing of assets acquired by Lone Star, including asset management, underwriting, real estate due diligence and valuation, operating company oversight, financing, accounting and reporting, income and property tax compliance, currency and interest rate hedging, risk management, and information technology development and systems support. Hudson Advisors is a rated primary and special servicer by both Standard & Poor’s and Fitch Ratings.

LONE STAR FUND IV INVESTMENT SUMMARY

To date, Lone Star Fund IV (U.S.), L.P. and Lone Star Fund IV (Bermuda), L.P., have invested or committed approximately $3,878,510,000 in sixty-five portfolios/investments and working capital/Hudco financing.

Total capitalization of portfolios/investments closed or committed by the Partnerships and other partners are summarized as follows:

Acquisition Debt (Third Party) $ 7,613,181,000 *

Invested Equity – Lone Star Fund IV (U.S.), L.P. 2,307,633,000 **

Invested Equity – Lone Star Fund IV (Bermuda), L.P. 1,494,757,000 ** (and Special Investment Vehicles)

Invested Equity – Other Partners 374,340,000 **

Working Capital/Hudco Financing 76,120,000**

Purchase/Acquisition Price $11,866,031,000

* Amount is based on actual and projected leverage. ** Amount is based on invested and committed equity projected as of the current date.

INTERNAL RATES OF RETURN - Projected Return Summary on

Portfolios Purchased

Projected

Contributions Current Prior Capital

at 09/30/05 Projected Projected Return

($ in thousands) IRR% IRR% Multiple

$ 152,257 133.60 52.24 4.84 145,120 25.00 25.00 2.09 88,305 25.00 25.00 2.17 70,240 45.82 45.12 2.27 65,125 51.07 46.03 2.19 62,925 103.97 103.14 4.48 53,111 25.03 25.00 2.12 45,023 368.86 370.23 4.40 ** 44,369 25.01 25.01 2.22 36,637 157.53 157.82 5.85 32,608 50.07 30.09 2.73 29,321 34.37 34.37 2.59 26,526 25.00 25.00 1.92 26,466 37.30 37.26 2.97 15,939 439.06 403.06 5.90 10,884 74.21 41.16 2.71 14,052 28.01 26.11 1.62 918,908 3.13

562,751 34.48 33.10 2.20 88,440 25.88 25.88 1.70 62,568 12.24 13.12 1.46 48,770 34.62 34.62 1.86 38,421 12.31 13.24 1.39 23,731 25.00 25.00 1.50 13,917 92.85 73.95 1.50 5,055 24.87 24.87 1.50 843,653 2.00

Portfolio/Investment

Japan

LSF IV Golf - Chisan

EA Investments

Star Capital (F4P1/ Home)

(continued on next page)

Hantu 2004-1

Subtotal Korea

LSF IV Golf - JGP

First Credit

Mega 1

Samsung Card II

KoreaProject Knight (KEB)

Chisan Hotels

Korean Consumer Debt Portfolio

SC-2005

Kukdong Construction Company

Other Investments (under $15 million each*) - Korea

Tokyo City Finance Portfolio

Other Investments (under $15 million each*) - Japan

Japan CFC Investment

LSF IV Golf - Other

Salmon

Star Lease 2004-1

Project Max

LSF IV Golf - STT

SC-2004

Star Lease (Hanvit Lease)

Kinkakuji

Subtotal Japan

INTERNAL RATES OF RETURN - Projected Return Summary on

Portfolios Purchased (cont.)Projected

Contributions Current Prior Capital

at 09/30/05 Projected Projected Return

($ in thousands) IRR% IRR% Multiple

43,714 30.16 25.15 1.65 35,536 30.09 25.07 1.89 26,862 21.64 22.65 1.66 21,114 25.02 25.18 1.37 19,270 25.01 25.62 1.77 11,538 17.01 23.80 1.38 6,802 25.04 25.23 1.49 164,836 1.66

57,691 25.73 25.73 1.23 32,592 20.05 24.21 1.50 28,548 68.67 68.67 2.26 25,931 25.00 25.00 2.22 20,638 34.07 33.95 1.32 ** 13,801 14.00 14.02 1.44 12,492 23.18 23.18 1.62 11,003 21.05 21.05 1.61 9,516 28.39 28.20 1.76 ** 20,638 29.59 29.99 1.47 232,851 1.61

28,905 72.88 55.62 1.44 26,546 104.47 104.36 3.34 14,968 15.00 17.71 1.53 9,813 60.03 60.03 1.40 9,404 19.66 21.62 1.85 8,969 90.25 88.24 3.26 ** 48,779 33.97 31.87 1.50 147,385 1.95

$ 2,307,633 48.43 39.36 2.38

Gontard

Ritter Ranch

** Portfolio is substantially liquidated.

CIT

* $15 million threshold is measured using the combined equity investment of LSF IV (U.S.) and LSF IV (Bermuda).

Subtotal Europe

Hypo Real Estate PortfolioThales

Adductor

Red Cross

Orix

North America

Shoney's, Inc.

Other Investments (under $15 million each*) - Europe

Value RetailLeipziger Tor

Marseille

Portfolio/Investment

Chung Shing 2 NPL Portfolio

Other Asia

Subtotal Other Asia

EuropeBHF

KBB

CHB - TaiwanFCB NPL Portfolio

Cosmos Bank NPL PortfolioOther Investments (under $15 million each*) - Other Asia

Chung Shing NPL Portfolio

Grand Total

Subtotal North America

Scotia Bank NPL Portfolio

Auritec

Other Investments (under $15 million each*) - North America

LONE STAR FUND IV - FCERA INVESTMENT SUMMARY

FRESNO COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

as of November 30, 2005

Commitment $20,000,000

Unfunded Commitment $1,753,361

Capital Account Balance* $20,542,024

Contributions to Date $18,246,639

Distributions to Date $10,467,808

% of Commitment Called 91%

% of Capital Returned 57%

Gross Projected IRR* 48.43%

Net Projected IRR* 34.67%

* as of September 30, 2005