Investment objectives

The principal investment objective of the Russian Federation First Mercantile Fund is to achieve long-term capital appreciation. The Fund will invest either directly or indirectly in a diversified portfolio of securities and other instruments of companies or other entities established in, or which have their primary business in one or more CIS countries. The Fund intends to invest with emphasis on equity and equity-related securities of companies and other entities established in the Region. The Fund intends to diversify into debt securities on a special opportunity basis. The Fund will attempt to structure a portfolio consisting of liquid shares of major companies in the Region and less liquid and illiquid second and third-tier companies that the Manager today believes to be significantly undervalued relative to other companies in the Region and where the Manager expects future liquidity to provide significant appreciation in the value of such companies. The Fund will invest in both quoted and unquoted securities. Debt securities in which the Fund invests may not be rated.

Operational Data

The Fund	Legal Advisers
Russian Federation First Mercantile Fund Ltd 31 Reid Street Hamilton HM12, Bermuda Telephone: +1 441 292 2739 Fax: +1 441 292 1884 E-Mail: info@apex.bm	Appleby Spurling Hunter Canon's Court 22 Victoria Street Hamilton HM EX Bermuda Telephone: +1 441 295 2244 Fax: +1 441 292 8666/5328 E-Mail: info@applebyglobal.com
Manager	Co-Custodians
FM Asset Management Limited 3 Burnaby street, 1st Floor T.J. Pearman Building, Hamilton HM 12, Bermuda Telephone: +1 441 292 2739 Fax: +1 441 292 1884 E-Mail: info@apex.bm	The Bank of Bermuda Limited 6 Front Street Hamilton HM 11 Bermuda ING Bank (Eurasia) ZAO 31 Krasnaya Presnya Moscow 123022 Russian Federation
Investment Adviser	Distributors
FMC Securities Ltd 1, Anastasi Sioukri Pamelva court, office 304 Limassol, 3105 Cyprus	FMG Fund Managers Limitede Alterum Fondkommission AB
Administrator, Registrar & Transfer Agent	Auditors
APEX Fund Services LTD 31 Reid Street Hamilton HM12, Bermuda Telephone: +1 441 292 2739 Fax: +1 441 292 1884 E-Mail: info@apex.bm	KPMG Chartered Accountants Crown House 4 Par-La-Ville Road Hamilton HM 08 Bermuda

Board Members

Members of the Board of Directors of Russian Federation First Mercantile Fund:

Peter Hughes- Apex, Bermuda
Yury A. Lopatinsky - First Mercantile Capital Partners, Moscow
Johan Kahm - FMG Fundmanagers Ltd, Bermuda
Carl de Geer - Alterum Fondkommission AB, Sweden
James Mullins- First Mercantile Capital Partners, Moscow
James Keyes - Appleby Spurling Hunter, Bermuda
Oleg E. Radzinsky - First Mercantile Capital Partners, Moscow

History

In April 2001, members of First Mercantile Capital Partners and FMG proposed a merger of The First Mercantile Emerging Russia Fund and The Russian Federation Fund. Investors in both funds subsequently approved the merger, which was to result in considerable operational improvements and efficiency gains. First Mercantile focused on managing the Fund, and FMG Fund Managers and Alterum Fondkommission focused on promoting the Fund. The new merged Fund was called the Russian Federation First Mercantile Fund.

By merging, the two funds were effectively going back to their roots. The history of The Russian Federation First Mercantile Fund dates back to September 1995 when FMG named Yury A. Lopatinsky of Creditanstalt Investment Bank as one of its core managers for the Russian Federation Fund. The Net Asset Value of the Russian Federation Fund's portfolio managed by Mr Lopatinsky subsequently increased by over 700%, and was rolled into Creditanstalt's CAIB Emerging Russia Fund in December 1997. The Russian Federation Fund became an investor in the CAIB Emerging Russia Fund. In early 1998, Mr. Lopatinsky left CAIB Investment Bank Russia to form First Mercantile Capital Partners. Later that year, investors in CAIB Emerging Russia Fund voted overwhelmingly for the transfer of the management of CAIB Emerging Russia Fund to First Mercantile Capital Partners and for the change of name of the Fund to First Mercantile Emerging Russia Fund.

Classes of Shares

Reflective of the Fund's history, there are different classes of shares in issue. The Fund's assets are allocated towards each class based on the amount of capital invested thereinto. A separate Net Asset Value (NAV) is calculated monthly, and a unique performance record exists for each class from the time of inception. It can be accessed here as follows:

Class A - Investments in the Fund from 1 June 2001
Class B - Investments in the First Mercantile Emerging Russia Fund prior to 1 June 2001
Class C - Investments in the Russian Federation Fund prior to 1 June 2001

Public Information

The Fund (Class A shares) is listed on the Bermuda Stock Exchange, and can be found on Bloomberg under the ticker symbol RUFEDFM BH.

The Fund's Net Asset Value (Class A and C shares) is published in the Financial Times.