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		Per Share				Total
Public offering price		$	22.00			$	88,000,000
Underwriting discount		$	0.47			$	1,880,000
Proceeds, before expenses, to us(1)		$	21.53			$	86,120,000

(1)	Expenses payable by us are estimated to be approximately $320,000.

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		Page
Fees and Expenses			S-1
Recent Developments			S-2
Use of Proceeds			S-6
Underwriting			S-7
Legal Matters			S-8
Interim Management’s Discussion and Analysis of Financial Condition and Results of Operations			S-9
Legal Proceedings			S-53
Interim Consolidated Financial Statements			S-55
Notice Regarding Independent Public Accountants’ Review Report			S-110
Prospectus
Prospectus Summary			1
Fees and Expenses			6
Selected Condensed Consolidated Financial Data			7
Where You Can Find Additional Information			9
Risk Factors			10
Use of Proceeds			20
Price Range of Common Stock and Distributions			21
Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Senior Securities			80
Business			83
Portfolio Companies			101
Determination of Net Asset Value			109
Management			113
Portfolio Management			121
Compensation of Directors and Executive Officers			124
Control Persons and Principal Holders of Securities			144
Certain Relationships and Related Party Transactions			146
Tax Status			147
Certain Government Regulations			153
Stock Trading Plans and Ownership Guidelines			157
Dividend Reinvestment Plan			157
Description of Capital Stock			159
Description of Public Notes			165
Plan of Distribution			168
Legal Matters			169
Custodians, Transfer and Dividend Paying Agent and Registrar			169
Brokerage Allocation and Other Practices			170
Independent Registered Public Accounting Firm			170
Index to Consolidated Financial Statements			F-1

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Shareholder Transaction Expenses
	Sales load (as a percentage of offering price)(1)				2.14	%
	Dividend reinvestment plan fees(2)				None
Annual Expenses (as a percentage of consolidated net assets attributable to common stock)(3)
	Operating expenses(4)				6.95	%
	Interest payments on borrowed funds(5)				4.82	%
	Acquired fund fees and expenses(6)				—	%
		Total annual expenses(7)(8)			11.77	%

		1 Year				3 Years				5 Years				10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return		$	137			$	361			$	578			$	1,090

(1)	Represents the underwriting discounts or commissions with respect to the shares sold by us in this offering.
(2)	The expenses of our dividend reinvestment plan are included in “Operating expenses.” We do not have a stock purchase plan. The participants in the dividend reinvestment plan will bear a pro rata share of brokerage commissions incurred with respect to open market purchases or sales, if any. See “Dividend Reinvestment Plan” in the accompanying prospectus.
(3)	“Consolidated net assets attributable to common stock” equals net assets (i.e., total consolidated assets less total consolidated liabilities), which at September 30, 2007, was $2.8 billion.
(4)	“Operating expenses” represent our estimated operating expenses for the year ending December 31, 2007, excluding interest on indebtedness. This percentage for the year ended December 31, 2006, was 5.2%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this prospectus supplement.
(5)	“Interest payments on borrowed funds” represents our estimated interest expense for the year ending December 31, 2007. We had outstanding borrowings of $1.9 billion at September 30, 2007. This percentage for the year ended December 31, 2006, was 3.5%. See “Risk Factors” in the accompanying prospectus.
(6)	See our Consolidated Statement of Investments as of September 30, 2007, on pages S-59 through S-69 for our investments in funds.
(7)	“Total annual expenses” as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. We borrow money to leverage our net assets and increase our total assets. The SEC requires that “Total annual expenses” percentage be calculated as a percentage of net assets, rather than the total assets, including assets that have been funded with borrowed monies. If the “Total annual expenses” percentage were calculated instead as a percentage of consolidated total assets, our “Total annual expenses” would be 6.7% of consolidated total assets.
(8)	The holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) indirectly bear the cost associated with our annual expenses.

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						Total Fees
						Without Exercise
						of Over-Allotment				With Full Exercise of
		Fee Per Share				Option				Over-Allotment Option
Underwriting Discount		$	0.47			$	1,880,000			$	2,162,000

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	•	changes in the economy and general economic conditions;
	•	risks associated with possible disruption in our operations due to terrorism;
	•	future changes in laws or regulations and conditions in our operating areas; and
	•	other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings.

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		September 30,								December 31,
		2007				2006				2006
Private finance			97%				97%				97%
Commercial real estate finance			3%				3%				3%

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		At and for the								At and for the
		Three Months Ended								Nine Months Ended								At and for the
		September 30,								September 30,								Year Ended
																		December 31,
		2007				2006				2007				2006				2006
($ in millions)
Portfolio at value		$	4,326.9			$	4,119.6			$	4,326.9			$	4,119.6			$	4,496.1
Investments funded		$	577.5			$	629.5			$	1,236.7			$	1,880.8			$	2,437.8
Change in accrued or reinvested interest and dividends(1)		$	5.1			$	7.2			$	22.8			$	(1.8	)		$	11.3
Principal collections related to investment repayments or sales(2)		$	351.1			$	116.3			$	1,086.5			$	885.9			$	1,055.3
Yield on interest-bearing portfolio investments(3)			11.9	%			12.4	%			11.9	%			12.4	%			11.9	%

(1)	Includes changes in accrued or reinvested interest related to our investments in money market securities of $1.9 million and $1.3 million for the three months ended September 30, 2007 and 2006, respectively, and $6.6 million, $3.0 million, and $3.1 million for the nine months ended September 30, 2007 and 2006, and for the year ended December 31, 2006, respectively.
(2)	Principal collections related to investment repayments or sales for the three and nine months ended September 30, 2007, included collections of $14.8 million and $197.2 million, respectively, related to the sale of loans to the Allied Capital Senior Debt Fund, L.P. See discussion below.
(3)	The weighted average yield on interest-bearing investments is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, plus the effective interest yield on the preferred shares/ income notes of CLOs divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date.

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					At and for Three Months																At and for the Nine Months
					Ended September 30,																Ended September 30,																At and for the
																																					Year Ended
																																					December 31,
					2007								2006								2007								2006								2006
					Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)
($ in millions)
Portfolio at value:
	Loans and debt securities:
		Senior loans			$	481.6				9.3	%		$	342.4				8.7	%		$	481.6				9.3	%		$	342.4				8.7	%		$	405.2				8.4	%
		Unitranche debt				698.1				11.5	%			745.8				11.2	%			698.1				11.5	%			745.8				11.2	%			799.2				11.2	%
		Subordinated debt				1,927.1				12.6	%			1,817.0				13.7	%			1,927.1				12.6	%			1,817.0				13.7	%			1,980.8				12.9	%
			Total loans and debt securities			3,106.8				11.8	%			2,905.2				12.5	%			3,106.8				11.8	%			2,905.2				12.5	%			3,185.2				11.9	%
	Equity Securities:
		Preferred shares/income notes of CLOs(2)				131.5				15.1	%			87.7				13.7	%			131.5				15.1	%			87.7				13.7	%			97.2				15.5	%
		Other equity securities				968.8								994.9								968.8								994.9								1,095.5
			Total equity securities			1,100.3								1,082.6								1,100.3								1,082.6								1,192.7
Total portfolio					$	4,207.1							$	3,987.8							$	4,207.1							$	3,987.8							$	4,377.9
Investments funded(3)					$	576.1							$	629.2							$	1,219.9							$	1,866.6							$	2,423.4
Change in accrued or reinvested interest and dividends					$	4.4							$	5.8							$	17.3							$	(5.4	)						$	7.2
Principal collections related to investment repayments or sales(4)					$	346.2							$	115.6							$	1,063.3							$	868.0							$	1,015.4

(1)	The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. The weighted average yield on the preferred shares/income notes of CLOs is calculated as the (a) effective interest yield on the preferred shares/income notes of CLOs, divided by (b) preferred shares/income notes of CLOs at value. The weighted average yields are computed as of the balance sheet date.
(2)	Investments in the preferred shares/income notes of CLOs earn a current return that is included in interest income in the consolidated statement of operations.
(3)	Investments funded for the nine months ended September 30, 2006, and for the year ended December 31, 2006, included debt investments in certain portfolio companies received in conjunction with the sale of such companies. See “— Private Finance, Investments Funded” below.
(4)	Includes collections from the sale or repayment of senior loans totaling $312.6 million, $268.3 million, and $322.7 million for the nine months ended September 30, 2007 and 2006, and for the year ended December 31, 2006, respectively.

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			For the Nine Months Ended September 30, 2007
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	285.6				10.3	%		$	83.0				10.7	%		$	368.6				10.4	%
	Unitranche debt(2)			104.0				10.8	%			—				—				104.0				10.8	%
	Subordinated debt			279.0				12.4	%			186.3				12.1	%			465.3				12.3	%
Total loans and debt securities				668.6				11.3	%			269.3				11.7	%			937.9				11.4	%
Equity				155.2	(4)(5)							126.8								282.0
	Total		$	823.8							$	396.1							$	1,219.9

			For the Nine Months Ended September 30, 2006
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	202.4				9.4	%		$	167.3				8.8	%		$	369.7				9.1	%
	Unitranche debt(2)			348.7				10.6	%			146.5				12.9	%			495.2				11.3	%
	Subordinated debt(3)			508.0				13.1	%			250.8				13.9	%			758.8				13.3	%
Total loans and debt securities				1,059.1				11.5	%			564.6				12.1	%			1,623.7				11.8	%
Equity				62.9	(4)							180.0								242.9
	Total		$	1,122.0							$	744.6							$	1,866.6

			For the Year Ended December 31, 2006
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	245.4				9.4	%		$	239.8				8.9	%		$	485.2				9.2	%
	Unitranche debt(2)			471.7				10.7	%			146.5				12.9	%			618.2				11.3	%
	Subordinated debt(3)			510.7				13.0	%			423.8				14.4	%			934.5				13.6	%
Total loans and debt securities				1,227.8				11.4	%			810.1				12.5	%			2,037.9				11.9	%
Equity				91.4	(4)							294.1								385.5
	Total		$	1,319.2							$	1,104.2							$	2,423.4

(1)	The weighted average yield on interest-bearing investments is computed as the (a) annual stated interest on accruing interest-bearing investments, divided by (b) total interest-bearing investments funded.
(2)	Unitranche debt is a single debt investment that is a blend of senior and subordinated debt terms. The yield on a unitranche investment reflects the blended yield of senior and subordinated debt.
(3)	Debt investments funded for the nine months ended September 30, 2006, and for the year ended December 31, 2006, included a $150 million subordinated debt investment in Advantage Sales & Marketing, Inc. received in conjunction with the sale of Advantage and a $30 million subordinated debt investment in STS Operating, Inc. received in conjunction with the sale of STS.
(4)	Equity investments for the nine months ended September 30, 2007 and 2006, and for the year ended December 31, 2006, included $42.4 million, $12.5 million, and $26.1 million, respectively, in investments in the preferred shares/income notes of collateralized loan obligations (CLOs) that are managed by Callidus Capital Corporation, a portfolio company controlled by us. These CLOs primarily invest in senior debt.
(5)	Equity investments for the nine months ended September 30, 2007, included $19.1 million invested in the Allied Capital Senior Debt Fund, L.P. See discussion below.

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			Companies				Companies				Companies
			More Than				5% to 25%				Less Than
			25% Owned(1)				Owned				5% Owned				Total
($ in millions)
Senior loans			$	12.4			$	15.0			$	123.0			$	150.4	(2)
Unitranche debt				—				—				45.4				45.4
Subordinated debt				18.0				0.1				—				18.1
	Total loans and debt securities			30.4				15.1				168.4				213.9
Equity securities				118.5				16.1				78.1				212.7	(3)
	Total		$	148.9			$	31.2			$	246.5			$	426.6

	(1)	Includes various commitments to Callidus Capital Corporation (Callidus), a portfolio company controlled by us, which owns 80% (subject to dilution) of Callidus Capital Management, LLC, an asset management company that structures and manages collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), and other related investments, as follows:

											Amount
			Committed				Amount				Available
			Amount				Drawn				to be Drawn
($ in millions)
Revolving line of credit for working capital			$	4.0			$	—			$	4.0
Subordinated debt to support warehouse facilities & warehousing activities(*)				18.0				—				18.0
Purchase of preferred equity in future CLO transactions (**)				—				—				—
	Total		$	22.0			$	—			$	22.0

	(*)	Callidus has a synthetic credit facility with a third party for up to approximately $66 million. We have agreed to designate our subordinated debt commitment for Callidus to draw upon to provide first loss capital as needed to support this facility.

	(**)	Subsequent to September 30, 2007, we made an additional commitment to Callidus to purchase preferred equity in future CLO transactions of $27.5 million.

	(2)	Includes $133.6 million in the form of revolving senior debt facilities to 31 portfolio companies.
	(3)	Includes $94.2 million to 21 private equity and venture capital funds, including $4.3 million in co-investment commitments to one private equity fund, and $12.7 million committed to the Allied Capital Senior Debt Fund, L.P. (see discussion above).

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			2007				2006
($ in millions)
Interest income on subordinated debt and Class A equity interests			$	—			$	11.9
Fees and other income				4.1				6.3
	Total interest and related portfolio income		$	4.1			$	18.2

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			2007				2006
($ in millions)
Interest income			$	5.1			$	7.3
Fees and other income				0.2				0.4
	Total interest and related portfolio income		$	5.3			$	7.7

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			At and for the Three Months																At and for the Nine Months
			Ended September 30,																Ended September 30,																At and for the
																																			Year Ended
																																			December 31,
			2007								2006								2007								2006								2006
			Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)
($ in millions)
Portfolio at value:
	Commercial mortgage loans		$	64.2				6.4%			$	94.4				7.7%			$	64.2				6.4%			$	94.4				7.7%			$	71.9				7.5%
	Real estate owned			22.0								15.3								22.0								15.3								19.6
	Equity interests			33.5								22.1								33.5								22.1								26.7
Total portfolio			$	119.7							$	131.8							$	119.7							$	131.8							$	118.2
Investments funded			$	1.4							$	0.3							$	16.8							$	14.2							$	14.4
Change in accrued or reinvested interest			$	(1.2	)						$	0.1								(1.1	)						$	0.6							$	1.0
Principal collections related to investment repayments or sales			$	4.9							$	0.7							$	23.2							$	17.9							$	39.9

(1)

The weighted average yield on the interest-bearing investments is computed as the (a) annual stated interest on accruing loans plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing interest-bearing investments less the annual amortization of origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date. Interest-bearing investments for the commercial real estate finance portfolio include all investments except for real estate owned and equity interests.

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		2007								2006
		Portfolio				Percentage of				Portfolio				Percentage of
Grade		at Value				Total Portfolio				at Value				Total Portfolio
($ in millions)
1		$	1,605.3				37.1	%		$	1,307.3				29.1	%
2			2,320.6				53.6				2,672.3				59.4
3			258.1				6.0				308.1				6.9
4			90.5				2.1				84.2				1.9
5			52.4				1.2				124.2				2.7
		$	4,326.9				100.0	%		$	4,496.1				100.0	%

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				2007				2006
($ in millions)
Loans and debt securities in workout status (classified as Grade 4 or 5)(1)
	Private finance
		Companies more than 25% owned		$	51.6			$	51.1
		Companies 5% to 25% owned			13.1				4.0
		Companies less than 5% owned			20.7				31.6
	Commercial real estate finance				12.4				12.2
Loans and debt securities not in workout status
	Private finance
		Companies more than 25% owned			116.2				87.1
		Companies 5% to 25% owned			16.4				7.2
		Companies less than 5% owned			13.0				38.9
	Commercial real estate finance				6.7				6.7
		Total		$	250.1			$	238.8
		Percentage of total portfolio			5.8	%			5.3	%

(1)	Workout loans and debt securities exclude equity securities that are included in the total Grade 4 and 5 assets above.

			2007				2006
($ in millions)
Private finance			$	160.8			$	46.5
Commercial mortgage loans				1.9				1.9
	Total		$	162.7			$	48.4
	Percentage of total portfolio			3.8	%			1.1	%

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				For the Three Months Ended September 30,																For the Nine Months Ended September 30,
																Percent																Percent
(in thousands, except per share				2007				2006				Change				Change				2007				2006				Change				Change
amounts)
Interest and Related Portfolio Income:
	Interest and dividends			$	105,669			$	98,668			$	7,001				7	%		$	310,466			$	282,982			$	27,484				10	%
	Fees and other income				12,699				14,715				(2,016	)			(14	%)			33,530				51,868				(18,338	)			(35	%)
		Total interest and related portfolio income			118,368				113,383				4,985				4	%			343,996				334,850				9,146				3	%
Expenses:
	Interest				33,744				26,109				7,635				29	%			98,368				72,455				25,913				36	%
	Employee				26,306				25,228				1,078				4	%			76,845				67,054				9,791				15	%
	Employee stock options				18,312				3,649				14,663				402	%			31,492				11,852				19,640				166	%
	Administrative				10,496				8,153				2,343				29	%			38,225				29,348				8,877				30	%
		Total operating expenses			88,858				63,139				25,719				41	%			244,930				180,709				64,221				36	%
		Net investment income before income taxes			29,510				50,244				(20,734	)			(41	%)			99,066				154,141				(55,075	)			(36	%)
	Income tax expense (benefit), including excise tax				11,192				1,586				9,606				606	%			16,073				13,988				2,085				15	%
		Net investment income			18,318				48,658				(30,340	)			(62	%)			82,993				140,153				(57,160	)			(41	%)
Net Realized and Unrealized Gains (Losses):
	Net realized gains				212,370				9,916				202,454				*				314,915				542,991				(228,076	)			*
	Net change in unrealized appreciation or depreciation				(327,156	)			19,312				(346,468	)			*				(272,132	)			(471,942	)			199,810				*
	Total net gains (losses)				(114,786	)			29,228				(144,014	)			*				42,783				71,049				(28,266	)			*
		Net income (loss)		$	(96,468	)		$	77,886			$	(174,354	)			(224	%)		$	125,776			$	211,202			$	(85,426	)			(40	%)
Diluted earnings (loss) per common share				$	(0.62	)		$	0.53			$	(1.15	)			(217	%)		$	0.81			$	1.47			$	(0.66	)			(45	%)
Weighted average common shares outstanding — diluted					155,329				147,112				8,217				6	%			154,708				144,030				10,678				7	%

*	Net change in unrealized appreciation or depreciation and net gains (losses) can fluctuate significantly from period to period. As a result, comparisons may not be meaningful.

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				For the Three								For the Nine
				Months Ended								Months Ended
				September 30,								September 30,
				2007				2006				2007				2006
($ in millions)
Interest:
	Private finance loans and debt securities			$	94.1			$	87.9			$	280.4			$	253.8
	Preferred shares/income notes of CLOs				4.3				3.0				11.5				8.3
	Commercial mortgage loans				1.1				1.7				4.9				6.5
	Cash, U.S. Treasury bills, money market and other securities				5.6				5.0				11.8				10.9
		Total interest			105.1				97.6				308.6				279.5
Dividends					0.6				1.1				1.9				3.5
		Total interest and dividends		$	105.7			$	98.7			$	310.5			$	283.0

				2007								2006
($ in millions)
				Value				Yield(1)				Value				Yield(1)
Loans and debt securities:
	Private finance			$	3,106.8				11.8	%		$	2,905.2				12.5	%
	Commercial mortgage loans				64.2				6.4	%			94.4				7.7	%
		Total loans and debt securities			3,171.0				11.7	%			2,999.6				12.3	%
Equity securities:
	Preferred shares/income notes of CLOs				131.5				15.1	%			87.7				13.7	%
		Total interest bearing securities		$	3,302.5				11.9	%		$	3,087.3				12.4	%

(1)

The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield on the preferred shares/income notes of CLOs is calculated as the (a) effective interest yield on the preferred shares/income notes of CLOs, divided by (b) preferred shares/income notes of CLOs at value. The weighted average yields are computed as of the balance sheet date.

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Structuring and diligence			$	7.3			$	9.3			$	15.3			$	28.4
Management, consulting and other services provided to portfolio companies(1)				3.2				2.6				7.3				9.1
Commitment, guaranty and other fees from portfolio companies(2)				2.0				2.1				7.0				6.7
Loan prepayment premiums				0.1				0.7				3.7				7.7
Other income				0.1				—				0.2				—
	Total fees and other income		$	12.7			$	14.7			$	33.5			$	51.9

(1)	The nine months ended September 30, 2006, includes $1.8 million in management fees from Advantage prior to its sale on March 29, 2006. See “— Portfolio and Investment Activity” above for further discussion. The three and nine months ended September 30, 2006, included management fees from BLX of $0.5 million and $1.7 million, respectively. We have not charged BLX management fees in 2007. See “— Private Finance, Business Loan Express, LLC” above.
(2)	Includes guaranty and other fees from BLX of $1.3 million and $1.5 million for the three months ended September 30, 2007 and 2006, respectively, and $4.1 million and $4.6 million for the nine months ended September 30, 2007 and 2006, respectively. See “— Private Finance, Business Loan Express, LLC” above.

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		For the Three								For the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
($ in millions)
Mercury		$	1.0			$	2.1			$	5.3			$	7.7
BLX		$	1.3			$	6.1			$	4.1			$	18.2

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		At and for the Three								At and for the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
($ in millions)
Total outstanding debt		$	1,922.4			$	1,590.7			$	1,922.4			$	1,590.7
Average outstanding debt		$	1,921.1			$	1,507.5			$	1,909.5			$	1,433.5
Weighted average cost(1)			6.6	%			6.6	%			6.6	%			6.6	%

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest rate on the debt plus the annual amortization of commitment fees, other facility fees and debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.

			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Salaries and employee benefits			$	23.3			$	19.6			$	65.9			$	54.6
Individual performance award (IPA)				2.4				2.1				7.4				6.0
IPA mark to market expense (benefit)				(2.0	)			1.2				(3.6	)			0.6
Individual performance bonus (IPB)				2.6				2.3				7.1				5.9
	Total employee expense		$	26.3			$	25.2			$	76.8			$	67.1
Number of employees at end of period				178				168				178				168

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					For the Three								For the Nine
					Months Ended								Months Ended
					September 30,								September 30,
					2007				2006				2007				2006
($ in millions)
Employee Stock Option Expense:
	Options granted:
		Previously awarded, unvested options as of January 1, 2006			$	1.7			$	3.2			$	8.2			$	9.9
		Options granted on or after January 1, 2006				2.2				0.4				8.9				2.0
			Total options granted			3.9				3.6				17.1				11.9
	Options cancelled in connection with tender offer (see below)					14.4				—				14.4				—
			Total employee stock option expense		$	18.3			$	3.6			$	31.5			$	11.9

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			For the Three								For the Nine
			Months Ending								Months Ending
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Administrative expenses			$	9.7			$	7.6			$	33.2			$	25.3
Investigation and litigation costs				0.8				0.6				5.0				4.0
	Total administrative expenses		$	10.5			$	8.2			$	38.2			$	29.3

			For the Three								For the Nine
			Months Ended								Months Ending
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Income tax expense (benefit)			$	2.2			$	(0.6	)		$	(0.5	)		$	0.2
Excise tax expense				9.0				2.2				16.6				13.8
	Income tax expense (benefit), including excise tax		$	11.2			$	1.6			$	16.1			$	14.0

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		For the Three								For the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
($ in millions)
Realized gains		$	275.8			$	12.6			$	396.4			$	550.1
Realized losses			(63.4	)			(2.7	)			(81.5	)			(7.1	)
Net realized gains		$	212.4			$	9.9			$	314.9			$	543.0

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
($ in millions)			2007				2006				2007				2006
Reversal of previously recorded net unrealized appreciation associated with realized gains			$	(243.9	)		$	(10.2	)		$	(330.9	)		$	(499.4	)
Reversal of previously recorded net unrealized depreciation associated with realized losses				65.8				2.2				88.1				5.4
	Total reversal		$	(178.1	)		$	(8.0	)		$	(242.8	)		$	(494.0	)

2007
Portfolio Company		Amount
Private Finance:
Mercury Air Centers, Inc.		$	259.5
Woodstream Corporation			14.6
Mogas Energy, LLC			1.2
Other			0.5
Total realized gains		$	275.8

2006
Portfolio Company		Amount
Private Finance:
Oriental Trading Company, Inc.		$	8.9
Component Hardware Group, Inc.			2.8
Advantage Sales & Marketing, Inc.			0.7
Other			0.2
Total realized gains		$	12.6

2007
Portfolio Company		Amount
Private Finance:
Jakel, Inc.		$	24.8
Startec Global Communications Corporation			20.2
Gordian Group, Inc.			9.7
Universal Environmental Services, LLC			8.6
Other			0.1
Total realized losses		$	63.4

2006
Portfolio Company		Amount
Private Finance:
Cooper Natural Resources, Inc.		$	2.2
Other			0.5
Total realized losses		$	2.7

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2007
Portfolio Company		Amount
Private Finance:
Mercury Air Centers, Inc.		$	259.5
HMT, Inc.			39.9
Healthy Pet Corp.			36.6
Palm Coast Data, LLC			20.0
Woodstream Corporation			14.6
Wear Me Apparel Corporation			6.1
Mogas Energy, LLC			5.7
Tradesmen International, Inc.			3.8
ForeSite Towers, LLC			3.8
Advantage Sales & Marketing, Inc.			3.1
Geotrace Technologies, Inc.			1.1
Other			2.2
Total realized gains		$	396.4

2006
Portfolio Company			Amount
Private Finance:
Advantage Sales & Marketing, Inc.			$	434.4
STS Operating, Inc.				94.8
Oriental Trading Company, Inc.				8.9
United Site Services, Inc.				3.3
Component Hardware Group, Inc.				2.8
Nobel Learning Communities, Inc.				1.5
MHF Logisitical Solutions, Inc.				1.2
The Debt Exchange, Inc.				1.1
Other				1.5
	Total private finance			549.5
Commercial Real Estate:
Other				0.6
	Total commercial real estate			0.6
Total realized gains			$	550.1

2007
Portfolio Company		Amount
Private Finance:
Jakel, Inc.		$	24.8
Startec Global Communications, Inc.			20.2
Powell Plant Farms, Inc.			11.6
Gordian Group, Inc.			9.7
Universal Environmental Services, LLC			8.6
Legacy Partners Group, LLC			5.8
Other			0.8
Total realized losses		$	81.5

2006
Portfolio Company			Amount
Private Finance:
Cooper Natural Resources, Inc.			$	2.2
Aspen Pet Products, Inc.				1.6
Nobel Learning Communities, Inc.				1.4
Other				1.0
	Total private finance			6.2
Commercial Real Estate:
Other				0.9
	Total commercial real estate			0.9
Total realized losses			$	7.1

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		2007												2006
		Q1				Q2				Q3				Q1				Q2				Q3
Number of private finance portfolio companies reviewed			88				92				135				78				78				105
Percentage of private finance portfolio reviewed at value			91.8	%			92.1	%			92.1	%			87.0	%			89.6	%			86.5	%

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007(1)				2006(1)				2007(1)				2006(1)
($ in millions)
Net unrealized appreciation (depreciation)			$	(149.1	)		$	27.3			$	(29.3	)		$	22.1
Reversal of previously recorded unrealized appreciation associated with realized gains				(243.9	)			(10.2	)			(330.9	)			(499.4	)
Reversal of previously recorded unrealized depreciation associated with realized losses				65.8				2.2				88.1				5.4
	Net change in unrealized appreciation or depreciation		$	(327.2	)		$	19.3			$	(272.1	)		$	(471.9	)

(1)	The net change in unrealized appreciation or depreciation can fluctuate significantly from period to period. As a result, comparisons may not be meaningful.

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		2007				2006
($ in millions)
Liquidity portfolio (includes money market and other securities)		$	200.7			$	201.8
Cash and investments in money market securities (including money market and other securities: 2007-$90.4; 2006-$0.4)		$	105.2			$	2.1
Total assets		$	4,861.5			$	4,887.5
Total debt outstanding		$	1,922.4			$	1,899.1
Total shareholders’ equity		$	2,765.8			$	2,841.2
Debt to equity ratio(1)			0.70				0.67
Asset coverage ratio(2)			244	%			250	%

(1)	The debt to equity ratio adjusted for the liquidity portfolio and cash and investments in money market securities was 0.58 and 0.60 at September 30, 2007, and December 31, 2006, respectively, which is calculated as (a) total debt less the value of the liquidity portfolio divided by (b) total shareholders’ equity.
(2)	As a business development company, we are generally required to maintain a minimum ratio of 200% of total assets to total borrowings.

			2007				2006
($ in millions)
Net cash provided by (used in) operating activities			$	240.8			$	(303.6	)
Add: portfolio investments funded				1,236.7				1,700.8
	Total cash provided by operating activities before new investments		$	1,477.5			$	1,397.2

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			2007								2006
			Value				Yield				Value				Yield
($ in millions)
Money market securities			$	200.7				5.3	%		$	161.2				5.3	%
Certificate of deposit				—				—				40.6				5.6	%
	Total		$	200.7				5.3	%		$	201.8				5.3	%

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				2007												2006
												Annual												Annual
				Facility				Amount				Interest				Facility				Amount				Interest
				Amount				Outstanding				Cost(1)				Amount				Outstanding				Cost(1)
($ in millions)
Notes payable and debentures:
	Privately issued unsecured notes payable			$	1,042.4			$	1,042.4				6.1	%		$	1,041.4			$	1,041.4				6.1	%
	Publicly issued unsecured notes payable				880.0				880.0				6.7	%			650.0				650.0				6.6	%
		Total notes payable and debentures			1,922.4				1,922.4				6.4	%			1,691.4				1,691.4				6.3	%
Revolving line of credit(4)					922.5				—				—	%(2)			922.5				207.7				6.4	%(2)
		Total debt		$	2,844.9			$	1,922.4				6.6	%(3)		$	2,613.9			$	1,899.1				6.5	% (3)

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest on the debt plus the annual amortization of commitment fees, other facility fees and the amortization of debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.
(2)	There were no amounts drawn on the revolving line of credit at September 30, 2007. The annual interest cost at December 31, 2006, reflects the interest rate payable for borrowings under the revolving line of credit. In addition to the current interest rate payable, there were annual costs of commitment fees, other facility fees and amortization of debt financing costs of $4.1 million and $3.9 million at September 30, 2007, and December 31, 2006, respectively.
(3)	The annual interest cost for total debt includes the annual cost of commitment fees and the amortization of debt financing costs on the revolving line of credit and other facility fees regardless of the amount outstanding on the facility as of the balance sheet date.
(4)	At September 30, 2007, $859.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $63.5 million issued under the credit facility.

			Amount				Maturity Date
($ in millions)
6.625% Notes due 2011			$	400.0				July 15, 2011
6.000% Notes due 2012				250.0				April 1, 2012
6.875% Notes due 2047				230.0				April 15, 2047
	Total		$	880.0

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							Payments Due By Year
																											After
			Total				2007				2008				2009				2010				2011				2011
($ in millions)
Unsecured notes payable			$	1,922.4			$	—			$	153.0			$	269.9			$	408.0			$	472.5			$	619.0
Revolving line of credit(1)				—				—				—				—				—				—				—
Operating leases				21.3				1.1				4.4				4.6				4.5				1.8				4.9
	Total contractual obligations		$	1,943.7			$	1.1			$	157.4			$	274.5			$	412.5			$	474.3			$	623.9

(1)	At September 30, 2007, $859.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $63.5 million issued under the credit facility.

							Amount of Commitment Expiration Per Year
																											After
			Total				2007				2008				2009				2010				2011				2011
($ in millions)
Guarantees			$	263.9			$	3.0			$	3.0			$	251.5			$	—			$	4.4			$	2.0
Standby letters of credit(1)				63.5				—				63.5				—				—				—				—
	Total commitments(2)		$	327.4			$	3.0			$	66.5			$	251.5			$	—			$	4.4			$	2.0

(1)	Standby letters of credit are issued under our revolving line of credit that expires in September 2008. Therefore, unless a standby letter of credit is set to expire at an earlier date, we have assumed that the standby letters of credit will expire contemporaneously with the expiration of our line of credit in September 2008.
(2)	Our most significant commitments relate to our investment in Business Loan Express, LLC (BLX), which commitments totaled $271.0 million at September 30, 2007. At September 30, 2007, the principal components of these guarantees included a guarantee of 60% of the outstanding total obligations on BLX’s revolving line of credit, which expires in March 2009, for a total guaranteed amount of $249.0 million and standby letters of credit totaling $19.0 million in connection with term securitizations completed by BLX. See “— Private Finance, Business Loan Express, LLC” above for further discussion.

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					September 30,				December 31,
					2007				2006
(in thousands, except per share amounts)					(unaudited)
ASSETS
Portfolio at value:
	Private finance
		Companies more than 25% owned (cost: 2007-$1,571,149; 2006-$1,578,822)			$	1,236,844			$	1,490,180
		Companies 5% to 25% owned (cost: 2007-$434,164; 2006-$438,560)				397,930				449,813
		Companies less than 5% owned (cost: 2007-$2,601,101; 2006-$2,479,981)				2,572,354				2,437,908
			Total private finance (cost: 2007-$4,606,414; 2006-$4,497,363)			4,207,128				4,377,901
	Commercial real estate finance (cost: 2007-$96,115; 2006-$103,546)					119,739				118,183
			Total portfolio at value (cost: 2007-$4,702,529; 2006-$4,600,909)			4,326,867				4,496,084
Investments in money market and other securities						291,069				202,210
Accrued interest and dividends receivable						74,829				64,566
Other assets						153,940				122,958
Cash						14,816				1,687
			Total assets		$	4,861,521			$	4,887,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Notes payable and debentures (maturing within one year: 2007-$153,000; 2006-$—)				$	1,922,370			$	1,691,394
	Revolving line of credit					—				207,750
	Accounts payable and other liabilities					173,368				147,117
			Total liabilities			2,095,738				2,046,261
Commitments and contingencies
Shareholders’ equity:
	Common stock, $0.0001 par value, 400,000 shares authorized; 154,506 and 148,575 shares issued and outstanding at September 30, 2007, and December 31, 2006, respectively					15				15
	Additional paid-in capital					2,594,406				2,493,335
	Common stock held in deferred compensation trust					(37,079	)			(28,335	)
	Notes receivable from sale of common stock					(2,708	)			(2,850	)
	Net unrealized appreciation (depreciation)					(395,216	)			(123,084	)
	Undistributed earnings					606,365				502,163
			Total shareholders’ equity			2,765,783				2,841,244
			Total liabilities and shareholders’ equity		$	4,861,521			$	4,887,505
Net asset value per common share					$	17.90			$	19.12

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					For the Three Months								For the Nine Months
					Ended September 30,								Ended September 30,
					2007				2006				2007				2006
(in thousands, except per share amounts)
					(unaudited)								(unaudited)
Interest and Related Portfolio Income:
	Interest and dividends
		Companies more than 25% owned			$	28,198			$	23,812			$	83,895			$	77,377
		Companies 5% to 25% owned				9,374				10,977				32,111				28,046
		Companies less than 5% owned				68,097				63,879				194,460				177,559
			Total interest and dividends			105,669				98,668				310,466				282,982
	Fees and other income
		Companies more than 25% owned				5,146				6,486				14,552				24,222
		Companies 5% to 25% owned				19				10				518				4,008
		Companies less than 5% owned				7,534				8,219				18,460				23,638
			Total fees and other income			12,699				14,715				33,530				51,868
			Total interest and related portfolio income			118,368				113,383				343,996				334,850
Expenses:
	Interest					33,744				26,109				98,368				72,455
	Employee					26,306				25,228				76,845				67,054
	Employee stock options					18,312				3,649				31,492				11,852
	Administrative					10,496				8,153				38,225				29,348
			Total operating expenses			88,858				63,139				244,930				180,709
Net investment income before income taxes						29,510				50,244				99,066				154,141
Income tax expense (benefit), including excise tax						11,192				1,586				16,073				13,988
Net investment income						18,318				48,658				82,993				140,153
Net Realized and Unrealized Gains (Losses):
	Net realized gains (losses)
		Companies more than 25% owned				201,582				394				267,359				528,793
		Companies 5% to 25% owned				(5,475	)			93				(5,171	)			(324	)
		Companies less than 5% owned				16,263				9,429				52,727				14,522
			Total net realized gains			212,370				9,916				314,915				542,991
	Net change in unrealized appreciation or depreciation					(327,156	)			19,312				(272,132	)			(471,942	)
			Total net gains (losses)			(114,786	)			29,228				42,783				71,049
Net increase (decrease) in net assets resulting from operations					$	(96,468	)		$	77,886			$	125,776			$	211,202
Basic earnings (loss) per common share					$	(0.63	)		$	0.54			$	0.83			$	1.50
Diluted earnings (loss) per common share					$	(0.62	)		$	0.53			$	0.81			$	1.47
Weighted average common shares outstanding — basic						154,025				144,163				151,979				141,002
Weighted average common shares outstanding — diluted						155,329				147,112				154,708				144,030

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				For the Nine Months
				Ended September 30,
				2007				2006
(in thousands, except per share amounts)
				(unaudited)
Operations:
	Net investment income			$	82,993			$	140,153
	Net realized gains				314,915				542,991
	Net change in unrealized appreciation or depreciation				(272,132	)			(471,942	)
		Net increase in net assets resulting from operations			125,776				211,202
Shareholder distributions:
	Common stock dividends				(293,706	)			(255,430	)
		Net decrease in net assets resulting from shareholder distributions			(293,706	)			(255,430	)
Capital share transactions:
	Sale of common stock				93,784				218,882
	Issuance of common stock in lieu of cash distributions				12,447				11,050
	Issuance of common stock upon the exercise of stock options				13,307				11,108
	Cash portion of option cancellation payment				(52,833	)			—
	Stock option expense				32,069				12,088
	Net decrease in notes receivable from sale of common stock				142				1,005
	Purchase of common stock held in deferred compensation trust				(9,272	)			(7,226	)
	Distribution of common stock held in deferred compensation trust				528				656
	Other				2,297				—
		Net increase in net assets resulting from capital share transactions			92,469				247,563
		Total increase (decrease) in net assets			(75,461	)			203,335
Net assets at beginning of period					2,841,244				2,620,546
Net assets at end of period				$	2,765,783			$	2,823,881
Net asset value per common share				$	17.90			$	19.38
Common shares outstanding at end of period					154,506				145,722

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					For the Nine Months Ended
					September 30,
					2007				2006
(in thousands)
					(unaudited)
Cash flows from operating activities:
	Net increase in net assets resulting from operations				$	125,776			$	211,202
	Adjustments:
		Portfolio investments				(1,236,671	)			(1,700,751	)
		Principal collections related to investment repayments or sales				1,086,513				885,872
		Change in accrued or reinvested interest and dividends				(22,812	)			1,820
		Net collection (amortization) of discounts and fees				(1,215	)			(3,644	)
		Redemption of (investments in) U.S. Treasury bills				—				(22,875	)
		Redemption of (investments in) money market securities				(82,219	)			7,581
		Stock option expense				32,069				12,088
		Changes in other assets and liabilities				13,943				33,897
		Depreciation and amortization				1,540				1,303
		Realized gains from the receipt of notes and other consideration from sale of investments, net of collections				(29,716	)			(209,049	)
		Realized losses				81,456				7,063
		Net change in unrealized (appreciation) or depreciation				272,132				471,942
			Net cash provided by (used in) operating activities			240,796				(303,551	)
Cash flows from financing activities:
	Sale of common stock					93,784				218,882
	Sale of common stock upon the exercise of stock options					13,307				11,108
	Collections of notes receivable from sale of common stock					142				1,005
	Borrowings under notes payable					230,000				450,000
	Repayments on notes payable and debentures					—				(53,500	)
	Net borrowings under (repayments on) revolving line of credit					(207,750	)			(91,750	)
	Cash portion of option cancellation payment					(52,833	)			—
	Purchase of common stock held in deferred compensation trust					(9,272	)			(7,226	)
	Other financing activities					(6,363	)			(4,674	)
	Common stock dividends and distributions paid					(288,682	)			(248,479	)
			Net cash provided by (used in) financing activities			(227,667	)			275,366
Net increase (decrease) in cash						13,129				(28,185	)
Cash at beginning of period						1,687				31,363
Cash at end of period					$	14,816			$	3,178

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Companies More Than 25% Owned
Alaris Consulting, LLC			Senior Loan
	(Business Services)		(16.5%, Due 12/05 – 12/07)(6)		$	27,055			$	26,987			$	—
			Equity Interests							5,189				—
			Guaranty ($1,100)
AllBridge Financial, LLC			Equity Interests							2,300				2,300
	(Financial Services)		Standby Letter of Credit ($30,000)
Allied Capital Senior Debt Fund, L.P.(5)			Equity Interests (See Note 3)							19,080				19,535
	(Private Debt Fund)
Avborne, Inc.(7)			Preferred Stock (12,500 shares)							611				850
	(Business Services)		Common Stock (27,500 shares)							—				—
Avborne Heavy Maintenance, Inc.(7)			Preferred Stock (1,568 shares)							2,401				973
	(Business Services)		Common Stock (2,750 shares)							—				—
			Guaranty ($2,401)
Aviation Properties Corporation			Common Stock (100 shares)							65				—
	(Business Services)		Guaranty ($1,000)
Border Foods, Inc.			Preferred Stock (100,000 shares)							12,721				2,473
	(Consumer Products)		Common Stock (148,838 shares)							3,847				—
Business Loan Express, LLC (Financial Services)			Class A Equity Interests (25.0% — See Note 3)(6)			95,822				95,822				95,822
			Class B Equity Interests							119,436				40,888
			Class C Equity Interests							109,301				—
			Guaranty ($252,007 — See Note 3)
			Standby Letters of Credit   ($19,000 — See Note 3)
Calder Capital Partners, LLC(5)			Senior Loan (8.5%, Due 5/09)(6)			2,218				2,218				2,218
	(Financial Services)		Equity Interests							2,235				347
Callidus Capital Corporation			Subordinated Debt
	(Financial Services)		(18.0%, Due 10/08)			6,575				6,575				6,575
			Common Stock (100 shares)							2,067				42,640
Coverall North America, Inc.			Unitranche Debt (12.0%, Due 7/11)			35,054				34,914				34,914
	(Business Services)		Subordinated Debt (15.0%, Due 7/11)			6,000				5,977				5,977
			Common Stock (884,880 shares)							16,648				23,018
CR Holding, Inc.			Subordinated Debt
	(Consumer Products)		(16.6%, Due 2/13)			40,602				40,452				40,452
			Common Stock (37,200,551 shares)							33,321				41,034
Direct Capital Corporation			Subordinated Debt
	(Financial Services)		(16.0%, Due 3/13)			37,676				37,515				37,515
			Common Stock (2,097,234 shares)							19,250				6,923
Financial Pacific Company			Subordinated Debt
	(Financial Services)		(17.4%, Due 2/12 – 8/12)			72,668				72,475				72,475
			Preferred Stock (10,964 shares)							10,276				18,454
			Common Stock (14,735 shares)							14,819				47,022
ForeSite Towers, LLC			Equity Interest							—				881
	(Tower Leasing)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(7)		Avborne, Inc. and Avborne Heavy Maintenance, Inc. are affiliated companies.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Global Communications, LLC			Senior Loan
	(Business Services)		(10.7%, Due 9/02 – 11/07)(6)		$	15,957			$	15,957			$	7,576
			Subordinated Debt (17.0%, Due 12/03 – 9/05)(6)			11,339				11,336				—
			Preferred Equity Interest							14,067				—
			Options							1,639				—
Gordian Group, Inc.			Senior Loan (10.0%, Due 12/08)(6)			2,625				2,625				—
	(Business Services)		Common Stock (1,000 shares)							6,942				—
Hot Stuff Foods, LLC			Senior Loan (8.6%, Due 2/11-2/12)			49,550				49,351				49,351
	(Consumer Products)		Subordinated Debt (13.8%, Due 8/12 – 2/13)			61,532				61,301				42,191
			Subordinated Debt (16.0%, Due 2/13)(6)			20,841				20,750				—
			Common Stock (1,147,453 shares)							56,187				—
Huddle House, Inc.			Subordinated Debt
	(Retail)		(15.0%, Due 12/12)			59,401				59,149				59,149
			Common Stock (415,328 shares)							41,533				44,262
Impact Innovations Group, LLC			Equity Interests in Affiliate							—				320
	(Business Services)
Insight Pharmaceuticals Corporation			Subordinated Debt
	(Consumer Products)		(15.0%, Due 9/12)			44,257				44,129				44,804
			Subordinated Debt (19.0%, Due 9/12)(6)			16,181				16,130				16,626
			Preferred Stock (25,000 shares)							25,000				1,845
			Common Stock (620,000 shares)							6,325				—
Jakel, Inc.			Subordinated Debt
	(Industrial Products)		(15.5%, Due 3/08)(6)			1,575				1,575				1,575
Legacy Partners Group, Inc.			Senior Loan (14.0%, Due 5/09)(6)			3,843				3,843				3,843
	(Financial Services)		Equity Interests							4,261				1,271
Litterer Beteiligungs-GmbH(4)			Subordinated Debt
	(Business Services)		(8.0%, Due 3/07)			748				748				748
			Equity Interest							1,809				1,585
MVL Group, Inc.			Senior Loan
	(Business Services)		(12.0%, Due 6/09 – 7/09)			30,674				30,633				30,633
			Subordinated Debt (14.5%, Due 6/09 – 7/09)			39,937				39,651				39,651
			Common Stock (648,661 shares)							643				4,961
Old Orchard Brands, LLC			Subordinated Debt
	(Consumer Products)		(18.0%, Due 7/14)			19,433				19,342				19,342
			Equity Interests							18,767				19,602
Penn Detroit Diesel Allison, LLC			Subordinated Debt
	(Business Services)		(15.5%, Due 8/13)			39,038				38,880				38,880
			Equity Interests							21,128				28,795
Powell Plant Farms, Inc.			Senior Loan (15.0%, Due 12/07)(6)			1,350				1,350				1,350
	(Consumer Products)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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					September 30, 2007
Private Finance					(unaudited)
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Service Champ, Inc.			Subordinated Debt (15.5%, Due 4/12)		$	28,262			$	28,165			$	28,165
	(Business Services)		Common Stock (63,888 shares)							13,662				26,355
Staffing Partners Holding
	Company, Inc.		Subordinated Debt
	(Business Services)		(13.5%, Due 1/07)(6)			541				541				544
Startec Equity, LLC			Equity Interests							230				440
	(Telecommunications)
Sweet Traditions, Inc.			Senior Loan
	(Retail)		(9.0%, Due 9/08 – 8/11)(6)			39,692				36,052				36,673
			Preferred Stock (961 Shares)							950				—
			Common Stock (10,000 Shares)							50				—
Triview Investments, Inc.(8)			Senior Loan (10.0%, Due 12/07)			433				433				433
	(Broadcasting & Cable/Business		Subordinated Debt
	Services/Consumer Products)		(12.9%, Due 1/10 – 6/17)			42,784				42,590				42,590
			Subordinated Debt
			(12.5%, Due 11/07 – 3/08)(6)			1,400				1,400				1,534
			Common Stock (202 shares)							119,836				82,777
			Guaranty ($900)
			Standby Letter of Credit ($200)
Worldwide Express Operations, LLC			Subordinated Debt (14.0%, Due 2/14)			2,800				2,624				2,624
	(Business Services)		Equity Interests							12,900				12,900
			Warrants							163				163
Total companies more than 25% owned									$	1,571,149			$	1,236,844
Companies 5% to 25% Owned
Advantage Sales & Marketing, Inc.			Subordinated Debt (12.0%, Due 3/14)		$	154,642			$	154,041			$	154,041
	(Business Services)		Equity Interests							—				11,000
Air Medical Group Holdings LLC			Senior Loan (7.9%, Due 3/11)			1,920				1,866				1,866
	(Healthcare Services)		Equity Interests							3,470				10,800
Alpine ESP Holdings, Inc.			Preferred Stock (622 shares)							622				719
	(Business Services)		Common Stock (13,513 shares)							14				300
Amerex Group, LLC			Subordinated Debt (12.0%, Due 1/13)			8,400				8,400				8,400
	(Consumer Products)		Equity Interests							3,509				15,657
BB&T Capital Partners/Windsor
	Mezzanine Fund, LLC (5)		Equity Interests							5,873				5,607
	(Private Equity Fund)
Becker Underwood, Inc.			Subordinated Debt (14.5%, Due 8/12)			24,707				24,636				24,636
	(Industrial Products)		Common Stock(5,073 shares)							5,813				4,200
BI Incorporated			Subordinated Debt (13.5%, Due 2/14)			30,615				30,495				30,495
	(Business Services)		Common Stock (40,000 shares)							4,000				7,400

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(8)		Triview Investments, Inc. has a cost basis of $164.3 million and holds investments in Longview Cable & Data, LLC (Broadcasting & Cable) with a value of $6.9 million, Triax Holdings, LLC (Consumer Products) with a value of $62.2 million, and Crescent Hotels & Resorts, LLC and affiliates (Business Services) with a value of $58.2 million.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
CitiPostal, Inc. and Affiliates			Senior Loan (11.1%, Due 8/13-11/14)		$	22,208			$	22,115			$	22,115
	(Business Services)		Equity Interests							4,543				6,900
Creative Group, Inc.			Subordinated Debt (14.0%, Due 9/13)(6)			15,000				13,686				9,259
	(Business Services)		Warrant							1,387				—
Drew Foam Companies, Inc.			Preferred Stock (722 shares)							722				396
	(Business Services)		Common Stock (7,287 shares)							7				—
MedBridge Healthcare, LLC			Senior Loan (8.0%, Due 8/09)(6)			7,164				7,164				7,164
	(Healthcare Services)		Subordinated Debt (10.0%, Due 8/14)(6)			5,184				5,184				1,723
			Convertible Subordinated Debt (2.0%, Due 8/14)(6)			2,970				984				—
			Equity Interests							1,416				—
MHF Logistical Solutions, Inc.			Subordinated Debt (11.5%, Due 6/12)(6)			33,600				33,448				10,585
	(Business Services)		Subordinated Debt (18.0%, Due 6/13)(6)			11,211				11,154				—
			Common Stock (20,934 shares)(12)							20,942				—
			Warrants(12)							—				—
Multi-Ad Services, Inc.			Unitranche Debt (11.3%, Due 11/11)			19,850				19,748				19,748
	(Business Services)		Equity Interests							2,000				942
PresAir LLC			Senior Loan (7.5%, Due 12/10)(6)			5,702				5,384				800
	(Industrial Products)		Equity Interests							1,341				—
Progressive International
	Corporation		Subordinated Debt (16.0%, Due 12/09)			3,985				3,970				3,970
	(Consumer Products)		Preferred Stock (500 shares)							500				1,017
			Common Stock (197 shares)							13				5,100
			Warrants							—				—
Regency Healthcare Group, LLC			Senior Loan (11.1%, Due 6/12)			500				484				484
	(Healthcare Services)		Unitranche Debt (11.1%, Due 6/12)			12,000				11,953				11,953
			Equity Interests							1,500				1,685
SGT India Private Limited(4)			Common Stock (109,524 shares)							4,098				2,625
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt (12.0%, Due 11/10)			14,500				13,702				13,702
	(Healthcare Services)		Equity Interests							2,170				2,641
Universal Environmental Services, LLC			Equity Interests							1,810				—
	(Business Services)
Total companies 5% to 25% owned									$	434,164			$	397,930
Companies Less Than 5% Owned
3SI Security Systems, Inc.			Subordinated Debt (14.5%, Due 8/13)		$	27,651			$	27,547			$	27,547
	(Consumer Products)
AgData, L.P.			Senior Loan (10.3%, Due 7/12)			526				496				496
	(Consumer Services)
Axium Healthcare Pharmacy, Inc.			Unitranche Debt (12.0%, Due 12/12)			10,950				10,877				10,877
	(Healthcare Services)		Common Stock (26,500 shares)							2,650				1,100
Baird Capital Partners IV Limited Partnership(5) (Private Equity Fund)			Limited Partnership Interest							1,967				1,856

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(12)		Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
BenefitMall, Inc.			Unitranche Debt (13.3%, Due 8/12)		$	110,030			$	109,699			$	109,699
	(Business Services)		Common Stock (45,528,000 shares)(12)							45,528				60,376
			Warrants(12)							—				—
			Standby Letters of Credit ($7,986)
Broadcast Electronics, Inc.			Senior Loan (9.4%, Due 7/12)			4,925				4,897				4,897
	(Business Services)
Bushnell, Inc.			Subordinated Debt
	(Consumer Products)		(12.3%, Due 2/14)			41,325				39,685				39,685
Callidus Debt Partners
	CDO Fund I, Ltd.(4)(10)		Class C Notes (12.9%, Due 12/13)			18,800				18,935				18,988
	(CDO/CLO)		Class D Notes (17.0%, Due 12/13)			9,400				9,467				9,494
Callidus Debt Partners
	CLO Fund III, Ltd. (4)(10)		Preferred Shares
	(CDO/CLO)		(23,600,000 shares, 15.0%)(11)							21,980				20,702
Callidus Debt Partners
	CLO Fund IV, Ltd.(4)(10)		Income Notes (13.5%)(11)							12,373				10,758
	(CDO/CLO)
Callidus Debt Partners
	CLO Fund V, Ltd. (4)(10)		Income Notes (20.0%)(11)							13,988				14,649
	(CDO/CLO)
Callidus Debt Partners
	CLO Fund VI, Ltd.(4)(10)		Income Notes (19.8%)(11)							25,662				25,662
	(CDO/CLO)
Callidus MAPS CLO Fund I LLC(10)			Class E Notes (10.7%, Due 12/17)			17,000				17,000				16,401
	(CDO/CLO)		Income Notes (8.7%)(11)							50,090				41,673
Callidus MAPS CLO Fund II, Ltd. (4)(10)			Income Notes (14.8%)(11)							18,061				18,061
	(CDO/CLO)
Camden Partners Strategic Fund II,
	L.P.(5)		Limited Partnership Interest							997				2,382
	(Private Equity Fund)
Carlisle Wide Plank Floors, Inc.			Unitranche Debt (10.0%, Due 6/11)			3,161				3,123				3,123
	(Consumer Products)		Preferred Stock (400,000 Shares)							400				500
Catterton Partners V, L.P.(5)			Limited Partnership Interest							3,510				4,038
	(Private Equity Fund)
Catterton Partners VI, L.P.(5)			Limited Partnership Interest							1,795				1,656
	(Private Equity Fund)
Centre Capital Investors IV, LP(5)			Limited Partnership Interest							2,079				2,170
	(Private Equity Fund)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(10)		The fund is managed by Callidus Capital, a portfolio company of Allied Capital.
(11)		Represents the effective interest yield earned on the cost basis of these preferred equity investments and income notes. The yield is included in interest income from companies less than 5% owned in the consolidated statement of operations.
(12)		Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
CK Franchising, Inc.			Senior Loan (11.0%, Due 7/12)		$	30,150			$	29,959			$	29,959
	(Consumer Services)		Subordinated Debt (15.0%, Due 7/17)			1,000				1,000				1,000
			Preferred Stock (1,486,004 shares)							1,486				1,486
			Common Stock (8,793,408 shares)							8,793				8,793
Commercial Credit Group, Inc.			Subordinated Debt (14.8%, Due 2/11)			12,000				12,025				12,025
	(Financial Services)		Preferred Stock (74,978 shares)							18,018				19,469
			Warrants							—				—
Community Education Centers, Inc. (Education Services)			Subordinated Debt (13.5%, Due 11/13)			34,878				34,800				34,800
Compass Group Diversified Holdings, LLC(3)			Senior Loan (8.0%, Due 11/11)			2,000				1,896				1,896
	(Financial Services)
Component Hardware Group, Inc. (Industrial Products)			Subordinated Debt (13.5%, Due 1/13)			18,363				18,290				18,290
Cook Inlet Alternative Risk, LLC			Unitranche Debt (10.8%, Due 4/13)			100,000				99,507				99,507
	(Business Services)		Equity Interests							640				1,700
Cortec Group Fund IV, L.P.(5)			Limited Partnership Interest							3,383				2,906
	(Private Equity)
CSAV, Inc. (Business Services)			Subordinated Debt (11.7%, Due 6/13)			37,500				37,500				37,500
Diversified Mercury
Communications, LLC			Senior Loan (9.0%, Due 3/13)			233				217				217
	(Business Services)
Digital VideoStream, LLC			Unitranche Debt (11.0%, Due 2/12)			17,677				17,586				17,586
	(Business Services)		Convertible Subordinated Debt
			(10.0%, Due 2/16)			4,017				4,003				4,100
Distant Lands Trading Co.			Senior Loan (10.3%, Due 11/11)			10,000				9,963				9,963
	(Consumer Products)		Unitranche Debt (11.0%, Due 11/11)			42,375				42,216				42,216
			Common Stock (4,000 shares)							4,000				2,652
Driven Brands, Inc. (Consumer Services)			Senior Loan (8.9%, Due 6/11)			36,070				35,942				35,942
	d/b/a Meineke and Econo Lube		Subordinated Debt (12.1%, Due 6/12 – 6/13)			83,000				82,736				82,736
			Common Stock (11,675,331 shares)(12)							29,455				17,977
			Warrants(12)							—				—
Dynamic India Fund IV (4)(5)			Equity Interests							6,050				6,215
	(Private Equity Fund)
EarthColor, Inc. (Business Services)			Subordinated Debt (15.0%, Due 11/13)			127,000				126,440				126,440
			Common Stock (73,540 shares)(12)							73,540				42,884
			Warrants(12)							—				—
eCentury Capital Partners, L.P.(5)			Limited Partnership Interest							6,899				2,615
	(Private Equity Fund)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Elexis Beta GmbH(4)			Options						$	426			$	50
	(Industrial Products)
Farley’s & Sathers Candy Company, Inc.			Subordinated Debt (11.4%, Due 3/11)		$	8,000				7,978				7,978
	(Consumer Products)
FCP-BHI Holdings, LLC			Subordinated Debt (12.8%, Due 9/13)			24,000				23,882				23,882
	d/b/a Bojangles’		Equity Interests							1,000				1,000
	(Consumer Products)
Fidus Mezzanine Capital, L.P.(5)			Limited Partnership Interest							3,294				3,294
	(Private Equity Fund)
Frozen Specialties, Inc.			Warrants							435				230
	(Consumer Products)
Garden Ridge Corporation (Retail)			Subordinated Debt (7.0%, Due 5/12)(6)			20,500				20,500				20,500
Geotrace Technologies, Inc.			Subordinated Debt (10.0%, Due 6/09)			7,347				7,167				7,167
	(Energy Services)		Warrants							2,350				3,000
Grant Broadcasting Systems II			Subordinated Debt (5.0%, Due 6/11)			3,005				3,005				3,005
	(Broadcasting & Cable)
Grotech Partners, VI, L.P.(5)			Limited Partnership Interest							8,808				6,970
	(Private Equity Fund)
Havco Wood Products LLC			Senior Loan (9.9%, Due 8/11)			1,150				1,134				1,134
	(Industrial Products)		Unitranche Debt (11.5%, Due 8/11)			7,600				6,740				6,740
			Equity Interests							1,055				3,200
Haven Eldercare of New England, LLC			Subordinated Debt (12.0%, Due 8/09)			1,927				1,927				1,927
	(Healthcare Services)
HealthASPex Services Inc.			Senior Loan (8.0%, Due 7/08)(6)			500				500				133
	(Business Services)
Higginbotham Insurance Agency, Inc.			Senior Loan (7.9%, Due 8/12)			15,196				15,099				15,099
	(Business Services)		Subordinated Debt (13.6%, Due 8/13 – 8/14)			46,855				46,626				46,626
			Common Stock (28,277 shares)(12)							26,522				26,522
			Warrant(12)							—				—
The Hillman Companies, Inc.(3)			Subordinated Debt (10.0%, Due 9/11)			44,580				44,450				44,450
	(Consumer Products)
The Homax Group, Inc.			Senior Loan (9.1%, Due 10/12)			11,027				11,027				11,027
	(Consumer Products)		Subordinated Debt (12.0%, Due 4/14)			14,000				13,225				13,225
			Preferred Stock (89 shares)							89				74
			Common Stock (28 shares)							6				—
			Warrants							1,106				909
Ideal Snacks Corporation			Senior Loan (9.5%, Due 6/10)			35				35				35
	(Consumer Products)
Integrity Interactive Corporation			Unitranche Debt (10.5%, Due 2/12)			12,434				12,331				12,331
	(Business Services)
International Fiber Corporation			Subordinated Debt (14.0%, Due 6/12)			24,447				24,354				24,354
	(Industrial Products)		Preferred Stock (25,000 shares)							2,500				2,200

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Jones Stephens Corporation			Senior Loan (8.9%, Due 9/12)		$	5,558			$	5,545			$	5,545
	(Consumer Products)
K2 Advisors Subsidiary Holdings, LLC			Senior Loan (8.7%, Due 4/13)			9,836				9,836				9,836
	(Business Services)
Kodiak Fund LP(5)			Equity Interests							9,423				2,853
	(Private Equity Fund)
Line-X, Inc.			Senior Loan (12.0%, Due 8/11)			1,100				1,084				1,084
	(Consumer Products)		Unitranche Debt (12.0% Due 8/11)			48,355				48,185				48,185
			Standby Letter of Credit ($1,500)
MedAssets, Inc.			Preferred Stock (227,865 shares)							2,049				3,845
	(Business Services)		Common Stock (50,000 shares)							—				100
Mid-Atlantic Venture Fund IV, L.P. (5)			Limited Partnership Interest							6,975				2,861
	(Private Equity Fund)
NetShape Technologies, Inc.			Senior Loan (8.9%, Due 2/13)			5,661				5,630				5,630
	(Industrial Products)
Network Hardware Resale, Inc. (Business Services)			Unitranche Debt (10.5%, Due 12/11)			20,805				20,913				20,913
			Convertible Subordinated Debt (9.8%, Due 12/15)			13,242				13,304				14,959
Norwesco, Inc. (Industrial Products)			Subordinated Debt (12.6%, Due 1/12 – 7/12)			82,812				82,546				82,546
			Common Stock (559,603 shares)(12)							38,313				118,118
			Warrants(12)							—				—
Novak Biddle Venture Partners III, L.P.(5)			Limited Partnership Interest							1,910				1,983
	(Private Equity Fund)
Oahu Waste Services, Inc.			Stock Appreciation Rights							239				1,000
	(Business Services)
Odyssey Investment Partners Fund III, LP(5)			Limited Partnership Interest							1,542				2,162
	(Private Equity Fund)
Passport Health
	Communications, Inc.		Preferred Stock (651,381 shares)							2,000				2,398
	(Healthcare Services)		Common Stock (19,680 shares)							48				48
Pendum, Inc. (Business Services)			Subordinated Debt (17.0%, Due 1/11)(6)			34,028				34,028				—
			Preferred Stock (82,715 shares)							—				—
			Warrants							—				—
Performant Financial Corporation			Common Stock (478,816 shares)							734				—
	(Business Services)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					September 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Postle Aluminum Company, LLC (Industrial Products)			Unitranche Debt (11.0%, Due 10/12)		$	61,750			$	61,489			$	61,489
			Equity Interests							2,500				3,100
Pro Mach, Inc. (Industrial Products)			Subordinated Debt (13.0%, Due 6/12)			14,525				14,466				14,466
			Equity Interests							1,500				1,600
Promo Works, LLC (Business Services)			Unitranche Debt (10.3%, Due 12/11)			26,215				25,995				25,995
			Guaranty ($600)
S.B. Restaurant Company			Unitranche Debt (9.8%, Due 4/11)			29,001				28,739				28,739
	(Retail)		Preferred Stock (54,125 shares)							135				135
			Warrants							619				2,100
			Standby Letters of Credit ($2,540)
SBBUT, LLC			Equity Interests							—				—
	(Consumer Products)
Service Center Metals, LLC (Industrial Products)			Subordinated Debt (15.5%, Due 9/11)			5,000				4,980				4,980
			Equity Interests							313				337
Snow Phipps Group, L.P.(5)			Limited Partnership Interest							2,317				2,317
	(Private Equity Fund)
SPP Mezzanine Funding, L.P.(5)			Limited Partnership Interest							2,364				2,928
	(Private Equity Fund)
SPP Mezzanine Funding II, L.P.(5)			Limited Partnership Interest							2,750				2,409
	(Private Equity Fund)
Stag-Parkway, Inc.			Unitranche Debt (10.8%, Due 7/12)			51,000				50,799				50,799
	(Business Services)
STS Operating, Inc. (Industrial Products)			Subordinated Debt (11.0%, Due 1/13)			30,386				30,268				30,268
Summit Energy Services, Inc.			Senior Loan (10.4%, Due 8/13)			60,000				59,824				59,824
	(Business Services)		Common Stock (89,406 shares)							2,000				2,000
Tappan Wire and Cable Inc.			Senior Loan (15.0%, Due 8/14)			24,100				23,970				23,970
	(Business Services)		Common Stock (15,000 shares)(12)							2,250				2,250
			Warrant(12)							—				—
The Step2 Company, LLC			Unitranche Debt (11.0%, Due 4/12)			96,041				95,672				95,672
	(Consumer Products)		Equity Interests							2,483				3,003
Tradesmen International, Inc. (Business Services)			Subordinated Debt (12.0%, Due 12/09)			9,136				8,668				8,668
TransAmerican Auto Parts, LLC (Consumer Products)			Subordinated Debt (14.0%, Due 11/12)			23,955				23,746				23,746
			Equity Interests							1,198				1,016
Trover Solutions, Inc. (Business Services)			Senior Loan (11.3%, Due 5/12 – 11/12)			77,000				76,725				76,725
Universal Air Filter Company			Senior Loan (12.0%, Due 11/12)			14,875				14,810				14,810
	(Industrial Products)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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						September 30, 2007
Private Finance
Portfolio Company						(unaudited)
(in thousands, except number of shares)				Investment(1)(2)		Principal				Cost				Value
Updata Venture Partners II, L.P.(5)				Limited Partnership Interest						$	4,727			$	6,148
	(Private Equity Fund)
Venturehouse-Cibernet Investors, LLC				Equity Interest							—				54
	(Business Services)
Venturehouse Group, LLC(5)				Equity Interest							—				1,381
	(Private Equity Fund)
VICORP Restaurants, Inc.				Warrants							33				—
	(Retail)
Walker Investment Fund II, LLLP(5)				Limited Partnership Interest							1,330				358
	(Private Equity Fund)
WMA Equity Corporation and Affiliates d/b/a Wear Me Apparel				Subordinated Debt (13.6%, Due 4/13)		$	125,000				123,971				123,971
	(Consumer Products)			Subordinated Debt (9.0%, Due 4/14)(6)			13,033				13,033				13,033
				Common Stock (100 shares)							46,046				14,428
Webster Capital II, L.P.(5)				Limited Partnership Interest							538				538
	(Private Equity Fund)
Woodstream Corporation				Subordinated Debt
	(Consumer Products)			(12.0%, Due 2/15)			90,000				89,560				89,560
				Common Stock (7,500 shares)							7,500				7,500
				Warrants							—				—
York Insurance Services Group, Inc. (Business Services)				Subordinated Debt (14.5%, Due 1/14)			44,916				44,734				44,734
				Common Stock (15,000 shares)							1,500				2,000
Other companies				Other debt investments(6)			6,516				6,516				6,511
				Other equity investments							8				—
Total companies less than 5% owned										$	2,601,101			$	2,572,354
Total private finance (151 portfolio investments)										$	4,606,414			$	4,207,128

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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Commercial Real Estate Finance
(in thousands, except number of loans)

												September 30, 2007
				Interest				Number of				(unaudited)
				Rate Ranges				Loans				Cost				Value
Commercial Mortgage Loans
					Up to 6.99%				3			$	20,388			$	19,838
					7.00%–8.99%				8				21,623				21,623
					9.00%–10.99%				3				8,371				8,371
					11.00%–12.99%				1				10,453				10,453
				15.00% and above					2				3,970				3,970
		Total commercial mortgage loans(13)							17			$	64,805			$	64,255
Real Estate Owned												$	15,568			$	21,979
Equity Interests(2) — Companies more than 25% owned												$	15,742			$	33,505
	Guarantees ($6,871)
	Standby Letter of Credit ($1,295)
		Total commercial real estate finance										$	96,115			$	119,739
Total portfolio												$	4,702,529			$	4,326,867

				Yield				Cost				Value
Liquidity Portfolio(14)
	American Beacon Money Market Select FD Fund				5.4%			$	126,410			$	126,410
	American Beacon Money Market Fund				5.2%				40,102				40,102
	SEI Daily Income Tr Prime Obligation Fund				5.2%				34,151				34,151
		Total liquidity portfolio						$	200,663			$	200,663
Other Investments in Money Market Securities(14)
	Columbia Treasury Reserves Money Market Fund				5.3%			$	90,406			$	90,406

(1)       Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for             a single issuer. The maturity dates represent the earliest and the latest maturity dates.

(2)       Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.

(3)       Public company.

(4)       Non-U.S. company or principal place of business outside the U.S.

(5)       Non-registered investment company.

(13)       Commercial mortgage loans totaling $19.1 million at value were on non-accrual status and therefore were considered non-income producing.

(14)       Included in investments in money market and other securities on the accompanying Consolidated Balance Sheet.

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	Valuation of Portfolio Investments

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	Loans and Debt Securities

	Equity Securities

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	Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

	Fee Income

	Guarantees

	Financing Costs

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	Dividends to Shareholders

	Stock Compensation Plans

					For the Three								For the Nine
					Months								Months
					Ended								Ended
					September 30,								September 30,
					2007				2006				2007				2006
($ in millions, except per share amounts)
Employee Stock Option Expense:
	Options granted:
		Previously awarded, unvested options as of January 1, 2006			$	1.7			$	3.2			$	8.2			$	9.9
		Options granted on or after January 1, 2006				2.2				0.4				8.9				2.0
			Total options granted			3.9				3.6				17.1				11.9
	Options cancelled in connection with tender offer (see Note 9)					14.4				—				14.4				—
			Total employee stock option expense		$	18.3			$	3.6			$	31.5			$	11.9
		Per basic share			$	0.12			$	0.03			$	0.21			$	0.08
		Per diluted share			$	0.12			$	0.02			$	0.20			$	0.08

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		For the Three								For the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
Expected term (in years)			5.0				5.0				5.0				5.0
Risk-free interest rate			4.6	%			4.7	%			4.6	%			4.8	%
Expected volatility			24.4	%			26.8	%			26.4	%			29.1	%
Dividend yield			8.9	%			9.0	%			8.9	%			9.0	%
Weighted average fair value per option		$	2.51			$	3.12			$	2.96			$	3.47

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	Federal and State Income Taxes and Excise Tax

	Per Share Information

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	Use of Estimates in the Preparation of Financial Statements

	Recent Accounting Pronouncements

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	Private Finance

				2007												2006
				Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans			$	523.9			$	481.6				9.3	%		$	450.0			$	405.2				8.4	%
	Unitranche debt(2)				698.1				698.1				11.5	%			800.0				799.2				11.2	%
	Subordinated debt				2,052.7				1,927.1				12.6	%			2,038.3				1,980.8				12.9	%
		Total loans and debt securities(3)			3,274.7				3,106.8				11.8	%			3,288.3				3,185.2				11.9	%
Equity securities:
	Preferred shares/income notes of CLOs (4)				142.2				131.5				15.1	%			101.1				97.2				15.5	%
	Other equity securities				1,189.5				968.8								1,108.0				1,095.5
		Total equity securities			1,331.7				1,100.3								1,209.1				1,192.7
		Total		$	4,606.4			$	4,207.1							$	4,497.4			$	4,377.9

(1)	The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. At September 30, 2007, and December 31, 2006, the cost and value of subordinated debt included the Class A equity interests in BLX and the guaranteed dividend yield on these equity interests, to the extent it was accrued, was included in interest income. During the fourth quarter of 2006, the Class A equity interests were placed on non-accrual status. The weighted average yield on the preferred shares/income notes of CLOs is calculated as the (a) effective interest yield on the preferred shares/income notes of CLOs, divided by (b) total preferred shares/income notes of CLOs at value. The weighted average yields are computed as of the balance sheet date. The yield on the CLO assets represents the yield used for recording interest income. The market yield used in the valuation of the CLO assets may be different than the interest yields.
(2)	Unitranche debt is a single debt investment that is a blend of senior and subordinated debt terms.
(3)	The total principal balance outstanding on loans and debt securities was $3,298.5 million and $3,322.3 million at September 30, 2007, and December 31, 2006, respectively. The difference between principal and cost is represented by unamortized loan origination fees and costs, original issue discounts, and market discounts totaling $23.8 million and $34.0 million at September 30, 2007, and December 31, 2006, respectively.
(4)	Investments in the preferred shares/income notes of CLOs earn a current return that is included in interest income in the accompanying consolidated statement of operations.

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Interest income on subordinated debt and Class A equity interests			$	—			$	4.1			$	—			$	11.9
Fees and other income				1.3				2.0				4.1				6.3
	Total interest and related portfolio income		$	1.3			$	6.1			$	4.1			$	18.2

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
Interest income			$	1.0			$	2.0			$	5.1			$	7.3
Fees and other income				—				0.1				0.2				0.4
	Total interest and related portfolio income		$	1.0			$	2.1			$	5.3			$	7.7

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				2007												2006
				Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Bonds(2):
Callidus Debt Partners CDO Fund I, Ltd.				$	28.4			$	28.5				14.2%			$	28.4			$	28.4				14.3%
Callidus MAPS CLO Fund I LLC					17.0				16.4				11.1%				17.0				17.2				10.8%
	Total bonds				45.4				44.9				13.1%				45.4				45.6				12.9%
Preferred Shares/ Income Notes(3):
Callidus Debt Partners CLO Fund III, Ltd.					22.0				20.7				15.9%				23.3				23.0				12.8%
Callidus Debt Partners CLO Fund IV, Ltd.					12.4				10.8				15.6%				13.0				13.0				13.8%
Callidus Debt Partners CLO Fund V, Ltd.					14.0				14.6				19.1%				13.8				13.8				15.8%
Callidus MAPS CLO Fund I LLC					50.1				41.7				10.4%				51.0				47.4				17.1%
Callidus MAPS CLO Fund II, Ltd.					18.0				18.0				14.8%				—				—				—
Callidus Debt Partners CLO Fund VI, Ltd.					25.7				25.7				19.8%				—				—				—
	Total preferred shares/ income notes				142.2				131.5				15.1%				101.1				97.2				15.5%
		Total		$	187.6			$	176.4							$	146.5			$	142.8

(1)	The yield on these debt and equity securities is included in interest income in the accompanying consolidated statement of operations. The weighted average yield is calculated as the (a) annual stated interest on the accruing bonds or the effective interest yield on the preferred shares/income notes, divided by (b) CLO and CDO assets at value. The market yield used in the valuation of the CLO and CDO assets may be different than the interest yields shown above.
(2)	These securities are included in private finance subordinated debt.
(3)	These securities are included in private finance equity securities.

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			2007				2006
($ in millions)
Bonds			$	273.3			$	245.4
Syndicated loans				2,471.8				1,769.9
Cash(1)				33.1				59.5
	Total underlying collateral assets		$	2,778.2			$	2,074.8

(1)	Includes undrawn liability amounts.

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				2007				2006
($ in millions)
Loans and debt securities in workout status
	Companies more than 25% owned			$	51.6			$	51.1
	Companies 5% to 25% owned				13.1				4.0
	Companies less than 5% owned				20.7				31.6
Loans and debt securities not in workout status
	Companies more than 25% owned				116.2				87.1
	Companies 5% to 25% owned				16.4				7.2
	Companies less than 5% owned				13.0				38.9
		Total		$	231.0			$	219.9

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			2007				2006
Industry
Business services				37	%			39	%
Consumer products				24				20
Industrial products				11				9
Financial services				10				9
Retail				5				6
Consumer services				4				6
CLO/CDO(1)				4				3
Healthcare services				2				3
Energy services				—				2
Other				3				3
	Total			100	%			100	%
Geographic Region(2)
Mid-Atlantic				36	%			31	%
Midwest				29				30
Southeast				19				18
West				14				17
Northeast				2				4
	Total			100	%			100	%

(1)	These funds invest in senior debt representing a variety of industries and are managed by Callidus Capital, a portfolio company of Allied Capital.
(2)	The geographic region for the private finance portfolio depicts the location of the headquarters for the Company’s portfolio companies. The portfolio companies may have a number of other locations in other geographic regions.

	Commercial Real Estate Finance

			2007												2006
			Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Commercial mortgage loans			$	64.8			$	64.2				6.4%			$	72.6			$	71.9				7.5%
Real estate owned				15.6				22.0								15.7				19.6
Equity interests				15.7				33.5								15.2				26.7
	Total		$	96.1			$	119.7							$	103.5			$	118.2

(1)	The weighted average yield on the commercial mortgage loans is computed as the (a) annual stated interest on accruing loans less the annual amortization of origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date.

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			2007				2006
Property Type
Hospitality				44	%			45	%
Office				21				20
Retail				19				19
Recreation				14				1
Housing				—				13
Other				2				2
	Total			100	%			100	%
Geographic Region
Southeast				36	%			36	%
Mid-Atlantic				31				35
Midwest				25				21
Northeast				8				8
West				—				—
	Total			100	%			100	%

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				2007												2006
												Annual												Annual
				Facility				Amount				Interest				Facility				Amount				Interest
				Amount				Drawn				Cost(1)				Amount				Drawn				Cost(1)
($ in millions)
Notes payable and debentures:
	Privately issued unsecured notes payable			$	1,042.4			$	1,042.4				6.1%				$1,041.4				$1,041.4				6.1%
	Publicly issued unsecured notes payable				880.0				880.0				6.7%				650.0				650.0				6.6%
		Total notes payable and debentures			1,922.4				1,922.4				6.4%				1,691.4				1,691.4				6.3%
Revolving line of credit(4)					922.5				—				—%	(2)			922.5				207.7				6.4%	(2)
	Total debt			$	2,844.9			$	1,922.4				6.6%	(3)			$2,613.9				$1,899.1				6.5%	(3)

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest on the debt plus the annual amortization of commitment fees, other facility fees and amortization of debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.
(2)	There were no amounts drawn on the revolving line of credit at September 30, 2007. The annual interest cost at December 31, 2006, reflects the interest rate payable for borrowings under the revolving line of credit. In addition to the current interest payable, there were annual costs of commitment fees, other facility fees and amortization of debt financing costs of $4.1 million and $3.9 million at September 30, 2007, and December 31, 2006, respectively.
(3)	The annual interest cost for total debt includes the annual cost of commitment fees, other facility fees and amortization of debt financing costs on the revolving line of credit regardless of the amount outstanding on the facility as of the balance sheet date.
(4)	At September 30, 2007, $859.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $63.5 million issued under the credit facility.

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			Amount				Maturity Date
($ in millions)
6.625% Notes due 2011			$	400.0				July 15, 2011
6.000% Notes due 2012				250.0				April 1, 2012
6.875% Notes due 2047				230.0				April 15, 2047
	Total		$	880.0

Year			Amount Maturing
			($ in millions)
2007			$	—
2008				153.0
2009				269.9
2010				408.0
2011				472.5
Thereafter				619.0
	Total		$	1,922.4

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	Revolving Line of Credit

	Covenant Compliance

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			Total				2007				2008				2009				2010				2011				After 2011
(in millions)
Guarantees			$	263.9			$	3.0			$	3.0			$	251.5			$	—			$	4.4			$	2.0
Standby letters of credit(1)				63.5				—				63.5				—				—				—				—
	Total(2)		$	327.4			$	3.0			$	66.5			$	251.5			$	—			$	4.4			$	2.0

(1)	Standby letters of credit are issued under the Company’s revolving line of credit that expires in September 2008. Therefore, unless a standby letter of credit is set to expire at an earlier date, it is assumed that the standby letters of credit will expire contemporaneously with the expiration of the Company’s line of credit in September 2008.
(2)	The Company’s most significant commitments relate to its investment in Business Loan Express, LLC (BLX), which commitments totaled $271.0 million at September 30, 2007. At September 30, 2007, the principal components of these guarantees included a guarantee of 60% of the outstanding total obligations on BLX’s revolving line of credit, which expires in March 2009, for a total guaranteed amount of $249.0 million and standby letters of credit totaling $19.0 million in connection with term securitizations completed by BLX. See Note 3.

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			2007				2006
(in millions)
Number of common shares				3,325				8,175
Gross proceeds			$	97,256			$	229,804
Less costs, including underwriting fees				(3,472	)			(10,922	)
	Net proceeds		$	93,784			$	218,882

		For the Nine
		Months Ended
		September 30,
		2007				2006
(in millions, except per share amounts)
Shares issued			0.4				0.4
Average price per share		$	30.05			$	29.95

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		For the Three								For the Nine
		Months Ended								Months Ended
		September 30,								September 30,
		2007				2006				2007				2006
(in millions, except per share amounts)
Net increase (decrease) in net assets resulting from operations		$	(96.5	)		$	77.9			$	125.8			$	211.2
Weighted average common shares outstanding — basic			154.0				144.2				152.0				141.0
Dilutive options outstanding			1.3				2.9				2.7				3.0
Weighted average common shares outstanding — diluted			155.3				147.1				154.7				144.0
Basic earnings (loss) per common share		$	(0.63	)		$	0.54			$	0.83			$	1.50
Diluted earnings (loss) per common share		$	(0.62	)		$	0.53			$	0.81			$	1.47

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			For the Three								For the Nine
			Months Ended								Months Ended
			September 30,								September 30,
			2007				2006				2007				2006
($ in millions)
IPA contributions			$	2.4			$	2.1			$	7.4			$	6.0
IPA mark to market expense (benefit)				(2.0	)			1.2				(3.6	)			0.6
	Total IPA expense (benefit)		$	0.4			$	3.3			$	3.8			$	6.6

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						Weighted				Weighted
						Average				Average				Aggregate
						Exercise				Contractual				Intrinsic
						Price Per				Remaining				Value at
		Shares				Share				Term (Years)				September 30, 2007(1)
(in millions, except per share amounts)
Options outstanding at January 1, 2007			23.2			$	24.92
Granted			6.6			$	29.52
Exercised			(0.5	)		$	25.19
Cancelled in tender offer(2)			(10.3	)		$	21.50
Forfeited			(0.5	)		$	28.94
Options outstanding at September 30, 2007			18.5			$	28.36				6.82			$	21.2
Exercisable at September 30, 2007(3)			11.8			$	27.99				6.78			$	17.5
Exercisable and expected to be exercisable at September 30, 2007(4)			18.0			$	28.34				6.82			$	20.9

(1)	Represents the difference between the market value of the options at September 30, 2007, and the cost for the option holders to exercise the options.
(2)	See description of the tender offer above.
(3)	Represents vested options.
(4)	The amount of options expected to be exercisable at September 30, 2007, is calculated based on an estimate of expected forfeitures.

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				At and for the								At and for the
				Nine Months Ended								Year Ended
				September 30,								December 31,
				2007(1)				2006				2006
				(unaudited)
Per Common Share Data
Net asset value, beginning of period				$	19.12			$	19.17			$	19.17
	Net investment income(2)				0.54				0.97				1.30
	Net realized gains(2)(3)				2.03				3.77				3.66
		Net investment income plus net realized gains(2)			2.57				4.74				4.96
	Net change in unrealized appreciation or depreciation (2)(3)				(1.76	)			(3.27	)			(3.28	)
Net increase in net assets resulting from operations(2)					0.81				1.47				1.68
Decrease in net assets from shareholder distributions					(1.92	)			(1.80	)			(2.47	)
Net increase in net assets from capital share transactions(2)(4)					0.23				0.54				0.74
Decrease in net assets from the cash portion of the option cancellation payment(2)(5)					(0.34	)			—				—
Net asset value, end of period				$	17.90			$	19.38			$	19.12
Market value, end of period				$	29.39			$	30.21			$	32.68
Total return(6)					(4.2	)%			9.2	%			20.6	%
Ratios and Supplemental Data ($ and shares in thousands, except per share amounts)
Ending net assets				$	2,765.8			$	2,823.9			$	2,841.2
Common shares outstanding at end of period					154.5				145.7				148.6
Diluted weighted average common shares outstanding					154.7				144.0				145.6
Employee, employee stock option and administrative expenses/average net assets(7)					5.06	%			3.99	%			5.38	%
Total operating expenses/average net assets(7)					8.46	%			6.65	%			9.05	%
Net investment income/average net assets(7)					2.87	%			5.16	%			6.90	%
Net increase in net assets resulting from operations/average net assets(7)					4.35	%			7.78	%			8.94	%
Portfolio turnover rate(7)					24.43	%			23.61	%			27.05	%
Average debt outstanding				$	1,909.5			$	1,433.5			$	1,491.0
Average debt per share(2)				$	12.34			$	9.95			$	10.24

(1)	The results for the nine months ended September 30, 2007, are not necessarily indicative of the operating results to be expected for the full year.
(2)	Based on diluted weighted average number of common shares outstanding for the period.
(3)	Net realized gains and net change in unrealized appreciation or depreciation can fluctuate significantly from period to period. As a result, quarterly comparisons may not be meaningful.
(4)	Excludes capital share transactions related to the cash portion of the option cancellation payment.
(5)	See Notes 2 and 9 to the consolidated financial statements above for further discussion.
(6)	Total return assumes the reinvestment of all dividends paid for the periods presented.
(7)	The ratios for the nine months ended September 30, 2007 and 2006, do not represent annualized results.

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,												September 30,
Portfolio Company					Credited								2006				Gross				Gross				2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Companies More Than 25% Owned
Alaris Consulting, LLC			Senior Loan(5)										$	—			$	572			$	(572	)		$	—
	(Business Services)		Equity Interests											—				1,025				(1,025	)			—
AllBridge Financial, LLC			Equity Interests											—				2,300				—				2,300
	(Financial Services)
Allied Capital Senior Debt Fund, L.P.			Equity Interests											—				19,535				—				19,535
	(Private Debt Fund)
Avborne, Inc.			Preferred Stock											918				—				(68	)			850
	(Business Services)		Common Stock											—				—				—				—
Avborne Heavy Maintenance,   Inc.			Preferred Stock											—				973				—				973
	(Business Services)		Common Stock											—				—				—				—
Aviation Properties Corporation			Common Stock											—				65				(65	)			—
	(Business Services)
Border Foods, Inc.			Preferred Stock											—				2,473				—				2,473
	(Consumer Products)		Common Stock											—				—				—				—
Business Loan Express, LLC			Class A Equity
	(Financial Services)		Interests(5)											66,622				29,200				—				95,822
			Class B Equity Interests											79,139				—				(38,251	)			40,888
			Class C Equity Interests											64,976				—				(64,976	)			—
Calder Capital Partners, LLC			Senior Loan(5)						$	33				975				1,326				(83	)			2,218
	(Financial Services)		Equity Interests											2,076				159				(1,888	)			347
Callidus Capital Corporation			Senior Loan		$	42								—				2,100				(2,100	)			—
	(Financial Services)		Subordinated Debt			850								5,762				813				—				6,575
			Common Stock											22,550				20,090				—				42,640
Coverall North America, Inc.			Unitranche Debt			3,240								36,333				27				(1,446	)			34,914
	(Business Services)		Subordinated Debt			687								5,972				5				—				5,977
			Common Stock											19,619				3,399				—				23,018
CR Holding, Inc.			Subordinated Debt			5,092								39,401				1,051				—				40,452
	(Consumer Products)		Common Stock											25,738				15,296				—				41,034
Direct Capital Corporation			Subordinated Debt			3,451								—				37,515				—				37,515
	(Financial Services)		Common Stock											—				19,250				(12,327	)			6,923
Financial Pacific Company			Subordinated Debt			9,473								71,362				1,113				—				72,475
	(Financial Services)		Preferred Stock											15,942				2,512				—				18,454
			Common Stock											65,186				—				(18,164	)			47,022
ForeSite Towers, LLC			Equity Interest			1,269								12,290				—				(11,409	)			881
	(Tower Leasing)
Global Communications, LLC			Senior Loan(5)											15,957				—				(8,381	)			7,576
	(Business Services)		Subordinated Debt (5)											11,237				—				(11,237	)			—
			Preferred Equity
			Interest											—				—				—				—
			Options											—				—				—				—
Gordian Group, Inc.			Senior Loan(5)			(11	)							—				9,169				(9,169	)			—
	(Business Services)		Common Stock											—				—				—				—
Healthy Pet Corp.			Senior Loan			1,309								27,038				6,350				(33,388	)			—
	(Consumer Services)		Subordinated Debt			2,893								43,579				580				(44,159	)			—
			Common Stock											28,921				1,221				(30,142	)			—
HMT, Inc.			Preferred Stock											2,637				—				(2,637	)			—
	(Energy Services)		Common Stock											8,664				—				(8,664	)			—
			Warrants											3,336				—				(3,336	)			—
Hot Stuff Foods, LLC (7)			Senior Loan			3,106								—				49,681				(330	)			49,351
	(Consumer Products)		Subordinated Debt			5,601								—				61,302				(19,111	)			42,191
			Subordinated Debt (5)											—				8,461				(8,461	)			—
			Common Stock											—				—				—				—
Huddle House, Inc.			Senior Loan			426								19,950				—				(19,950	)			—
	(Retail)		Subordinated Debt			6,731								58,196				1,131				(178	)			59,149
			Common Stock											41,662				2,729				(129	)			44,262

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,												September 30,
Portfolio Company					Credited								2006				Gross				Gross				2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Impact Innovations Group, LLC			Equity Interests in
	(Business Services)		Affiliate										$	873				—				(553	)			320
Insight Pharmaceuticals			Subordinated Debt		$	4,406								43,884			$	920			$	—			$	44,804
	Corporation		Subordinated Debt (5)											15,966				660				—				16,626
	(Consumer Products)		Preferred Stock											7,845				—				(6,000	)			1,845
			Common Stock											—				—				—				—
Jakel, Inc.			Subordinated Debt (5)			1								6,655				9,037				(14,117	)			1,575
	(Industrial Products)		Preferred Stock											—				9,347				(9,347	)			—
			Common Stock											—				6,460				(6,460	)			—
Legacy Partners Group, Inc.			Senior Loan (5)											4,843				2,804				(3,804	)			3,843
			Subordinated Debt											—				2,952				(2,952	)			—
	(Financial Services)		Equity Interests											—				1,271				—				1,271
Litterer Beteiligungs-GmbH			Subordinated Debt			32								692				56				—				748
	(Business Services)		Equity Interest											1,199				386				—				1,585
Mercury Air Centers, Inc.			Subordinated Debt			5,054								49,217				1,654				(50,871	)			—
	(Business Services)		Common Stock											195,019				—				(195,019	)			—
MVL Group, Inc.			Senior Loan			2,743								27,245				3,388				—				30,633
	(Business Services)		Subordinated Debt			4,408								35,478				4,173				—				39,651
			Common Stock											—				4,961				—				4,961
Old Orchard Brands, LLC			Senior Loan			347								—				23,500				(23,500	)			—
	(Consumer Products)		Subordinated Debt			1,498								—				19,342				—				19,342
			Equity Interests											—				19,602				—				19,602
Penn Detroit Diesel Allison, LLC			Subordinated Debt			4,525								37,994				886				—				38,880
	(Business Services)		Equity Interests											25,949				2,846				—				28,795
Powell Plant Farms, Inc.			Senior Loan(5)											26,192				3,950				(28,792	)			1,350
	(Consumer Products)		Subordinated Debt (5)											962				18,261				(19,223	)			—
			Preferred Stock											—				—				—				—
			Warrants											—				—				—				—
Service Champ, Inc.			Subordinated Debt			3,317								27,619				546				—				28,165
	(Business Services)		Common Stock											16,786				9,569				—				26,355
Staffing Partners Holding
	Company, Inc.		Subordinated Debt (5)											486				58				—				544
	(Business Services)
Startec Global Communications
	Corporation		Senior Loan			723								15,965				—				(15,965	)			—
	(Telecommunications)		Common Stock											11,232				26,023				(37,255	)			—
Startec Equity, LLC			Equity Interests											—				440				—				440
	(Telecommunications)
Sweet Traditions, Inc.			Senior Loan(5)			1,088								35,172				1,501				—				36,673
	(Retail)		Preferred Stock											400				550				(950	)			—
			Common Stock											50				—				(50	)			—
Triview Investments, Inc.			Senior Loan			966								14,747				11				(14,325	)			433
	(Broadcasting & Cable/		Subordinated Debt			9,934								56,008				32,009				(45,427	)			42,590
	Business Services/		Subordinated Debt (5)			592								4,342				792				(3,600	)			1,534
	Consumer Products)		Common Stock			37								31,322				53,458				(2,003	)			82,777
Worldwide Express Operations, LLC			Subordinated Debt			65								—				2,800				(176	)			2,624
	(Business Services)		Equity Interests											—				12,900				—				12,900
			Warrants											—				163				—				163
Total companies more than 25% owned					$	83,895							$	1,490,180											$	1,236,844
Companies 5% to 25% Owned
Advantage Sales &
	Marketing, Inc.		Subordinated Debt		$	14,002							$	151,648			$	2,393			$	—			$	154,041
	(Business Services)		Equity Interests											11,000				—				—				11,000
Air Medical Group Holdings LLC			Senior Loan			167								1,763				5,233				(5,130	)			1,866
	(Healthcare Services)		Subordinated Debt			1,931								35,128				318				(35,446	)			—
			Equity Interests											5,950				4,850				—				10,800
Alpine ESP Holdings, Inc.			Preferred Stock											602				117				—				719
	(Business Services)		Common Stock											—				300				—				300
Amerex Group, LLC			Subordinated Debt			764								8,400				—				—				8,400
	(Consumer Products)		Equity Interests											13,823				1,872				(38	)			15,657

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,												September 30,
Portfolio Company					Credited								2006				Gross				Gross				2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
BB&T Capital
	Partners/Windsor
	Mezzanine Fund, LLC		Equity Interests										$	5,554			$	53			$	—			$	5,607
	(Private Equity Fund)
Becker Underwood, Inc.			Subordinated Debt		$	2,711								24,163				473				—				24,636
	(Industrial Products)		Common Stock											3,700				500				—				4,200
BI Incorporated			Subordinated Debt			3,137								30,135				360				—				30,495
	(Business Services)		Common Stock											4,100				3,300				—				7,400
CitiPostal, Inc. and Affiliates			Senior Loan			1,754								20,569				2,326				(780	)			22,115
	(Business Services)		Equity Interests											4,700				2,287				(87	)			6,900
Creative Group, Inc.			Subordinated Debt (5)			480								13,656				30				(4,427	)			9,259
	(Business Services)		Warrant											1,387				—				(1,387	)			—
Drew Foam Companies, Inc.			Preferred Stock											722				—				(326	)			396
	(Business Services)		Common Stock											7				—				(7	)			—
MedBridge Healthcare, LLC			Senior Loan(5)											7,164				—				—				7,164
	(Healthcare Services)		Subordinated Debt (5)											1,813				—				(90	)			1,723
			Convertible
			Subordinated Debt (5)											—				—				—				—
			Equity Interests											—				110				(110	)			—
MHF Logistical Solutions,Inc(8)			Subordinated Debt (5)											—				27,518				(16,933	)			10,585
	(Business Services)		Subordinated Debt (5)											—				—				—				—
			Common Stock											—				—				—				—
			Warrants											—				—				—				—
Multi-Ad Services, Inc.			Unitranche Debt			1,716								19,879				19				(150	)			19,748
	(Business Services)		Equity Interests											2,000				—				(1,058	)			942
Nexcel Synthetics, LLC			Subordinated Debt			611								10,978				199				(11,177	)			—
	(Consumer Products)		Equity Interests											1,486				269				(1,755	)			—
PresAir LLC			Senior Loan(5)						$	27				2,206				—				(1,406	)			800
	(Industrial Products)		Equity Interests											—				5				(5	)			—
Progressive International
	Corporation		Subordinated Debt			842								7,533				121				(3,684	)			3,970
	(Consumer Products)		Preferred Stock											1,024				—				(7	)			1,017
			Common Stock											2,300				2,800				—				5,100
			Warrants											—				—				—				—
Regency Healthcare Group, LLC			Senior Loan			88								1,232				2				(750	)			484
	(Healthcare Services)		Unitranche Debt			1,448								19,908				45				(8,000	)			11,953
			Equity Interests											1,616				69				—				1,685
SGT India Private Limited			Common Stock											3,346				155				(876	)			2,625
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt			1,645								17,569				1,133				(5,000	)			13,702
	(Healthcare Services)		Equity Interests											2,541				100				—				2,641
Universal Environmental
	Services, LLC		Unitranche Debt			815								10,211				777				(10,988	)			—
	(Business Services)		Equity Interests											—				15				(15	)			—
Total companies 5% to 25% owned					$	32,111							$	449,813											$	397,930

(1)	Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted. The principal amount for loans and debt securities and the number of shares of common stock and preferred stock is shown in the consolidated statement of investments as of September 30, 2007.
(2)	Other includes interest, dividend, or other income which was applied to the principal of the investment and therefore reduced the total investment. These reductions are also included in the Gross Reductions for the investment, as applicable.
(3)	Gross additions include increases in the cost basis of investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and closing fees, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(4)	Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(5)	Loan or debt security is on non-accrual status at September 30, 2007, and is therefore considered non-income producing. Loans or debt securities on non-accrual status at the end of the period may or may not have been on non-accrual status for the full period.
(6)	Represents the total amount of interest or dividends credited to income for the portion of the year an investment was included in the companies more than 25% owned or companies 5% to 25% owned categories, respectively.
(7)	In the first quarter of 2007, the Company exercised its option to acquire a majority of the voting securities of Hot Stuff Foods, LLC (Hot Stuff) at fair market value. Therefore, Hot Stuff was reclassified to companies more than 25% owned in the first quarter of 2007. At December 31, 2006, the Company’s investment in Hot Stuff was included in the companies less than 5% owned category.
(8)	In the second quarter of 2007, the Company obtained a seat on the board of directors of MHF Logistical Solutions, Inc. (MHF). Therefore, MHF was reclassified to companies 5% to 25% owned in the second quarter of 2007. At December 31, 2006, the Company’s investment in MHF was included in the companies less than 5% owned category.

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	We may offer, from time to time, up to 50,000,000 shares of our common stock in one or more offerings.
	The shares of common stock may be offered at prices and on terms to be described in one or more supplements to this prospectus. The offering price per share of our common stock less any underwriting commissions or discounts will not be less than the net asset value per share of our common stock at the time we make the offering.
	We are an internally managed closed-end, non-diversified management investment company that has elected to be regulated as a business development company under the Investment Company Act of 1940.
	Our investment objective is to achieve current income and capital gains. We seek to achieve our investment objective by investing in primarily private middle market companies in a variety of industries. No assurances can be given that we will continue to achieve our objective.
	Please read this prospectus and the accompanying prospectus supplement, if any, before investing, and keep it for future reference. The prospectus and the accompanying prospectus supplement contain important information about us that a prospective investor should know before investing in our common stock. We file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission. This information is available free of charge by contacting us at 1919 Pennsylvania Avenue, N.W., Washington, DC, 20006 or by telephone at (202) 721-6100 or on our website at www.alliedcapital.com. The SEC also maintains a website at www.sec.gov that contains such information.
	Our common stock is traded on the New York Stock Exchange under the symbol “ALD.” As of August 17, 2007, the last reported sale price on the New York Stock Exchange for the common stock was $29.58.
	You should review the information, including the risk of leverage, set forth under “Risk Factors” on page 10 of this prospectus before investing in our common stock.

	Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

	This prospectus may not be used to consummate sales of shares of common stock unless accompanied by a prospectus supplement.

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		Page
Prospectus Summary			1
Fees and Expenses			6
Selected Condensed Consolidated Financial Data			7
Where You Can Find Additional Information			9
Risk Factors			10
Use of Proceeds			20
Price Range of Common Stock and Distributions			21
Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Senior Securities			80
Business			83
Portfolio Companies			101
Determination of Net Asset Value			109
Management			113
Portfolio Management			121
Compensation of Directors and Executive Officers			124
Control Persons and Principal Holders of Securities			144
Certain Relationships and Related Party Transactions			146
Tax Status			147
Certain Government Regulations			153
Stock Trading Plans and Ownership Guidelines			157
Dividend Reinvestment Plan			157
Description of Capital Stock			159
Description of Public Notes			165
Plan of Distribution			168
Legal Matters			169
Custodians, Transfer and Dividend Paying Agent and Registrar			169
Brokerage Allocation and Other Practices			170
Independent Registered Public Accounting Firm			170
Index to Consolidated Financial Statements			F-1

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Shareholder Transaction Expenses
	Sales load (as a percentage of offering price)(1)				—%
	Dividend reinvestment plan fees(2)				None
Annual Expenses (as a percentage of consolidated net assets attributable to common stock)(3)
	Operating expenses(4)				5.97%
	Interest payments on borrowed funds(5)				4.61%
	Acquired fund fees and expenses(6)				—%
		Total annual expenses(7)(8)			10.58%

		1 Year				3 Years				5 Years				10 Years
You would pay the following expenses on a $1,000 investment, assuming a 5.0% annual return		$	105			$	311			$	512			$	993

(1)	In the event that the shares of common stock to which this prospectus relates are sold to or through underwriters, a corresponding prospectus supplement will disclose the applicable sales load.
(2)	The expenses of our dividend reinvestment plan are included in “Operating expenses.” We do not have a stock purchase plan. The participants in the dividend reinvestment plan will bear a pro rata share of brokerage commissions incurred with respect to open market purchases or sales, if any. See “Dividend Reinvestment Plan.”
(3)	“Consolidated net assets attributable to common stock” equals net assets (i.e., total consolidated assets less total consolidated liabilities), which at June 30, 2007, was $3.0 billion.
(4)	“Operating expenses” represent our estimated operating expenses for the year ending December 31, 2007, excluding interest on indebtedness. This percentage for the year ended December 31, 2006, was 5.19%. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Management” and “Compensation of Executive Officers and Directors.”
(5)	The “Interest payments on borrowed funds” represents our estimated interest expense for the year ending December 31, 2007, including estimated interest related to usage under our revolving line of credit and new debt issuances that we anticipate during the remainder of 2007. We had outstanding borrowings of $1.9 billion at June 30, 2007. See “Risk Factors.” This percentage for the year ended December 31, 2006, was 3.54%.
(6)	See our Consolidated Statement of Investments as of June 30, 2007, on pages F-75 through F-85 for our investments in funds.
(7)	“Total annual expenses” as a percentage of consolidated net assets attributable to common stock are higher than the total annual expenses percentage would be for a company that is not leveraged. We borrow money to leverage our net assets and increase our total assets. The SEC requires that “Total annual expenses” percentage be calculated as a percentage of net assets, rather than the total assets, including assets that have been funded with borrowed monies. If the “Total annual expenses” percentage were calculated instead as a percentage of consolidated total assets, our “Total annual expenses” would be 6.27% of consolidated total assets.
(8)	The holders of shares of our common stock (and not the holders of our debt securities or preferred stock, if any) indirectly bear the cost associated with our annual expenses.

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				At and for the
				Six Months
				Ended June 30,								At and for the Year Ended December 31,
(in thousands,				2007				2006				2006				2005				2004				2003				2002
except per share data)
				(unaudited)
Operating Data:
Interest and related portfolio income:
	Interest and dividends			$	204,797			$	184,314			$	386,427			$	317,153			$	319,642			$	290,719			$	264,042
	Fees and other income				20,831				37,153				66,131				56,999				47,448				38,510				45,886
		Total interest and related portfolio income			225,628				221,467				452,558				374,152				367,090				329,229				309,928
Expenses:
	Interest				64,624				46,346				100,600				77,352				75,650				77,233				70,443
	Employee				50,539				41,826				92,902				78,300				53,739				36,945				33,126
	Employee stock options(1)				13,180				8,203				15,599				—				—				—				—
	Administrative				27,729				21,195				39,005				69,713				34,686				22,387				21,504
		Total operating expenses			156,072				117,570				248,106				225,365				164,075				136,565				125,073
Net investment income before income taxes					69,556				103,897				204,452				148,787				203,015				192,664				184,855
	Income tax expense (benefit), including excise tax				4,881				12,402				15,221				11,561				2,057				(2,466	)			930
Net investment income					64,675				91,495				189,231				137,226				200,958				195,130				183,925
Net realized and unrealized gains (losses):
	Net realized gains				102,545				533,075				533,301				273,496				117,240				75,347				44,937
	Net change in unrealized appreciation or depreciation				55,024				(491,254	)			(477,409	)			462,092				(68,712	)			(78,466	)			(571	)
		Total net gains (losses)			157,569				41,821				55,892				735,588				48,528				(3,119	)			44,366
Net increase in net assets resulting from operations				$	222,244			$	133,316			$	245,123			$	872,814			$	249,486			$	192,011			$	228,291
Per Share:
Diluted earnings per common share				$	1.44			$	0.94			$	1.68			$	6.36			$	1.88			$	1.62			$	2.20
Net investment income plus net realized gains per share(2)				$	1.08			$	4.38			$	4.96			$	2.99			$	2.40			$	2.28			$	2.21
Dividends per common share(2)				$	1.27			$	1.19			$	2.47			$	2.33			$	2.30			$	2.28			$	2.23
Weighted average common shares outstanding – diluted					154,446				142,466				145,599				137,274				132,458				118,351				103,574

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		At and for the
		Six Months
		Ended June 30,				At and for the Year Ended December 31,
(in thousands,		2007				2006				2005				2004				2003				2002
except per share data)
		(unaudited)
Balance Sheet Data:
Portfolio at value		$	4,471,060			$	4,496,084			$	3,606,355			$	3,013,411			$	2,584,599			$	2,488,167
Total assets			5,045,488				4,887,505				4,025,880				3,260,998				3,019,870				2,794,319
Total debt outstanding(3)			1,921,815				1,899,144				1,284,790				1,176,568				954,200				998,450
Undistributed (distributions in excess of) earnings			476,015				502,163				112,252				12,084				(13,401	)			(15,830	)
Shareholders’ equity			2,991,134				2,841,244				2,620,546				1,979,778				1,914,577				1,546,071
Shareholders’ equity per common share (net asset value)(4)		$	19.59			$	19.12			$	19.17			$	14.87			$	14.94			$	14.22
Common shares outstanding at end of period			152,652				148,575				136,697				133,099				128,118				108,698
Asset coverage ratio(5)			256%				250	%			309	%			280	%			322	%			270	%
Debt to equity ratio			0.64				0.67				0.49				0.59				0.50				0.65
Other Data:
Investments funded		$	659,141			$	2,437,828			$	1,675,773			$	1,524,523			$	931,450			$	506,376
Principal collections related to investment repayments or sales			735,441				1,055,347				1,503,388				909,189				788,328				356,641
Realized gains			120,602				557,470				343,061				267,702				94,305				95,562
Realized losses			(18,057	)			(24,169	)			(69,565	)			(150,462	)			(18,958	)			(50,625	)

		2007								2006																2005
(in thousands,		Qtr 2				Qtr 1				Qtr 4				Qtr 3				Qtr 2				Qtr 1				Qtr 4				Qtr 3				Qtr 2				Qtr 1
except per share data)
Quarterly Data (unaudited):
Total interest and related portfolio income		$	117,676			$	107,952			$	117,708			$	113,383			$	110,456			$	111,011			$	98,169			$	94,857			$	86,207			$	94,919
Net investment income			25,175				39,500				49,078				48,658				50,195				41,300				37,073				46,134				15,267				38,752
Net increase in net assets resulting from operations			89,158				133,086				33,921				77,886				33,729				99,587				328,140				113,168				311,885				119,621
Diluted earnings per common share			0.57				0.87				0.23				0.53				0.24				0.70				2.36				0.82				2.29				0.88
Dividends declared per common share (6)			0.64				0.63				0.67				0.61				0.60				0.59				0.61				0.58				0.57				0.57
Net asset value per common share(4)			19.59				19.58				19.12				19.38				19.17				19.50				19.17				17.37				17.01				15.22

(1)	Effective January 1, 2006, we adopted the provisions of Statement No. 123 (Revised 2004), Share-Based Payment. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” below.
(2)	Dividends are based on taxable income, which differs from income for financial reporting purposes. Net investment income and net realized gains are the most significant components of our annual taxable income from which dividends are paid. At December 31, 2006, we had estimated excess taxable income of $397.1 million carried over for distribution to shareholders in 2007. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Dividends and Distributions” below.
(3)	See “Senior Securities” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for more information regarding our level of indebtedness.
(4)	We determine net asset value per common share as of the last day of the period presented. The net asset values shown are based on outstanding shares at the end of each period presented.
(5)	As a business development company, we are generally required to maintain a minimum ratio of 200% of total assets to total borrowings.
(6)	Dividends declared per common share for the fourth quarter of 2006 included the regular quarterly dividend of $0.62 per common share and an extra dividend of $0.05 per common share. Dividends declared per common share for the fourth quarter of 2005 included the regular quarterly dividend of $0.58 per common share and an extra dividend of $0.03 per common share.

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		-20%				-10%				-5%				0%				5%				10%				20%
Corresponding return to shareholder			-37.98%				-21.11%				-12.67%				-4.24%				4.19%				12.63%				29.50%

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	•	price and volume fluctuations in the overall stock market from time to time;
	•	significant volatility in the market price and trading volume of securities of business development companies or other financial services companies;
	•	volatility resulting from trading in derivative securities related to our common stock including puts, calls, long-term equity anticipation securities, or LEAPs, or short trading positions;
	•	changes in laws or regulatory policies or tax guidelines with respect to business development companies or regulated investment companies;
	•	actual or anticipated changes in our earnings or fluctuations in our operating results or changes in the expectations of securities analysts;
	•	general economic conditions and trends;
	•	loss of a major funding source; or
	•	departures of key personnel.

	•	the time remaining to the maturity of these debt securities;
	•	the outstanding principal amount of debt securities with terms identical to these debt securities;
	•	the supply of debt securities trading in the secondary market, if any;
	•	the redemption or repayment features, if any, of these debt securities;

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	•	the level, direction and volatility of market interest rates generally; and
	•	market rates of interest higher or lower than rates borne by the debt securities.

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	•	changes in the economy;
	•	risks associated with possible disruption in our operations due to terrorism;
	•	future changes in laws or regulations and conditions in our operating areas; and
	•	other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings.

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							Closing Sales								Premium				Premium
							Price								of High				of Low
															Sales Price				Sales Price				Declared
			NAV(1)				High				Low				to NAV(2)				to NAV(2)				Dividends
Year ended December 31, 2005
	First Quarter		$	15.22			$	27.84			$	24.89				183	%			164	%		$	0.57
	Second Quarter		$	17.01			$	29.29			$	25.83				172	%			152	%		$	0.57
	Third Quarter		$	17.37			$	29.17			$	26.92				168	%			155	%		$	0.58
	Fourth Quarter		$	19.17			$	30.80			$	26.11				161	%			136	%		$	0.58
	Extra Dividend																						$	0.03
Year ended December 31, 2006
	First Quarter		$	19.50			$	30.68			$	28.51				157	%			146	%		$	0.59
	Second Quarter		$	19.17			$	31.32			$	28.77				163	%			150	%		$	0.60
	Third Quarter		$	19.38			$	30.88			$	27.30				159	%			141	%		$	0.61
	Fourth Quarter		$	19.12			$	32.70			$	29.99				171	%			157	%		$	0.62
	Extra Dividend																						$	0.05
Year ended December 31, 2007
	First Quarter		$	19.58			$	32.98			$	28.05				168	%			143	%		$	0.63
	Second Quarter		$	19.59			$	32.96			$	28.90				168	%			148	%		$	0.64
	Third Quarter (through August 17, 2007)			*			$	32.87			$	27.10				*				*			$	0.65	(3)
	Fourth Quarter			*				*				*				*				*			$	0.65	(3)

(1)	Net asset value per share is determined as of the last day in the relevant quarter and therefore may not reflect the net asset value per share on the date of the high and low sales prices. The net asset values shown are based on outstanding shares at the end of each period.
(2)	Calculated as the respective high or low closing sales price divided by NAV.
(3)	On July 27, 2007, our Board of Directors declared a $0.65 per share dividend for both the third and fourth quarters of 2007. See “Management’s Discussion and Analysis and Results of Operations — Dividends and Distributions” below.

*	Not determinable at the time of filing.

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	•	changes in the economy;
	•	risks associated with possible disruption in our operations due to terrorism;
	•	future changes in laws or regulations and conditions in our operating areas; and
	•	other risks and uncertainties as may be detailed from time to time in our public announcements and SEC filings.

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		June 30,								December 31,
		2007				2006				2006				2005				2004
Private finance			97	%			96	%			97	%			96	%			76	%
Commercial real estate finance(1)			3	%			4	%			3	%			4	%			24	%

(1)	On May 3, 2005, we completed the sale of our portfolio of non-investment grade commercial mortgage-backed securities and real estate related collateralized debt obligation bonds and preferred shares investments. Upon the completion of this transaction, our lending and investment activity has been focused primarily on private finance investments.

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		At and for the
		Six Months Ended								At and for the
		June 30,								Years Ended December 31,
		2007				2006				2006				2005				2004
($ in millions)
Portfolio at value		$	4,471.1			$	3,593.5			$	4,496.1			$	3,606.4			$	3,013.4
Investments funded(1)		$	659.1			$	1,251.2			$	2,437.8			$	1,675.8			$	1,524.5
Change in accrued or reinvested interest and dividends(2)		$	17.7			$	(9.1	)		$	11.3			$	6.6			$	52.2
Principal collections related to investment repayments or sales(3)		$	735.4			$	769.6			$	1,055.3			$	1,503.4			$	909.2
Yield on interest-bearing investments(4)			11.6	%			12.6	%			11.8	%			12.8	%			14.0	%

(1)	Investments funded included investments acquired through the issuance of our common stock as consideration totaling $7.2 million and $3.2 million, respectively, for the years ended December 31, 2005 and 2004. See also “— Private Finance” below.
(2)	Includes changes in accrued or reinvested interest related to our investments in money market securities of $4.7 million and $1.7 million, respectively, for the six months ended June 30, 2007 and 2006, and $3.1 million for the year ended December 31, 2006.
(3)	Principal collections related to investment repayments or sales for the six months ended June 30, 2007, included collections of $182.4 million related to the sale of loans to the Allied Capital Senior Debt Fund, L.P. in the second quarter of 2007. See discussion below.
(4)	The weighted average yield on interest-bearing investments is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date.

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					At and for the																At and for the
					Six Months Ended June 30,																Years Ended December 31,
					2007								2006								2006								2005								2004
					Value				Yield(2)				Value				Yield(2)				Value				Yield(2)				Value				Yield(2)				Value				Yield(2)
($ in millions)
Portfolio at value:
	Loans and debt securities:
		Senior loans			$	409.8				8.3	%		$	275.9				9.5	%		$	405.2				8.4	%		$	239.8				9.5	%		$	234.6				8.5	%
		Unitranche debt				681.4				11.4	%			515.0				10.7	%			799.2				11.2	%			294.2				11.4	%			43.9				14.8	%
		Subordinated debt				1,892.2				12.5	%			1,700.3				13.9	%			1,980.8				12.9	%			1,560.9				13.8	%			1,324.4				14.9	%
			Total loans and debt securities			2,983.4				11.7	%			2,491.2				12.7	%			3,185.2				11.9	%			2,094.9				13.0	%			1,602.9				13.9	%
	Equity securities					1,364.9								969.2								1,192.7								1,384.4								699.2
Total portfolio					$	4,348.3							$	3,460.4							$	4,377.9							$	3,479.3							$	2,302.1
Investments funded(1)					$	643.7							$	1,237.3							$	2,423.4							$	1,462.3							$	1,140.8
Change in accrued or reinvested interest and dividends					$	12.9							$	(11.3	)						$	7.2							$	24.6							$	45.6
Principal collections related to investment repayments or sales(3)					$	717.0							$	752.4							$	1,015.4							$	703.9							$	551.9

(1)	Investments funded for the six months ended June 30, 2006, and for the years ended December 31, 2006 and 2004, included debt investments in certain portfolio companies received in conjunction with the sale of such companies. See “— Private Finance, Investments Funded” below.
(2)	The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. The weighted average yield is computed as of the balance sheet date.
(3)	Includes collections from the sale or repayment of senior loans totaling $236.2 million and $228.2 million for the six months ended June 30, 2007 and 2006, respectively, and $322.7 million, $301.8 million, and $35.6 million for the years ended December 31, 2006, 2005, and 2004, respectively. Principal collections also included the principal repayment of our $15 million subordinated debt investment in Drilltec Patents & Technologies Company, Inc. There was no realized gain or loss resulting from the Drilltec repayment.

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			For the Six Months Ended June 30, 2007
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	177.0				10.2	%		$	40.0				9.4	%		$	217.0				10.0	%
	Unitranche debt(2)			57.1				10.7	%			—				—				57.1				10.7	%
	Subordinated debt			114.4				12.5	%			103.2				10.9	%			217.6				11.8	%
Total loans and debt securities				348.5				11.0	%			143.2				10.5	%			491.7				10.9	%
Equity				99.1	(5)(6)							52.9								152.0
	Total		$	447.6							$	196.1							$	643.7

			2006 Investments Funded
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	245.4				9.4	%		$	239.8				8.9	%		$	485.2				9.2	%
	Unitranche debt(2)			471.7				10.7	%			146.5				12.9	%			618.2				11.3	%
	Subordinated debt(3)			510.7				13.0	%			423.8				14.4	%			934.5				13.6	%
Total loans and debt securities				1,227.8				11.4	%			810.1				12.5	%			2,037.9				11.9	%
Equity				91.4	(5)							294.1								385.5
	Total		$	1,319.2							$	1,104.2							$	2,423.4

			2005 Investments Funded
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	76.8				10.0	%		$	250.2				6.4	%		$	327.0				7.2	%
	Unitranche debt(2)			259.5				10.5	%			—				—				259.5				10.5	%
	Subordinated debt			296.9	(4)			12.3	%			330.9				12.5	%			627.8				12.4	%
Total loans and debt securities				633.2				11.3	%			581.1				9.9	%			1,214.3				10.6	%
Equity				82.5	(5)							165.5								248.0
	Total		$	715.7							$	746.6							$	1,462.3

			2004 Investments Funded
			Debt Investments								Buyout Investments								Total
			Amount				Yield(1)				Amount				Yield(1)				Amount				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans		$	25.1				9.1	%		$	140.8				7.2	%		$	165.9				7.5	%
	Unitranche debt(2)			18.9				13.0	%			—				—				18.9				13.0	%
	Subordinated debt(3)			396.4				13.4	%			320.1				15.5	%			716.5				14.4	%
Total loans and debt securities				440.4				13.2	%			460.9				13.0	%			901.3				13.1	%
Equity				72.3	(5)							167.2								239.5
	Total		$	512.7							$	628.1							$	1,140.8

(1)	The weighted average yield on interest-bearing investments is computed as the (a) annual stated interest on accruing interest-bearing investments, divided by (b) total interest-bearing investments funded.
(2)	Unitranche debt is a single debt investment that is a blend of senior and subordinated debt terms. The yield on a unitranche investment reflects the blended yield of senior and subordinated debt combined.
(3)	Debt investments funded for the year ended December 31, 2006, included a $150 million subordinated debt investment in Advantage Sales & Marketing, Inc. received in conjunction with the sale of Advantage and a $30 million subordinated debt investment in STS Operating, Inc. received in conjunction with the sale of STS. Debt investments funded for the year ended December 31, 2004, included a $47.5 million subordinated debt investment in The Hillman Companies, Inc. received in conjunction with the sale of Hillman.
(4)	Subordinated debt investments for the year ended December 31, 2005, included $45.5 million in investments in the bonds of collateralized loan obligations (CLOs) and collateralized debt obligations (CDOs) that are managed by Callidus Capital Corporation (Callidus), a portfolio company controlled by us. These CLOs and CDOs primarily invest in senior debt.
(5)	Equity investments for the six months ended June 30, 2007, and for the years ended December 31, 2006, 2005, and 2004, included $17.2 million, $26.1 million, $47.9 million, and $23.6 million, respectively, in investments in the preferred shares/income notes of CLOs and CDOs that are managed by Callidus. These CDOs and CLOs primarily invest in senior debt.
(6)	Equity investments for the six months ended June 30, 2007, included $19.1 million invested in the Allied Capital Senior Debt Fund, L.P. See discussion below.

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			Companies				Companies				Companies
			More Than				5% to 25%				Less Than
			25% Owned(1)				Owned				5% Owned				Total
($ in millions)
Senior loans			$	14.6			$	16.0			$	113.6			$	144.2	(2)
Unitranche debt				—				—				45.4				45.4
Subordinated debt				44.0				0.1				—				44.1
	Total loans and debt securities			58.6				16.1				159.0				233.7
Equity securities				83.3				16.0				73.4				172.7	(3)
	Total		$	141.9			$	32.1			$	232.4			$	406.4

(1)	Includes various commitments to Callidus Capital Corporation (Callidus), a portfolio company controlled by us, which owns 80% (subject to dilution) of Callidus Capital Management, LLC, an asset management company that structures and manages collateralized debt obligations (CDOs), collateralized loan obligations (CLOs), and other related investments, as follows:

											Amount
			Committed				Amount				Available
			Amount				Drawn				to be Drawn
($ in millions)
Revolving line of credit for working capital			$	4.0			$	(0.7	)		$	3.3
Subordinated debt to support warehouse facilities & warehousing activities(*)				44.0				—				44.0
Purchase of preferred equity in future CLO transactions				13.2				—				13.2
	Total		$	61.2			$	(0.7	)		$	60.5

(*)

Callidus had a secured warehouse credit facility with a third party for up to $360 million. The facility was used primarily to finance the acquisition of loans pending securitization through a CDO or CLO. In addition, Callidus has a synthetic credit facility with a third party for up to $50 million. We have agreed to designate our subordinated debt commitment for Callidus to draw upon to provide first loss capital as needed to support these facilities.

(2)	Includes $125.0 million in the form of revolving senior debt facilities to 30 companies.
(3)	Includes $89.4 million to 20 private equity and venture capital funds, including $4.3 million in co-investment commitments to one private equity fund, and $12.7 million to the Allied Capital Senior Debt Fund, L.P. (see discussion above).

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			Six Months
			Ended								Year Ended
			June 30,								December 31,
			2007				2006				2006				2005				2004
($ in millions)
Interest income			$	4.1			$	5.3			$	9.3			$	8.8			$	5.5
Fees and other income				0.2				0.3				0.6				0.7				1.9
	Total interest and related portfolio income		$	4.3			$	5.6			$	9.9			$	9.5			$	7.4

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			Six Months								Year Ended
			Ended June 30,								December 31,
			2007				2006				2006				2005				2004
($ in millions)
Interest income			$	—			$	7.8			$	11.9			$	14.3			$	23.2
Dividend income				—				—				—				14.0				14.8
Fees and other income				2.8				4.3				7.8				9.2				12.0
	Total interest and related portfolio income		$	2.8			$	12.1			$	19.7			$	37.5			$	50.0

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			At and for the																At and for the
			Six Months Ended June 30,																Years Ended December 31,
			2007								2006								2006								2005								2004
			Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)				Value				Yield(1)
($ in millions)
Portfolio at value:
	CMBS bonds		$	—							$	—							$	—							$	—							$	373.8				14.6%
	CDO bonds and preferred shares			—								—								—								—								212.6				16.8%
	Commercial mortgage loans			68.7				6.6%				96.5				8.1%				71.9				7.5%				102.6				7.6%				95.0				6.8%
	Real estate owned			20.4								14.6								19.6								13.9								16.9
	Equity interests			33.7								22.0								26.7								10.6								13.0
Total portfolio			$	122.8							$	133.1							$	118.2							$	127.1							$	711.3
Investments funded			$	15.4							$	13.9							$	14.4							$	213.5							$	383.7
Change in accrued or reinvested interest			$	0.1							$	0.5							$	1.0							$	(18.0	)						$	6.6
Principal collections related to investment repayments or sales(2)			$	18.4							$	17.2							$	39.9							$	799.5							$	357.3

(1)	The weighted average yield on the interest-bearing investments is computed as the (a) annual stated interest on accruing loans plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing interest-bearing investments less the annual amortization of origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date. Interest-bearing investments for the commercial real estate finance portfolio include all investments except for real estate owned and equity interests.
(2)	Principal collections related to investment repayments or sales for the year ended December 31, 2005, included $718.1 million related to the sale of our CMBS and CDO portfolio in May 2005.

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			Face								Amount
			Amount				Discount				Funded
($ in millions)
For the Year Ended December 31, 2006
Commercial mortgage loans			$	8.0			$	—			$	8.0
Equity interests				6.4				—				6.4
	Total		$	14.4			$	—			$	14.4
For the Year Ended December 31, 2005
CMBS bonds(1)			$	211.5			$	(90.5	)		$	121.0
Commercial mortgage loans				88.5				(0.8	)			87.7
Equity interests				4.8				—				4.8
	Total		$	304.8			$	(91.3	)		$	213.5
For the Year Ended December 31, 2004
CMBS bonds			$	419.1			$	(183.7	)		$	235.4
CDO bonds and preferred shares				40.5				(0.1	)			40.4
Commercial mortgage loans				112.1				(8.2	)			103.9
Equity interests				4.0				—				4.0
	Total		$	575.7			$	(192.0	)		$	383.7

(1)	The CMBS bonds invested in during 2005, were sold on May 3, 2005.

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		2007								2006								2005
						Percentage								Percentage								Percentage
		Portfolio				of Total				Portfolio				of Total				Portfolio				of Total
Grade		at Value				Portfolio				at Value				Portfolio				at Value				Portfolio
($ in millions)
1		$	1,727.2				38.6	%		$	1,307.3				29.1	%		$	1,643.0				45.6	%
2			2,207.0				49.4				2,672.3				59.4				1,730.8				48.0
3			359.4				8.0				308.1				6.9				149.1				4.1
4			72.8				1.6				84.2				1.9				26.5				0.7
5			104.7				2.4				124.2				2.7				57.0				1.6
		$	4,471.1				100.0	%		$	4,496.1				100.0	%		$	3,606.4				100.0	%

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				2007				2006				2005
($ in millions)
Loans and debt securities in workout status (classified as Grade 4 or 5)(1)
	Private finance
		Companies more than 25% owned		$	20.4			$	51.1			$	15.6
		Companies 5% to 25% owned			27.5				4.0				—
		Companies less than 5% owned			22.7				31.6				11.4
	Commercial real estate finance				12.3				12.2				12.9
Loans and debt securities not in workout status
	Private finance
		Companies more than 25% owned			171.0				87.1				58.0
		Companies 5% to 25% owned			18.3				7.2				0.5
		Companies less than 5% owned			19.1				38.9				49.5
	Commercial real estate finance				6.8				6.7				7.9
		Total		$	298.1			$	238.8			$	155.8
		Percentage of total portfolio			6.7	%			5.3	%			4.3	%

(1)	Workout loans and debt securities exclude equity securities that are included in the total Grade 4 and 5 assets above.

			2007				2006				2005
($ in millions)
Private finance			$	136.1			$	46.5			$	74.6
Commercial mortgage loans				1.9				1.9				6.1
	Total		$	138.0			$	48.4			$	80.7
	Percentage of total portfolio			3.1	%			1.1	%			2.2	%

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				For the Three Months Ended June 30,																For the Six Months Ended June 30,
																Percent																Percent
				2007				2006				Change				Change				2007				2006				Change				Change
(in thousands, except per share amounts)
Interest and Related Portfolio Income:
	Interest and dividends			$	102,814			$	95,433			$	7,381				8	%		$	204,797			$	184,314			$	20,483				11	%
	Fees and other income				14,862				15,023				(161	)			(1	%)			20,831				37,153				(16,322	)			(44	%)
		Total interest and related portfolio income			117,676				110,456				7,220				7	%			225,628				221,467				4,161				2	%
Expenses:
	Interest				34,336				21,861				12,475				57	%			64,624				46,346				18,278				39	%
	Employee				28,611				20,398				8,213				40	%			50,539				41,826				8,713				21	%
	Employee stock options				9,519				4,597				4,922				107	%			13,180				8,203				4,977				61	%
	Administrative				14,505				9,861				4,644				47	%			27,729				21,195				6,534				31	%
		Total operating expenses			86,971				56,717				30,254				53	%			156,072				117,570				38,502				33	%
		Net investment income before income taxes			30,705				53,739				(23,034	)			(43	%)			69,556				103,897				(34,341	)			(33	%)
	Income tax expense (benefit), including excise tax				5,530				3,544				1,986				56	%			4,881				12,402				(7,521	)			(61	%)
		Net investment income			25,175				50,195				(25,020	)			(50	%)			64,675				91,495				(26,820	)			(29	%)
Net Realized and Unrealized Gains (Losses):
	Net realized gains				74,879				100,240				(25,361	)			*				102,545				533,075				(430,530	)			*
	Net change in unrealized appreciation or depreciation				(10,896	)			(116,706	)			105,810				*				55,024				(491,254	)			(546,278	)			*
	Total net gains (losses)				63,983				(16,466	)			80,449				*				157,569				41,821				115,748				*
		Net income		$	89,158			$	33,729			$	55,429				164	%		$	222,244			$	133,316			$	88,928				67	%
Diluted earnings per common share				$	0.57			$	0.24			$	0.33				138	%		$	1.44			$	0.94			$	0.50				54	%
Weighted average common shares outstanding — diluted					156,051				143,213				12,838				9	%			154,446				142,466				11,980				8	%

*	Net change in unrealized appreciation or depreciation and net gains (losses) can fluctuate significantly from period to period. As a result, comparisons may not be meaningful.

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				For the Three								For the Six
				Months Ended								Months Ended
				June 30,								June 30,
				2007				2006				2007				2006
($ in millions)
Interest
	Private finance loans and debt securities			$	96.9			$	88.6			$	193.5			$	171.2
	Commercial mortgage loans				2.5				2.1				3.8				4.8
	Cash, U.S. Treasury bills, money market and other securities				3.4				2.9				6.2				5.9
		Total interest			102.8				93.6				203.5				181.9
Dividends					—				1.8				1.3				2.4
		Total interest and dividends		$	102.8			$	95.4			$	204.8			$	184.3

			2007								2006
($ in millions)			Value				Yield(1)				Value				Yield(1)
Private finance loans and debt securities			$	2,983.4				11.7	%		$	2,491.2				12.7	%
Commercial mortgage loans				68.7				6.6	%			96.5				8.1	%
	Total		$	3,052.1				11.6	%		$	2,587.7				12.6	%

(1)

The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. The weighted average yield is computed as of the balance sheet date.

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			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Structuring and diligence			$	6.2			$	8.0			$	7.9			$	19.0
Management, consulting and other services provided to portfolio companies(1)				2.3				2.4				4.1				6.6
Commitment, guaranty and other fees from portfolio companies(2)				2.9				2.9				5.0				4.6
Loan prepayment premiums				3.4				1.7				3.6				7.0
Other income				0.1				—				0.2				—
	Total fees and other income		$	14.9			$	15.0			$	20.8			$	37.2

(1)	The six months ended June 30, 2006 includes $1.8 million in management fees from Advantage prior to its sale on March 29, 2006. See “— Portfolio and Investment Activity” above for further discussion.
(2)	Includes guaranty and other fees from BLX of $1.3 million and $1.6 million for the three months ended June 30, 2007 and 2006, respectively, and $2.8 million and $3.1 million for the six months ended June 30, 2007 and 2006, respectively. See “— Private Finance, Business Loan Express, LLC” above.

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		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
($ in millions)
Mercury		$	2.2			$	2.5			$	4.3			$	5.6
BLX		$	1.3			$	6.0			$	2.8			$	12.1

		At and for the Three								At and for the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
($ in millions)
Total outstanding debt		$	1,921.8			$	1,208.9			$	1,921.8			$	1,208.9
Average outstanding debt		$	1,965.6			$	1,301.1			$	1,904.4			$	1,395.8
Weighted average cost(1)			6.6	%			6.6	%			6.6	%			6.6	%

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest rate on the debt plus the annual amortization of commitment fees, other facility fees and debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.

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			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Salaries and employee benefits			$	21.2			$	17.6			$	42.6			$	35.0
Individual performance award (IPA)				2.4				2.1				4.9				3.8
IPA mark to market expense (benefit)				2.4				(1.5	)			(1.6	)			(0.6	)
Individual performance bonus (IPB)				2.6				2.2				4.6				3.6
	Total employee expense		$	28.6			$	20.4			$	50.5			$	41.8
Number of employees at end of period				173				166				173				166

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				For the Three								For the Six
				Months Ended								Months Ended
				June 30,								June 30,
				2007				2006				2007				2006
($ in millions)
Employee Stock Option Expense:
	Previously awarded, unvested options as of January 1, 2006			$	3.3			$	3.3			$	6.5			$	6.7
	Options granted on or after January 1, 2006				6.2				1.3				6.7				1.5
		Total employee stock option expense		$	9.5			$	4.6			$	13.2			$	8.2

			For the Three								For the Six
			Months Ending								Months Ending
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Administrative expenses			$	13.6			$	9.4			$	23.5			$	17.8
Investigation and litigation costs				0.9				0.5				4.2				3.4
	Total administrative expenses		$	14.5			$	9.9			$	27.7			$	21.2

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			For the Three								For the Six
			Months Ended								Months Ending
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Income tax expense (benefit)			$	1.5			$	0.3			$	(2.7	)		$	0.8
Excise tax expense				4.0				3.2				7.6				11.6
	Income tax expense (benefit), including excise tax		$	5.5			$	3.5			$	4.9			$	12.4

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		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
($ in millions)
Realized gains		$	87.4			$	101.0			$	120.6			$	537.5
Realized losses			(12.5	)			(0.8	)			(18.1	)			(4.4	)
Net realized gains		$	74.9			$	100.2			$	102.5			$	533.1

			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
($ in millions)			2007				2006				2007				2006
Reversal of previously recorded net unrealized appreciation associated with realized gains			$	(55.0	)		$	(95.6	)		$	(87.0	)		$	(489.2	)
Reversal of previously recorded net unrealized depreciation associated with realized losses				16.6				0.5				22.3				3.2
	Total reversal		$	(38.4	)		$	(95.1	)		$	(64.7	)		$	(486.0	)

2007
Portfolio Company		Amount
Private Finance:
HMT, Inc.		$	39.9
Healthy Pet Corp.			36.6
Wear Me Apparel Corporation			6.1
Advantage Sales & Marketing, Inc.			3.1
Geotrace Technologies, Inc.			1.1
Other			0.6
Total realized gains		$	87.4

2006
Portfolio Company		Amount
Private Finance:
STS Operating, Inc.		$	94.8
United Site Services, Inc.			3.3
MHF Logistical Solutions, Inc.			1.2
Advantage Sales & Marketing, Inc.			0.6
Other			1.1
Total realized gains		$	101.0

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2007
Portfolio Company		Amount
Private Finance:
Powell Plant Farms, Inc.		$	11.5
Alaris Consulting, LLC			1.0
Total realized losses		$	12.5

2006
Portfolio Company			Amount
Private Finance:
Other			$	0.3
	Total private finance			0.3
Commercial Real Estate:
Other				0.5
	Total commercial real estate			0.5
Total realized losses			$	0.8

2007
Portfolio Company		Amount
Private Finance:
HMT, Inc.		$	39.9
Healthy Pet Corp.			36.6
Palm Coast Data, LLC			20.0
Wear Me Apparel Corporation			6.1
Mogas Energy, LLC			4.5
Tradesmen International, Inc.			3.8
ForeSite Towers, LLC			3.8
Advantage Sales & Marketing, Inc.			3.1
Geotrace Technologies, Inc.			1.1
Other			1.7
Total realized gains		$	120.6

2006
Portfolio Company			Amount
Private Finance:
Advantage Sales & Marketing, Inc.			$	433.7
STS Operating, Inc.				94.8
United Site Services, Inc.				3.3
Nobel Learning Communities, Inc.				1.5
MHF Logistical Solutions, Inc.				1.2
The Debt Exchange, Inc.				1.1
Other				1.3
	Total private finance			536.9
Commercial Real Estate:
Other				0.6
	Total commercial real estate			0.6
Total realized gains			$	537.5

2007
Portfolio Company		Amount
Private Finance:
Powell Plant Farms, Inc.		$	11.5
Legacy Partners Group, LLC			5.8
Alaris Consulting, LLC			1.0
Other			(0.2	)
Total realized losses		$	18.1

2006
Portfolio Company			Amount
Private Finance:
Aspen Pet Products, Inc.			$	1.6
Nobel Learning Communities, Inc.				1.4
Other				0.6
	Total private finance			3.6
Commercial Real Estate:
Other				0.8
	Total commercial real estate			0.8
Total realized losses			$	4.4

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		2007								2006
		Q1				Q2				Q1				Q2
Number of private finance portfolio companies reviewed			88				92				78				78
Percentage of private finance portfolio reviewed at value			91.8	%			92.1	%			87.0	%			89.6	%

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			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
			2007(1)				2006(1)				2007(1)				2006(1)
($ in millions)
Net unrealized appreciation (depreciation)			$	27.5			$	(21.6	)		$	119.7			$	(5.3	)
Reversal of previously recorded unrealized appreciation associated with realized gains				(55.0	)			(95.6	)			(87.0	)			(489.2	)
Reversal of previously recorded unrealized depreciation associated with realized losses				16.6				0.5				22.3				3.2
	Net change in unrealized appreciation or depreciation		$	(10.9	)		$	(116.7	)		$	55.0			$	(491.3	)

(1)	The net change in unrealized appreciation or depreciation can fluctuate significantly from period to period. As a result, comparisons may not be meaningful.

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																Percent																Percent
				2006				2005				Change				Change				2005				2004				Change				Change
(in thousands, except per share amounts)
Interest and Related Portfolio Income
	Interest and dividends			$	386,427			$	317,153			$	69,274				22	%		$	317,153			$	319,642			$	(2,489	)			(1	)%
	Fees and other income				66,131				56,999				9,132				16	%			56,999				47,448				9,551				20	%
		Total interest and related portfolio income			452,558				374,152				78,406				21	%			374,152				367,090				7,062				2	%
Expenses
	Interest				100,600				77,352				23,248				30	%			77,352				75,650				1,702				2	%
	Employee				92,902				78,300				14,602				19	%			78,300				53,739				24,561				46	%
	Employee stock options				15,599				—				15,599				—				—				—				—				—
	Administrative				39,005				69,713				(30,708	)			(44	)%			69,713				34,686				35,027				101	%
		Total operating expenses			248,106				225,365				22,741				10	%			225,365				164,075				61,290				37	%
		Net investment income before income taxes			204,452				148,787				55,665				37	%			148,787				203,015				(54,228	)			(27	)%
		Income tax expense (benefit), including excise tax			15,221				11,561				3,660				32	%			11,561				2,057				9,504				462	%
		Net investment income			189,231				137,226				52,005				38	%			137,226				200,958				(63,732	)			(32	)%
Net Realized and Unrealized Gains (Losses)
	Net realized gains				533,301				273,496				259,805				95	%			273,496				117,240				156,256				133	%
	Net change in unrealized appreciation or depreciation				(477,409	)			462,092				(939,501	)			*				462,092				(68,712	)			530,804				*
	Total net gains (losses)				55,892				735,588				(679,696	)			*				735,588				48,528				687,060				*
		Net income		$	245,123			$	872,814			$	(627,691	)			(72	)%		$	872,814			$	249,486			$	623,328				250	%
Diluted earnings per common share				$	1.68			$	6.36			$	(4.68	)			(74	)%		$	6.36			$	1.88			$	4.48				238	%
Weighted average common shares outstanding — diluted					145,599				137,274				8,325				6	%			137,274				132,458				4,816				4	%

	*	Net change in unrealized appreciation or depreciation and net gains (losses) can fluctuate significantly from year to year.

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				2006				2005				2004
($ in millions)
Interest
	Private finance loans and debt securities			$	359.9			$	251.0			$	195.2
	CMBS and CDO portfolio				—				29.4				93.3
	Commercial mortgage loans				8.3				7.6				9.4
	Cash, U.S. Treasury bills, money market and other securities				14.0				9.4				3.1
		Total interest			382.2				297.4				301.0
Dividends					4.2				19.8				18.6
		Total interest and dividends		$	386.4			$	317.2			$	319.6

			2006								2005								2004
($ in millions)			Value				Yield(1)				Value				Yield(1)				Value				Yield(1)
Private finance loans and debt securities			$	3,185.2				11.9	%		$	2,094.9				13.0	%		$	1,602.9				13.9	%
CMBS and CDO				—				—				—				—				586.4				15.4	%
Commercial mortgage loans				71.9				7.5	%			102.6				7.6	%			95.0				6.8	%
	Total		$	3,257.1				11.8	%		$	2,197.5				12.8	%		$	2,284.3				14.0	%

(1)

The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. The weighted average yield is computed as of the balance sheet date.

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			2006				2005				2004
($ in millions)
Structuring and diligence			$	37.3			$	24.6			$	18.4
Management, consulting and other services provided to portfolio companies(1)				11.1				14.4				11.4
Commitment, guaranty and other fees from portfolio companies(2)				8.8				9.3				9.4
Loan prepayment premiums				8.8				6.3				5.5
Other income				0.1				2.4				2.7
	Total fees and other income(3)		$	66.1			$	57.0			$	47.4

(1)	2006 includes $1.8 million in management fees from Advantage prior to its sale on March 29, 2006. See “— Portfolio and Investment Activity” above for further discussion. 2005 and 2004 include $6.5 million and $3.1 million, respectively, in management fees from Advantage.
(2)	Includes guaranty and other fees from BLX of $6.1 million, $6.3 million, and $6.0 million for 2006, 2005, and 2004, respectively. See “— Private Finance, Business Loan Express, LLC” above.
(3)	Fees and other income related to the CMBS and CDO portfolio were $4.1 million and $6.2 million for 2005 and 2004, respectively. As noted above, we sold our CMBS and CDO portfolio on May 3, 2005.

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		2006				2005				2004
($ in millions)
Mercury		$	9.9			$	9.5			$	7.4
BLX		$	19.7			$	37.5			$	50.0
Advantage(1)		$	14.1			$	37.4			$	21.3

(1)	Includes income from the period we had a majority interest only. See “— Portfolio and Investment Activity” above for further discussion.

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		2006				2005				2004
($ in millions)
Total outstanding debt		$	1,899.1			$	1,284.8			$	1,176.6
Average outstanding debt		$	1,491.0			$	1,087.1			$	985.6
Weighted average cost(1)			6.5	%			6.5	%			6.6	%

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest rate on the debt plus the annual amortization of commitment fees, other facility fees and debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.

			2006				2005				2004
($ in millions)
Salaries and employee benefits			$	73.8			$	57.3			$	40.7
Individual performance award (IPA)				8.1				7.0				13.4
IPA mark to market expense (benefit)				2.9				2.0				(0.4	)
Individual performance bonus (IPB)				8.1				6.9				—
Transition compensation, net(1)				—				5.1				—
	Total employee expense		$	92.9			$	78.3			$	53.7
Number of employees at end of period				170				131				162

(1)

Transition compensation for the year ended December 31, 2005, included $3.1 million of costs under retention agreements and $3.1 million of transition services bonuses awarded to certain employees in the commercial real estate group as a result of the sale of the CMBS and CDO portfolio. Transition compensation costs were reduced by $1.1 million for salary reimbursements from CWCapital under a transition services agreement.

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				2006
($ in millions)
Employee Stock Option Expense:
	Previously awarded, unvested options as of January 1, 2006			$	13.2
	Options granted on or after January 1, 2006				2.4
		Total employee stock option expense		$	15.6

			2006				2005				2004
($ in millions)
Administrative expenses			$	34.0			$	33.3			$	30.1
Investigation and litigation costs				5.0				36.4				4.6
	Total administrative expenses		$	39.0			$	69.7			$	34.7

			2006				2005				2004
($ in millions)
Income tax expense (benefit)			$	0.1			$	5.4			$	1.1
Excise tax expense(1)				15.1				6.2				1.0
	Income tax expense (benefit), including excise tax		$	15.2			$	11.6			$	2.1

(1)	2006 includes an accrual for estimated excise tax of $15.4 million for the year ended December 31, 2006, net of the reversal of over accrued estimated excise taxes related to 2005 of $0.3 million.

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		2006				2005				2004
($ in millions)
Realized gains		$	557.5			$	343.1			$	267.7
Realized losses			(24.2	)			(69.6	)			(150.5	)
Net realized gains		$	533.3			$	273.5			$	117.2

			2006				2005(1)				2004
($ in millions)
Reversal of previously recorded net unrealized appreciation associated with realized gains			$	(501.5	)		$	(108.0	)		$	(210.5	)
Reversal of previously recorded net unrealized depreciation associated with realized losses				22.5				68.0				151.8
	Total reversal		$	(479.0	)		$	(40.0	)		$	(58.7	)

(1)	Includes the reversal of net unrealized appreciation of $6.5 million on the CMBS and CDO assets sold and the related hedges. The net unrealized appreciation recorded on these assets prior to their sale was determined on an individual security-by-security basis. The net gain realized upon the sale of $227.7 million reflects the total value received for the portfolio as a whole.

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2006
Portfolio Company			Amount
Private Finance:
Advantage Sales & Marketing, Inc.(1)			$	434.4
STS Operating, Inc.				94.8
Oriental Trading Company, Inc.				8.9
Advantage Sales & Marketing, Inc.(2)				4.8
United Site Services, Inc.				3.3
Component Hardware Group, Inc.				2.8
Opinion Research Corporation				1.9
Nobel Learning Communities, Inc.				1.5
MHF Logistical Solutions, Inc.				1.2
The Debt Exchange, Inc.				1.1
Other				1.5
	Total private finance			556.2
Commercial Real Estate:
Other				1.3
	Total commercial real estate			1.3
Total realized gains			$	557.5

2005
Portfolio Company			Amount
Private Finance:
Housecall Medical Resources, Inc.			$	53.7
Fairchild Industrial Products Company				16.2
Apogen Technologies Inc.				9.0
Polaris Pool Systems, Inc.				7.4
MasterPlan, Inc.				3.7
U.S. Security Holdings, Inc.				3.3
Ginsey Industries, Inc.				2.8
E-Talk Corporation				1.6
Professional Paint, Inc.				1.6
Oriental Trading Company, Inc.				1.0
Woodstream Corporation				0.9
Impact Innovations Group, LLC				0.8
DCS Business Services, Inc.				0.7
Other				3.4
	Total private finance			106.1
Commercial Real Estate:
CMBS/CDO assets, net(3)				227.7
Other				9.3
	Total commercial real estate			237.0
Total realized gains			$	343.1

2004
Portfolio Company			Amount
Private Finance:
The Hillman Companies, Inc.			$	150.3
CorrFlex Graphics, LLC				25.7
Professional Paint, Inc.				13.7
Impact Innovations Group, LLC				11.1
The Hartz Mountain Corporation				8.3
Housecall Medical Resources, Inc.				7.2
International Fiber Corporation				5.2
CBA-Mezzanine Capital Finance, LLC				4.1
United Pet Group, Inc.				3.8
Oahu Waste Services, Inc.				2.8
Grant Broadcasting Systems II				2.7
Matrics, Inc.				2.1
SmartMail, LLC				2.1
Other				7.6
	Total private finance			246.7
Commercial Real Estate:
CMBS/CDO assets, net(3)				17.4
Other				3.6
	Total commercial real estate			21.0
Total realized gains			$	267.7

(1)	Represents the realized gain on our majority equity investment only. See “—Private Finance” above.
(2)	Represents a realized gain on our minority equity investment only. See “—Private Finance” above.
(3)	Net of net realized losses from related hedges of $0.7 million and $3.8 million for the years ended December 31, 2005 and 2004, respectively.

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2006
Portfolio Company			Amount
Private Finance:
Staffing Partners Holding Company, Inc.			$	10.6
Acme Paging, L.P.				4.7
Cooper Natural Resources, Inc.				2.2
Aspen Pet Products, Inc.				1.6
Nobel Learning Communities, Inc.				1.4
Other				1.6
	Total private finance			22.1
Commercial Real Estate:
Other				2.1
	Total commercial real estate			2.1
Total realized losses			$	24.2

2005
Portfolio Company			Amount
Private Finance:
Norstan Apparel Shops, Inc.			$	18.5
Acme Paging, L.P.				13.8
E-Talk Corporation				9.0
Garden Ridge Corporation				7.1
HealthASPex, Inc.				3.5
MortgageRamp, Inc.				3.5
Maui Body Works, Inc.				2.7
Packaging Advantage Corporation				2.2
Other				3.7
	Total private finance			64.0
Commercial Real Estate:
Other				5.6
	Total commercial real estate			5.6
Total realized losses			$	69.6

2004
Portfolio Company				Amount
Private Finance:
American Healthcare Services, Inc.				$	32.9
The Color Factory, Inc.					24.5
Executive Greetings, Inc.					19.3
Sydran Food Services II, L.P.					18.2
Ace Products, Inc.					17.6
Prosperco Finanz Holding AG					7.5
Logic Bay Corporation					5.0
Sun States Refrigerated Services, Inc.					4.7
Chickasaw Sales & Marketing, Inc.					3.8
Sure-Tel, Inc.					2.3
Liberty-Pittsburgh Systems, Inc.					2.0
EDM Consulting, LLC					1.9
Pico Products, Inc.					1.7
Impact Innovations Group, LLC					1.7
Interline Brands, Inc.					1.3
Startec Global Communications Corporation					1.1
Other					2.7
	Total private finance				148.2
Commercial Real Estate:
Other					2.3
		Total commercial real estate			2.3
Total realized losses				$	150.5

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		2006																2005
		Q4				Q3				Q2				Q1				Q4				Q3				Q2				Q1
Number of private finance portfolio companies reviewed			81				105				78				78				80				89				72				36
Percentage of private finance portfolio reviewed at value			82.9	%			86.5	%			89.6	%			87.0	%			92.4	%			89.3	%			83.0	%			74.5	%

			2006(1)				2005(1)				2004(1)
($ in millions)
Net unrealized appreciation or depreciation			$	1.6			$	502.1			$	(10.0	)
Reversal of previously recorded unrealized appreciation associated with realized gains				(501.5	)			(108.0	)			(210.5	)
Reversal of previously recorded unrealized depreciation associated with realized losses				22.5				68.0				151.8
	Net change in unrealized appreciation or depreciation		$	(477.4	)		$	462.1			$	(68.7	)

(1)	The net change in unrealized appreciation or depreciation can fluctuate significantly from year to year. As a result, annual comparisons may not be meaningful.

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			2006				2005				2004
($ in millions)
			(ESTIMATED)(1)
Taxable income(2)			$	595.5			$	445.0			$	323.2
Taxable income earned in current year and carried forward for distribution in next year				(397.1	)			(156.5	)			(26.0	)
Taxable income earned in prior year and carried forward and distributed in current year				156.5				26.0				2.1
	Total dividends to common shareholders		$	354.9			$	314.5			$	299.3

(1)	Our taxable income for 2006 is an estimate and will not be finally determined until we file our 2006 tax return in September 2007. Therefore, the final taxable income and the taxable income earned in 2006 and carried forward for distribution in 2007 may be different than the estimate above. See “Risk Factors” above and Note 10, “Dividends and Distributions and Taxes” of our Notes to the 2006 Consolidated Financial Statements.
(2)	See Note 10, “Dividends and Distributions and Taxes” of our Notes to the 2006 Consolidated Financial Statements for further information on the differences between net income for book purposes and taxable income.

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($ in millions)		2007				2006				2005
Liquidity portfolio (including money market and other securities: 2007-$200.7; 2006-$201.8; 2005-$100.0)		$	200.7			$	201.8			$	200.3
Cash and investments in money market securities (including money market and other securities: 2007-$103.7; 2006-$0.4; 2005-$22.0)		$	149.3			$	2.1			$	53.3
Total assets		$	5,045.5			$	4,887.5			$	4,025.9
Total debt outstanding		$	1,921.8			$	1,899.1			$	1,284.8
Total shareholders’ equity		$	2,991.1			$	2,841.2			$	2,620.5
Debt to equity ratio(1)			0.64				0.67				0.49
Asset coverage ratio(2)			256	%			250	%			309	%

(1)	The debt to equity ratio adjusted for the liquidity portfolio and cash and investments in money market securities was 0.53, 0.60, and 0.39 at June 30, 2007, and December 31, 2006 and 2005, respectively, which is calculated as (a) total debt less the value of the liquidity portfolio divided by (b) total shareholders’ equity.
(2)	As a business development company, we are generally required to maintain a minimum ratio of 200% of total assets to total borrowings.

			For the Six Months								For the Year Ended
			Ended June 30,								December 31,
			2007				2006				2006				2005				2004
($ in millions)
Net cash provided by (used in) operating activities			$	122.8			$	126.8			$	(597.5	)		$	116.0			$	(179.3	)
Add: portfolio investments funded				659.1				1,071.2				2,257.8				1,668.1				1,472.4
	Total cash provided by operating activities before new investments		$	781.9			$	1,198.0			$	1,660.3			$	1,784.1			$	1,293.1

			2007								2006								2005
			Value				Yield				Value				Yield				Value				Yield
($ in millions)
U.S. Treasury bills			$	—				—			$	—				—			$	100.3				4.3	%
Money market securities				140.7				5.2	%			161.2				5.3	%			100.0				4.1	%
Certificate of Deposit(1)				60.0				5.5	%			40.6				5.6	%			—				—
	Total		$	200.7				5.3	%		$	201.8				5.3	%		$	200.3				4.2	%

(1)	The certificate of deposit at June 30, 2007, matures in September 2007.

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				2007																2006																2005
																Annual																Annual																Annual
																Return to																Return to																Return to
												Annual				Cover												Annual				Cover												Annual				Cover
				Facility				Amount				Interest				Interest				Facility				Amount				Interest				Interest				Facility				Amount				Interest				Interest
				Amount				Outstanding				Cost(1)				Payments(2)				Amount				Outstanding				Cost(1)				Payments(2)				Amount				Outstanding				Cost(1)				Payments(2)
($ in millions)
Notes payable and debentures:
	Privately issued unsecured notes payable				$1,041.8				$1,041.8				6.1	%			1.2	%			$1,041.4				$1,041.4				6.1	%			1.3	%			$1,164.5				$1,164.5				6.2	%			1.8	%
	Publicly issued unsecured notes payable				880.0				880.0				6.7	%			1.2	%			650.0				650.0				6.6	%			0.9	%			—				—				—				—	%
	SBA debentures (3)				—				—				—	%			—	%			—				—				—	%			—	%			28.5				28.5				7.5	%			0.1	%
		Total notes payable and debentures			1,921.8				1,921.8				6.4	%			2.4	%			1,691.4				1,691.4				6.3	%			2.2	%			1,193.0				1,193.0				6.3	%			1.9	%
Revolving line of credit(6)					922.5				—				—	%(4)			0.1	%			922.5				207.7				6.4	%(4)			0.3	%			772.5				91.8				5.6	%(4)			0.2	%
		Total debt			$2,844.3				$1,921.8				6.6	%(5)			2.5	%			$2,613.9				$1,899.1				6.5	%(5)			2.5	%			$1,965.5				$1,284.8				6.5	% (5)			2.1	%

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest on the debt plus the annual amortization of commitment fees, other facility fees and the amortization of debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.
(2)	The annual return to cover interest payments is calculated as the June 30, 2007, or December 31, 2006 or 2005, annualized cost of debt per class of financing outstanding divided by total assets at June 30, 2007, or December 31, 2006 or 2005, respectively.
(3)	The SBA debentures were repaid in full during 2006.
(4)	There were no amounts drawn on the revolving line of credit at June 30, 2007. The annual interest cost at December 31, 2006 and 2005, reflects the interest rate payable for borrowings under the revolving line of credit. In addition to the current interest rate payable, there were annual costs of commitment fees, other facility fees and amortization of debt financing costs of $3.8 million, $3.9 million and $3.3 million at June 30, 2007, and December 31, 2006 and 2005, respectively.
(5)	The annual interest cost for total debt includes the annual cost of commitment fees and the amortization of debt financing costs on the revolving line of credit and other facility fees regardless of the amount outstanding on the facility as of the balance sheet date.
(6)	At June 30, 2007, $886.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $36.5 million issued under the credit facility.

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			Amount				Maturity Date
($ in millions)
6.625% Notes due 2011			$	400.0				July 15, 2011
6.000% Notes due 2012				250.0				April 1, 2012
6.875% Notes due 2047				230.0				April 15, 2047
	Total		$	880.0

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							Payments Due By Year
																											After
			Total				2007				2008				2009				2010				2011				2011
($ in millions)
Unsecured notes payable			$	1,921.8			$	—			$	153.0			$	269.3			$	408.0			$	472.5			$	619.0
Revolving line of credit(1)				—				—				—				—				—				—				—
Operating leases				22.4				2.2				4.4				4.6				4.5				1.8				4.9
	Total contractual obligations		$	1,944.2			$	2.2			$	157.4			$	273.9			$	412.5			$	474.3			$	623.9

(1)	At June 30, 2007, $886.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $36.5 million issued under the credit facility.

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							Amount of Commitment Expiration Per Year
																											After
			Total				2007				2008				2009				2010				2011				2011
($ in millions)
Guarantees			$	220.9			$	3.3			$	3.0			$	208.3			$	—			$	4.4			$	1.9
Standby letters of credit(1)				36.5				3.9				32.6				—				—				—				—
	Total commitments(2)		$	257.4			$	7.2			$	35.6			$	208.3			$	—			$	4.4			$	1.9

(1)	Standby letters of credit are issued under our revolving line of credit that expires in September 2008. Therefore, unless a standby letter of credit is set to expire at an earlier date, we have assumed that the standby letters of credit will expire contemporaneously with the expiration of our line of credit in September 2008.
(2)	Our most significant commitments relate to our investment in Business Loan Express, LLC (BLX), which commitments totaled $228.8 million at June 30, 2007. At June 30, 2007, we guaranteed 50% of the outstanding total obligations on BLX’s revolving line of credit, which expires in March 2009, for a total guaranteed amount of $205.8 million and we had also provided four standby letters of credit totaling $20.0 million in connection with four term securitizations completed by BLX. In addition, we have agreed to purchase the $3.0 million of Class A equity interests purchased by the chief executive officer of BLX at fair value in the event that BLX amends or otherwise restructures its existing senior credit facility or he is terminated for any reason. See “— Private Finance, Business Loan Express, LLC” above for further discussion.

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		Total Amount
		Outstanding								Involuntary
		Exclusive of				Asset				Liquidating				Average
		Treasury				Coverage				Preference				Market Value
Class and Year		Securities(1)				Per Unit(2)				Per Unit(3)				Per Unit(4)
Privately Issued Unsecured Notes Payable
1997		$	0			$	0			$	—				N/A
1998			180,000,000				2,734				—				N/A
1999			419,000,000				2,283				—				N/A
2000			544,000,000				2,445				—				N/A
2001			694,000,000				2,453				—				N/A
2002			694,000,000				2,704				—				N/A
2003			854,000,000				3,219				—				N/A
2004			981,368,000				2,801				—				N/A
2005(5)			1,164,540,000				3,086				—				N/A
2006(5)			1,041,400,000				2,496				—				N/A
2007 (as of June 30, unaudited)(6)			1,041,815,000				2,556				—				N/A
Publicly Issued Unsecured Notes Payable
1997		$	0			$	0			$	—				N/A
1998			0				0				—				N/A
1999			0				0				—				N/A
2000			0				0				—				N/A
2001			0				0				—				N/A
2002			0				0				—				N/A
2003			0				0				—				N/A
2004			0				0				—				N/A
2005(5)			0				0				—				N/A
2006(5)			650,000,000				2,496				—			$	1,000
2007 (as of June 30, unaudited)(6)			880,000,000				2,556				—			$	745
Revolving Lines of Credit
1997		$	38,842,000			$	2,215			$	—				N/A
1998			95,000,000				2,734				—				N/A
1999			82,000,000				2,283				—				N/A
2000			82,000,000				2,445				—				N/A
2001			144,750,000				2,453				—				N/A
2002			204,250,000				2,704				—				N/A
2003			0				0				—				N/A
2004			112,000,000				2,801				—				N/A
2005			91,750,000				3,086				—				N/A
2006			207,750,000				2,496				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A

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		Total Amount
		Outstanding								Involuntary
		Exclusive of				Asset				Liquidating				Average
		Treasury				Coverage				Preference				Market Value
Class and Year		Securities(1)				Per Unit(2)				Per Unit(3)				Per Unit(4)
Small Business Administration Debentures(7)
1997		$	54,300,000			$	2,215			$	—				N/A
1998			47,650,000				2,734				—				N/A
1999			62,650,000				2,283				—				N/A
2000			78,350,000				2,445				—				N/A
2001			94,500,000				2,453				—				N/A
2002			94,500,000				2,704				—				N/A
2003			94,500,000				3,219				—				N/A
2004			77,500,000				2,801				—				N/A
2005			28,500,000				3,086				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A
Overseas Private Investment   Corporation Loan
1997		$	8,700,000			$	2,215			$	—				N/A
1998			5,700,000				2,734				—				N/A
1999			5,700,000				2,283				—				N/A
2000			5,700,000				2,445				—				N/A
2001			5,700,000				2,453				—				N/A
2002			5,700,000				2,704				—				N/A
2003			5,700,000				3,219				—				N/A
2004			5,700,000				2,801				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A
Auction Rate Reset Note
1997		$	0			$	0			$	—				N/A
1998			0				0				—				N/A
1999			0				0				—				N/A
2000			76,598,000				2,445				—				N/A
2001			81,856,000				2,453				—				N/A
2002			0				0				—				N/A
2003			0				0				—				N/A
2004			0				0				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A
Master Repurchase Agreement and Master Loan and Security Agreement
1997		$	225,821,000			$	2,215			$	—				N/A
1998			6,000,000				2,734				—				N/A
1999			23,500,000				2,283				—				N/A
2000			0				0				—				N/A
2001			0				0				—				N/A
2002			0				0				—				N/A
2003			0				0				—				N/A
2004			0				0				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A

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		Total Amount
		Outstanding								Involuntary
		Exclusive of				Asset				Liquidating				Average
		Treasury				Coverage				Preference				Market Value
Class and Year		Securities(1)				Per Unit(2)				Per Unit(3)				Per Unit(4)
Senior Note Payable(8)
1997		$	20,000,000			$	2,215			$	—				N/A
1998			0				0				—				N/A
1999			0				0				—				N/A
2000			0				0				—				N/A
2001			0				0				—				N/A
2002			0				0				—				N/A
2003			0				0				—				N/A
2004			0				0				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A
Redeemable Cumulative   Preferred Stock(7)(9)
1997		$	1,000,000			$	217			$	100				N/A
1998			1,000,000				267				100				N/A
1999			1,000,000				225				100				N/A
2000			1,000,000				242				100				N/A
2001			1,000,000				244				100				N/A
2002			1,000,000				268				100				N/A
2003			1,000,000				319				100				N/A
2004			0				0				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A
Non-Redeemable Cumulative Preferred Stock(7)
1997		$	6,000,000			$	217			$	100				N/A
1998			6,000,000				267				100				N/A
1999			6,000,000				225				100				N/A
2000			6,000,000				242				100				N/A
2001			6,000,000				244				100				N/A
2002			6,000,000				268				100				N/A
2003			6,000,000				319				100				N/A
2004			0				0				—				N/A
2005			0				0				—				N/A
2006			0				0				—				N/A
2007 (as of June 30, unaudited)			0				0				—				N/A

(1)	Total amount of each class of senior securities outstanding at the end of the period presented.
(2)	The asset coverage ratio for a class of senior securities representing indebtedness is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness. This asset coverage ratio is multiplied by $1,000 to determine the Asset Coverage Per Unit. The asset coverage ratio for a class of senior securities that is preferred stock is calculated as our consolidated total assets, less all liabilities and indebtedness not represented by senior securities, divided by senior securities representing indebtedness, plus the involuntary liquidation preference of the preferred stock (see footnote 3). The Asset Coverage Per Unit for preferred stock is expressed in terms of dollar amounts per share.
(3)	The amount to which such class of senior security would be entitled upon the involuntary liquidation of the issuer in preference to any security junior to it.
(4)	Not applicable, except for publicly issued unsecured notes payable, as other senior securities are not registered for public trading. The average market value of the publicly issued unsecured notes payable is calculated as the weighted average face value of the notes. On August 17, 2007, the closing price of our $230 million 6.875% Notes due 2047 was $20.04 per share.
(5)	See Note 4 to our 2006 consolidated financial statements for a description of the terms.
(6)	See Note 4 to our June 30, 2007, consolidated financial statements for a description of the terms.
(7)	Issued by our small business investment company subsidiary to the Small Business Administration. These categories of senior securities were not subject to the asset coverage requirements of the 1940 Act. During 2006, our small business investment company (SBIC) subsidiary surrendered its SBIC license and was merged into its parent.
(8)	We were the obligor on $15 million of the senior notes. Our small business investment company subsidiary was the obligor on the remaining $5 million, which was not subject to the asset coverage requirements of the 1940 Act.
(9)	The Redeemable Cumulative Preferred Stock was reclassified to Other Liabilities on the accompanying financial statements during 2003 in accordance with SFAS No. 150.

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• Buyouts		• Recapitalizations
• Acquisitions		• Note purchases
• Growth		• Other types of financings

	•	Management team with meaningful equity ownership
	•	Dominant or defensible market position
	•	High return on invested capital
	•	Stable operating margins
	•	Ability to generate free cash flow
	•	Well-constructed balance sheet

• Business Services		• Industrial Products
• Consumer Products		• Consumer Services
• Financial Services

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				At June 30, 2007
($ in millions)
								Unrealized
Portfolio								Appreciation								Percentage of
Company		Company Information		Cost				(Depreciation)				Value				Total Assets
Mercury Air Centers, Inc. (1,2)		Owns and operates fixed base operations generally under long- term leases from local airport authorities, which consist of terminal and hangar complexes that service the needs of the general aviation community.		$	85.3			$	234.8			$	320.1				6.3%
Business Loan Express, LLC(1)		Originates, sells, and services primarily real estate secured loans, generally for businesses with financing needs of up to $8.0 million. Provides primarily real estate secured conventional small business loans, SBA 7(a) loans, and small investment real estate loans.		$	324.6			$	(103.8	)		$	220.8				4.4%
WMA Equity Corporation and Affiliates d/b/a/ Wear Me Apparel		Designer and marketer of licensed and private children’s apparel.		$	182.7			$	—			$	182.7				3.6%
Norwesco, Inc.		Designs, manufactures and markets a broad assortment of polyethylene tanks primarily to the agricultural and septic tank markets.		$	120.7			$	58.1			$	178.8				3.5%
BenefitMall, Inc.		Insurance general agency providing brokers with products, tools, and services that make selling employee benefits to small businesses more efficient.		$	155.2			$	10.6			$	165.8				3.3%
Advantage Sales & Marketing, Inc.(1)		Sales and marketing agency providing outsourced sales, merchandising, and marketing services to the consumer packaged goods industry.		$	153.2			$	11.0			$	164.2				3.3%
Financial Pacific Company		Specialized commercial finance company that leases business- essential equipment to small businesses nationwide.		$	97.2			$	63.0			$	160.2				3.2%
Driven Brands, Inc.		Business format franchisor in the car care sector of the automotive aftermarket industry and in the general car care services with approximately 1,100 locations worldwide operating primarily under the Meineke Car Care Centers ® and Econo Lube N’ Tune® brands.		$	149.1			$	(9.9	)		$	139.2				2.8%
EarthColor, Inc.		Commercial printer focused on providing a one-stop printing solution of electronic pre-press, printing and finishing primarily for promotional products such as direct mail pieces, brochures, product information and free standing inserts.		$	160.1			$	(23.4	)		$	136.7				2.7%
Huddle House Inc.		Franchisor of more than 400 value-priced, full service, family dining restaurants.		$	100.2			$	1.6			$	101.8				2.0%

(1)	See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(2)	In August 2007, we sold our majority equity interest in Mercury Air Centers, Inc. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

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			2007				2006
Industry
Business services				39	%			39	%
Consumer products				23				20
Financial services				12				9
Industrial products				10				9
Retail				4				6
CDO/CLO Funds(1)				4				3
Consumer services				3				6
Healthcare services				1				3
Energy services				1				2
Other				3				3
	Total			100	%			100	%

(1)	These funds invest in senior debt representing a variety of industries and are managed by Callidus Capital, our portfolio company.

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	•	Initial investment screening;
	•	Initial investment committee approval;
	•	Due diligence, structuring and negotiation;
	•	Internal review of diligence results, including peer review;
	•	Final investment committee approval;
	•	Approval by the Executive Committee of the Board of Directors (for all debt investments that represent a commitment equal to or greater than $20 million and every buyout transaction); and
	•	Funding of the investment (due diligence must be completed with final investment committee approval and Executive Committee approval, as needed, before funds are disbursed).

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	•	Our valuation process begins with each portfolio company or investment being initially valued by the investment professionals, led by the Managing Director or senior officer who is responsible for the portfolio company relationship (the Deal Team).
	•	The CVO and third-party valuation consultants, as applicable (see below), review the preliminary valuation documentation as prepared by the Deal Team.
	•	The CVO, members of the valuation team, and third-party consultants (see below), as applicable, meet with each Managing Director or responsible senior officer to discuss the preliminary valuation determined and documented by the Deal Team for each of their respective investments.
	•	The CEO, COO, CFO and the Managing Directors meet with the CVO to discuss the preliminary valuation results.
	•	Valuation documentation is distributed to the members of the Board of Directors.
	•	The Audit Committee of the Board of Directors meets separately from the full Board of Directors with the third-party consultants (see below) to discuss the assistance provided and results. The CVO attends this meeting.
	•	The CVO discusses and reviews the valuations with the Board of Directors.
	•	To the extent there are changes or if additional information is deemed necessary, a follow-up Board meeting may take place.
	•	The Board of Directors determines the fair value of the portfolio in good faith.

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
PRIVATE FINANCE
Companies More Than 25% Owned
Alaris Consulting, LLC (1)(2)			Consulting Firm		Equity Interests			83.1%
	1815 South Meyers Road
	Suite 1000
	Oakbrook, IL 60181
AllBridge Financial, LLC(1)			Real Estate		Class A Equity Interests			95.2%
	5080 Spectrum Drive		Finance Company
	Suite 1150 E
	Addison, TX 75001
Allied Capital Senior Debt Fund, L.P.(1)(13)			Private Debt Fund		Class A-1 Limited
	1919 Pennsylvania Ave, N.W.				Partnership Interest			41.0%
	Washington, DC 20006
Avborne, Inc.(1)(7)			Aviation Services		Series B Preferred Stock			23.8%
	c/o Trivest, Inc.				Common Stock			27.2%
	7500 NW 26th Street
	Miami, FL 33122
Avborne Heavy Maintenance, Inc.(1)(7)			Aviation Services		Series A Preferred Stock			27.5%
	c/o Trivest, Inc.				Common Stock			27.5%
	7500 NW 26th Street
	Miami, FL 33122
Border Foods, Inc.(1)			Mexican Ingredient & Food		Series A Preferred Stock			100.0%
	1750 Valley View Lane		Product Manufacturer		Series A Common Stock			100.0%
	Suite 350
	Farmers Branch, TX 75234
Business Loan Express, LLC(1)			Real-Estate Secured		Class A Equity Interests			97.0%
	1633 Broadway		Small Business Lender		Class B Equity Interests			100.0%
	New York, NY 10019				Class C Equity Interests			94.9%
					Equity Interest in BLX
					Subsidiary(3)			20.0%

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
Calder Capital Partners, LLC(1)			Private Investment Firm		Equity Interests			65.0%
	321 North Clark Street, 8th Floor
	Chicago, IL 60610
Callidus Capital Corporation(1)(4)			Asset Manager and		Common stock			100.0%
	520 Madison Avenue		Finance Company
	New York, NY 10022
Coverall North America, Inc.(1)			Corporate Cleaning Service		Common Stock			98.8%
	5201 Congress Avenue		Provider
	Suite 275
	Boca Raton, Florida 33487
CR Holding, Inc.(1)			Household Cleaning		Common Stock			82.2%
	141 Venture Boulevard		Products
	Spartanburg, SC 29306
Direct Capital Corporation(1)			Business Equipment		Class A Common Stock			66.1%
	155 Commerce Way		Leasing
	Portsmouth, NH 03801
Financial Pacific Company(1)			Commercial Finance		Series A Preferred Stock			99.4%
	3455 South 344th Way		Leasing		Common Stock			99.4%
	Suite 300
	Federal Way, WA 98001
ForeSite Towers, LLC(1)			Tower Leasing		Common Equity Interest			88.1%
	5809 Feldspar Way
	Birmingham, AL 35244
Global Communications, LLC(1)			Muzak Franchisee		Preferred Equity Interest			77.8%
	1000 North Dixie Highway				Options for Common
	West Palm Beach, FL 33401				Equity Interest			59.3%
Gordian Group, Inc.(1)			Financial Advisory Services		Common Stock			100.0%
	499 Park Avenue
	New York, NY 10022
Hot Stuff Foods, LLC(1)			Foodservice to		Class B Common Stock			95.5%
	2930 W. Maple Street		Convenience Stores		Class A Common Stock(6)			52.9%
	Sioux Falls, SD 57118
Huddle House, Inc.(1)			Restaurant Franchisor		Common Stock			97.4%
	5901-B Peachtree-Dunwoody Road
	Suite 450
	Atlanta, Georgia 30328
Impact Innovations Group, LLC			Information Technology		Equity Interests in
	500 Northwinds Parkway		Services Provider		Affiliate(5)			50.0%
	Suite 200
	Alpharetta, GA 30004
Insight Pharmaceuticals Corporation (1)			Marketer of Over-The-		Preferred Stock			100.0%
	1170 Wheeler Way		Counter Pharmaceuticals		Common Stock			99.7%
	Suite 150
	Langhorne, PA 19047
Jakel, Inc.(1)			Manufacturer of Electric		Series A-1 Preferred Stock			32.3%
	201 S. Madison Avenue		Motors and Blowers		Class B Common Stock			100.0%
	Aurora, MO 65605
Legacy Partners Group, Inc.(1)			Merger and Acquisition		Equity Interests			100.0%
	520 Madison Avenue, 27th Floor		Advisor
	New York, NY 10022
Litterer Beteiligungs-GmbH			Scaffolding Company		Equity Interest			25.0%
	Theodor-Heuss-Anlage 2
	68165 Manheim
	Germany
Mercury Air Centers, Inc.(1)(12)			Fixed Base Operations		Series A Common Stock			100.0%
	Cuyahoga County Airport				Common Stock			84.3%
	355 Richmond Road
	Richmond Heights, OH 44143
MVL Group, Inc.(1)			Market Research		Common Stock			64.9%
	1061 E. Indiantown Road		Services
	Suite 300
	Jupiter, FL 33477
Old Orchards Brand, LLC(1)			Beverage Manufacturer		Equity Interests			78.0%
	1991 Twelve Mile Road		and Marketer
	Sparta, MI 49345

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
Penn Detroit Diesel Allison, LLC(1)			Distributor of Engines,		Equity Interests			78.0%
	8330 State Road		Transmissions, and Parts
	Philadelphia, PA 19136
Powell Plant Farms, Inc.(1)			Plant Producer &		Preferred Stock			100.0%
	Route 3, Box 1058		Wholesaler		Warrants to Purchase
	Troup, TX 75789				Common Stock			83.5%
Service Champ, Inc.(1)			Wholesale Distributor of		Common Stock			63.9%
	180 New Britain Boulevard		Auto Parts
	Chalfont, PA 18914
Startec Global Communications Corporation(1)			Telecommunications		Common Stock			68.5%
	7631 Calhoun Place		Services
	Suite 650
	Rockville, MD 20855
Sweet Traditions, Inc. (1)			Franchisor of Krispy		Class B-2 Preferred Stock			100.0%
	11780 Manchester Road		Kreme Doughnut		Class A-1 Common Stock			51.0%
	Suite 207		Corporation
	St. Louis, MO 63131
Triview Investments, Inc.(1)(11)			Multi-system Cable		Common Stock			99.5%
	1919 Pennsylvania Ave, N.W.		Operator,
	Washington, DC 20006		Pharmaceutical Marketer and Hotel Management Company
Companies 5% to 25% Owned
Advantage Sales & Marketing, Inc.(1)			Sales and Marketing		Equity Interests			4.1%
	19100 Von Karman Avenue		Agency
	Suite 600
	Irvine, CA 92612
Air Medical Group Holdings LLC			Air Ambulance Service		Series A Preferred Equity
	306 Davis Drive				Interests			6.6%
	P.O. Box 768				Series B Preferred Equity
	West Plains, MO 65775				Interests			6.2%
Alpine ESP Holdings, Inc.			Engineering and Technical		Preferred Stock			13.1%
	3361 Rouse Road		Services		Common Stock			10.8%
	Suite 165
	Orlando, FL 32817
Amerex Group, LLC(1)			Outerwear Apparel		Class A Equity Interests			100.0%
	350 Fifth Avenue		Supplier
	Suite 1401
	New York, NY 10118
BB&T Capital Partners/ Windsor			Private Equity Fund		Class A Equity Interests			32.6%
Mezzanine Fund, LLC
	101 N. Cherry Street
	Suite 400
	Winston-Salem, NC 27101
Becker Underwood, Inc.			Speciality Chemical		Common Stock			5.6%
	801 Dayton Avenue		Manufacturer
	Ames, IA 50010
BI Incorporated			Electronic Monitoring		Common Stock			7.1%
	6400 Lookout Road		Equipment
	Boulder, CO 80301
CitiPostal, Inc. and Affiliates			Storage and Management		Equity Interests			10.0%
	5 North 11th Street				Equity Interests of
	Brooklyn, NY 11211				Affiliates			10.0%
Creative Group, Inc.(1)			Concept-to-Completion		Warrants to Purchase
	1601 Broadway, 10th Floor		Development		Common Stock			28.5%
	New York, NY 10019
Drew Foam Companies, Inc.			Polystyrene Block Plastic		Preferred Stock			8.8%
	144 Industrial Drive		Foam Manufacturer		Common Stock			7.3%
	Monticello, AR 71655
MedBridge Healthcare, LLC(1)			Sleep Diagnostic Facilities		Debt Convertible
	110 West North Street				into Equity Interests			75.0%
	Suite 100				Class C Equity Interest			100.0%
	Greenville, SC 29601

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
MHF Logistical Solutions, Inc.(1)			Third-Party		Class B Common Stock (10)			84.3%
	800 Cranberry Woods Drive		Environmental Logistics		Warrants to Purchase
	Suite 450				Class C Common Stock (10)			100.0%
	Cranberry Township, PA 16066
Multi-Ad Services, Inc.			Marketing Services		Series A Preferred Equity
	1720 W. Detweiller Drive				Interests			17.4%
	Peoria, IL 61615				Class A Common Equity Interests			10.5%
PresAir LLC			Pressure Switch		Equity Interests			15.0%
	1009 W. Boston Post Road		Manufacturer
	Mamaroneck, NY 10543
Progressive International
	Corporation		Retail Kitchenware		Series A Redeemable
	6111 S. 228th Street				Preferred Stock			14.3%
	Kent, WA 98064				Class A Common Stock			1.0%
					Warrants to Purchase
					Class A Common Stock			42.3%
Regency Healthcare Group, LLC			Hospice Services		Class A Equity Interests			8.8%
	2151 Highland Avenue
	Suite 350
	Birmingham, AL 35205
SGT India Private Limited(1)			Software/Business Process		Common Stock			17.4%
	5858 Westheimer Road		Developer
	Houston, TX 77057
Soteria Imaging Services, LLC			Diagnostic Imaging		Class A Preferred Equity
	6009 Brownsboro Park Boulevard		Facilities Operator		Interests			10.8%
	Suite H
	Louisville, KY 40207
Universal Environmental Services, LLC			Used Oil Recycling		Preferred Equity
	411 Dividend Drive				Interests			15.0%
	Peachtree City, GA 30269
Companies Less Than 5% Owned
Axium Healthcare Pharmacy, Inc.			Pharmaceutical Services		Common Stock			14.6%
	550 Technology Park
	Lake Mary, FL 32746
Baird Capital Partners IV Limited Partnership			Private Equity Fund		Limited Partnership Interest			2.5%
	777 East Wisconsin Avenue
	Milwaukee, WI 53202
BenefitMall, Inc.			Insurance General Agency		Series B Common Stock (10)			100.0%
	4851 LBJ Freeway, Suite 1100		to Small Businesses		Warrant to Purchase
	Dallas, TX 75244				Class C Common Stock(10)			100.0%
Callidus Debt Partners CLO Fund III, Ltd.(8)			CDO/CLO Fund		Preferred Shares			68.4%
	520 Madison Avenue
	New York, NY 10022
Callidus Debt Partners CLO Fund IV, Ltd.(8)			CDO/CLO Fund		Income Notes			27.5%
	520 Madison Avenue
	New York, NY 10022
Callidus Debt Partners CLO Fund V, Ltd.(8)			CDO/CLO Fund		Income Notes			43.1%
	520 Madison Avenue
	New York, NY 10022

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
Callidus MAPS CLO Fund I LLC(8)			CDO/CLO Fund		Income Notes			86.5%
	520 Madison Avenue
	New York, NY 10022
Callidus MAPS CLO Fund II, Ltd.(8)			CDO/CLO Fund		Income Notes			47.1%
	520 Madison Avenue
	New York, NY 10022
Camden Partners Strategic Fund II, L.P.			Private Equity Fund		Limited Partnership
	One South Street				Interest			3.9%
	Suite 2150
	Baltimore, MD 21202
Carlisle Wide Plank Floors, Inc.			Wide Plank Wood Flooring		Class A-1 Preferred Stock			5.2%
	1676 Route 9
	Stoddard, NH 03464
Catterton Partners V, L.P.			Private Equity Fund		Limited Partnership
	599 West Putnam Avenue				Interest			0.8%
	Greenwich, CT 06830
Catterton Partners VI, L.P.			Private Equity Fund		Limited Partnership
	599 West Putnam Avenue				Interest			0.5%
	Greenwich, CT 06830
Centre Capital Investors IV, LP			Private Equity Fund		Limited Partnership
	30 Rockefeller Plaza, Suite 5050				Interest			0.6%
	New York, NY 10020
Commercial Credit Group, Inc.			Equipment Finance and		Series C Preferred Stock			100.0%
	121 West Trade Street		Leasing		Series D Preferred Stock			52.0%
	Suite 2100				Warrant to Purchase
	Charlotte, NC 28202				Common Stock(10)			28.5%
Cook Inlet Alternative Risk, LLC			Management Services		Equity Interests			3.7%
	10 British American Boulevard
	Latham, NY 12110
Cortec Group Fund IV, L.P.			Private Equity Fund		Limited Partnership
	200 Park Avenue				Interest			2.2%
	New York, NY 10166
Digital VideoStream, LLC			Media Post Production		Debt Convertible
	2600 West Olive Avenue				into Equity Interests			20.8%
	Burbank, CA 91505
Distant Lands Trading Co.			Provider of Premium		Series A-1 Common Stock			10.3%
	801 Houser Way North		Coffee and Coffee		Class A Common Stock			4.4%
	Renton, WA 98055		Beans
Driven Brands, Inc. (d/b/a Meineke Car Care Centers® and Econo Lube N’ Tune®)			Franchisor of		Class B Common Stock(10)			97.9%
	128 South Tryon Street		Car Care Centers		Warrant to Purchase
	Suite 900				Class A Common Stock(10)			51.0%
	Charlotte, NC 28202
Dynamic India Fund IV			Fund Focused on Real		Equity Interests			2.4%
	International Financial Services Limited		Estate in India
	IFS Court, Twenty Eight
	Cybercity, Ebene, Mauritius
EarthColor, Inc.			Full Service Commercial		Class B Common Stock(10)			100.0%
	527 W. 34th Street, 4th Floor		Printer		Warrant to Purchase
	New York, NY 10001				Class C Common Stock(10)			100.0%
eCentury Capital Partners, L.P.			Private Equity Fund		Limited Partnership
	8180 Greensboro Drive				Interest			25.0%
	Suite 1150
	McLean, VA 22102
Elexis Beta GmbH			Distance Measurement		Options to Purchase
	Ulmenstraße 22		Device		Shares			9.8%
	60325 Frankfurt		Manufacturer
	Germany
Fidus Mezzanine Capital, L.P.			Private Equity Fund		Limited Partnership Interest(15)			33.1%
	101 North Tryon Street
	Charlotte, NC 28246
Frozen Specialties, Inc.			Private Label Frozen		Warrants to Purchase
	720 Barre Road		Food Manufacturer		Class A Common Stock			2.7%
	Archbold, OH 43502

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
Geotrace Technologies, Inc.			Oil and Gas Reservoir		Warrant to Purchase
	1011 Highway 6 South		Analysis		Preferred Stock			8.9%
	Suite 220				Warrant to Purchase
	Houston, TX 77077				Common Stock			8.1%
Grotech Partners, VI, L.P.			Private Equity Fund		Limited Partnership
	c/o Grotech Capital Group				Interest			2.4%
	9690 Deereco Road
	Suite 800
	Timonium, MD 21093
Havco Wood Products LLC			Hardwood Flooring		Equity Interests			4.5%
	3200 East Outer Road		Products Manufacturer
	Scott City, MO 63780
The Homax Group, Inc.			Supplier of Branded		Preferred Stock			0.1%
	P.O. Box 5643		Consumer Products		Common Stock			0.1%
	Bellingham, WA 98227				Warrant to Purchase
					Preferred Stock			1.1%
					Warrant to Purchase
					Common Stock			1.1%
International Fiber Corporation			Cellulose and Fiber		Series A Preferred Stock			4.7%
	50 Bridge Street		Producer
	North Tonawanda, NY 14120
Kodiak Fund LP			Real Estate Finance Fund		Equity Interests			4.0%
	2107 Wilson Boulevard
	Suite 450
	Arlington, VA 22201
MedAssets, Inc.			Healthcare Outsourcing		Series B Convertible
	100 North Pointe Center				Preferred Stock			7.8%
	Suite 150				Common Stock			0.4%
	Alpharetta, GA 30022
Mid-Atlantic Venture Fund IV, L.P.			Private Equity Fund		Limited Partnership
	128 Goodman Drive				Interest			6.7%
	Bethlehem, PA 18015
Network Hardware Resale, Inc.			Provider of Pre-Owned		Debt Convertible into
	26 Castilian Drive		Networking Equipment		Common Stock			21.8%
	Suite A
	Santa Barbara, CA 93117
Norwesco, Inc.			Polyethylene Tanks		Class B Common Stock(10)			96.3%
	P.O. BOX 439		Manufacturer		Warrants to Purchase
	4365 Steiner St.				Class A Common Stock(10)			50.2%
	St. Bonifacius, MN 55375
Novak Biddle Venture Partners III, L.P.			Private Equity Fund		Limited Partnership
	7501 Wisconsin Avenue				Interest			2.5%
	East Tower, Suite 1380
	Bethesda, MD 20814
Odyssey Investment Partners Fund III, LP			Private Equity Investment		Limited Partnership
	280 Park Avenue, 38th Floor		Fund		Interest			0.7%
	West Tower
	New York, NY 10017
Passport Health Communications, Inc.			Healthcare Technology		Preferred Stock			6.7%
	720 Cool Springs Blvd				Common Stock			0.1%
	Suite 450
	Franklin, TN 37067
Pendum, Inc.			Outsourced ATM Services		Series C-2 Preferred Stock			100.0%
	1415 West Cedar Avenue		Provider		Warrants to Purchase Class C-2
	Denver, CO 80223				Common Stock			100.0%
Performant Financial Corporation			Collections and		Common Stock			2.1%
	333 N. Canyons Pkwy		Default Prevention
	Suite 100		Services
	Livermore, CA 94551
Postle Aluminum Company, LLC			Aluminum Extrusions		Class B Equity Interests			100.0%
	511 Pine Creek Court		Distributor and
	Elkhart, IN 46516		Manufacturer
Pro Mach, Inc.			Packaging Machinery		Equity Interests			2.3%
	6279 Tri-Ridge Boulevard		Manufacturer
	Suite 410
	Loveland, OH 45140

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
S.B. Restaurant Company (d/b/a Elephant Bar)			Restaurants		Series B Convertible
	14241 Firestone Boulevard				Preferred Stock			2.5%
	Suite 315				Warrants to Purchase
	La Mirada, CA 90638				Series A Common Stock			13.1%
SBBUT, LLC			Holding Company		Equity Interests in
	52 River Road				Affiliate Company			10.4%
	Stowe, VT 05672
Service Center Metals, LLC			Manufacturer Aluminum		Series C Preferred
	5850 Quality Way		Products		Equity Interests			2.8%
	Prince George, VA 23875
SPP Mezzanine Fund, L.P.			Private Equity Fund		Limited Partnership
	330 Madison Avenue, 28th Floor				Interest			35.7%
	New York, NY 10017
SPP Mezzanine Fund II, L.P.			Private Equity Fund		Limited Partnership
	330 Madison Avenue, 28th Floor				Interest			31.2%
	New York, NY 10017
The Step2 Company, LLC			Manufacturer of Plastic		Preferred Equity Interests			3.3%
	10010 Aurora-Hudson Road		Childrens and Home		Common Equity Interests			3.3%
	Streetsboro, Ohio 44241		Products
TransAmerican Auto Parts, LLC			Auto Parts and		Preferred Equity Interests			1.4%
	801 West Artesia Boulevard		Accessories Retailer		Common Equity Interests			1.4%
	Compton, CA 90220		and Wholesaler
Updata Venture Partners II, L.P.			Private Equity Fund		Limited Partnership
	11955 Freedom Drive				Interest			15.0%
	Reston, VA 20190
Venturehouse-Cibernet Investors, LLC			Third-Party Billing		Equity Interest			3.3%
	509 Seventh Street, NW
	Washington, DC 20004
Venturehouse Group, LLC			Private Equity Fund		Common Equity Interest			3.1%
	509 Seventh Street, NW
	Washington, DC 20004
VICORP Restaurants, Inc.			Restaurants		Warrant to Purchase
	400 W. 48th Avenue				Preferred Stock			1.4%
	Denver, CO 80216				Warrant to Purchase
					Common Stock			3.4%
Walker Investment Fund II, LLLP			Private Equity Fund		Limited Partnership
	3060 Washington Road				Interest			5.1%
	Suite 200
	Glenwood, MD 21738
WMA Equity Corporation and Affiliates(14)			Marketer of Children’s		Common Stock			100%
	31 West 34th Street		Apparel
	New York, NY 10001
Webster Capital II, L.P.			Private Equity Fund		Limited Partnership Interest			3.5%
	950 Winter Street
	Suite 4200
	Waltham, MA 02451
Woodstream Corporation			Pest Control		Common Stock			4.4%
	69 North Locust Street		Manufacturer		Warrants to Purchase
	Lititz, PA 17543				Common Stock			3.7%
York Insurance Services Group, Inc.			Insurance Claims		Common Stock			2.5%
	99 Cherry Hill Road		Administrator
	Suite 102
	Parsippany, NJ 07054
COMMERCIAL REAL ESTATE FINANCE(9)
Aquila Binks Forest Development, LLC(1)			Real Estate Developer		Equity Interest			50%
	15430 Endeavour Drive
	Jupiter, FL 33478

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							Percentage
Name and Address			Nature of its		Title of Securities		of Class
of Portfolio Company			Principal Business		Held by the Company		Held
MGP Park Place
	Equity, LLC		Commercial Real		Equity Interest			70.0%
	6901 Rockledge Drive		Estate Development
	Suite 230
	Bethesda, MD 20817
NPH, Inc.(1)			Commercial Real		Common Stock			100.0%
	1919 Pennsylvania Ave, N.W.		Estate Developer
	Washington, DC 20006
Stemmons Freeway Hotel, LLC(1)			Hotel		Equity Interests			100.0%
	1919 Pennsylvania Ave, N.W.
	Washington, DC 20006
WSA Commons LLC			Residential Real		Equity Interests			50.0%
	421 East 4th Street		Estate Development
	Cincinnati, OH 45202
WSALD-CEH, LLC(1)			Commercial Real		Equity Interest			50.0%
	1919 Pennsylvania Ave, N.W.		Estate Developer
	Washington, DC 20006
Van Ness Hotel, Inc.(1)			Hotel		Common Stock			100.0%
	1919 Pennsylvania Ave, N.W.
	Washington, DC 20006

(1)	The portfolio company is deemed to be an affiliated person under the 1940 Act because we hold one or more seats on the portfolio company’s board of directors, are the general partner, or are the managing member.
(2)	Alaris Consulting, LLC owns 95% of Alaris Consulting, Inc.
(3)	Included in Class C Equity Interests in the Consolidated Statement of Investments.
(4)	Callidus Capital Corporation owns 80% of Callidus Capital Management, LLC.
(5)	The affiliate holds subordinated debt issued by Impact Innovations Group, LLC. We made an investment in and exchanged our existing subordinated debt for equity interests in the affiliate.
(6)	In the first quarter of 2007, we exercised our option to acquire a majority of the voting securities of Hot Stuff Foods, LLC at fair market value.
(7)	Avborne, Inc. and Avborne Heavy Maintenance, Inc. are affiliated companies.
(8)	Callidus Capital Management, LLC is the manager of the fund (see Note 4 above).
(9)	These portfolio companies are included in the Commercial Real Estate Finance — Equity Interests in the Consolidated Statement of Investments.

(10)	Common stock is non-voting. In addition to non-voting stock ownership, we have an option to acquire a majority of the voting securities of the portfolio company at fair market value.
(11)	Triview Investments Inc. holds investments in Longview Cable & Data, LLC, Triax Holdings, LLC, and Crescent Hotels & Resorts, LLC and affiliates.
(12)	In August 2007, we sold our majority equity interest in Mercury Air Centers, Inc. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
(13)	Our affiliate holds 100% of the general partnership interests in the Allied Capital Senior Debt Fund, L.P. (the Fund). See “Management’s Discussion and Analysis and Results of Operations — Allied Capital Senior Debt Fund, L.P.” above. We hold 41% of the Class A-1 limited partnership interests in the Fund, however; we only own 25% of the total limited partnership interests in the Fund.
(14)	WMA Equity Corporation holds 23% of the equity interests in Wear Me Apparel LLC.
(15)	Limited partnership interests are non-voting.

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	•	the net asset value of our common stock disclosed in the most recent periodic report we filed with the SEC;
	•	our management’s assessment of whether any material change in the net asset value has occurred (including through the realization of net gains on the sale of our portfolio investments) from the period beginning on the date of the most recently disclosed net asset value to the period ending two days prior to the date of the sale of our common stock; and
	•	the magnitude of the difference between the net asset value disclosed in the most recent periodic report we filed with the SEC and our management’s assessment of any material change in the net asset value since the date of the most recently disclosed net asset value, and the offering price of the shares of our common stock in the proposed offering.

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								Director				Expiration
Name		Age				Position		Since(1)				of Term
Interested Directors
William L. Walton			57			Chairman, Chief Executive Officer and President			1986				2010
Joan M. Sweeney			47			Chief Operating Officer			2004				2010
Robert E. Long			76			Director			1972				2010
Independent Directors
Ann Torre Bates			49			Director			2003				2009
Brooks H. Browne			57			Director			1990				2010
John D. Firestone			63			Director			1993				2008
Anthony T. Garcia			51			Director			1991				2008
Edwin L. Harper			65			Director			2006				2009
Lawrence I. Hebert			60			Director			1989				2008
John I. Leahy			76			Director			1994				2009
Alex J. Pollock			64			Director			2003				2009
Marc F. Racicot			59			Director			2005				2008
Guy T. Steuart II			76			Director			1984				2009
Laura W. van Roijen			55			Director			1992				2008

(1)	Includes service as a director of any of the predecessor companies of Allied Capital.

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Name		Age				Position
William L. Walton			57			Chairman, Chief Executive Officer and President
Joan M. Sweeney			47			Chief Operating Officer
Kelly A. Anderson			53			Executive Vice President and Treasurer
Scott S. Binder			52			Chief Valuation Officer
Ralph G. Blasey III			46			Executive Vice President and Private Finance General Counsel
John M. Fruehwirth			39			Managing Director
Michael J. Grisius			43			Managing Director
Jeri J. Harman			50			Managing Director
Thomas C. Lauer			40			Managing Director
G. Scott Lesmes			40			Chief Legal Officer and Chief Compliance Officer
Robert D. Long			50			Managing Director
Justin S. Maccarone			48			Managing Director
Robert M. Monk			41			Managing Director
Diane E. Murphy			53			Executive Vice President and Director of Human Resources
Penni F. Roll			41			Chief Financial Officer
Daniel L. Russell			42			Managing Director
John M. Scheurer			55			Managing Director
John D. Shulman			44			Managing Director
Suzanne V. Sparrow			41			Executive Vice President and Corporate Secretary

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																		Change in
																		Pension Value
																		and Non-
		Fees																Qualified
		Earned or												Non-Equity				Deferred
		Paid in				Stock				Option				Incentive Plan				Compensation				All Other
Name		Cash				Awards				Awards(1)				Compensation				Earnings(4)				Compensation				Total
Interested Directors
William L. Walton(2)		$	—				n/a			$	—				n/a			$	—			$	—			$	—
Joan M. Sweeney(2)		$	—				n/a			$	—				n/a			$	—			$	—			$	—
Robert E. Long		$	109,000				n/a			$	18,169				n/a			$	—			$	—			$	127,169
Independent Directors
Ann Torre Bates		$	84,000				n/a			$	18,169				n/a			$	—			$	—			$	102,169
Brooks H. Browne		$	102,000				n/a			$	18,169				n/a			$	—			$	—			$	120,169
John D. Firestone		$	66,000				n/a			$	18,169				n/a			$	—			$	—			$	84,169
Anthony T. Garcia		$	102,000				n/a			$	18,169				n/a			$	—			$	—			$	120,169
Edwin L. Harper		$	86,500				n/a			$	36,337	(3)			n/a			$	—			$	—			$	122,837
Lawrence I. Hebert		$	126,500				n/a			$	18,169				n/a			$	—			$	—			$	144,669
John I. Leahy		$	138,000				n/a			$	18,169				n/a			$	—			$	—			$	156,169
Alex J. Pollock		$	115,500				n/a			$	18,169				n/a			$	—			$	—			$	133,669
Marc F. Racicot		$	64,000				n/a			$	18,169				n/a			$	—			$	—			$	82,169
Guy T. Steuart II		$	106,500				n/a			$	18,169				n/a			$	—			$	—			$	124,669
Laura W. van Roijen		$	79,000				n/a			$	18,169				n/a			$	—			$	—			$	97,169

(1)	Reflects the annual grant of 5,000 options. Options granted vest immediately. The fair value of the options was estimated on the grant date for financial reporting purposes using the Black-Scholes option pricing model and pursuant to the requirements of FASB Statement No. 123 (Revised) (FAS 123R). See Note 2 to our consolidated financial statements for the assumptions used in determining FAS 123R values.
(2)	Mr. Walton and Ms. Sweeney did not receive any compensation for serving on the Board of Directors. See “Executive Compensation — Summary Compensation” below.
(3)	Reflects the grant of 10,000 options made upon Mr. Harper’s initial election to the Board.
(4)	There were no above market or preferential earnings on the non-qualified deferred compensation plans. See “Non- Qualified Deferred Compensation” below.

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	•	Competitiveness and Market Alignment — Our compensation and benefits programs are designed to be competitive with those provided by companies with whom we compete for talent and to be sufficient to attract the best talent from an increasingly competitive market for top performers in the private equity industry. In general, programs are considered competitive when they are in a range between the median (50th percentile) and 75th percentile of market compensation levels as measured against similarly situated competitor companies. Benefit programs are designed to provide competitive levels of protection and financial security and are not based on performance. As part of its annual review process, the Committee reviews the competitiveness of our current compensation levels of its key employees and executives with a third-party compensation consultant against the competitive market and relative to overall corporate performance during the year.
	•	Achievement of Corporate and Individual Performance Objectives — We believe that the best way to accomplish alignment of compensation with the interests of our stockholders is to link pay to individual performance and individual contributions to the returns generated for stockholders. Compensation is determined by the Compensation Committee on a discretionary basis and is dependent on the achievement of certain corporate and executive performance objectives that have been established to achieve long-term objectives of Allied Capital. When individual

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		performance exceeds expectations and performance goals established during the year, pay levels for the individual are expected to be above competitive market levels. When individual performance falls below expectations, pay levels are expected to be below competitive levels.
	•	Alignment with Requirements of the 1940 Act — Our compensation program must align with the requirements of the 1940 Act, which imposes certain limitations on the structure of a BDC’s compensation program. For example, the 1940 Act prohibits a BDC from maintaining a stock option plan and a profit sharing arrangement simultaneously. As a result, if a BDC has a stock option plan, it is prohibited from using a carried interest formula, a common form of compensation in the private equity industry, as a form of compensation. Because of these and other similar limitations imposed by the 1940 Act, the Compensation Committee is limited as to the type of compensation arrangements that can be utilized in order to attract, retain and motivate employees.

	•	Annual base salary;
	•	Annual cash bonus;
	•	Stock options, priced at current market value;
	•	Individual Performance Award (IPA), which is a cash award that is generally determined at the beginning of the year based upon the individual performance of the officer, which is used exclusively to purchase shares of our common stock in the market through a deferred compensation plan; and
	•	Individual Performance Bonus (IPB), which is a cash award that is generally determined at the beginning of the year based upon the individual performance of the officer and is paid as current compensation during the year.

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																										Change in
																										Pension Value
																										and Non-
																						Non-Equity				Qualified
																						Incentive				Deferred
Name and Principal														Stock				Option				Plan				Compensation				All Other
Position		Year				Salary				Bonus(1)				Awards				Awards(2)				Compensation				Earnings(3)				Compensation(4)				Total
William L. Walton, Chief Executive Officer			2006			$	1,500,000			$	5,700,000				n/a			$	421,142				n/a				n/a			$	250,763			$	7,871,905
Joan M. Sweeney, Chief Operating Officer			2006			$	1,000,000			$	3,000,000				n/a			$	314,827				n/a				n/a			$	134,418			$	4,449,245
Penni F. Roll, Chief Financial Officer			2006			$	523,568			$	1,550,000				n/a			$	490,659				n/a				n/a			$	70,571			$	2,634,798
John D. Shulman, Managing Director			2006			$	561,250			$	5,000,000				n/a			$	633,987				n/a				n/a			$	130,772			$	6,326,009
Michael J. Grisius, Managing Director			2006			$	556,538			$	2,500,000				n/a			$	596,974				n/a				n/a			$	81,945			$	3,735,457

(1)	This column includes annual cash bonus, IPA and IPB. See “Compensation Discussion and Analysis” above for a discussion of these components. The following table provides detail as to the composition of the bonus received by each of the NEOs:

		Bonus				IPA				IPB
Mr. Walton		$	2,750,000			$	1,475,000			$	1,475,000
Ms. Sweeney		$	1,500,000			$	750,000			$	750,000
Ms. Roll		$	850,000			$	350,000			$	350,000
Mr. Shulman		$	3,000,000			$	1,000,000			$	1,000,000
Mr. Grisius		$	1,500,000			$	500,000			$	500,000

(2)	No option grants were made to NEOs in 2006. This column includes amounts from awards granted prior to 2006 which were recognized for financial statement reporting purposes without regard to estimated forfeitures in 2006 in accordance with FAS 123R. See Note 2 to our 2006 consolidated financial statements for the assumptions used in determining FAS 123R values.
(3)	There were no above market or preferential earnings on the non-qualified deferred compensation plans. See “Non-Qualified Deferred Compensation” below.
(4)	All Other Compensation is composed of the following:

		Company
		Contribution				Company
		to 401(k)				Contribution
		Plan				to DCP I				Other(5)
Mr. Walton		$	11,000			$	201,500			$	38,263
Ms. Sweeney		$	11,000			$	114,000			$	9,418
Ms. Roll		$	11,000			$	55,154			$	4,417
Mr. Shulman		$	11,000			$	117,000			$	2,772
Mr. Grisius		$	11,000			$	66,770			$	4,175

(5)

This amount includes perquisites such as Company-paid parking and the imputed income value of split dollar life insurance arrangements. For Mr. Walton, the amount also includes the premiums associated with executive long-term disability insurance. In addition, the amount includes approximately $28,000 for Mr. Walton and approximately $3,000 for Ms. Sweeney related to the direct variable costs associated with the travel of non-employee family members when they have accompanied the NEOs on trips for business purposes. The value of this perquisite is different than each NEO’s imputed income, which is calculated in accordance with IRS requirements.

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All Other

All Other

Estimated Future Payouts

Estimated Future Payouts

Stock

Option

Under Non-Equity Incentive

Under Equity Incentive Plan

Awards;

Awards;

Exercise

Grant Date

Plan Awards

Awards

Number of

Number of

or Base

Fair Value

Shares of

Securities

Price of

of Stock and

Grant

Stock or

Underlying

Option

Option

Name

Date

Threshold

Target

Maximum

Threshold

Target

Maximum

Units

Options

Awards

Awards

William L. Walton

—

—

—

—

—

—

—

—

—

—

—

Joan M. Sweeney

—

—

—

—

—

—

—

—

—

—

—

Penni F. Roll

—

—

—

—

—

—

—

—

—

—

—

John D. Shulman

—

—

—

—

—

—

—

—

—

—

—

Michael J. Grisius

—

—

—

—

—

—

—

—

—

—

—

(1)	No option grants were made to NEOs in 2006.

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		Option Awards																				Stock Awards(4)
																														Equity
																														Incentive				Equity
																														Plan				Incentive
																														Awards:				Plan
																														Number				Awards:
										Equity																				of				Market or
										Incentive																				Unearned				Payout
										Plan																				Shares,				Value of
										Awards:																Market				Units or				Unearned
		Number of				Number of				Number of												Number of				Value of				Other				Shares,
		Securities				Securities				Securities												Shares or				Shares or				Rights				Units
		Underlying				Underlying				Underlying												Units of				Units of				That				of Other
		Unexercised				Unexercised				Unexercised				Option				Option				Stock That				Stock That				Have				Rights That
		Options				Options				Unearned				Exercise				Expiration				Have Not				Have Not				Not				Have Not
Name		Exercisable(1)				Unexercisable				Options				Price				Date				Vested				Vested				Vested				Vested
William L. Walton			659,188				—				—			$	21.375				01/08/2008				n/a				n/a				n/a				n/a
			51,196				—				—			$	17.875				12/08/2008				n/a				n/a				n/a				n/a
			90,922				—				—			$	17.750				12/30/2009				n/a				n/a				n/a				n/a
			755,500				—				—			$	16.813				05/26/2010				n/a				n/a				n/a				n/a
			254,274				—				—			$	21.590				09/20/2011				n/a				n/a				n/a				n/a
			607,554				—				—			$	21.520				12/13/2012				n/a				n/a				n/a				n/a
			300,000				100,000	(2)			—			$	28.980				03/11/2014				n/a				n/a				n/a				n/a
Joan M. Sweeney			310,049				—				—			$	21.375				01/08/2008				n/a				n/a				n/a				n/a
			32,469				—				—			$	17.875				12/08/2008				n/a				n/a				n/a				n/a
			75,511				—				—			$	17.750				12/30/2009				n/a				n/a				n/a				n/a
			285,000				—				—			$	16.813				05/26/2010				n/a				n/a				n/a				n/a
			151,722				—				—			$	21.590				09/20/2011				n/a				n/a				n/a				n/a
			462,281				—				—			$	21.520				12/13/2012				n/a				n/a				n/a				n/a
			225,000				75,000	(2)			—			$	28.980				03/11/2014				n/a				n/a				n/a				n/a
Penni F. Roll			19,254				—				—			$	21.375				01/08/2008				n/a				n/a				n/a				n/a
			48,000				—				—			$	19.875				07/28/2008				n/a				n/a				n/a				n/a
			3,656				—				—			$	17.750				12/30/2009				n/a				n/a				n/a				n/a
			75,398				—				—			$	16.813				05/26/2010				n/a				n/a				n/a				n/a
			58,927				—				—			$	21.590				09/20/2011				n/a				n/a				n/a				n/a
			245,354				—				—			$	21.520				12/13/2012				n/a				n/a				n/a				n/a
			150,000				50,000	(2)			—			$	28.980				03/11/2014				n/a				n/a				n/a				n/a
			66,667				133,333	(3)			—			$	27.510				08/03/2015				n/a				n/a				n/a				n/a
John D. Shulman			295,429				—				—			$	21.875				04/05/2011				n/a				n/a				n/a				n/a
			22,053				—				—			$	21.590				09/20/2011				n/a				n/a				n/a				n/a
			289,620				—				—			$	21.520				12/13/2012				n/a				n/a				n/a				n/a
			300,000				100,000	(2)			—			$	28.980				03/11/2014				n/a				n/a				n/a				n/a
			50,000				100,000	(3)			—			$	27.510				08/03/2015				n/a				n/a				n/a				n/a
Michael J. Grisius			140,410				—				—			$	21.375				01/08/2008				n/a				n/a				n/a				n/a
			140,797				—				—			$	16.813				05/26/2010				n/a				n/a				n/a				n/a
			13,767				—				—			$	21.590				09/20/2011				n/a				n/a				n/a				n/a
			71,746				—				—			$	21.520				12/13/2012				n/a				n/a				n/a				n/a
			225,000				75,000	(2)			—			$	28.980				03/11/2014				n/a				n/a				n/a				n/a
			66,667				133,333	(3)			—			$	27.510				08/03/2015				n/a				n/a				n/a				n/a

(1)	No stock option awards have been transferred.
(2)	The options granted vest in four installments on 6/30/04, 6/30/05, 6/30/06 and 6/30/07 and vest immediately upon a change in control.
(3)	The options granted vest in three installments on 6/30/06, 6/30/07 and 6/30/08 and vest immediately upon a change in control.
(4)	We have not made any stock awards. As a business development company, we are prohibited by the 1940 Act from issuing stock awards except pursuant to an SEC exemptive order.

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Option Awards(1)

Stock Awards

Number of Shares

Number of Shares

Acquired on

Value Realized

Acquired on

Value Realized

Name

Exercise

on Exercise(2)

Vesting

on Vesting

William L. Walton

4,646

$

35,588

n/a

n/a

Joan M. Sweeney

11,188

$

128,494

n/a

n/a

Penni F. Roll

20,871

$

221,644

n/a

n/a

John D. Shulman

—

—

n/a

n/a

Michael J. Grisius

13,306

$

131,751

n/a

n/a

(1)	See “Compensation Discussion and Analysis” for more information about the options.
(2)	Represents the difference between the market price at the date of exercise and the exercise price. These options were exercised and the underlying shares were held by the individuals.

														Aggregate				Aggregate
		Executive				Company				Aggregate				Withdrawals/				Balance at
		Contributions in				Contributions in				Earnings in				Distributions in				December 31,
Name		2006(1)(4)				2006(2)(4)				2006(3)				2006				2006
William L. Walton		$	1,453,612			$	100,521			$	1,565,725			$	—			$	12,027,985
Joan M. Sweeney		$	739,125			$	63,565			$	949,212			$	—			$	6,074,302
Penni F. Roll		$	344,925			$	26,609			$	252,786			$	—			$	2,257,335
John D. Shulman		$	985,500			$	34,000			$	278,929			$	—			$	2,355,683
Michael J. Grisius		$	492,750			$	26,609			$	260,040			$	—			$	1,899,901

(1)	Executive contributions are based on the IPAs earned during the 2006 plan year (net of FICA tax) and contributed to the 2005 DCP II. There are no other executive deferrals.
(2)	Company contributions are based on the excess 401(k) employer contribution made to the 2005 DCP I in 2006 (for the 2005 plan year) and allocated to the participant’s account.
(3)	Includes interest and dividend income and realized and unrealized gains and losses.
(4)	Executive and company contributions are included in the Summary Compensation table above.

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										Dollar Range of
		Number of								Equity Securities
Name of		Shares Owned				Percentage				Beneficially Owned
Beneficial Owner		Beneficially(1)				of Class(2)				by Directors(3)
Capital Research and Management Company			7,646,020	(4)			5.0	%
333 South Hope Street, 55th Floor
Los Angeles, CA 90071-1447
Interested Directors:
William L. Walton			1,909,792	(5,6,7,15)			1.2	%			over $100,000
Joan M. Sweeney			848,808	(5,15)			*				over $100,000
Robert E. Long			39,716	(8,15)			*				over $100,000
Independent Directors:
Ann Torre Bates			25,845	(7,8)			*				over $100,000
Brooks H. Browne			85,236	(7,8,15)			*				over $100,000
John D. Firestone			61,031	(7,8)			*				over $100,000
Anthony T. Garcia			74,083	(8)			*				over $100,000
Edwin L. Harper			1,946	(13,15)			*				$50,001-$100,000
Lawrence I. Hebert			28,371	(8,12)			*				over $100,000
John I. Leahy			25,137				*				over $100,000
Alex J. Pollock			30,288	(7,8,9,15)			*				over $100,000
Marc F. Racicot			1,088				*				$10,001-$50,000
Guy T. Steuart II			329,924	(10,15)			*				over $100,000
Laura W. van Roijen			76,864	(7,8,15)			*				over $100,000
Named Executive Officers:
Michael J. Grisius			737,993	(5,7,15)			*
Penni F. Roll			727,830	(5,15)			*
John D. Shulman			596,035	(5)			*
All directors and executive officers as a group (31 in number)			10,762,108	(6,11)			6.7	%

	(1)	Beneficial ownership has been determined in accordance with Rule 13d-3 of the Securities Exchange Act of 1934.

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	(2)	Based on a total of 154,358,570 shares of our common stock issued and outstanding on August 9, 2007, and the number of shares of our common stock issuable upon the exercise of stock options exercisable within 60 days held by each executive officer and non-officer director, which totals 5,686,590 in the aggregate.
	(3)	Beneficial ownership has been determined in accordance with Rule 16a-1(a)(2) of the Securities Exchange Act of 1934.
	(4)	Information regarding share ownership was obtained from the Schedule 13F that Capital Research and Management Company filed with the SEC on June 21, 2007.
	(5)	Share ownership for the following executive officers includes:

						Owned				Options
						Through				Exercisable
						Deferred				Within 60 Days
		Owned				Compensation				of August 9,				Allocated to
		Directly				Plans (14)				2007				401(k) Plan
William L. Walton			922,475				273,955				462,000				8,367
Joan M. Sweeney			558,018				137,509				135,229				18,052
Penni F. Roll			163,822				49,321				502,511				12,176
Michael J. Grisius			177,122				60,129				479,834				20,908
John D. Shulman			106,459				79,288				410,288				—

(6)	Includes 251,362 shares held by the 401(k) Plan, of which Mr. Walton and Mr. Blasey are sub-trustees of the fund holding our shares. The sub-trustees disclaim beneficial ownership of such shares.
(7)	Includes certain shares held in IRA or Keogh accounts: Walton — 12,015 shares; Bates — 4,250 shares; Browne — 12,280 shares; Firestone — 3,415 shares; Pollock — 1,000 shares; van Roijen — 9,883 shares; and Grisius — 1,295 shares.
(8)	Beneficial ownership for these non-officer directors includes exercisable options to purchase 40,000 shares, except with respect to Mr. Firestone who has exercisable options to purchase 25,000 shares; Ms. Bates and Mr. Long who have exercisable options to purchase 20,000 shares; and Mr. Garcia, Mr. Hebert, and Mr. Pollock who have exercisable options to purchase 10,000 shares.
(9)	Includes 5,238 shares held in a deferred compensation plan for Mr. Pollock.

(10)	Includes 276,691 shares held by a corporation for which Mr. Steuart serves as an executive officer.
(11)	Includes a total of 5,686,590 shares underlying stock options exercisable within 60 days of August 9, 2007, which are assumed to be outstanding for the purpose of calculating the group’s percentage ownership, and 251,362 shares held by the 401(k) Plan.
(12)	Includes 9,000 shares held in a revocable trust.
(13)	Includes 1,500 shares held in a revocable trust.
(14)	See “Individual Performance Award” and “The 2005 Deferred Compensation Plan II” for a discussion of shares owned through the deferred compensation plans.
(15)	Includes certain shares held in margin accounts or otherwise could be pledged.

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			Amount				Amount								Range of
			of Principal				of Interest				Highest Amount				Interest Rates										Amount
Name and Position			Paid During				Paid During				Outstanding														Outstanding at
with Company			2006				2006				During 2006				High						Low				August 9, 2007
Executive Officers:
	Kelly A. Anderson, Executive Vice President and Treasurer		$	—			$	24,116			$	496,225				5.96%			—			3.91%			$	496,225
	Michael J. Grisius, Managing Director		$	24,000			$	12,594			$	230,727				4.68%			—			3.91%			$	194,727
	Penni F. Roll, Chief Financial Officer		$	344,246			$	23,179			$	875,770				5.89%			—			4.45%			$	531,524
	Suzanne V. Sparrow, Executive Vice President and Corporate Secretary		$	147,170			$	17,342			$	556,498				6.18%			—			4.45%			$	281,213
	Joan M. Sweeney, Chief Operating Officer and Director (1)		$	399,962			$	9,346			$	399,962				4.45%			—			4.45%			$	—

(1)	Ms. Sweeney is an interested director. Interested directors are “interested persons” as defined by the 1940 Act.

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	•	Securities purchased in transactions not involving any public offering, the issuer of which is an eligible portfolio company;
	•	Securities received in exchange for or distributed with respect to securities described in the bullet above or pursuant to the exercise of options, warrants or rights relating to such securities; and
	•	Cash, cash items, government securities or high quality debt securities (within the meaning of the 1940 Act), maturing in one year or less from the time of investment.

	•	does not have a class of securities with respect to which a broker may extend margin credit at the time the acquisition is made;
	•	is controlled by the business development company and has an affiliate of a business development company on its board of directors;
	•	does not have any class of securities listed on a national securities exchange; or
	•	meets such other criteria as may be established by the SEC.

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	•	Our Chief Executive Officer and Chief Financial Officer certify the financial statements contained in our periodic reports through the filing of Section 302 certifications;
	•	Our periodic reports disclose our conclusions about the effectiveness of our disclosure controls and procedures;
	•	Our annual report on Form 10-K contains a report from our management on internal control over financial reporting, including a statement that our management is responsible for establishing and maintaining adequate internal control over financial reporting as well as our management’s assessment of the effectiveness of our internal control over financial reporting, which must be audited by our independent registered public accounting firm;
	•	Our periodic reports disclose whether there were significant changes in our internal control over financial reporting or in other factors that could significantly affect our internal control over financial reporting subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses; and
	•	We may not make any loan to any director or executive officer and we may not materially modify any existing loans.

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(4)

(3)

Amount

Amount Held

Outstanding

(2)

by Us

Exclusive of

(1)

Amount

or for Our

Amounts Shown

Title of Class

Authorized

Account

Under(3)

Allied Capital Corporation

Common Stock

400,000,000

—

154,358,570

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	(1)	one-tenth or more but less than one-third;
	(2)	one-third or more but less than a majority; or
	(3)	a majority of all voting power.

	(1)	gives a written undertaking and, if required by the directors of the issuing corporation, posts a bond for the cost of the meeting; and
	(2)	submits definitive financing agreements for the acquisition of the control shares to the extent that financing is not provided by the acquiring person.

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	(1)	there is a stockholder vote and the grant of voting rights is not approved; or
	(2)	an “acquiring person statement” is not delivered to the target within 10 days following a control share acquisition.

			Amount				Maturity Date
($ in millions)
6.625% Notes due 2011(1)(2)			$	400.0				July 15, 2011
6.000% Notes due 2012(1)(2)				250.0				April 1, 2012
6.875% Notes due 2047(1)(3)				230.0				April 15, 2047
	Total		$	880.0

(1)	The terms of the notes are governed by two additional covenants, through which we have agreed to not violate Section 18(a)(1)(A) as modified by Section 61(a)(1) of the 1940 Act, as amended, while the notes are outstanding, and to provide financial information to the holders of the notes and the trustee if we should no longer be subject to the reporting requirements under the Securities Exchange Act of 1934, as amended. The supplements to the Indenture governing the issuance of the notes also revise certain events of default. The amendments to the Indenture apply to the notes only and do not apply to any prior or future issuance of debt securities under the Indenture unless so provided in an applicable supplement to the Indenture.
(2)	We may redeem the notes in whole at any time or in part from time to time provided that any exercise of our option to redeem the notes will be done in compliance with the 1940 Act, and the rules and regulations promulgated thereunder, to the extent applicable.
(3)	These notes are listed on the New York Stock Exchange under the trading symbol “AFC.” We may redeem the notes in whole or in part at any time or from time to time on or after April 15, 2012, and upon the occurrence of certain tax events provided that any exercise of our option to redeem the notes will be done in compliance with the 1940 Act, and the rules and regulations promulgated thereunder, to the extent applicable.

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	•	to defease and be discharged from, subject to some limitations, all of our obligations with respect to those debt securities; or
	•	to be released from our obligations to comply with certain covenants relating to those debt securities.

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	•	we fail to make any interest payment on a security when it is due, and we do not cure this default within 30 days;
	•	we fail to make any payment of principal when it is due at the maturity of any security, and we do not cure this default within 5 days;
	•	we fail to deposit a sinking fund payment when due, and we do not cure this default within 5 days;
	•	we fail to comply with the indenture, and after we have been notified of the default by the trustee or holders of 25% in principal amount of the series, we do not cure the default within 60 days;
	•	we file for bankruptcy, or other events in bankruptcy, insolvency or reorganization occur and remain undischarged or unstayed for a period of 60 days;
	•	on the last business day of each of twenty-four consecutive calendar months, we have an asset coverage of less than 100 per centum, or
	•	any other event of default described as being applicable to any particular series of debt securities.

	•	duly and punctually pay the principal of and any premium and interest on the debt securities of each series in accordance with the terms of the debt securities and the indenture;
	•	maintain an office or agency where the debt securities may be presented or surrendered for payment, registration of transfer or exchange, and where notices and demands to or upon us regarding the securities and the indenture may be served. We will give prompt written notice to the trustee of the location, and any change in the location, of such office or agency;
	•	if we act as our own paying agent at any time, segregate and hold in trust, for the benefit of the holders, an amount of money, in the currency in which the securities are payable, sufficient to pay the principal and any premium or interest due on the securities of any series on or before the due date for such payment;

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	•	do all things necessary to preserve and keep in full force and effect our existence, rights (charter and statutory) and franchises unless failure to do so would not disadvantage the Holders in any material respect;
	•	deliver an officers’ certificate to the trustee, within 120 calendar days after the end of each fiscal year, stating whether or not, to the best knowledge of the persons signing the officers’ certificate, we are in default in the performance and observance of any of the terms, provisions and conditions of the indenture and, if we are, specifying all such defaults and the nature and status thereof of which we may have knowledge;
	•	maintain, preserve, and keep our material properties that are used in the conduct of our business in good repair, condition and working order, ordinary wear and tear excepted; and
	•	pay or discharge when due all taxes, assessments and governmental charges levied or imposed upon us or our income, profits or property, as well as all lawful claims for labor, materials and supplies that, if unpaid, might by law become a lien upon our property, except those contested in good faith or that would not have a material adverse effect on us.

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		Page
Report of Independent Registered Public Accounting Firm			F-2
Consolidated Balance Sheet — December 31, 2006 and 2005			F-3
Consolidated Statement of Operations — For the Years Ended December 31, 2006, 2005, and 2004			F-4
Consolidated Statement of Changes in Net Assets — For the Years Ended December 31, 2006, 2005, and 2004			F-5
Consolidated Statement of Cash Flows — For the Years Ended December 31, 2006, 2005, and 2004			F-6
Consolidated Statement of Investments — December 31, 2006			F-7
Consolidated Statement of Investments — December 31, 2005			F-18
Notes to Consolidated Financial Statements			F-28
Report of Independent Registered Public Accounting Firm			F-69
Schedule 12-14 — Investments in and Advances to Affiliates for the Year Ended December 31, 2006			F-70
Report of Independent Registered Public Accounting Firm			F-74
Consolidated Balance Sheet as of June 30, 2007 (unaudited) and December 31, 2006			F-75
Consolidated Statement of Operations (unaudited) — For the Three and Six Months Ended June 30, 2007 and 2006			F-76
Consolidated Statement of Changes in Net Assets (unaudited) — For the Six Months Ended June 30, 2007 and 2006			F-77
Consolidated Statement of Cash Flows (unaudited) — For the Six Months Ended June 30, 2007 and 2006			F-78
Consolidated Statement of Investments as of June 30, 2007 (unaudited)			F-79
Notes to Consolidated Financial Statements			F-90
Schedule 12-14 — Investments in and Advances to Affiliates for the Six Months Ended June 30, 2007			F-126

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					December 31,
					2006				2005
(in thousands, except per share amounts)
ASSETS
Portfolio at value:
	Private finance
		Companies more than 25% owned (cost: 2006-$1,578,822; 2005-$1,489,782)			$	1,490,180			$	1,887,651
		Companies 5% to 25% owned (cost: 2006-$438,560; 2005-$168,373)				449,813				158,806
		Companies less than 5% owned (cost: 2006-$2,479,981; 2005-$1,448,268)				2,437,908				1,432,833
			Total private finance (cost: 2006-$4,497,363; 2005-$3,106,423)			4,377,901				3,479,290
	Commercial real estate finance (cost: 2006-$103,546; 2005-$131,695)					118,183				127,065
			Total portfolio at value (cost: 2006-$4,600,909; 2005-$3,238,118)			4,496,084				3,606,355
U.S. Treasury bills (cost: 2006-$—; 2005-$100,000)						—				100,305
Investments in money market and other securities						202,210				121,967
Deposits of proceeds from sales of borrowed Treasury securities						—				17,666
Accrued interest and dividends receivable						64,566				60,366
Other assets						122,958				87,858
Cash						1,687				31,363
			Total assets		$	4,887,505			$	4,025,880
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Notes payable and debentures (maturing within one year: 2006-$—; 2005-$175,000)				$	1,691,394			$	1,193,040
	Revolving line of credit					207,750				91,750
	Obligations to replenish borrowed Treasury securities					—				17,666
	Accounts payable and other liabilities					147,117				102,878
			Total liabilities			2,046,261				1,405,334
Commitments and contingencies
Shareholders’ equity:
	Common stock, $0.0001 par value, 200,000 shares authorized; 148,575 and 136,697 shares issued and outstanding at December 31, 2006 and 2005, respectively					15				14
	Additional paid-in capital					2,493,335				2,177,283
	Common stock held in deferred compensation trust					(28,335	)			(19,460	)
	Notes receivable from sale of common stock					(2,850	)			(3,868	)
	Net unrealized appreciation (depreciation)					(123,084	)			354,325
	Undistributed earnings					502,163				112,252
			Total shareholders’ equity			2,841,244				2,620,546
			Total liabilities and shareholders’ equity			4,887,505			$	4,025,880
Net asset value per common share					$	19.12			$	19.17

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					For the Years Ended December 31,
					2006				2005				2004
(in thousands, except per share amounts)
Interest and Related Portfolio Income:
	Interest and dividends
		Companies more than 25% owned			$	102,636			$	122,450			$	91,710
		Companies 5% to 25% owned				39,754				21,924				25,702
		Companies less than 5% owned				244,037				172,779				202,230
			Total interest and dividends			386,427				317,153				319,642
	Fees and other income
		Companies more than 25% owned				29,606				27,365				29,774
		Companies 5% to 25% owned				4,447				124				2,383
		Companies less than 5% owned				32,078				29,510				15,291
			Total fees and other income			66,131				56,999				47,448
			Total interest and related portfolio income			452,558				374,152				367,090
Expenses:
	Interest					100,600				77,352				75,650
	Employee					92,902				78,300				53,739
	Employee stock options					15,599				—				—
	Administrative					39,005				69,713				34,686
			Total operating expenses			248,106				225,365				164,075
Net investment income before income taxes						204,452				148,787				203,015
Income tax expense, including excise tax						15,221				11,561				2,057
Net investment income						189,231				137,226				200,958
Net Realized and Unrealized Gains (Losses):
	Net realized gains (losses)
		Companies more than 25% owned				513,314				33,237				86,812
		Companies 5% to 25% owned				4,467				5,285				43,818
		Companies less than 5% owned				15,520				234,974				(13,390	)
			Total net realized gains			533,301				273,496				117,240
	Net change in unrealized appreciation or depreciation					(477,409	)			462,092				(68,712	)
			Total net gains			55,892				735,588				48,528
Net increase in net assets resulting from operations					$	245,123			$	872,814			$	249,486
Basic earnings per common share					$	1.72			$	6.48			$	1.92
Diluted earnings per common share					$	1.68			$	6.36			$	1.88
Weighted average common shares outstanding — basic						142,405				134,700				129,828
Weighted average common shares outstanding — diluted						145,599				137,274				132,458

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				For the Years Ended December 31,
				2006				2005				2004
(in thousands, except per share amounts)
Operations:
	Net investment income			$	189,231			$	137,226			$	200,958
	Net realized gains				533,301				273,496				117,240
	Net change in unrealized appreciation or depreciation				(477,409	)			462,092				(68,712	)
		Net increase in net assets resulting from operations			245,123				872,814				249,486
Shareholder distributions:
	Common stock dividends				(354,892	)			(314,509	)			(299,326	)
	Preferred stock dividends				(10	)			(10	)			(62	)
		Net decrease in net assets resulting from shareholder distributions			(354,902	)			(314,519	)			(299,388	)
Capital share transactions:
	Sale of common stock				295,769				—				70,251
	Issuance of common stock for portfolio investments				—				7,200				3,227
	Issuance of common stock in lieu of cash distributions				14,996				9,257				5,836
	Issuance of common stock upon the exercise of stock options				11,734				66,688				32,274
	Stock option expense				15,835				—				—
	Net decrease in notes receivable from sale of common stock				1,018				1,602				13,162
	Purchase of common stock held in deferred compensation trust				(9,855	)			(7,968	)			(13,687	)
	Distribution of common stock held in deferred compensation trust				980				2,011				184
	Other				—				3,683				3,856
		Net increase in net assets resulting from capital share transactions			330,477				82,473				115,103
		Total net increase in net assets			220,698				640,768				65,201
Net assets at beginning of year					2,620,546				1,979,778				1,914,577
Net assets at end of year				$	2,841,244			$	2,620,546			$	1,979,778
Net asset value per common share				$	19.12			$	19.17			$	14.87
Common shares outstanding at end of year					148,575				136,697				133,099

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					For the Years Ended December 31,
					2006				2005				2004
(in thousands)
Cash flows from operating activities:
	Net increase in net assets resulting from operations				$	245,123			$	872,814			$	249,486
	Adjustments:
		Portfolio investments				(2,257,828	)			(1,668,113	)			(1,472,396	)
		Principal collections related to investment repayments or sales				1,055,347				1,503,388				909,189
		Change in accrued or reinvested interest and dividends				(11,296	)			(6,594	)			(52,193	)
		Net collection (amortization) of discounts and fees				1,713				(1,564	)			(5,235	)
		Redemption of (investments in) U.S. Treasury bills				100,000				(100,000	)			—
		Redemption of (investments in) money market securities				(77,106	)			(121,967	)			—
		Stock option expense				15,835				—				—
		Changes in other assets and liabilities				36,418				33,023				18,716
		Depreciation and amortization				1,800				1,820				1,433
		Realized gains from the receipt of notes and other consideration from sale of investments, net of collections				(209,049	)			(4,293	)			(47,497	)
		Realized losses				24,169				69,565				150,462
		Net change in unrealized (appreciation) or depreciation				477,409				(462,092	)			68,712
			Net cash provided by (used in) operating activities			(597,465	)			115,987				(179,323	)
Cash flows from financing activities:
	Sale of common stock					295,769				—				70,251
	Sale of common stock upon the exercise of stock options					11,734				66,688				32,274
	Collections of notes receivable from sale of common stock					1,018				1,602				13,162
	Borrowings under notes payable					700,000				350,000				340,212
	Repayments on notes payable and debentures					(203,500	)			(219,700	)			(231,000	)
	Net borrowings under (repayments on) revolving line of credit					116,000				(20,250	)			112,000
	Redemption of preferred stock					—				—				(7,000	)
	Purchase of common stock held in deferred compensation trust					(9,855	)			(7,968	)			(13,687	)
	Other financing activities					(6,795	)			(8,333	)			(3,004	)
	Common stock dividends and distributions paid					(336,572	)			(303,813	)			(290,830	)
	Preferred stock dividends paid					(10	)			(10	)			(62	)
			Net cash provided by (used in) financing activities			567,789				(141,784	)			22,316
Net decrease in cash						(29,676	)			(25,797	)			(157,007	)
Cash at beginning of year						31,363				57,160				214,167
Cash at end of year					$	1,687			$	31,363			$	57,160

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					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Companies More Than 25% Owned
Alaris Consulting, LLC			Senior Loan (16.5%, Due 12/05 – 12/07)(6)		$	27,055			$	26,987			$	—
	(Business Services)		Equity Interests							5,305				—
			Guaranty ($1,100)
Avborne, Inc.(7)			Preferred Stock (12,500 shares)							610				918
	(Business Services)		Common Stock (27,500 shares)							—				—
Avborne Heavy Maintenance, Inc.(7)			Preferred Stock (1,568 shares)							2,401				—
	(Business Services)		Common Stock (2,750 shares)							—				—
			Guaranty ($2,401)							—				—
Border Foods, Inc.			Preferred Stock (100,000 shares)							12,721				—
	(Consumer Products)		Common Stock (148,838 shares)							3,848				—
Business Loan Express, LLC			Class A Equity Interests(25.0%)(6)			66,622				66,622				66,622
	(Financial Services)		Class B Equity Interests							119,436				79,139
			Class C Equity Interests							109,301				64,976
			Guaranty ($189,706 — See Note 3)
			Standby Letters of Credit ($25,000 —   See Note 3)
Calder Capital Partners, LLC(5)			Senior Loan (8.0%, Due 5/09)(6)			975				975				975
	(Financial Services)		Equity Interests							2,076				2,076
Callidus Capital Corporation			Subordinated Debt (18.0%, Due 10/08)			5,762				5,762				5,762
	(Financial Services)		Common Stock (100 shares)							2,058				22,550
Coverall North America, Inc.			Unitranche Debt (12.0%, Due 7/11)			36,500				36,333				36,333
	(Business Services)		Subordinated Debt (15.0%, Due 7/11)			6,000				5,972				5,972
			Common Stock (884,880 shares)							16,649				19,619
CR Brands, Inc.			Subordinated Debt (16.6%, Due 2/13)			39,573				39,401				39,401
	(Consumer Products)		Common Stock (37,200,551 shares)							33,321				25,738
Financial Pacific Company			Subordinated Debt (17.4%, Due 2/12 – 8/12)			71,589				71,362				71,362
	(Financial Services)		Preferred Stock (10,964 shares)							10,276				15,942
			Common Stock (14,735 shares)							14,819				65,186
ForeSite Towers, LLC			Equity Interests							7,620				12,290
	(Tower Leasing)
Global Communications, LLC			Senior Loan (10.7%, Due 9/02 – 11/07)(6)			15,957				15,957				15,957
	(Business Services)		Subordinated Debt (17.0%, Due 12/03 – 9/05)(6)			11,339				11,336				11,237
			Preferred Equity Interest							14,067				—
			Options							1,639				—
Gordian Group, Inc.			Senior Loan (10.0%, Due 6/06 – 12/08)(6)			11,792				11,803				—
	(Business Services)		Common Stock (1,000 shares)							6,762				—

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(7)		Avborne, Inc. and Avborne Heavy Maintenance, Inc. are affiliated companies.

F-7

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Healthy Pet Corp.			Senior Loan (9.9%, Due 8/10)		$	27,038			$	27,038			$	27,038
	(Consumer Services)		Subordinated Debt (15.0%, Due 8/10)			43,720				43,579				43,579
			Common Stock (30,142 shares)							30,142				28,921
HMT, Inc.			Preferred Stock (554,052 shares)							2,637				2,637
	(Energy Services)		Common Stock (300,000 shares)							3,000				8,664
			Warrants							1,155				3,336
Huddle House, Inc.			Senior Loan (8.9%, Due 12/11)			19,950				19,950				19,950
	(Retail)		Subordinated Debt (15.0%, Due 12/12)			58,484				58,196				58,196
			Common Stock (415,328 shares)							41,662				41,662
Impact Innovations Group, LLC			Equity Interests in Affiliate							—				873
	(Business Services)
Insight Pharmaceuticals Corporation			Subordinated Debt (16.1%, Due 9/12)			60,049				59,850				59,850
	(Consumer Products)		Preferred Stock (25,000 shares)							25,000				7,845
			Common Stock (620,000 shares)							6,325				—
Jakel, Inc.			Subordinated Debt (15.5%, Due 3/08)(6)			15,192				15,192				6,655
	(Industrial Products)		Preferred Stock (6,460 shares)							6,460				—
			Common Stock (158,061 shares)							9,347				—
Legacy Partners Group, LLC			Senior Loan (14.0%, Due 5/09)(6)			7,646				7,646				4,843
	(Financial Services)		Subordinated Debt (18.0%, Due 5/09)(6)			2,952				2,952				—
			Equity Interests							4,248				—
Litterer Beteiligungs-GmbH(4)			Subordinated Debt (8.0%, Due 3/07)			692				692				692
	(Business Services)		Equity Interest							1,809				1,199
Mercury Air Centers, Inc.			Subordinated Debt (16.0%, Due 4/09 –
	(Business Services)		11/12)			49,358				49,217				49,217
			Common Stock (57,970 shares)							35,053				195,019
			Standby Letters of Credit ($1,581)
MVL Group, Inc.			Senior Loan (12.0%, Due 6/09 – 7/09)			27,299				27,245				27,245
	(Business Services)		Subordinated Debt (14.5%, Due 6/09)			35,846				35,478				35,478
			Common Stock (648,661 shares)							643				—
Penn Detroit Diesel Allison, LLC			Subordinated Debt (15.5%, Due 8/13)			38,173				37,994				37,994
	(Business Services)		Equity Interests							21,128				25,949
Powell Plant Farms, Inc.			Senior Loan (15.0%, Due 12/07)(6)			35,040				26,192				26,192
	(Consumer Products)		Subordinated Debt (20.0%, Due 6/03)(6)			19,291				19,223				962
			Preferred Stock (1,483 shares)							—				—
			Warrants							—				—
Service Champ, Inc.			Subordinated Debt (15.5%, Due 4/12)			27,733				27,619				27,619
	(Business Services)		Common Stock (63,888 shares)							13,662				16,786

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

F-8

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Table of Contents

						December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)				Investment(1)(2)		Principal				Cost				Value
Staffing Partners Holding
	Company, Inc.			Subordinated Debt (13.5%, Due 1/07)(6)		$	540			$	540			$	486
	(Business Services)
Startec Global Communications
	Corporation			Senior Loan (10.0%, Due 5/07 – 5/09)			15,965				15,965				15,965
	(Telecommunications)			Common Stock (19,180,000 shares)							37,256				11,232
Sweet Traditions, LLC				Senior Loan (9.0%, Due 8/11)			39,022				35,172				35,172
	(Retail)			Equity Interests							450				450
				Standby Letter of Credit ($120)
Triview Investments, Inc.(8)				Senior Loan (9.6%, Due 6/07 – 12/07)			14,758				14,747				14,747
	(Broadcasting & Cable/Business			Subordinated Debt (16.0%, Due 9/11 – 7/12)			56,288				56,008				56,008
	Services/Consumer Products)			Subordinated Debt (7.9%, Due 11/07 – 7/08)(6)			4,327				4,327				4,342
				Common Stock (202 shares)							98,604				31,322
				Guaranty ($800)
				Standby Letter of Credit ($200)
Total companies more than 25% owned										$	1,578,822			$	1,490,180
Companies 5% to 25% Owned
Advantage Sales & Marketing, Inc.				Subordinated Debt (12.0%, Due 3/14)		$	152,320			$	151,648			$	151,648
	(Business Services)			Equity Interests							—				11,000
Air Medical Group Holdings LLC				Senior Loan (9.9%, Due 3/11)			1,828				1,763				1,763
	(Healthcare Services)			Subordinated Debt (14.0%, Due 11/12)			35,180				35,128				35,128
				Equity Interests							3,470				5,950
Alpine ESP Holdings, Inc.				Preferred Stock (622 shares)							622				602
	(Business Services)			Common Stock (13,513 shares)							14				—
Amerex Group, LLC				Subordinated Debt (12.0%, Due 1/13)			8,400				8,400				8,400
	(Consumer Products)			Equity Interests							3,546				13,823
BB&T Capital Partners/Windsor
	Mezzanine Fund, LLC (5)			Equity Interests							5,873				5,554
	(Private Equity Fund)
Becker Underwood, Inc.				Subordinated Debt (14.5%, Due 8/12)			24,244				24,163				24,163
	(Industrial Products)			Common Stock (5,073 shares)							5,813				3,700
BI Incorporated				Subordinated Debt (13.5%, Due 2/14)			30,269				30,135				30,135
	(Business Services)			Common Stock (40,000 shares)							4,000				4,100

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(8)		Triview Investments, Inc. holds investments in Longview Cable & Data, LLC (Broadcasting & Cable) with a cost of $67.3 million and a value of $7.5 million, Triax Holdings, LLC (Consumer Products) with a cost of $98.9 million and a value of $91.5 million, and Crescent Hotels & Resorts, LLC and affiliates (Business Services) with a cost of $7.5 million and a value of $7.3 million.

F-9

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
CitiPostal, Inc. and Affiliates			Senior Loan (11.1%, Due 8/13-11/14)		$	20,670			$	20,569			$	20,569
	(Business Services)		Equity Interests							4,447				4,700
Creative Group, Inc.			Subordinated Debt (12.0%, Due 9/13)			15,000				13,656				13,656
	(Business Services)		Warrant							1,387				1,387
Drew Foam Companies, Inc.			Preferred Stock (722 shares)							722				722
	(Business Services)		Common Stock (7,287 shares)							7				7
MedBridge Healthcare, LLC			Senior Loan (6.0%, Due 8/09)(6)			7,164				7,164				7,164
	(Healthcare Services)		Subordinated Debt (10.0%, Due 8/14)(6)			5,184				5,184				1,813
			Convertible Subordinated Debt (2.0%, Due 8/14)(6)			2,970				984				—
			Equity Interests							1,306				—
Multi-Ad Services, Inc.			Unitranche Debt (11.3%, Due 11/11)			20,000				19,879				19,879
	(Business Services)		Equity Interests							2,000				2,000
Nexcel Synthetics, LLC			Subordinated Debt (14.5%, Due 6/09)			10,998				10,978				10,978
	(Consumer Products)		Equity Interests							1,755				1,486
PresAir LLC			Senior Loan (7.5%, Due 12/10)(6)			5,810				5,492				2,206
	(Industrial Products)		Equity Interests							1,336				—
Progressive International
	Corporation		Subordinated Debt (16.0%, Due 12/09)			7,553				7,533				7,533
	(Consumer Products)		Preferred Stock (500 shares)							500				1,024
			Common Stock (197 shares)							13				2,300
			Warrants							—				—
Regency Healthcare Group, LLC			Senior Loan (11.1%, Due 6/12)			1,250				1,232				1,232
	(Healthcare Services)		Unitranche Debt (11.1%, Due 6/12)			20,000				19,908				19,908
			Equity Interests							1,500				1,616
SGT India Private Limited(4)			Common Stock (109,524 shares)							3,944				3,346
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt (11.6%, Due 11/10)			18,500				17,569				17,569
	(Healthcare Services)		Equity Interests							2,163				2,541
Universal Environmental Services, LLC			Unitranche Debt (14.5%, Due 2/09)			10,989				10,962				10,211
	(Business Services)		Equity Interests							1,795				—
Total companies 5% to 25% owned									$	438,560			$	449,813
Companies Less Than 5% Owned
3SI Security Systems, Inc.			Subordinated Debt (14.5%, Due 8/13)		$	26,857			$	26,740			$	26,740
	(Consumer Products)
AgData, L.P.			Unitranche Debt (10.3%, Due 7/12)			11,330				11,269				11,269
	(Consumer Services)
Anthony, Inc.			Subordinated Debt (13.3%, Due 8/11 –
	(Industrial Products)		9/12)			14,818				14,768				14,768
Axium Healthcare Pharmacy, Inc.			Senior Loan (12.0%, Due 12/12)			200				161				161
	(Healthcare Services)		Unitranche Debt (12.0%, Due 12/12)			9,000				8,956				8,956
			Common Stock (26,500 shares)							2,650				2,650
Baird Capital Partners IV Limited Partnership(5) (Private Equity Fund)			Limited Partnership Interest							876				876

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

F-10

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Bantek West, Inc.			Subordinated Debt (11.6%, Due 1/11)(6)		$	30,000			$	30,000			$	21,463
	(Business Services)
Benchmark Medical, Inc.			Warrants							18				—
	(Healthcare Services)
BenefitMall, Inc.			Unitranche Debt (13.3%, Due 8/12)			110,030				109,648				109,648
	(Business Services)		Common Stock (45,528,000 shares)(11)							45,528				43,578
			Warrants(11)							—				—
			Standby Letters of Credit ($9,981)
Breeze-Eastern Corporation(3)			Senior Loan (10.1%, Due 5/11)			10,000				10,000				10,000
	(Industrial Products)
Broadcast Electronics, Inc.			Senior Loan (9.1%, Due 7/12)			4,963				4,930				4,930
	(Business Services)
C&K Market, Inc.			Subordinated Debt (14.0%, Due 12/08)			27,819				27,738				27,738
	(Retail)
Callidus Debt Partners
	CDO Fund I, Ltd. (4)(9)		Class C Notes (12.9%, Due 12/13)			18,800				18,951				18,951
	(Senior Debt Fund)		Class D Notes (17.0%, Due 12/13)			9,400				9,476				9,476
Callidus Debt Partners
	CLO Fund III, Ltd.(4)(9) (Senior Debt Fund)		Preferred Shares (23,600,000 shares, 12.7%) (12)							23,285				23,010
Callidus Debt Partners
	CLO Fund IV, Ltd. (4)(9)		Income Notes (13.8%)(12)							12,986				12,986
	(Senior Debt Fund)
Callidus Debt Partners
	CLO Fund V, Ltd.(4)(9)		Income Notes (15.8%)(12)							13,769				13,769
	(Senior Debt Fund)
Callidus MAPS CLO Fund I LLC(9)			Class E Notes (10.9%, Due 12/17)			17,000				17,000				17,155
	(Senior Debt Fund)		Income Notes (15.9%)(12)							50,960				47,421
Camden Partners Strategic Fund II,
	L.P.(5)		Limited Partnership Interest							2,141				2,873
	(Private Equity Fund)
Carlisle Wide Plank Floors, Inc.			Unitranche Debt (10.5%, Due 6/11)			14,000				13,900				13,900
	(Consumer Products)		Preferred Stock (400,000 Shares)							400				400
Catterton Partners V, L.P.(5)			Limited Partnership Interest							3,306				3,412
	(Private Equity Fund)
Catterton Partners VI, L.P.(5)			Limited Partnership Interest							531				531
	(Private Equity Fund)
Centre Capital Investors IV, LP(5)			Limited Partnership Interest							1,991				1,889
	(Private Equity Fund)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(9)		The fund is managed by Callidus Capital, a portfolio company of Allied Capital.
(11)		Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.
(12)		Represents the effective yield earned on these preferred equity investments. The yield is included in interest income from companies less than 5% owned in the consolidated statement of operations.

F-11

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Commercial Credit Group, Inc.			Subordinated Debt (14.8%, Due 2/11)		$	5,000			$	4,959			$	4,959
	(Financial Services)		Preferred Stock (32,500 shares)							3,900				3,900
			Warrants							—				—
Community Education Centers, Inc.			Subordinated Debt (16.0%, Due 12/10)			34,158				34,067				34,067
	(Education Services)
Compass Group Diversified
	Holdings LLC(3)		Senior Loan (8.4%, Due 11/11)			8,500				8,375				8,375
	(Financial Services)
Component Hardware Group, Inc.			Subordinated Debt (13.5%, Due 1/13)			18,158				18,075				18,075
	(Industrial Products)
Cook Inlet Alternative Risk, LLC			Unitranche Debt (10.0%, Due 4/12)			67,500				67,146				67,146
	(Business Services)		Equity Interests							2,000				2,300
Cortec Group Fund IV, L.P.(5)			Limited Partnership Interest							1,137				1,137
	(Private Equity)
CSAV, Inc.			Subordinated Debt (11.9%, Due 6/13)			37,500				37,500				37,500
	(Business Services)
DCWV Acquisition Corporation			Senior Loan (8.9%, Due 7/12)			2,074				2,060				2,060
	(Consumer Products)		Unitranche Debt (11.0%, Due 7/12)			16,788				16,694				16,694
Deluxe Entertainment Services Group, Inc.			Subordinated Debt (13.6%, Due 7/11)			30,000				30,000				30,000
	(Business Services)
Distant Lands Trading Co.			Senior Loan (10.6%, Due 11/11)			2,700				2,656				2,656
	(Consumer Products)		Unitranche Debt (11.0%, Due 11/11)			54,375				54,130				54,130
			Common Stock (4,000 shares)							4,000				2,975
Drilltec Patents & Technologies
	Company, Inc.		Subordinated Debt (18.0%, Due 8/06)			4,119				4,119				4,119
	(Energy Services)		Subordinated Debt (16.5%, Due 8/06)(6)			10,994				10,918				9,121
Driven Brands, Inc.			Senior Loan (8.9%, Due 6/11)			37,070				36,918				36,918
	d/b/a Meineke and Econo Lube		Subordinated Debt (12.1%, Due 6/12 – 6/13)			83,000				82,684				82,684
	(Consumer Services)		Common Stock (11,675,331 shares)(11)							29,455				19,702
			Warrants(11)							—				—
Digital VideoStream, LLC			Unitranche Debt (11.0%, Due 2/12)			19,127				19,021				19,021
	(Business Services)		Convertible Subordinated Debt (10.0%, Due 2/16)			3,730				3,714				3,714
Dynamic India Fund IV(4)(5)			Equity Interests							3,850				3,850
	(Private Equity Fund)
EarthColor, Inc.			Senior Loan (7.4%, Due 11/11)			35,000				35,000				35,000
	(Business Services)		Subordinated Debt (15.0%, Due 11/13)			107,000				106,478				106,478
			Common Stock (53,540 shares)(11)							53,540				53,540
			Warrants(11)							—				—
eCentury Capital Partners, L.P.(5)			Limited Partnership Interest							6,274				2,090
	(Private Equity Fund)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(11)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

F-12

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Elexis Beta GmbH(4)			Options						$	426			$	50
	(Industrial Products)
Farley’s & Sathers Candy Company, Inc.			Subordinated Debt (11.4%, Due 3/11)		$	20,000				19,931				19,931
	(Consumer Products)
Frozen Specialties, Inc.			Warrants							435				320
	(Consumer Products)
Garden Ridge Corporation (Retail)			Subordinated Debt (7.0%, Due 5/12)(6)			22,500				22,500				22,500
Geotrace Technologies, Inc.			Subordinated Debt (10.0%, Due 6/09)			23,945				22,481				22,481
	(Energy Services)		Warrants							2,350				1,900
Ginsey Industries, Inc.			Subordinated Debt (12.5%, Due 3/07)			2,743				2,743				2,743
	(Consumer Products)
Grant Broadcasting Systems II			Subordinated Debt (5.0%, Due 6/11)			3,005				3,005				3,005
	(Broadcasting & Cable)
Grotech Partners, VI, L.P.(5)			Limited Partnership Interest							8,223				6,088
	(Private Equity Fund)
Havco Wood Products LLC			Unitranche Debt (11.1%, Due 8/11)			19,654				18,615				18,615
	(Industrial Products)		Equity Interests							1,049				3,000
Haven Eldercare of New England, LLC (10)			Subordinated Debt (12.0%, Due 8/09)			2,827				2,827				2,827
	(Healthcare Services)
Haven Healthcare Management, LLC(10)			Subordinated Debt (18.0%, Due 4/07)			140				140				140
	(Healthcare Services)
HealthASPex Services Inc.			Senior Loan (4.0%, Due 7/08)			500				500				500
	(Business Services)
The Hillman Companies, Inc.(3)			Subordinated Debt (10.0%, Due 9/11)			44,580				44,427				44,427
	(Consumer Products)
The Homax Group, Inc.			Senior Loan (9.2%, Due 10/12)			12,485				12,485				12,485
	(Consumer Products)		Subordinated Debt (12.0%, Due 4/14)			14,000				13,171				13,171
			Preferred Stock (89 shares)							89				89
			Common Stock (28 shares)							6				6
			Warrants							1,106				1,106
Hot Stuff Foods, LLC			Senior Loan (8.9%, Due 2/11-2/12)			48,580				48,351				48,351
	(Consumer Products)		Subordinated Debt (13.7%, Due 8/12 – 2/13)			60,606				60,353				60,353
			Subordinated Debt (16.0%, Due 2/13)(6)			20,841				20,749				8,460
			Common Stock (1,122,452 shares)(11)							56,186				—
			Warrants(11)							—				—
Ideal Snacks Corporation			Senior Loan (9.0%, Due 6/10)			5,850				5,815				5,815
	(Consumer Products)
Integrity Interactive Corporation			Unitranche Debt (10.5%, Due 2/12)			29,500				29,314				29,314
	(Business Services)
International Fiber Corporation			Subordinated Debt (14.0%, Due 6/12)			21,986				21,914				21,914
	(Industrial Products)		Preferred Stock (25,000 shares)							2,500				2,200

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(10)			Haven Eldercare of New England, LLC and Haven Healthcare Management, LLC are affiliated companies.
	(11)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

F-13

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Kodiak Fund LP(5)			Equity Interests						$	4,700			$	4,656
	(Private Equity Fund)
Line-X, Inc.			Senior Loan (9.1%, Due 8/11)		$	2,000				1,981				1,981
	(Consumer Products)		Unitranche Debt (10.0% Due 8/11)			48,509				48,306				48,306
			Standby Letter of Credit ($1,500)
MedAssets, Inc.			Preferred Stock (227,865 shares)							2,049				3,623
	(Business Services)		Common Stock (50,000 shares)							—				250
MHF Logistical Solutions, Inc.			Subordinated Debt (11.5%, Due 6/12)			33,600				33,448				33,448
	(Business Services)		Subordinated Debt (18.0%, Due 6/13)(6)			11,211				11,155				8,719
			Common Stock (20,934 shares)(11)							20,942				—
			Warrants(11)							—				—
Mid-Atlantic Venture Fund IV, L.P.(5)			Limited Partnership Interest							6,974				3,221
	(Private Equity Fund)
Mogas Energy, LLC			Subordinated Debt (9.5%, Due 3/12 – 4/12)			16,336				15,100				16,318
	(Energy Services)		Warrants							1,774				6,250
Network Hardware Resale, Inc.			Unitranche Debt (10.5%, Due 12/11)			37,154				37,357				37,357
	(Business Services)		Convertible Subordinated Debt (9.8%, Due 12/15)			12,000				12,068				12,559
Norwesco, Inc.			Subordinated Debt (12.6%, Due 1/12 – 7/12)			82,486				82,172				82,172
	(Industrial Products)		Common Stock (559,603 shares)(11)							38,313				83,329
			Warrants(11)							—				—
Novak Biddle Venture Partners III, L.P.(5)			Limited Partnership Interest							1,834				1,947
	(Private Equity Fund)
Oahu Waste Services, Inc.			Stock Appreciation Rights							239				800
	(Business Services)
Odyssey Investment Partners Fund III,
	LP(5)		Limited Partnership Interest							1,883				1,744
	(Private Equity Fund)
Palm Coast Data, LLC			Senior Loan (8.9%, Due 8/10)			15,306				15,243				15,243
	(Business Services)		Subordinated Debt (15.5%, Due 8/12 – 8/15)			30,396				30,277				30,277
			Common Stock (21,743 shares)(11)							21,743				41,707
			Warrants(11)							—				—
Passport Health
	Communications, Inc.		Subordinated Debt (14.0%, Due 4/12)			10,145				10,101				10,101
	(Healthcare Services)		Preferred Stock (651,381 shares)							2,000				2,189
Performant Financial Corporation			Common Stock (478,816 shares)							734				—
	(Business Services)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(11)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

F-14

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Postle Aluminum Company, LLC			Unitranche Debt (11.0%, Due 10/12)		$	57,500			$	57,189			$	57,189
	(Industrial Products)		Equity Interests							2,500				2,500
Pro Mach, Inc.			Subordinated Debt (12.5%, Due 6/12)			14,471				14,402				14,402
	(Industrial Products)		Equity Interests							1,500				2,200
Promo Works, LLC			Unitranche Debt (10.3%, Due 12/11)			31,000				30,727				30,727
	(Business Services)		Guaranty ($1,200)
S.B. Restaurant Company			Unitranche Debt (9.8%, Due 4/11)			41,501				41,094				41,094
	(Retail)		Preferred Stock (54,125 shares)							135				135
			Warrants							619				1,200
			Standby Letters of Credit ($2,611)
SBBUT, LLC			Equity Interests							—				—
	(Consumer Products)
Service Center Metals, LLC			Subordinated Debt (15.5%, Due 9/11)			5,000				4,976				4,976
	(Industrial Products)		Equity Interests							312				318
Soff-Cut Holdings, Inc.			Preferred Stock (300 shares)							300				300
	(Industrial Products)		Common Stock (2,000 shares)							200				180
SPP Mezzanine Funding, L.P.(5)			Limited Partnership Interest							2,551				2,825
	(Private Equity Fund)
SPP Mezzanine Funding II, L.P.(5)			Limited Partnership Interest							326				326
	(Private Equity Fund)
Stag-Parkway, Inc.			Unitranche Debt (10.8%, Due 7/12)			63,000				62,711				62,711
	(Business Services)
STS Operating, Inc.			Subordinated Debt (15.0%, Due 1/13)			30,156				30,021				30,021
	(Industrial Products)
The Step2 Company, LLC			Unitranche Debt (10.5%, Due 4/12)			67,898				67,457				67,457
	(Consumer Products)		Equity Interests							2,000				1,763
Tradesmen International, Inc.			Subordinated Debt (12.0%, Due 12/09)			15,000				14,468				14,468
	(Business Services)		Warrants							710				3,300
TransAmerican Auto Parts, LLC			Subordinated Debt (14.0%, Due 11/12)			12,947				12,892				12,892
	(Consumer Products)		Equity Interests							1,190				747
Universal Air Filter Company			Unitranche Debt (11.0%, Due 11/11)			19,117				19,026				19,026
	(Industrial Products)
Updata Venture Partners II, L.P.(5)			Limited Partnership Interest							5,477				5,158
	(Private Equity Fund)
Venturehouse-Cibernet Investors, LLC			Equity Interest							42				42
	(Business Services)
Venturehouse Group, LLC(5)			Equity Interest							598				365
	(Private Equity Fund)
VICORP Restaurants, Inc.			Warrants							33				—
	(Retail)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.

F-15

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Table of Contents

					December 31, 2006
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Walker Investment Fund II, LLLP(5)			Limited Partnership Interest						$	1,329			$	458
	(Private Equity Fund)
Wear Me Apparel Corporation			Subordinated Debt (15.0%, Due 12/10)		$	40,000				39,407				39,407
	(Consumer Products)		Warrants							1,219				5,120
Wilton Industries, Inc.			Subordinated Debt (16.0%, Due 6/08)			2,400				2,400				2,400
	(Consumer Products)
Woodstream Corporation			Subordinated Debt (13.5%, Due 11/12 – 5/13)			53,114				52,989				52,989
	(Consumer Products)		Common Stock (180 shares)							673				3,885
			Warrants							—				2,815
York Insurance Services Group, Inc.			Subordinated Debt (14.5%, Due 1/14)			44,249				44,045				44,045
	(Business Services)		Common Stock (15,000 shares)							1,500				1,500
Other companies			Other debt investments(6)			223				223				218
			Other equity investments							8				—
Total companies less than 5% owned									$	2,479,981			$	2,437,908
Total private finance (145 portfolio companies)									$	4,497,363			$	4,377,901

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.

F-16

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Table of Contents

											December 31, 2006
			Interest				Number of
			Rate Ranges				Loans				Cost				Value
Commercial Mortgage Loans
				Up to 6.99%				3			$	20,470			$	19,692
				7.00%–8.99%				9				24,092				24,073
				9.00%–10.99%				4				24,117				24,117
			15.00% and above					2				3,970				3,970
	Total commercial mortgage loans(13)							18			$	72,649			$	71,852
Real Estate Owned											$	15,708			$	19,660
Equity Interests(2) — Companies more than 25% owned (Guarantees — $6,871)											$	15,189			$	26,671
	Total commercial real estate finance										$	103,546			$	118,183
Total portfolio											$	4,600,909			$	4,496,084

				Yield				Cost				Value
Liquidity Portfolio
	American Beacon Money Market Select FD Fund(14)				5.3%			$	85,672			$	85,672
	Certificate of Deposit (Due March 2007)(14)				5.6%				40,565				40,565
	American Beacon Money Market Fund(14)				5.2%				40,384				40,384
	SEI Daily Income Tr Prime Obligation Fund(14)				5.2%				34,671				34,671
	Blackrock Liquidity Funds(14)				5.2%				476				476
		Total liquidity portfolio						$	201,768			$	201,768
Other Investments in Money Market Securities(14)
	Columbia Treasury Reserves Money Market Fund				5.2%			$	441			$	441
	Columbia Money Market Reserves				5.2%			$	1			$	1

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(13)			Commercial mortgage loans totaling $18.9 million at value were on non-accrual status and therefore were considered non-income producing.
	(14)			Included in investments in money market and other securities on the accompanying Consolidated Balance Sheet.

F-17

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Table of Contents

					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Companies More Than 25% Owned
Acme Paging, L.P.(4)			Senior Loan (6.0%, Due 12/07)(6)		$	3,750			$	3,750			$	—
	(Telecommunications)		Subordinated Debt (10.0%, Due 1/08)(6)			881				881				—
			Common Stock (23,513 shares)							27				—
Advantage Sales & Marketing, Inc.			Subordinated Debt (10.5%, Due 9/09)			60,000				59,787				59,787
	(Business Services)		Subordinated Debt (18.5%, Due 12/09)			124,000				124,000				124,000
			Common Stock (18,924,976 shares)							73,932				476,578
Alaris Consulting, LLC			Senior Loan (15.8%, Due 12/05 – 12/07)(6)			27,055				27,050				—
	(Business Services)		Equity Interests							5,305				—
			Guaranty ($1,100)
American Healthcare Services, Inc.			Senior Loan (0.7%, Due 12/04 – 12/05)(6)			4,999				4,600				4,097
	and Affiliates
	(Healthcare Services)
Avborne, Inc.(7)			Preferred Stock (12,500 shares)							658				892
	(Business Services)		Common Stock (27,500 shares)							—				—
Avborne Heavy Maintenance, Inc.(7)			Preferred Stock (1,568 shares)							2,401				—
	(Business Services)		Common Stock (2,750 shares)							—				—
			Guaranty ($2,401)
Business Loan Express, LLC			Subordinated Debt (6.9%, Due 4/06)			10,000				10,000				10,000
	(Financial Services)		Class A Equity Interests			60,693				60,693				60,693
			Class B Equity Interests							119,436				146,910
			Class C Equity Interests							109,301				139,521
			Guaranty ($135,437 — See Note 3)
			Standby Letters of Credit ($34,050 —   See Note 3)
Callidus Capital Corporation			Senior Loan (12.0%, Due 12/06)			600				600				600
	(Financial Services)		Subordinated Debt (18.0%, Due 10/08)			4,832				4,832				4,832
			Common Stock (10 shares)							2,049				7,968
Diversified Group Administrators, Inc.			Preferred Stock (1,000,000 shares)							700				728
	(Business Services)		Preferred Stock (1,451,380 shares)							841				841
			Common Stock (1,451,380 shares)							—				502
Financial Pacific Company			Subordinated Debt (17.4%, Due 2/12 – 8/12)			70,175				69,904				69,904
	(Financial Services)		Preferred Stock (10,964 shares)							10,276				13,116
			Common Stock (14,735 shares)							14,819				44,180
ForeSite Towers, LLC			Equity Interests							7,620				9,750
	(Tower Leasing)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(7)		Avborne, Inc. and Avborne Heavy Maintenance, Inc. are affiliated companies.

F-18

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Table of Contents

					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Global Communications, LLC			Senior Loan (10.7%, Due 9/02 – 11/07) (6)		$	15,957			$	15,957			$	15,957
	(Business Services)		Subordinated Debt (17.0%, Due 12/03 – 9/05)(6)			11,201				11,198				11,198
			Preferred Equity Interest							14,067				4,303
			Options							1,639				—
Gordian Group, Inc.			Senior Loan (10.0%, Due 6/06 – 12/08) (6)			11,392				11,421				4,161
	(Business Services)		Common Stock (1,000 shares)							6,542				—
Healthy Pet Corp.			Senior Loan (10.1%, Due 8/10)			4,086				4,086				4,086
	(Consumer Services)		Subordinated Debt (15.0%, Due 8/10)			38,716				38,535				38,535
			Common Stock (25,766 shares)							25,766				25,766
HMT, Inc.			Preferred Stock (554,052 shares)							2,637				2,637
	(Energy Services)		Common Stock (300,000 shares)							3,000				5,343
			Warrants							1,155				2,057
Impact Innovations Group, LLC (Business Services)			Equity Interests in Affiliate							—				742
Insight Pharmaceuticals Corporation			Subordinated Debt (16.1%, Due 9/12)			58,534				58,298				58,298
	(Consumer Products)		Preferred Stock (25,000 shares)							25,000				26,791
			Common Stock (6,200 shares)							6,325				236
Jakel, Inc.			Subordinated Debt (15.5%, Due 3/08)(6)			13,742				13,742				—
	(Industrial Products)		Preferred Stock (6,460 shares)							6,460				—
			Common Stock (158,061 shares)							9,347				—
Legacy Partners Group, LLC			Senior Loan (14.0%, Due 5/09)(6)			7,646				7,646				5,029
	(Financial Services)		Subordinated Debt (18.0%, Due 5/09)(6)			2,952				2,952				—
			Equity Interests							4,229				—
Litterer Beteiligungs-GmbH(4)			Subordinated Debt (8.0%, Due 3/07)			621				621				621
	(Business Services)		Equity Interest							1,810				2,226
Mercury Air Centers, Inc.			Senior Loan (10.0%, Due 4/09)			31,720				31,720				31,720
	(Business Services)		Subordinated Debt (16.0%, Due 4/09)			46,703				46,519				46,519
			Common Stock (57,970 shares)							35,053				88,898
			Standby Letters of Credit ($1,397)
MVL Group, Inc.			Senior Loan (12.1%, Due 7/09)			27,519				27,218				27,218
	(Business Services)		Subordinated Debt (14.4%, Due 7/09)			32,905				32,417				32,417
			Common Stock (648,661 shares)							643				3,211
Pennsylvania Avenue Investors, L.P. (5)			Equity Interests							2,576				1,864
	(Private Equity Fund)
Powell Plant Farms, Inc.			Senior Loan (15.0%, Due 12/05 - 12/06)			32,640				23,792				23,792
	(Consumer Products)		Subordinated Debt (20.0%, Due 6/03)(6)			19,291				19,224				7,364
			Preferred Stock (1,483 shares)							—				—
			Warrants							—				—

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

F-19

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Table of Contents

					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Redox Brands, Inc.			Preferred Stock (2,726,444 shares)						$	7,903			$	12,097
	(Consumer Products)		Warrants							584				500
Service Champ, Inc.			Subordinated Debt (15.5%, Due 4/12)		$	27,041				26,906				26,906
	(Business Services)		Common Stock (63,888 shares)							13,662				13,319
Staffing Partners Holding			Subordinated Debt (13.5%, Due 1/07)(6)			6,343				6,343				6,343
	Company, Inc.		Preferred Stock (439,600 shares)							4,968				1,812
	(Business Services)		Common Stock (69,773 shares)							50				—
			Warrants							10				—
Startec Global Communications			Senior Loan (10.0%, Due 5/07 – 5/09)			25,226				25,226				21,685
	Corporation		Common Stock (19,180,000 shares)							37,255				—
	(Telecommunications)
STS Operating, Inc.			Subordinated Debt (15.3%, Due 3/12)			6,593				6,593				6,593
	(Industrial Products)		Common Stock (3,000,000 shares)							3,522				64,963
			Options							—				560
Triview Investments, Inc.(8)			Senior Loan (8.6%, Due 12/06)			7,449				7,449				7,449
	(Broadcasting & Cable/		Subordinated Debt (15.0%, Due 7/12)			31,000				30,845				30,845
	Consumer Products)		Subordinated Debt (16.8%, Due 7/08 –
			7/12)(6)			19,600				19,520				19,520
			Common Stock (202 shares)							93,889				29,171
			Guaranty ($800)
			Standby Letter of Credit ($200)
Total companies more than 25% owned									$	1,489,782			$	1,887,651
Companies 5% to 25% Owned
Air Evac Lifeteam			Subordinated Debt (13.8%, Due 7/10)		$	42,414			$	42,267			$	42,267
	(Healthcare Services)		Equity Interests							3,941				4,025
Aspen Pet Products, Inc.			Subordinated Debt (19.0%, Due 6/08)			20,051				19,959				19,959
	(Consumer Products)		Preferred Stock (2,935 shares)							2,154				1,638
			Common Stock (1,400 shares)							140				17
			Warrants							—				—
Becker Underwood, Inc.			Subordinated Debt (14.5%, Due 8/12)			23,639				23,543				23,543
	(Industrial Products)		Common Stock (5,073 shares)							5,813				2,200
The Debt Exchange Inc.			Preferred Stock (921,875 shares)							1,250				3,219
	(Business Services)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(8)		Triview Investments, Inc. (formerly GAC Investments, Inc.) holds investments in Longview Cable & Data, LLC (Broadcasting & Cable) with a cost of $66.5 million and value of $16.0 million and Triax Holdings, LLC (Consumer Products) with a cost of $85.2 million and a value of $71.0 million. The guaranty and standby letter of credit relate to Longview Cable & Data, LLC.

F-20

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Table of Contents

					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
MedBridge Healthcare, LLC			Senior Loan (4.0%, Due 8/09)		$	7,093			$	7,093			$	7,093
	(Healthcare Services)		Subordinated Debt (10.0%, Due 8/14)(6)			4,809				4,809				534
			Convertible Subordinated Debt (2.0%, Due 8/14)(6)			2,970				984				—
			Equity Interests							800				—
Nexcel Synthetics, LLC			Subordinated Debt (14.5%, Due 6/09)			10,617				10,588				10,588
	(Consumer Products)		Equity Interests							1,708				1,367
Pres Air Trol LLC			Unitranche Debt (12.0%, Due 4/10)			6,138				5,820				5,820
	(Industrial Products)		Equity Interests							1,356				318
Progressive International			Subordinated Debt (16.0%, Due 12/09)			7,401				7,376				7,376
	Corporation		Preferred Stock (500 shares)							500				884
	(Consumer Products)		Common Stock (197 shares)							13				13
			Warrants							—				—
Soteria Imaging Services, LLC			Subordinated Debt (11.8%, Due 11/10)			14,500				13,447				13,447
	(Healthcare Services)		Equity Interests							2,153				2,308
Universal Environmental Services, LLC			Unitranche Debt (15.5%, Due 2/09)			10,900				10,862				10,862
	(Business Services)		Equity Interests							1,797				1,328
Total companies 5% to 25% owned									$	168,373			$	158,806
Companies Less Than 5% Owned
Advanced Circuits, Inc.			Senior Loans (10.1%, Due 9/11 – 3/12)		$	18,732			$	18,642			$	18,642
	(Industrial Products)		Common Stock (40,000 shares)							1,000				1,000
Anthony, Inc. (Industrial Products)			Subordinated Debt (12.9%, Due 9/11 – 9/12)			14,670				14,610				14,610
Benchmark Medical, Inc.			Warrants							18				190
	(Healthcare Services)
BI Incorporated			Subordinated Debt (14.0%, Due 2/12)			16,203				16,133				16,133
	(Business Services)
Border Foods, Inc.			Subordinated Debt (13.0%, Due 12/10)(6)			13,428				12,721				—
	(Consumer Products)		Preferred Stock (140,214 shares)							2,893				—
			Common Stock (1,810 shares)							45				—
			Warrants							910				—

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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Table of Contents

					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
C&K Market, Inc.			Subordinated Debt (13.0%, Due 12/08)		$	14,694			$	14,638			$	14,638
	(Retail)
Callidus Debt Partners			Class C Notes (12.9%, Due 12/13)			18,800				18,973				18,973
	CDO Fund I, Ltd.(4)(9)		Class D Notes (17.0%, Due 12/13)			9,400				9,487				9,487
	(Senior Debt Fund)
Callidus Debt Partners			Preferred Shares (23,600,000 shares)							24,233				24,233
	CLO Fund III, Ltd. (4)(9)
	(Senior Debt Fund)
Callidus MAPS CLO Fund I LLC(9)			Class E Notes (9.7%, Due 12/17)			17,000				17,000				17,000
	(Senior Debt Fund)		Income Notes							48,108				48,108
Camden Partners Strategic Fund II, L.P.(5)			Limited Partnership Interest							2,142				2,726
	(Private Equity Fund)
Catterton Partners V, L.P.(5)			Limited Partnership Interest							2,650				2,691
	(Private Equity Fund)
CBS Personnel Holdings, Inc. (Business Services)			Subordinated Debt (14.5%, Due 12/09)			20,617				20,541				20,541
Community Education Centers, Inc.			Subordinated Debt (16.0%, Due 12/10)			32,852				32,738				32,738
	(Education Services)
Component Hardware Group, Inc.			Preferred Stock (18,000 shares)							2,605				2,783
	(Industrial Products)		Common Stock (2,000 shares)							200				700
Cooper Natural Resources, Inc.			Subordinated Debt (0%, Due 11/07)			840				840				840
	(Industrial Products)		Preferred Stock (6,316 shares)							1,424				20
			Warrants							830				—
Coverall North America, Inc.			Subordinated Debt (14.6%, Due 2/11)			27,309				27,261				27,261
	(Business Services)		Preferred Stock (6,500 shares)							6,500				6,866
			Warrants							2,950				3,100

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(9)		The fund is managed by Callidus Capital, a portfolio company of Allied Capital.

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					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Drilltec Patents & Technologies Company, Inc.			Subordinated Debt (17.0%, Due 8/06)(6)		$	1,500			$	1,500			$	1,500
	(Energy Services)		Subordinated Debt (10.0%, Due 8/06)(6)			10,994				10,918				9,792
eCentury Capital Partners, L.P.(5)			Limited Partnership Interest							5,649				83
	(Private Equity Fund)
Elexis Beta GmbH(4)			Options							426				50
	(Industrial Products)
Event Rentals, Inc.			Senior Loans (9.9%, Due 11/11)			18,341				18,244				18,244
	(Consumer Services)
Frozen Specialties, Inc.			Warrants							435				470
	(Consumer Products)
Garden Ridge Corporation			Subordinated Debt (7.0%, Due 5/12)(6)			22,500				22,500				22,500
	(Retail)
Geotrace Technologies, Inc.			Subordinated Debt (10.0%, Due 6/09)			25,618				23,875				23,875
(Energy Services)			Warrants							2,350				2,500
Ginsey Industries, Inc.			Subordinated Debt (12.5%, Due 3/07)			3,680				3,680				3,680
	(Consumer Products)
Grant Broadcasting Systems II			Subordinated Debt (5.0%, Due 6/09)			2,756				2,756				2,756
	(Broadcasting & Cable)
Grotech Partners, VI, L.P.(5)			Limited Partnership Interest							6,914				4,161
	(Private Equity Fund)
Havco Wood Products LLC			Unitranche Debt (10.4%, Due 8/11)			33,000				31,794				31,794
	(Industrial Products)		Equity Interests							1,048				1,048
Haven Eldercare of New England, LLC (10)			Subordinated Debt (12.0%, Due 8/09)(6)			4,320				4,320				4,320
	(Healthcare Services)
Haven Healthcare Management, LLC(10)			Subordinated Debt (18.0% Due 4/07)(6)			1,319				1,319				485
	(Healthcare Services)
HealthASPex Services Inc.			Senior Loans (4.0%, Due 7/08)			500				500				500
	(Business Services)
The Hillman Companies, Inc.(3)			Subordinated Debt (13.5%, Due 9/11)			44,000				43,815				43,815
	(Consumer Products)
Homax Holdings, Inc.			Subordinated Debt (12.0%, Due 8/11)			14,000				13,039				13,039
	(Consumer Products)		Preferred Stock (89 shares)							89				92
			Common Stock (28 shares)							6				6
			Warrants							1,106				1,492
Icon International, Inc.			Common Stock (25,707 shares)							76				16
	(Business Services)
International Fiber Corporation			Subordinated Debt (14.0%, Due 6/12)			21,546				21,460				21,460
	(Industrial Products)		Preferred Stock (25,000 shares)							2,500				1,900
Line-X, Inc.			Senior Loan (8.1%, Due 8/11)			4,134				4,111				4,111
	(Consumer Products)		Unitranche Debt (10.0% Due 8/11)			51,475				51,229				51,229
			Standby Letter of Credit ($1,500)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(10)			Haven Eldercare of New England, LLC and Haven Healthcare Management, LLC are affiliated companies.

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					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
MedAssets, Inc.			Preferred Stock (227,865 shares)						$	2,049			$	2,893
	(Business Services)		Warrants							136				180
Meineke Car Care Centers, Inc.			Senior Loan (8.0%, Due 6/11)		$	28,000				27,865				27,865
	(Consumer Services)		Subordinated Debt (11.9%, Due 6/12 – 6/13)			72,000				71,675				71,675
			Common Stock (10,696,308 shares)(11)							26,985				26,629
			Warrants							—				—
MHF Logistical Solutions, Inc.			Unitranche Debt (10.0%, Due 5/11)			22,281				22,177				22,177
	(Business Services)		Preferred Stock (431 shares)							431				455
			Common Stock (1,438 shares)							144				211
Mid-Atlantic Venture Fund IV, L.P. (5)			Limited Partnership Interest							6,600				3,339
	(Private Equity Fund)
Mogas Energy, LLC			Subordinated Debt (9.5%, Due 3/12 – 4/12)			16,855				15,472				15,472
	(Energy Services)		Warrants							1,774				3,550
Network Hardware Resale, Inc.			Unitranche Debt (10.5%, Due 12/11)			38,500				38,743				38,743
	(Business Services)		Convertible Subordinated Debt (9.8%, Due 12/15)			12,000				12,076				12,076
N.E.W. Customer Service Companies, Inc.			Subordinated Debt (11.0%, Due 7/12)			40,000				40,016				40,016
	(Business Services)
Nobel Learning Communities,			Preferred Stock (1,214,356 shares)							2,764				2,343
	Inc.(3)		Warrants							575				1,296
	(Education)
Norwesco, Inc.			Subordinated Debt (12.6%, Due 1/12 – 7/12)			82,061				81,683				81,683
	(Industrial Products)		Common Stock (559,603 shares)(11)							38,313				38,313
			Warrants							—				—
Novak Biddle Venture Partners III, L.P.(5)			Limited Partnership Interest							1,669				1,809
	(Private Equity Fund)
Oahu Waste Services, Inc.			Stock Appreciation Rights							239				1,000
	(Business Services)
Opinion Research Corporation(3)			Warrants							996				45
	(Business Services)
Oriental Trading Company, Inc.			Common Stock (13,820 shares)							—				5,200
	(Consumer Products)
Palm Coast Data, LLC			Senior Loan (7.6%, Due 8/10)			16,100				16,024				16,024
	(Business Services)		Subordinated Debt (15.5%, Due 8/12 – 8/15)			29,600				29,461				29,461
			Common Stock (21,743 shares)(11)							21,743				21,743
			Warrants							—				—
Performant Financial Corporation			Common Stock (478,816 shares)							734				2,500
	(Business Services)
Pro Mach, Inc.			Subordinated Debt (13.8%, Due 6/12)			19,275				19,193				19,193
	(Industrial Products)		Equity Interests							1,500				1,200

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(11)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Promo Works, LLC			Senior Loan (8.5%, Due 12/11)		$	900			$	851			$	851
	(Business Services)		Unitranche Debt (10.3%, Due 12/11)			31,000				30,728				30,728
			Guaranty ($1,650)
RadioVisa Corporation			Unitranche Debt (15.5%, Due 12/08)			27,093				26,993				26,993
	(Broadcasting & Cable)
Red Hawk Industries, LLC			Unitranche Debt (11.0%, Due 4/11)			56,343				56,063				56,063
	(Business Services)
S.B. Restaurant Company			Subordinated Debt (14.6%, Due 11/08 – 12/09)			29,085				28,615				28,615
	(Retail)		Preferred Stock (54,125 shares)							135				135
			Warrants							619				700
SBBUT, LLC			Equity Interests							—				—
	(Consumer Products)
off-Cut Holdings, Inc.			Preferred Stock (300 shares)							300				300
	(Industrial Products)		Common Stock (2,000 shares)							200				37
SPP Mezzanine Fund, L.P.(5)			Limited Partnership Interest							3,007				2,969
	(Private Equity Fund)
Tradesmen International, Inc.			Subordinated Debt (12.0%, Due 12/09)			15,000				14,323				14,323
	(Business Services)		Warrants							710				1,700
TransAmerican Auto Parts, LLC			Subordinated Debt (14.0%, Due 11/12)			10,000				9,951				9,951
	(Consumer Products)		Equity Interests							889				889
United Site Services, Inc.			Subordinated Debt (12.4%, Due 8/11)			49,712				49,503				49,503
	(Business Services)		Common Stock (160,588 shares)							1,000				1,200
Universal Air Filter Company			Senior Loans (7.9%, Due 11/11)			400				390				390
	(Industrial Products)		Unitranche Debt (11.0%, Due 11/11)			19,867				19,768				19,768
Universal Tax Systems, Inc.			Subordinated Debt (14.5%, Due 7/11)			19,068				18,995				18,995
	(Business Services)
Updata Venture Partners II, L.P.(5)			Limited Partnership Interest							4,977				4,686
	(Private Equity Fund)
Venturehouse-Cibernet Investors, LLC			Equity Interest							42				42
	(Business Services)
Venturehouse Group, LLC(5)			Equity Interest							598				397
	(Private Equity Fund)
VICORP Restaurants, Inc.(3)			Warrants							33				691
	(Retail)
Walker Investment Fund II, LLLP(5)			Limited Partnership Interest							1,330				676
	(Private Equity Fund)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(11)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					December 31, 2005
Private Finance
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Wear Me Apparel Corporation			Subordinated Debt (15.0%, Due 12/10)		$	40,000			$	38,992			$	38,992
	(Consumer Products)		Warrants							1,219				2,000
Wilshire Restaurant Group, Inc.			Subordinated Debt (20.0%, Due 6/07)(6)			22,471				21,930				21,930
	(Retail)		Warrants							735				538
Wilton Industries, Inc.			Subordinated Debt (19.3%, Due 6/08)			4,800				4,800				4,800
	(Consumer Products)
Woodstream Corporation			Subordinated Debt (13.2%, Due 11/12 – 5/13)			52,397				52,251				52,251
	(Consumer Products)		Common Stock (180 shares)							673				3,336
			Warrants							—				2,365
Other companies			Other debt investments			382				382				382
			Other debt investments(6)			470				470				348
			Other equity investments							8				—
			Guaranty ($135)
Total companies less than 5% owned									$	1,448,268			$	1,432,833
Total private finance (118 portfolio companies)									$	3,106,423			$	3,479,290

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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											December 31, 2005
			Interest				Number of
			Rate Ranges				Loans				Cost				Value
Commercial Mortgage Loans
				Up to 6.99%				5			$	23,121			$	21,844
				7.00%–8.99%				24				48,156				48,156
				9.00%–10.99%				5				25,999				25,967
				11.00%–12.99%				1				338				338
				13.00%–14.99%				1				2,294				2,294
			15.00% and above					2				3,970				3,970
	Total commercial mortgage loans(12)							38			$	103,878			$	102,569
Real Estate Owned											$	14,240			$	13,932
Equity Interests(2) — Companies more than 25% owned (Guarantees — $7,054)											$	13,577			$	10,564
	Total commercial real estate finance										$	131,695			$	127,065
Total portfolio											$	3,238,118			$	3,606,355

				Yield				Cost				Value
Liquidity Portfolio
	U.S. Treasury bills (Due June 2006)				4.25%			$	100,000			$	100,305
	SEI Daily Income Tr Prime Obligation Fund(13)				4.11%				100,000				100,000
		Total liquidity portfolio						$	200,000			$	200,305
Other Investments in Money Market Securities(13)
	PNC Bank Corporate Money Market Deposit Account				4.15%			$	21,967			$	21,967

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(12)			Commercial mortgage loans totaling $20.8 million at value were on non-accrual status and therefore were considered non-income producing.
	(13)			Included in investments in money market securities on the accompanying Consolidated Balance Sheet.

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	Valuation Of Portfolio Investments

	Loans and Debt Securities

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	Equity Securities

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	Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

	Fee Income

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	Guarantees

	Financing Costs

	Dividends to Shareholders

	Stock Compensation Plans

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				2006
($ in millions, except per share amounts)
Employee Stock Option Expense:
	Previously awarded, unvested options as of January 1, 2006			$	13.2
	Options granted on or after January 1, 2006				2.4
		Total employee stock option expense		$	15.6
		Per basic share		$	0.11
		Per diluted share		$	0.11

			2005				2004
($ in millions, except per share amounts)
Net increase in net assets resulting from operations as reported			$	872.8			$	249.5
Less total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects				(12.7	)			(16.9	)
Pro forma net increase in net assets resulting from operations				860.1				232.6
Less preferred stock dividends				—				(0.1	)
Pro forma net income available to common shareholders			$	860.1			$	232.5
Basic earnings per common share:
	As reported		$	6.48			$	1.92
	Pro forma		$	6.39			$	1.79
Diluted earnings per common share:
	As reported		$	6.36			$	1.88
	Pro forma		$	6.27			$	1.76

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		2006				2005				2004
Expected term (in years)			5.0				5.0				5.0
Risk-free interest rate			4.8	%			4.1	%			2.9	%
Expected volatility			29.1	%			35.1	%			37.0	%
Dividend yield			9.0	%			9.0	%			8.8	%
Weighted average fair value per option		$	3.47			$	3.94			$	4.17

	Federal and State Income Taxes and Excise Tax

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	Per Share Information

	Use of Estimates in the Preparation of Financial Statements

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	Recent Accounting Pronouncements

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	Private Finance

				2006												2005
				Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans			$	450.0			$	405.2				8.4	%		$	284.7			$	239.8				9.5	%
	Unitranche debt(2)				800.0				799.2				11.2	%			294.2				294.2				11.4	%
	Subordinated debt				2,038.3				1,980.8				12.9	%			1,610.2				1,560.9				13.8	%
		Total loans and debt securities (3)			3,288.3				3,185.2				11.9	%			2,189.1				2,094.9				13.0	%
Equity securities					1,209.1				1,192.7								917.3				1,384.4
		Total		$	4,497.4			$	4,377.9							$	3,106.4			$	3,479.3

(1)	The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. At December 31, 2006 and 2005, the cost and value of subordinated debt included the Class A equity interests in BLX and the guaranteed dividend yield on these equity interests was included in interest income. During the fourth quarter of 2006, the Class A equity interests were placed on non-accrual status. The weighted average yield is computed as of the balance sheet date.
(2)	Unitranche debt is a single debt investment that is a blend of senior and subordinated debt terms.
(3)	The total principal balance outstanding on loans and debt securities was $3,322.3 million and $2,216.3 million at December 31, 2006 and 2005, respectively. The difference between principal and cost is represented by unamortized loan origination fees and costs, original issue discounts, and market discounts totaling $34.0 million and $27.2 million at December 31, 2006 and 2005, respectively.

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			2006				2005				2004
($ in millions)
Interest income			$	9.3			$	8.8			$	5.5
Fees and other income				0.6				0.7				1.9
	Total interest and related portfolio income		$	9.9			$	9.5			$	7.4

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			2006				2005				2004
($ in millions)
Interest income on subordinated debt and Class A equity interests			$	11.9			$	14.3			$	23.2
Dividend income on Class B equity interests				—				14.0				14.8
Fees and other income				7.8				9.2				12.0
	Total interest and related portfolio income		$	19.7			$	37.5			$	50.0

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			2006								2005
			Cost				Value				Cost				Value
($ in millions)
Callidus Debt Partners CDO Fund I, Ltd.			$	28.4			$	28.4			$	28.5			$	28.5
Callidus Debt Partners CLO Fund III, Ltd.				23.3				23.0				24.2				24.2
Callidus Debt Partners CLO Fund IV, Ltd.				13.0				13.0				—				—
Callidus MAPS CLO Fund I LLC				68.0				64.6				65.1				65.1
Callidus Debt Partners CLO Fund V, Ltd.				13.8				13.8				—				—
	Total		$	146.5			$	142.8			$	117.8			$	117.8

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			2006				2005
($ in millions)
Bonds			$	245.4			$	230.7
Syndicated loans				1,769.9				704.0
Cash(1)				59.5				238.4
	Total underlying collateral assets		$	2,074.8			$	1,173.1

(1)	Includes undrawn liability amounts.

				2006				2005
($ in millions)
Loans and debt securities in workout status
	Companies more than 25% owned			$	51.1			$	15.6
	Companies 5% to 25% owned				4.0				—
	Companies less than 5% owned				31.6				11.4
Loans and debt securities not in workout status
	Companies more than 25% owned				87.1				58.0
	Companies 5% to 25% owned				7.2				0.5
	Companies less than 5% owned				38.9				49.5
		Total		$	219.9			$	135.0

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			2006				2005
Industry
Business services				39	%			42	%
Consumer products				20				14
Financial services				9				14
Industrial products				9				10
Consumer services				6				6
Retail				6				3
Healthcare services				3				2
Energy services				2				2
Other(1)				6				7
	Total			100	%			100	%
Geographic Region(2)
Mid-Atlantic				31	%			29	%
Midwest				30				21
Southeast				18				12
West				17				34
Northeast				4				4
	Total			100	%			100	%

(1)	Includes investments in senior debt CDO and CLO funds which represented 3% of the private finance portfolio at both December 31, 2006 and 2005. These funds invest in senior debt representing a variety of industries.
(2)	The geographic region for the private finance portfolio depicts the location of the headquarters for the Company’s portfolio companies. The portfolio companies may have a number of other locations in other geographic regions.

	Commercial Real Estate Finance

			2006												2005
			Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Commercial mortgage loans			$	72.6			$	71.9				7.5%			$	103.9			$	102.6				7.6%
Real estate owned				15.7				19.6								14.2				13.9
Equity interests				15.2				26.7								13.6				10.6
	Total		$	103.5			$	118.2							$	131.7			$	127.1

(1)

The weighted average yield on the commercial mortgage loans is computed as the (a) annual stated interest on accruing loans plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans less the annual amortization of origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date.

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			2006				2005
Property Type
Hospitality				45	%			37	%
Office				20				11
Retail				19				16
Housing				13				30
Other				3				6
	Total			100	%			100	%
Geographic Region
Southeast				36	%			25	%
Mid-Atlantic				35				31
Midwest				21				21
Northeast				8				5
West				—				18
	Total			100	%			100	%

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				2006												2005
												Annual												Annual
				Facility				Amount				Interest				Facility				Amount				Interest
				Amount				Drawn				Cost(1)				Amount				Drawn				Cost(1)
($ in millions)
Notes payable and debentures:
	Privately issued unsecured notes payable				$1,041.4				$1,041.4				6.1	%		$	1,164.5			$	1,164.5				6.2	%
	Publicly issued unsecured notes payable				650.0				650.0				6.6	%			—				—				—
	SBA debentures(2)				—				—				—	%			28.5				28.5				7.5	%
		Total notes payable and debentures			1,691.4				1,691.4				6.3	%			1,193.0				1,193.0				6.3	%
Revolving line of credit(5)					922.5				207.7				6.4	%(3)			772.5				91.8				5.6	%(3)
	Total debt				$2,613.9				$1,899.1				6.5	%(4)		$	1,965.5			$	1,284.8				6.5	%(4)

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest on the debt plus the annual amortization of commitment fees, other facility fees and amortization of debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.
(2)	The SBA debentures were repaid in full during 2006.
(3)	The annual interest cost reflects the interest rate payable for borrowings under the revolving line of credit. In addition to the current interest payable, there were annual costs of commitment fees, other facility fees and amortization of debt financing costs of $3.9 million and $3.3 million at December 31, 2006 and 2005, respectively.
(4)	The annual interest cost for total debt includes the annual cost of commitment fees, other facility fees and amortization of debt financing costs on the revolving line of credit regardless of the amount outstanding on the facility as of the balance sheet date.
(5)	At December 31, 2006, $673.8 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $41.0 million issued under the credit facility.

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			Amount				Coupon				Maturity Date
($ in millions)
July 25, 2006			$	400.0				6.625%				July 15, 2011
December 8, 2006				250.0				6.000%				April 1, 2012
	Total		$	650.0

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Year			Amount Maturing
			($ in millions)
2007			$	—
2008				153.0
2009				268.9
2010				408.0
2011				472.5
Thereafter				389.0
	Total		$	1,691.4

	Revolving Line of Credit

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	Fair Value of Debt

	Covenant Compliance

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			Total				2007				2008				2009				2010				2011				After 2011
(in millions)
Guarantees			$	202.1			$	0.6			$	3.0			$	192.2			$	—			$	4.4			$	1.9
Standby letters of credit(1)				41.0				4.0				37.0				—				—				—				—
	Total(2)		$	243.1			$	4.6			$	40.0			$	192.2			$	—			$	4.4			$	1.9

(1)	Standby letters of credit are issued under the Company’s revolving line of credit that expires in September 2008. Therefore, unless a standby letter of credit is set to expire at an earlier date, it is assumed that the standby letters of credit will expire contemporaneously with the expiration of the Company’s line of credit in September 2008.
(2)	The Company’s most significant commitments relate to its investment in Business Loan Express, LLC (BLX), which commitments totaled $214.7 million at December 31, 2006. At December 31, 2006, the Company guaranteed 50% of the outstanding total obligations on BLX’s revolving line of credit for a total guaranteed amount of $189.7 million and had also provided four standby letters of credit totaling $25.0 million in connection with four term securitizations completed by BLX. See Note 3.

			2006				2005(1)				2004
(in millions)
Number of common shares				10.9				—				3.0
Gross proceeds			$	310.2			$	—			$	75.0
Less costs, including underwriting fees				(14.4	)			—				(4.7	)
	Net proceeds		$	295.8			$	—			$	70.3

(1)	The Company did not sell any common stock during the year ended December 31, 2005.

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		2006				2005				2004
(in millions, except per share amounts)
Shares issued			0.5				0.3				0.2
Average price per share		$	30.58			$	28.00			$	26.34

		2006				2005				2004
(in millions, except per share amounts)
Net increase in net assets resulting from operations		$	245.1			$	872.8			$	249.5
Less preferred stock dividends			—				—				(0.1	)
Income available to common shareholders		$	245.1			$	872.8			$	249.4
Weighted average common shares outstanding — basic			142.4				134.7				129.8
Dilutive options outstanding			3.2				2.6				2.7
Weighted average common shares outstanding — diluted			145.6				137.3				132.5
Basic earnings per common share		$	1.72			$	6.48			$	1.92
Diluted earnings per common share		$	1.68			$	6.36			$	1.88

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			2006				2005				2004
($ in millions)
IPA contributions			$	8.1			$	7.0			$	13.4
IPA mark to market expense (benefit)				2.9				2.0				(0.4	)
	Total IPA expense		$	11.0			$	9.0			$	13.0

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						Weighted				Weighted
						Average				Average
						Exercise				Contractual				Aggregate Intrinsic
						Price Per				Remaining				Value at
		Shares				Share				Term (Years)				December 31, 2006(1)
(in millions, except per share amounts)
Options outstanding at January 1, 2004			14.9			$	20.68
Granted			8.2			$	28.34
Exercised			(1.6	)		$	19.73
Forfeited			(1.1	)		$	26.07
Options outstanding at December 31, 2004			20.4			$	23.55
Granted			6.8			$	27.37
Exercised			(3.0	)		$	22.32
Forfeited			(1.9	)		$	27.83
Options outstanding at December 31, 2005			22.3			$	24.52
Granted			1.8			$	29.88
Exercised			(0.5	)		$	22.99
Forfeited			(0.4	)		$	27.67
Options outstanding at December 31, 2006			23.2			$	24.92				6.27			$	180.1
Exercisable at December 31, 2006			16.7			$	23.70				5.60			$	150.2
Exercisable and expected to be exercisable at December 31, 2006(2)			22.7			$	24.85				6.24			$	178.0

(1)	Represents the difference between the market value of the options at December 31, 2006, and the cost for the option holders to exercise the options.
(2)	The amount of options expected to be exercisable at December 31, 2006, is calculated based on an estimate of expected forfeitures.

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		Outstanding
														Exercisable
						Weighted
						Average				Weighted								Weighted
		Total				Remaining				Average				Total				Average
Range of		Number				Contractual Life				Exercise				Number				Exercise
Exercise Prices		Outstanding				(Years)				Price				Exercisable				Price
(in millions, except per share amounts and years)
$16.81 — $17.88			2.4				3.28			$	16.97				2.4			$	16.97
$19.00 — $21.38			1.8				1.04			$	21.30				1.8			$	21.30
$21.52			3.3				5.95			$	21.52				3.3			$	21.52
$21.59 — $24.98			2.6				5.49			$	22.43				2.4			$	22.23
$25.50 — $27.38			1.8				7.35			$	26.49				1.4			$	26.47
$27.51			5.2				8.59			$	27.51				1.7			$	27.51
$28.98			4.3				7.19			$	28.98				3.2			$	28.98
$29.23 — $30.52			1.8				7.18			$	29.88				0.5			$	29.77
			23.2				6.27			$	24.92				16.7			$	23.70

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			2006								2005								2004
			Total				Total Per				Total				Total Per				Total				Total Per
			Amount				Share				Amount				Share				Amount				Share
(in millions, except per share amounts)
First quarter			$	82.5			$	0.59			$	76.1			$	0.57			$	73.3			$	0.57
Second quarter				84.1				0.60				76.2				0.57				73.5				0.57
Third quarter				88.8				0.61				78.8				0.58				74.0				0.57
Fourth quarter				92.0				0.62				79.3				0.58				75.8				0.57
Extra dividend				7.5				0.05				4.1				0.03				2.7				0.02
	Total distributions to common shareholders		$	354.9			$	2.47			$	314.5			$	2.33			$	299.3			$	2.30

			2006								2005								2004
			Total				Total Per				Total				Total Per				Total				Total Per
			Amount				Share				Amount				Share				Amount				Share
(in millions, except per share amounts)
Ordinary income			$	177.4			$	1.23			$	157.3			$	1.17			$	145.3			$	1.12
Long-term capital gains				177.5				1.24				157.2				1.16				154.0				1.18
	Total distributions to common shareholders(1)		$	354.9			$	2.47			$	314.5			$	2.33			$	299.3			$	2.30

(1)	For the years ended December 31, 2006, 2005 and 2004, ordinary income included dividend income of approximately $0.04 per share, $0.03 per share, and $0.04 per share, respectively, that qualified to be taxed at the 15% maximum capital gains rate.
(2)	For certain eligible corporate shareholders, the dividend received deduction for 2006, 2005, and 2004, was $0.042 per share, $0.034 per share, and $0.038 per share, respectively.

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				2006				2005				2004
($ in millions)				(ESTIMATED)(1)
Financial statement net increase in net assets resulting from operations				$	245.1			$	872.8			$	249.5
Adjustments:
	Net change in unrealized appreciation or depreciation				477.4				(462.1	)			68.7
	Amortization of discounts and fees				(0.3	)			4.7				(5.4	)
	Interest- and dividend-related items				7.3				5.5				6.3
	Employee compensation-related items				18.1				3.0				7.7
	Nondeductible excise tax				15.1				6.2				1.0
	Realized gains recognized (deferred) through installment treatment (2)				(181.1	)			(5.9	)			(33.7	)
	Other realized gain or loss related items				11.5				18.6				5.5
	Net income (loss) from partnerships and limited liability companies (3)				(1.9	)			18.0				8.6
	Net loss from consolidated SBIC subsidiary				—				(8.4	)			15.2
	Net (income) loss from consolidated taxable subsidiary, net of tax				3.9				(5.0	)			(1.0	)
	Other				0.4				(2.4	)			0.8
		Taxable income		$	595.5			$	445.0			$	323.2

(1)	The Company’s taxable income for 2006 is an estimate and will not be finally determined until the Company files its 2006 tax return in September 2007. Therefore, the final taxable income may be different than this estimate.
(2)	2006 includes the deferral of long-term capital gains through installment treatment related to the Company’s sale of its control equity investment in Advantage and certain other portfolio companies.
(3)	Includes taxable income passed through to the Company from BLX in excess of interest and related portfolio income from BLX included in the financial statements totaling $3.7 million, $15.4 million, and $10.0 million for the years ended December 31, 2006, 2005 and 2004, respectively. See Note 3 for additional related disclosure.

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			2006				2005				2004
($ in millions)			(ESTIMATED)(1)
Taxable income			$	595.5			$	445.0			$	323.2
Taxable income earned in current year and carried forward for distribution in next year(2)				(397.1	)			(156.5	)			(26.0	)
Taxable income earned in prior year and carried forward and distributed in current year				156.5				26.0				2.1
	Total distributions to common shareholders		$	354.9			$	314.5			$	299.3

(1)	The Company’s taxable income for 2006 is an estimate and will not be finally determined until the Company files its 2006 tax return in September 2007. Therefore, the final taxable income and the taxable income earned in 2006 and carried forward for distribution in 2007 may be different than this estimate.
(2)	Estimated taxable income for 2006 includes undistributed income of $397.1 million that is being carried over for distribution in 2007, which represents approximately $120.6 million of ordinary income and approximately $276.5 million of net long-term capital gains.

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			2006				2005
($ in millions)
Cash			$	2.3			$	33.4
Less escrows held				(0.6	)			(2.0	)
	Total cash		$	1.7			$	31.4

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	•	a note received as consideration from the sale of the Company’s equity investment in Advantage of $150.0 million;
	•	a note received as consideration from the sale of the Company’s equity investment in STS Operating, Inc. of $30.0 million;
	•	the exchange of existing debt securities and accrued interest of S.B. Restaurant Company with a cost basis of $29.2 million for new debt securities;
	•	the exchange of existing debt securities, preferred stock and common stock of Border Foods, Inc. with a cost basis of $16.6 million for new preferred and common equity securities; and
	•	the exchange of existing preferred stock and common stock of Redox Brands, Inc. with a cost basis of $10.2 million for common stock in CR Brands, Inc.

	•	the exchange of existing subordinated debt securities and accrued interest of BLX with a cost basis of $44.8 million for additional Class B equity interests (see Note 3);
	•	the exchange of debt securities and accrued interest of Coverall North America, Inc. with a cost basis of $24.2 million for new debt securities and warrants with a total cost basis of $26.8 million;
	•	the exchange of debt securities of Garden Ridge Corporation with a cost basis of $25.0 million for a new loan with a cost basis of $22.5 million; and
	•	the contribution to capital of existing debt securities of GAC Investments, Inc. (“GAC”) with a cost basis of $11.0 million, resulting in a decrease in the Company’s debt cost basis and an increase in the Company’s common stock cost basis in GAC. During the third quarter of 2005, GAC changed its name to Triview Investments, Inc.

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	•	notes or other securities received as consideration from the sale of investments of $56.6 million. Notes received included a note received for $47.5 million in conjunction with the sale of the Company’s investment in Hillman. During the second quarter of 2004, the Company sold a $5.0 million participation in its subordinated debt in Hillman to a third party, which reduced its investment, and no gain or loss resulted from the transaction;
	•	an exchange of $93.7 million of subordinated debt in certain predecessor companies of Advantage Sales & Marketing, Inc. for new subordinated debt in Advantage;
	•	an exchange of existing debt securities with a cost basis of $46.4 million for new debt and common stock in Startec Global Communications Corporation;
	•	an exchange of existing debt securities with a cost basis of $13.1 million for new debt of $11.3 million with the remaining cost basis attributed to equity in Fairchild Industrial Products Company;
	•	an exchange of existing loans with a cost basis of $11.1 million for a new loan and equity in Gordian Group, Inc.;
	•	the repayment in kind of $12.7 million of existing debt in American Healthcare Services, Inc. with $10.0 million of debt in MedBridge Healthcare, LLC and $2.7 million of debt and equity from other companies;
	•	an exchange of existing subordinated debt with a cost basis of $7.3 million for equity interests in an affiliate of Impact Innovations Group, LLC;
	•	GAC acquired certain assets of Galaxy out of bankruptcy during the third quarter of 2004. The Company exchanged its $50.7 million outstanding debt in Galaxy for debt and equity in GAC to facilitate the asset acquisition; and
	•	$25.5 million of CMBS bonds and LLC interests received from the securitization of commercial mortgage loans.

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($ in millions)
Description of Issue		2005
5-year Treasury securities, due April 2010		$	17.7

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				At and for the Years
				Ended December 31,
				2006				2005				2004
Per Common Share Data
Net asset value, beginning of year				$	19.17			$	14.87			$	14.94
	Net investment income(1)				1.30				1.00				1.52
	Net realized gains(1)(2)				3.66				1.99				0.88
		Net investment income plus net realized gains(1)			4.96				2.99				2.40
		Net change in unrealized appreciation or depreciation(1)(2)			(3.28	)			3.37				(0.52	)
Net increase in net assets resulting from operations (1)					1.68				6.36				1.88
Net decrease in net assets from shareholder distributions					(2.47	)			(2.33	)			(2.30	)
Net increase in net assets from capital share transactions(1)					0.74				0.27				0.35
Net asset value, end of year				$	19.12			$	19.17			$	14.87
Market value, end of year				$	32.68			$	29.37			$	25.84
Total return(3)					20.6	%			23.5	%			1.1	%
Ratios and Supplemental Data ($ and shares in millions, except per share amounts)
Ending net assets				$	2,841.2			$	2,620.5			$	1,979.8
Common shares outstanding at end of year					148.6				136.7				133.1
Diluted weighted average common shares outstanding					145.6				137.3				132.5
Employee, employee stock option and administrative expenses/average net assets					5.38	%			6.56	%			4.65	%
Total operating expenses/average net assets					9.05	%			9.99	%			8.53	%
Net investment income/average net assets					6.90	%			6.08	%			10.45	%
Net increase in net assets resulting from operations/ average net assets					8.94	%			38.68	%			12.97	%
Portfolio turnover rate					27.05	%			47.72	%			32.97	%
Average debt outstanding				$	1,491.0			$	1,087.1			$	985.6
Average debt per share(1)				$	10.24			$	7.92			$	7.44

(1)	Based on diluted weighted average number of common shares outstanding for the year.
(2)	Net realized gains and net change in unrealized appreciation or depreciation can fluctuate significantly from year to year.
(3)	Total return assumes the reinvestment of all dividends paid for the periods presented.

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		2006
($ in millions, except per share amounts)		Qtr. 1				Qtr. 2				Qtr. 3				Qtr. 4
Total interest and related portfolio income		$	111.0			$	110.5			$	113.4			$	117.7
Net investment income		$	41.3			$	50.2			$	48.7			$	49.1
Net increase in net assets resulting from operations		$	99.6			$	33.7			$	77.9			$	33.9
Basic earnings per common share		$	0.72			$	0.24			$	0.54			$	0.23
Diluted earnings per common share		$	0.70			$	0.24			$	0.53			$	0.23

		2005
		Qtr. 1				Qtr. 2				Qtr. 3				Qtr. 4
Total interest and related portfolio income		$	94.9			$	86.2			$	94.9			$	98.2
Net investment income		$	38.8			$	15.3			$	46.1			$	37.1
Net increase in net assets resulting from operations		$	119.6			$	311.9			$	113.2			$	328.1
Basic earnings per common share		$	0.90			$	2.33			$	0.84			$	2.40
Diluted earnings per common share		$	0.88			$	2.29			$	0.82			$	2.36

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					Amount of Interest or
					Dividends
PRIVATE FINANCE
Portfolio Company					Credited								December 31, 2005				Gross				Gross				December 31, 2006
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Companies More Than 25% Owned
Acme Paging, L.P.			Senior Loan(5)		$	(176	)						$	—			$	3,750			$	(3,750	)		$	—
	(Telecommunications)		Subordinated Debt(5)			(3	)							—				881				(881	)			—
			Common Stock											—				27				(27	)			—
Advantage Sales &			Subordinated Debt			1,712								59,787				213				(60,000	)			—
	Marketing, Inc.(7)		Subordinated Debt			5,555								124,000				374				(124,374	)			—
	(Business Services)		Common Stock											476,578				—				(476,578	)			—
Alaris Consulting, LLC			Senior Loan(5)			(63	)							—				—				—				—
	(Business Services)		Equity Interests											—				—				—				—
American Healthcare			Senior Loan(5)						$	1				4,097				502				(4,599	)			—
	Services, Inc. and Affiliates
	(Healthcare Services)
Avborne, Inc.			Preferred Stock											892				73				(47	)			918
	(Business Services)		Common Stock											—				—				—				—
Avborne Heavy Maintenance,   Inc.			Preferred Stock											—				—				—				—
	(Business Services)		Common Stock											—				—				—				—
Border Foods, Inc.			Preferred Stock											—				—				—				—
	(Consumer Products)		Common Stock											—				—				—				—
Business Loan Express, LLC			Subordinated Debt			38								10,000				15,000				(25,000	)			—
	(Financial Services)		Class A Equity
			Interests(5)			11,889								60,693				5,929				—				66,622
			Class B Equity Interests											146,910				—				(67,771	)			79,139
			Class C Equity Interests											139,521				—				(74,545	)			64,976
Calder Capital Partners, LLC			Senior Loan(5)											—				975				—				975
	(Financial Services)		Equity Interests											—				2,076				—				2,076
Callidus Capital Corporation			Senior Loan			441								600				8,705				(9,305	)			—
	(Financial Services)		Subordinated Debt			972								4,832				930				—				5,762
			Common Stock											7,968				14,582				—				22,550
Coverall North America, Inc.			Unitranche Debt			1,926								—				36,333				—				36,333
	(Business Services)		Subordinated Debt			395								—				5,972				—				5,972
			Common Stock											—				19,729				(110	)			19,619
			Warrants											—				—				—				—
CR Brands, Inc.			Senior Loan			1,109								—				37,219				(37,219	)			—
	(Consumer Products)		Subordinated Debt			5,700								—				39,401				—				39,401
			Common Stock											—				33,321				(7,583	)			25,738
Diversified Group			Preferred Stock			87								728				—				(728	)			—
	Administrators, Inc.		Preferred Stock											841				—				(841	)			—
	(Business Services)		Common Stock			68								502				—				(502	)			—
Financial Pacific Company			Subordinated Debt			12,415								69,904				1,458				—				71,362
	(Financial Services)		Preferred Stock											13,116				2,826				—				15,942
			Common Stock											44,180				21,006				—				65,186
ForeSite Towers, LLC			Equity Interests			329								9,750				2,540				—				12,290
	(Tower Leasing)
Global Communications, LLC			Senior Loan(5)											15,957				—				—				15,957
	(Business Services)		Subordinated Debt(5)											11,198				138				(99	)			11,237
			Preferred Equity
			Interest											4,303				—				(4,303	)			—
			Options											—				—				—				—
Gordian Group, Inc.			Senior Loan(5)			(18	)							4,161				392				(4,553	)			—
	(Business Services)		Common Stock											—				220				(220	)			—
Healthy Pet Corp.			Senior Loan			1,746								4,086				24,252				(1,300	)			27,038
	(Consumer Services)		Subordinated Debt			6,549								38,535				5,230				(186	)			43,579
			Common Stock											25,766				4,500				(1,345	)			28,921
HMT, Inc.			Preferred Stock											2,637				—				—				2,637
	(Energy Services)		Common Stock											5,343				3,321				—				8,664
			Warrants											2,057				1,279				—				3,336

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					Amount of Interest or
					Dividends
PRIVATE FINANCE
Portfolio Company					Credited								December 31, 2005				Gross				Gross				December 31, 2006
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Huddle House, Inc.			Senior Loan		$	59							$	—			$	19,950			$	—			$	19,950
	(Retail)		Subordinated Debt			296								—				58,196				—				58,196
			Common Stock											—				41,662				—				41,662
Impact Innovations Group, LLC			Equity Interests in
	(Business Services)		Affiliate											742				131				—				873
Insight Pharmaceuticals			Subordinated Debt			9,724								58,298				1,552				—				59,850
	Corporation		Preferred Stock											26,791				—				(18,946	)			7,845
	(Consumer Products)		Common Stock											236				—				(236	)			—
Jakel, Inc.			Subordinated Debt(5)											—				6,655				—				6,655
	(Industrial Products)		Preferred Stock											—				—				—				—
			Common Stock											—				—				—				—
Legacy Partners Group, LLC			Senior Loan (5)											5,029				—				(186	)			4,843
	(Financial Services)		Subordinated Debt(5)											—				—				—				—
			Equity Interests											—				18				(18	)			—
Litterer Beteiligungs-GmbH			Subordinated Debt			43								621				71				—				692
	(Business Services)		Equity Interest											2,226				—				(1,027	)			1,199
Mercury Air Centers, Inc.			Senior Loan			1,231								31,720				4,000				(35,720	)			—
	(Business Services)		Subordinated Debt			8,076								46,519				5,698				(3,000	)			49,217
			Common Stock											88,898				106,121				—				195,019
MVL Group, Inc.			Senior Loan			3,605								27,218				1,000				(973	)			27,245
	(Business Services)		Subordinated Debt			5,052								32,417				3,061				—				35,478
			Common Stock											3,211				—				(3,211	)			—
Penn Detroit Diesel Allison, LLC			Subordinated Debt			2,473								—				37,994				—				37,994
	(Business Services)		Equity Interests											—				25,949				—				25,949
Pennsylvania Avenue
	Investors, L.P.		Equity Interests											1,864				1,193				(3,057	)			—
	(Private Equity Fund)
Powell Plant Farms, Inc.			Senior Loan(5)			2,394								23,792				10,625				(8,225	)			26,192
	(Consumer Products)		Subordinated Debt(5)											7,364				—				(6,402	)			962
			Preferred Stock											—				—				—				—
			Warrants											—				—				—				—
Redox Brands, Inc.			Preferred Stock			363								12,097				1,708				(13,805	)			—
	(Consumer Products)		Warrants											500				84				(584	)			—
Service Champ, Inc.			Subordinated Debt			4,339								26,906				713				—				27,619
	(Business Services)		Common Stock											13,319				3,467				—				16,786
Staffing Partners Holding			Subordinated Debt(5)						$	355				6,343				—				(5,857	)			486
	Company, Inc.		Preferred Stock											1,812				3,156				(4,968	)			—
	(Business Services)		Common Stock											—				60				(60	)			—
			Warrants											—				—				—				—
Startec Global Communications
	Corporation		Senior Loan			2,165								21,685				3,540				(9,260	)			15,965
	(Telecommunications)		Common Stock											—				11,232				—				11,232
STS Operating, Inc.			Subordinated Debt			328								6,593				123				(6,716	)			—
	(Industrial Products)		Common Stock											64,963				—				(64,963	)			—
			Options											560				—				(560	)			—
Sweet Traditions, LLC			Senior Loan			1,755								—				36,150				(978	)			35,172
	(Consumer Products)		Equity Interests											—				450				—				450
Triview Investments, Inc.			Senior Loan			1,302								7,449				7,298				—				14,747
	(Broadcasting & Cable/		Subordinated Debt			8,692								30,845				25,163				—				56,008
	Consumer Products/		Subordinated Debt(5)											19,520				742				(15,920	)			4,342
	Business Services)		Common Stock			68								29,171				11,516				(9,365	)			31,322
Total companies more than 25% owned					$	102,636							$	1,887,651											$	1,490,180
Companies 5% to 25% Owned
Advantage Sales &			Subordinated Debt		$	14,050							$	—			$	151,648			$	—			$	151,648
	Marketing, Inc.(7)		Equity Interests											—				15,272				(4,272	)			11,000
	(Business Services)
Air Medical Group Holdings LLC			Senior Loan			3,298								—				8,097				(6,334	)			1,763
	(Healthcare Services)		Subordinated Debt			2,145								42,267				35,488				(42,627	)			35,128
			Equity Interests			1,694								4,025				3,393				(1,468	)			5,950
Alpine ESP Holdings, Inc.			Preferred Stock											—				622				(20	)			602
	(Business Services)		Common Stock											—				14				(14	)			—

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					Amount of Interest or
					Dividends
PRIVATE FINANCE
Portfolio Company					Credited								December 31, 2005				Gross				Gross				December 31, 2006
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Amerex Group, LLC			Subordinated Debt		$	669							$	—			$	8,400			$	—			$	8,400
	(Consumer Products)		Equity Interests											—				13,860				(37	)			13,823
Aspen Pet Products, Inc.			Subordinated Debt			1,130								19,959				399				(20,358	)			—
	(Consumer Products)		Preferred Stock			29								1,638				516				(2,154	)			—
			Common Stock											17				123				(140	)			—
			Warrants											—				—				—				—
BB&T Capital
	Partners/Windsor
	Mezzanine Fund, LLC		Equity Interests											—				5,867				(313	)			5,554
	(Private Equity Fund)
Becker Underwood, Inc.			Subordinated Debt			3,545								23,543				620				—				24,163
	(Industrial Products)		Common Stock											2,200				1,500				—				3,700
BI Incorporated			Senior Loan			125								—				15,000				(15,000	)			—
	(Business Services)		Subordinated Debt			3,484								—				30,135				—				30,135
			Common Stock											—				4,100				—				4,100
CitiPostal, Inc. and Affiliates			Senior Loan			1,061								—				20,689				(120	)			20,569
	(Business Services)		Common Stock											—				4,700				—				4,700
Creative Group, Inc.			Subordinated Debt			583								—				13,656				—				13,656
	(Business Services)		Warrants											—				1,387				—				1,387
Drew Foam Companies, Inc.			Preferred Stock											—				722				—				722
	(Business Services)		Common Stock											—				7				—				7
The Debt Exchange Inc.			Preferred Stock											3,219				—				(3,219	)			—
	(Business Services)
MedBridge Healthcare, LLC			Senior Loan(5)											7,093				71				—				7,164
	(Healthcare Services)		Subordinated Debt(5)											534				1,279				—				1,813
			Convertible
			Subordinated Debt(5)											—				—				—				—
			Equity Interests											—				501				(501	)			—
Multi-Ad Services, Inc.			Unitranche Debt			348								—				19,879				—				19,879
	(Business Services)		Equity Interests											—				2,000				—				2,000
Nexcel Synthetics, LLC			Subordinated Debt			1,604								10,588				390				—				10,978
	(Consumer Products)		Equity Interests											1,367				119				—				1,486
PresAir LLC			Senior Loan(5)						$	261				—				5,492				(3,286	)			2,206
	(Industrial Products)		Unitranche Debt(5)											5,820				328				(6,148	)			—
			Equity Interests											318				5				(323	)			—
Progressive International
	Corporation		Subordinated Debt			1,223								7,376				157				—				7,533
	(Consumer Products)		Preferred Stock											884				140				—				1,024
			Common Stock											13				2,287				—				2,300
			Warrants											—				—				—				—
Regency Healthcare Group, LLC			Senior Loan			72								—				1,232				—				1,232
	(Healthcare Services)		Unitranche Debt			1,152								—				19,908				—				19,908
			Equity Interests											—				1,616				—				1,616
SGT India Private Limited			Common Stock											—				3,944				(598	)			3,346
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt			2,013								13,447				4,122				—				17,569
	(Healthcare Services)		Equity Interests											2,308				233				—				2,541
Universal Environmental
	Services, LLC		Unitranche Debt			1,529								10,862				101				(752	)			10,211
	(Business Services)		Equity Interests											1,328				13				(1,341	)			—
Total companies 5% to 25% owned					$	39,754							$	158,806											$	449,813

(1)	Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted. The principal amount for loans and debt securities and the number of shares of common stock and preferred stock is shown in the consolidated statement of investments as of December 31, 2006 and 2005.

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(2)	Other includes interest, dividend, or other income which was applied to the principal of the investment and therefore reduced the total investment. These reductions are also included in the Gross Reductions for the investment, as applicable.
(3)	Gross additions include increased in the cost basis of investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and closing fees, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(4)	Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(5)	Loan or debt security is on non-accrual status at December 31, 2006, and is therefore considered non-income producing. Loans or debt securities on non-accrual status at the end of the period may or may not have been on non-accrual status for the full period.
(6)	Represents the total amount of interest or dividends credited to income for the portion of the year an investment was included in the companies more than 25% owned or companies 5% to 25% owned categories, respectively.
(7)	Included in the companies more than 25% owned category while the Company held a majority equity interest. On March 29, 2006, the Company sold its majority equity interest in Advantage. The Company’s investment in Advantage after the sale transaction is included in the companies 5% to 25% owned category. See Note 3 to the consolidated financial statements for further information.

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					June 30,				December 31,
					2007				2006
(in thousands, except per share amounts)					(unaudited)
ASSETS
Portfolio at value:
	Private finance
		Companies more than 25% owned (cost: 2007-$1,775,496; 2006-$1,578,822)			$	1,709,770			$	1,490,180
		Companies 5% to 25% owned (cost: 2007-$446,746; 2006-$438,560)				418,647				449,813
		Companies less than 5% owned (cost: 2007-$2,197,112; 2006-$2,479,981)				2,219,839				2,437,908
			Total private finance (cost: 2007-$4,419,354; 2006-$4,497,363)			4,348,256				4,377,901
	Commercial real estate finance (cost: 2007-$100,805; 2006-$103,546)					122,804				118,183
			Total portfolio at value (cost: 2007-$4,520,159; 2006-$4,600,909)			4,471,060				4,496,084
Investments in money market and other securities						304,407				202,210
Accrued interest and dividends receivable						70,933				64,566
Other assets						153,514				122,958
Cash						45,574				1,687
			Total assets		$	5,045,488			$	4,887,505
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
	Notes payable and debentures (maturing within one year: 2007-$153,000; 2006-$—)				$	1,921,815			$	1,691,394
	Revolving line of credit					—				207,750
	Accounts payable and other liabilities					132,539				147,117
			Total liabilities			2,054,354				2,046,261
Commitments and contingencies
Shareholders’ equity:
	Common stock, $0.0001 par value, 400,000 shares authorized; 152,652 and 148,575 shares issued and outstanding at June 30, 2007, and December 31, 2006, respectively					15				15
	Additional paid-in capital					2,620,247				2,493,335
	Common stock held in deferred compensation trust					(34,374	)			(28,335	)
	Notes receivable from sale of common stock					(2,709	)			(2,850	)
	Net unrealized appreciation (depreciation)					(68,060	)			(123,084	)
	Undistributed earnings					476,015				502,163
			Total shareholders’ equity			2,991,134				2,841,244
			Total liabilities and shareholders’ equity		$	5,045,488			$	4,887,505
Net asset value per common share					$	19.59			$	19.12

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					For the Three Months								For the Six Months
					Ended June 30,								Ended June 30,
					2007				2006				2007				2006
(in thousands, except per share amounts)
					(unaudited)								(unaudited)
Interest and Related Portfolio Income:
	Interest and dividends
		Companies more than 25% owned			$	28,540			$	23,419			$	55,697			$	53,565
		Companies 5% to 25% owned				10,876				11,419				22,737				17,069
		Companies less than 5% owned				63,398				60,595				126,363				113,680
			Total interest and dividends			102,814				95,433				204,797				184,314
	Fees and other income
		Companies more than 25% owned				5,417				5,649				9,406				17,736
		Companies 5% to 25% owned				471				1,282				499				3,998
		Companies less than 5% owned				8,974				8,092				10,926				15,419
			Total fees and other income			14,862				15,023				20,831				37,153
			Total interest and related portfolio income			117,676				110,456				225,628				221,467
Expenses:
	Interest					34,336				21,861				64,624				46,346
	Employee					28,611				20,398				50,539				41,826
	Employee stock options					9,519				4,597				13,180				8,203
	Administrative					14,505				9,861				27,729				21,195
			Total operating expenses			86,971				56,717				156,072				117,570
Net investment income before income taxes						30,705				53,739				69,556				103,897
Income tax expense (benefit), including excise tax						5,530				3,544				4,881				12,402
Net investment income						25,175				50,195				64,675				91,495
Net Realized and Unrealized Gains (Losses):
	Net realized gains (losses)
		Companies more than 25% owned				67,127				95,212				65,777				528,399
		Companies 5% to 25% owned				138				(74	)			304				(417	)
		Companies less than 5% owned				7,614				5,102				36,464				5,093
			Total net realized gains			74,879				100,240				102,545				533,075
	Net change in unrealized appreciation or depreciation					(10,896	)			(116,706	)			55,024				(491,254	)
			Total net gains (losses)			63,983				(16,466	)			157,569				41,821
Net increase in net assets resulting from operations					$	89,158			$	33,729			$	222,244			$	133,316
Basic earnings per common share					$	0.59			$	0.24			$	1.47			$	0.96
Diluted earnings per common share					$	0.57			$	0.24			$	1.44			$	0.94
Weighted average common shares outstanding — basic						152,361				140,024				150,940				139,395
Weighted average common shares outstanding — diluted						156,051				143,213				154,446				142,466

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				For the Six Months
				Ended June 30,
				2007				2006
(in thousands, except per share amounts)
				(unaudited)
Operations:
	Net investment income			$	64,675			$	91,495
	Net realized gains				102,545				533,075
	Net change in unrealized appreciation or depreciation				55,024				(491,254	)
		Net increase in net assets resulting from operations			222,244				133,316
Shareholder distributions:
	Common stock dividends				(193,368	)			(166,632	)
		Net decrease in net assets resulting from shareholder distributions			(193,368	)			(166,632	)
Capital share transactions:
	Sale of common stock				93,784				82,970
	Issuance of common stock in lieu of cash distributions				8,279				7,199
	Issuance of common stock upon the exercise of stock options				11,967				8,226
	Stock option expense				13,358				8,439
	Net decrease in notes receivable from sale of common stock				141				498
	Purchase of common stock held in deferred compensation trust				(6,166	)			(4,649	)
	Distribution of common stock held in deferred compensation trust				127				106
	Other				(476	)			—
		Net increase in net assets resulting from capital share transactions			121,014				102,789
		Total increase in net assets			149,890				69,473
Net assets at beginning of period					2,841,244				2,620,546
Net assets at end of period				$	2,991,134			$	2,690,019
Net asset value per common share				$	19.59			$	19.17
Common shares outstanding at end of period					152,652				140,312

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					For the Six Months Ended
					June 30,
					2007				2006
(in thousands)
					(unaudited)
Cash flows from operating activities:
	Net increase in net assets resulting from operations				$	222,244			$	133,316
	Adjustments:
		Portfolio investments				(659,141	)			(1,071,243	)
		Principal collections related to investment repayments or sales				735,441				769,598
		Change in accrued or reinvested interest and dividends				(17,714	)			9,064
		Net collection (amortization) of discounts and fees				(425	)			(3,094	)
		Redemption of (investments in) U.S. Treasury bills				—				(22,875	)
		Redemption of (investments in) money market securities				(97,478	)			25,581
		Stock option expense				13,358				8,439
		Changes in other assets and liabilities				(28,354	)			(1,410	)
		Depreciation and amortization				1,022				870
		Realized gains from the receipt of notes and other consideration from sale of investments, net of collections				(9,201	)			(217,086	)
		Realized losses				18,057				4,405
		Net change in unrealized (appreciation) or depreciation				(55,024	)			491,254
			Net cash provided by (used in) operating activities			122,785				126,819
Cash flows from financing activities:
	Sale of common stock					93,784				82,970
	Sale of common stock upon the exercise of stock options					11,967				8,226
	Collections of notes receivable from sale of common stock					141				498
	Borrowings under notes payable					230,000				50,000
	Repayments on notes payable and debentures					—				(37,000	)
	Net borrowings under (repayments on) revolving line of credit					(207,750	)			(90,000	)
	Purchase of common stock held in deferred compensation trust					(6,166	)			(4,649	)
	Other financing activities					(8,362	)			(1,590	)
	Common stock dividends and distributions paid					(192,512	)			(163,531	)
			Net cash provided by (used in) financing activities			(78,898	)			(155,076	)
Net increase (decrease) in cash						43,887				(28,257	)
Cash at beginning of period						1,687				31,363
Cash at end of period					$	45,574			$	3,106

F-78

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Companies More Than 25% Owned
Alaris Consulting, LLC			Senior Loan (16.5%, Due 12/05 – 12/07)(6)		$	27,055			$	26,987			$	—
	(Business Services)		Equity Interests							5,189				—
			Guaranty ($1,100)
AllBridge Financial, LLC			Equity Interests							800				800
	(Financial Services)
Allied Capital Senior Debt Fund, L.P.(5)			Equity Interests (See Note 3)							19,080				19,252
	(Private Debt Fund)
Avborne, Inc.(7)			Preferred Stock (12,500 shares)							611				927
	(Business Services)		Common Stock (27,500 shares)							—				—
Avborne Heavy Maintenance, Inc.(7)			Preferred Stock (1,568 shares)							2,401				—
	(Business Services)		Common Stock (2,750 shares)							—				—
			Guaranty ($2,401)
Border Foods, Inc.			Preferred Stock (100,000 shares)							12,721				—
	(Consumer Products)		Common Stock (148,838 shares)							3,847				—
Business Loan Express, LLC			Class A Equity Interests (25.0% — See Note 3)(6)			95,822				95,822				95,822
	(Financial Services)		Class B Equity Interests							119,436				70,023
			Class C Equity Interests							109,301				54,948
			Guaranty ($208,821 — See Note 3)
			Standby Letters of Credit ($20,000 —   See Note 3)
Calder Capital Partners, LLC(5)			Senior Loan (8.0%, Due 5/09)(6)			1,952				1,952				1,952
	(Financial Services)		Equity Interests							2,154				538
Callidus Capital Corporation			Senior Loan (12.0%, Due 12/08)			700				700				700
	(Financial Services)		Subordinated Debt (18.0%, Due 10/08)			6,292				6,292				6,292
			Common Stock (100 shares)							2,067				48,341
Coverall North America, Inc.			Unitranche Debt (12.0%, Due 7/11)			35,054				34,905				34,905
	(Business Services)		Subordinated Debt (15.0%, Due 7/11)			6,000				5,976				5,976
			Common Stock (884,880 shares)							16,648				22,510
CR Holding, Inc.			Subordinated Debt (16.6%, Due 2/13)			40,256				40,099				40,099
	(Consumer Products)		Common Stock (37,200,551 shares)							33,321				38,522
Direct Capital Corporation			Subordinated Debt (16.0%, Due 3/13)			36,227				36,058				36,058
	(Financial Services)		Common Stock (2,097,234 shares)							19,250				17,166
Financial Pacific Company			Subordinated Debt (17.4%, Due 2/12 – 8/12)			72,306				72,102				72,102
	(Financial Services)		Preferred Stock (10,964 shares)							10,276				17,576
			Common Stock (14,735 shares)							14,819				70,473
ForeSite Towers, LLC			Equity Interests							—				913
	(Tower Leasing)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(7)		Avborne, Inc. and Avborne Heavy Maintenance, Inc. are affiliated companies.

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Global Communications, LLC			Senior Loan (10.7%, Due 9/02 – 11/07)(6)		$	15,957			$	15,957			$	15,957
	(Business Services)		Subordinated Debt (17.0%, Due 12/03 – 9/05)(6)			11,339				11,336				3,221
			Preferred Equity Interest							14,067				—
			Options							1,639				—
Gordian Group, Inc.			Senior Loan (10.0%, Due 6/06 – 12/08)(6)			11,792				11,794				—
	(Business Services)		Common Stock (1,000 shares)							6,942				—
Hot Stuff Foods, LLC			Senior Loan (8.8%, Due 2/11-2/12)			49,660				49,450				49,450
	(Consumer Products)		Subordinated Debt (13.7%, Due 8/12 – 2/13)			61,532				61,293				48,155
			Subordinated Debt (16.0%, Due 2/13)(6)			20,841				20,750				—
			Common Stock (1,147,453 shares)							56,187				—
Huddle House, Inc.			Subordinated Debt (15.0%, Due 12/12)			58,949				58,686				58,686
	(Retail)		Common Stock (415,328 shares)							41,533				43,070
Impact Innovations Group, LLC			Equity Interests in Affiliate							—				320
	(Business Services)
Insight Pharmaceuticals Corporation			Subordinated Debt (15.0%, Due 9/12)			44,257				44,123				44,569
	(Consumer Products)		Subordinated Debt (19.0%, Due 9/12)(6)			16,181				16,130				16,457
			Preferred Stock (25,000 shares)							25,000				209
			Common Stock (620,000 shares)							6,325				—
Jakel, Inc.			Subordinated Debt (15.5%, Due 3/08)(6)			15,692				15,692				—
	(Industrial Products)		Preferred Stock (6,460 shares)							6,460				—
			Common Stock (158,061 shares)							9,347				—
Legacy Partners Group, Inc.			Senior Loan (14.0%, Due 5/09)(6)			3,843				3,843				3,843
	(Financial Services)		Equity Interests							4,261				568
Litterer Beteiligungs-GmbH(4)			Subordinated Debt (8.0%, Due 3/07)			706				706				706
	(Business Services)		Equity Interest							1,809				2,906
Mercury Air Centers, Inc.			Subordinated Debt (16.0%, Due 4/09 –
	(Business Services)		11/12)			50,361				50,252				50,252
			Common Stock (57,970 shares)							35,053				269,886
MVL Group, Inc.			Senior Loan (12.0%, Due 6/09 – 7/09)			30,674				30,623				30,623
	(Business Services)		Subordinated Debt (14.5%, Due 6/09 – 7/09)			39,687				39,364				39,364
			Common Stock (648,661 shares)							643				2,013
Old Orchard Brands, LLC			Subordinated Debt (18.0%, Due 7/14)			19,300				19,206				19,206
	(Consumer Products)		Equity Interests							18,767				18,767
Penn Detroit Diesel Allison, LLC			Subordinated Debt (15.5%, Due 8/13)			38,748				38,583				38,583
	(Business Services)		Equity Interests							21,128				27,532
Powell Plant Farms, Inc.			Senior Loan (15.0%, Due 12/07)(6)(+)			12,748				12,748				12,748
	(Consumer Products)		Preferred Stock (1,483 shares)							—				—
			Warrants							—				—

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(+)		Loan repayments of $11.4 million were received on July 2, 2007.

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Table of Contents

					June 30, 2007
Private Finance					(unaudited)
Portfolio Company
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Service Champ, Inc.			Subordinated Debt (15.5%, Due 4/12)		$	28,084			$	27,982			$	27,982
	(Business Services)		Common Stock (63,888 shares)							13,662				21,194
Staffing Partners Holding
	Company, Inc.		Subordinated Debt (13.5%, Due 1/07)(6)			541				541				549
	(Business Services)
Startec Global Communications
	Corporation		Senior Loan (10.0%, Due 5/07 – 5/09)			11,175				11,175				11,175
	(Telecommunications)		Common Stock (19,180,000 shares)							37,255				17,109
Sweet Traditions, Inc.			Senior Loan (9.0%, Due 8/11)(6)			39,392				35,752				35,752
	(Retail)		Preferred Stock (961 Shares)							950				950
			Common Stock (10,000 Shares)							50				50
Triview Investments, Inc.(8)			Senior Loan (9.6%, Due 12/07 – 6/08)			14,758				14,758				14,758
	(Broadcasting & Cable/Business		Subordinated Debt (14.7%, Due 1/10 – 5/17)			75,484				75,116				75,116
	Services/Consumer Products)		Subordinated Debt (8.5%, Due 11/07 – 7/08)(6)			5,000				5,000				5,087
			Common Stock (202 shares)							110,744				47,062
			Guaranty ($800)
			Standby Letter of Credit ($200)
Total companies more than 25% owned									$	1,775,496			$	1,709,770
Companies 5% to 25% Owned
Advantage Sales & Marketing, Inc.			Subordinated Debt (12.0%, Due 3/14)		$	153,856			$	153,231			$	153,231
	(Business Services)		Equity Interests							—				11,000
Air Medical Group Holdings LLC			Senior Loan (8.5%, Due 3/11)			1,787				1,729				1,729
	(Healthcare Services)		Equity Interests							3,470				9,200
Alpine ESP Holdings, Inc.			Preferred Stock (622 shares)							622				696
	(Business Services)		Common Stock (13,513 shares)							14				100
Amerex Group, LLC			Subordinated Debt (12.0%, Due 1/13)			8,400				8,400				8,400
	(Consumer Products)		Equity Interests							3,509				21,787
BB&T Capital Partners/Windsor
	Mezzanine Fund, LLC (5)		Equity Interests							5,873				5,608
	(Private Equity Fund)
Becker Underwood, Inc.			Subordinated Debt (14.5%, Due 8/12)			24,552				24,477				24,477
	(Industrial Products)		Common Stock(5,073 shares)							5,813				3,600
BI Incorporated			Subordinated Debt (13.5%, Due 2/14)			30,499				30,374				30,374
	(Business Services)		Common Stock (40,000 shares)							4,000				6,800

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(8)		Triview Investments, Inc. holds investments in Longview Cable & Data, LLC (Broadcasting & Cable) with a cost of $68.0 million and a value of $7.4 million, Triax Holdings, LLC (Consumer Products) with a cost of $98.9 million and a value of $94.4 million, and Crescent Hotels & Resorts, LLC and affiliates (Business Services) with a cost of $38.8 million and a value of $40.3 million.

F-81

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
CitiPostal, Inc. and Affiliates			Senior Loan (11.1%, Due 8/13-11/14)		$	20,610			$	20,513			$	20,513
	(Business Services)		Equity Interests							4,578				6,900
Creative Group, Inc.			Subordinated Debt (12.0%, Due 9/13)(6)			15,000				13,686				11,198
	(Business Services)		Warrant							1,387				—
Drew Foam Companies, Inc.			Preferred Stock (722 shares)							722				428
	(Business Services)		Common Stock (7,287 shares)							7				—
MedBridge Healthcare, LLC			Senior Loan (6.0%, Due 8/09)(6)			7,164				7,164				7,164
	(Healthcare Services)		Subordinated Debt (10.0%, Due 8/14)(6)			5,184				5,184				2,129
			Convertible Subordinated Debt (2.0%, Due 8/14)(6)			2,970				984				—
			Equity Interests							1,416				—
MHF Logistical Solutions, Inc.			Subordinated Debt (11.5%, Due 6/12)(6)			33,600				33,448				17,277
	(Business Services)		Subordinated Debt (18.0%, Due 6/13)(6)			11,211				11,154				—
			Common Stock (20,934 shares)(12)							20,942				—
			Warrants(12)							—				—
Multi-Ad Services, Inc.			Unitranche Debt (11.3%, Due 11/11)			19,900				19,792				19,792
	(Business Services)		Equity Interests							2,000				940
PresAir LLC			Senior Loan (7.5%, Due 12/10)(6)			5,729				5,411				2,082
	(Industrial Products)		Equity Interests							1,341				—
Progressive International
	Corporation		Subordinated Debt (16.0%, Due 12/09)			7,629				7,613				7,613
	(Consumer Products)		Preferred Stock (500 shares)							500				1,068
			Common Stock (197 shares)							13				4,300
			Warrants							—				—
Regency Healthcare Group, LLC			Senior Loan (11.1%, Due 6/12)			1,250				1,233				1,233
	(Healthcare Services)		Unitranche Debt (11.1%, Due 6/12)			12,000				11,949				11,949
			Equity Interests							1,500				1,720
SGT India Private Limited(4)			Common Stock (109,524 shares)							4,093				3,076
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt (12.0%, Due 11/10)			14,500				13,661				13,661
	(Healthcare Services)		Equity Interests							2,170				2,592
Universal Environmental Services, LLC			Unitranche Debt (15.5%, Due 2/09)(6)			10,989				10,963				6,010
	(Business Services)		Equity Interests							1,810				—
Total companies 5% to 25% owned									$	446,746			$	418,647
Companies Less Than 5% Owned
3SI Security Systems, Inc.			Subordinated Debt (14.5%, Due 8/13)		$	27,376			$	27,268			$	27,268
	(Consumer Products)
AgData, L.P.			Senior Loan (10.3%, Due 7/12)			1,726				1,694				1,694
	(Consumer Services)
Axium Healthcare Pharmacy, Inc.			Unitranche Debt (12.0%, Due 12/12)			8,500				8,423				8,423
	(Healthcare Services)		Common Stock (26,500 shares)							2,650				1,400
Baird Capital Partners IV Limited Partnership(5) (Private Equity Fund)			Limited Partnership Interest							1,557				1,298

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(12)		Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
BenefitMall, Inc.			Unitranche Debt (13.3%, Due 8/12)		$	110,030			$	109,682			$	109,682
	(Business Services)		Common Stock (45,528,000 shares)(12)							45,528				56,162
			Warrants(12)							—				—
			Standby Letters of Credit ($9,981)
Broadcast Electronics, Inc.			Senior Loan (9.4%, Due 7/12)			4,938				4,908				4,908
	(Business Services)
Callidus Debt Partners
	CDO Fund I, Ltd. (4)(10)		Class C Notes (12.9%, Due 12/13)			18,800				18,940				18,988
	(CDO/CLO Fund)		Class D Notes (17.0%, Due 12/13)			9,400				9,470				9,494
Callidus Debt Partners
	CLO Fund III, Ltd.(4)(10)		Preferred Shares (23,600,000 shares,
	(CDO/CLO Fund)		15.1%)(11)							22,158				22,947
Callidus Debt Partners
	CLO Fund IV, Ltd. (4)(10)		Income Notes (13.0%)(11)							12,492				12,143
	(CDO/CLO Fund)
Callidus Debt Partners
	CLO Fund V, Ltd.(4)(10)		Income Notes (15.8%)(11)							14,143				14,143
	(CDO/CLO Fund)
Callidus MAPS CLO Fund I LLC(10)			Class E Notes (10.9%, Due 12/17)			17,000				17,000				17,112
	(CDO/CLO Fund)		Income Notes (11.6%)(11)							50,515				44,672
Callidus MAPS CLO Fund II, Ltd. (4)(10)			Income Notes (14.8%)(11)							17,396				17,396
	(CDO/CLO Fund)
Camden Partners Strategic Fund II,
	L.P.(5)		Limited Partnership Interest							997				2,219
	(Private Equity Fund)
Carlisle Wide Plank Floors, Inc.			Unitranche Debt (10.5%, Due 6/11)			3,161				3,119				3,119
	(Consumer Products)		Preferred Stock (400,000 Shares)							400				600
Catterton Partners V, L.P.(5)			Limited Partnership Interest							3,760				4,016
	(Private Equity Fund)
Catterton Partners VI, L.P.(5)			Limited Partnership Interest							1,573				1,454
	(Private Equity Fund)
Centre Capital Investors IV, LP(5)			Limited Partnership Interest							2,022				2,100
	(Private Equity Fund)

(1)		Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
(2)		Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
(3)		Public company.
(4)		Non-U.S. company or principal place of business outside the U.S.
(5)		Non-registered investment company.
(6)		Loan or debt security is on non-accrual status and therefore is considered non-income producing.
(10)		The fund is managed by Callidus Capital, a portfolio company of Allied Capital.
(11)		Represents the effective yield earned on these preferred equity investments and income notes. The yield is included in interest income from companies less than 5% owned in the consolidated statement of operations.
(12)		Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Commercial Credit Group, Inc.			Subordinated Debt (14.8%, Due 2/11)		$	10,000			$	9,964			$	9,964
	(Financial Services)		Preferred Stock (42,478 shares)							7,018				8,319
			Warrants							—				—
Community Education Centers, Inc.			Subordinated Debt (13.5%, Due 12/10 – 11/13)			34,814				34,732				34,732
	(Education Services)
Component Hardware Group, Inc.			Subordinated Debt (13.5%, Due 1/13)			18,295				18,218				18,218
	(Industrial Products)
Cook Inlet Alternative Risk, LLC			Unitranche Debt (10.8%, Due 4/13)			100,000				99,484				99,484
	(Business Services)		Equity Interests							640				2,100
Cortec Group Fund IV, L.P.(5)			Limited Partnership Interest							3,345				2,919
	(Private Equity)
CSAV, Inc.			Subordinated Debt (11.9%, Due 6/13)			37,500				37,500				37,500
	(Business Services)
DCWV Acquisition Corporation			Senior Loan (9.7%, Due 7/12)			2,499				2,486				2,486
	(Consumer Products)		Unitranche Debt (11.0%, Due 7/12)			19,363				19,276				19,276
Digital VideoStream, LLC			Unitranche Debt (11.0%, Due 2/12)			17,886				17,790				17,790
	(Business Services)		Convertible Subordinated Debt
			(10.0%, Due 2/16)			3,919				3,904				3,904
Distant Lands Trading Co.			Senior Loan (10.2%, Due 11/11)			5,750				5,711				5,711
	(Consumer Products)		Unitranche Debt (11.0%, Due 11/11)			42,375				42,202				42,202
			Common Stock (4,000 shares)							4,000				3,969
Driven Brands, Inc.			Senior Loan (8.8%, Due 6/11)			37,070				36,934				36,934
	d/b/a Meineke and Econo Lube		Subordinated Debt (12.1%, Due 6/12 – 6/13)			83,000				82,719				82,719
	(Consumer Services)		Common Stock (11,675,331 shares)(12)							29,455				19,516
			Warrants(12)							—				—
Dynamic India Fund IV (4)(5)			Equity Interests							6,050				6,050
	(Private Equity Fund)
EarthColor, Inc.			Subordinated Debt (15.0%, Due 11/13)			107,000				106,516				106,516
	(Business Services)		Common Stock (53,540 shares)(12)							53,540				30,185
			Warrants(12)							—				—
eCentury Capital Partners, L.P.(5)			Limited Partnership Interest							6,274				2,123
	(Private Equity Fund)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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Table of Contents

					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Elexis Beta GmbH(4)			Options						$	426			$	50
	(Industrial Products)
Farley’s & Sathers Candy Company, Inc.			Subordinated Debt (11.4%, Due 3/11)		$	8,000				7,975				7,975
	(Consumer Products)
Fidus Mezzanine Capital, L.P.(5)			Limited Partnership Interest							3,244				3,244
	(Private Equity Fund)
Frozen Specialties, Inc.			Warrants							435				290
	(Consumer Products)
Garden Ridge Corporation (Retail)			Subordinated Debt (7.0%, Due 5/12)(6)			22,500				22,500				22,500
Geotrace Technologies, Inc.			Subordinated Debt (10.0%, Due 6/09)			7,921				7,713				7,713
	(Energy Services)		Warrants							2,350				2,500
Grant Broadcasting Systems II			Subordinated Debt (5.0%, Due 6/11)			3,005				3,005				3,005
	(Broadcasting & Cable)
Grotech Partners, VI, L.P.(5)			Limited Partnership Interest							8,723				6,745
	(Private Equity Fund)
Havco Wood Products LLC			Senior Debt (9.8%, Due 8/11)			1,750				1,733				1,733
	(Industrial Products)		Unitranche Debt (11.5%, Due 8/11)			10,350				9,481				9,481
			Equity Interests							1,055				4,000
Haven Eldercare of New England, LLC			Subordinated Debt (12.0%, Due 8/09)			2,227				2,227				2,227
	(Healthcare Services)
HealthASPex Services Inc.			Senior Loan (4.0%, Due 7/08)(6)			500				500				441
	(Business Services)
The Hillman Companies, Inc.(3)			Subordinated Debt (10.0%, Due 9/11)			44,580				44,442				44,442
	(Consumer Products)
The Homax Group, Inc.			Senior Loan (9.2%, Due 10/12)			12,400				12,400				12,400
	(Consumer Products)		Subordinated Debt (12.0%, Due 4/14)			14,000				13,207				13,207
			Preferred Stock (89 shares)							89				78
			Common Stock (28 shares)							6				—
			Warrants							1,106				972
Ideal Snacks Corporation			Senior Loan (10.0%, Due 6/10)			33				33				33
	(Consumer Products)
Integrity Interactive Corporation			Unitranche Debt (10.5%, Due 2/12)			13,759				13,646				13,646
	(Business Services)
International Fiber Corporation			Subordinated Debt (14.0%, Due 6/12)			24,324				24,219				24,219
	(Industrial Products)		Preferred Stock (25,000 shares)							2,500				2,200
Jones Stephens Corporation			Senior Loan (8.9%, Due 9/12)			5,579				5,565				5,565
	(Consumer Products)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
K2 Advisors Subsidiary Holdings, LLC			Senior Loan (8.6%, Due 4/13)		$	10,000			$	10,000			$	10,000
	(Business Services)
Kodiak Fund LP(5)			Equity Interests							9,423				8,243
	(Private Equity Fund)
Line-X, Inc.			Senior Loan (12.0%, Due 8/11)			2,200				2,183				2,183
	(Consumer Products)		Unitranche Debt (12.0% Due 8/11)			48,355				48,174				48,174
			Standby Letter of Credit ($1,500)
MedAssets, Inc.			Preferred Stock (227,865 shares)							2,049				3,769
	(Business Services)		Common Stock (50,000 shares)							—				200
Mid-Atlantic Venture Fund IV, L.P. (5)			Limited Partnership Interest							6,975				3,019
	(Private Equity Fund)
Mogas Energy, LLC			Subordinated Debt (9.5%, Due 8/08)			16,285				15,125				16,285
	(Energy Services)
NetShape Technologies, Inc.			Senior Debt (8.6%, Due 2/13)			5,689				5,657				5,657
	(Industrial Products)
Network Hardware Resale, Inc.			Unitranche Debt (10.5%, Due 12/11)			21,086				21,204				21,204
	(Business Services)		Convertible Subordinated Debt (9.8%, Due 12/15)			13,242				13,306				14,121
Norwesco, Inc.			Subordinated Debt (12.6%, Due 1/12 – 7/12)			82,703				82,421				82,421
	(Industrial Products)		Common Stock (559,603 shares)(12)							38,313				96,386
			Warrants(12)							—				—
Novak Biddle Venture Partners III, L.P.(5)			Limited Partnership Interest							1,910				2,007
	(Private Equity Fund)
Oahu Waste Services, Inc.			Stock Appreciation Rights							239				900
	(Business Services)
Odyssey Investment Partners Fund III, LP(5)			Limited Partnership Interest							1,542				1,371
	(Private Equity Fund)
Passport Health
	Communications, Inc.		Subordinated Debt (14.0%, Due 4/12)			10,299				10,260				10,260
	(Healthcare Services)		Preferred Stock (651,381 shares)							2,000				2,325
			Common Stock (19,680 shares)							48				48
Pendum, Inc.			Subordinated Debt (17.0%, Due 1/11)(6)			34,028				34,028				18,622
	(Business Services)		Preferred Stock (82,715 shares)							—				—
			Warrants							—				—
Performant Financial Corporation			Common Stock (478,816 shares)							734				—
	(Business Services)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.
	(12)			Common stock is non-voting. In addition to non-voting stock ownership, the Company has an option to acquire a majority of the voting securities of the portfolio company at fair market value.

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					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
Postle Aluminum Company, LLC			Unitranche Debt (11.0%, Due 10/12)		$	61,750			$	61,476			$	61,476
	(Industrial Products)		Equity Interests							2,500				2,700
Pro Mach, Inc.			Subordinated Debt (13.0%, Due 6/12)			14,489				14,427				14,427
	(Industrial Products)		Equity Interests							1,500				1,900
Promo Works, LLC			Unitranche Debt (10.3%, Due 12/11)			26,215				25,980				25,980
	(Business Services)		Guaranty ($900)
S.B. Restaurant Company			Unitranche Debt (9.8%, Due 4/11)			26,501				26,226				26,226
	(Retail)		Preferred Stock (54,125 shares)							135				135
			Warrants							619				2,100
			Standby Letters of Credit ($3,557)
SBBUT, LLC			Equity Interests							—				—
	(Consumer Products)
Service Center Metals, LLC			Subordinated Debt (15.5%, Due 9/11)			5,000				4,979				4,979
	(Industrial Products)		Equity Interests							313				331
SPP Mezzanine Funding, L.P.(5)			Limited Partnership Interest							2,207				2,604
	(Private Equity Fund)
SPP Mezzanine Funding II, L.P.(5)			Limited Partnership Interest							1,990				1,690
	(Private Equity Fund)
Stag-Parkway, Inc.			Unitranche Debt (10.8%, Due 7/12)			51,000				50,793				50,793
	(Business Services)
STS Operating, Inc.			Subordinated Debt (11.0%, Due 1/13)			30,386				30,262				30,262
	(Industrial Products)
The Step2 Company, LLC			Unitranche Debt (10.5%, Due 4/12)			51,923				51,700				51,700
	(Consumer Products)		Equity Interests							2,000				2,368
Tradesmen International, Inc.			Subordinated Debt (12.0%, Due 12/09)			9,136				8,648				8,648
	(Business Services)
TransAmerican Auto Parts, LLC			Subordinated Debt (14.0%, Due 11/12)			13,076				13,027				13,027
	(Consumer Products)		Equity Interests							1,198				953
Trover Solutions, Inc.			Senior Loan (11.1%, Due 5/12 – 11/12)			81,000				80,710				80,710
	(Business Services)
Universal Air Filter Company			Senior Loan (10.3%, Due 11/12)			30,000				29,864				29,864
	(Industrial Products)
Updata Venture Partners II, L.P.(5)			Limited Partnership Interest							4,627				4,955
	(Private Equity Fund)
Venturehouse-Cibernet Investors, LLC			Equity Interest							—				54
	(Business Services)
Venturehouse Group, LLC(5)			Equity Interest							—				108
	(Private Equity Fund)

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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					June 30, 2007
Private Finance
Portfolio Company					(unaudited)
(in thousands, except number of shares)			Investment(1)(2)		Principal				Cost				Value
VICORP Restaurants, Inc.			Warrants						$	33			$	—
	(Retail)
Walker Investment Fund II, LLLP(5)			Limited Partnership Interest							1,330				375
	(Private Equity Fund)
WMA Equity Corporation and Affiliates			Subordinated Debt (13.6%, Due 4/13)		$	125,000				123,932				123,932
	d/b/a Wear Me Apparel		Subordinated Debt (9.0%, Due 4/14)			12,750				12,750				12,750
	(Consumer Products)		Common Stock (100 shares)							46,046				46,046
Webster Capital II, L.P.(5)			Limited Partnership Interest							75				75
	(Private Equity Fund)
Woodstream Corporation			Subordinated Debt (13.5%,
	(Consumer Products)		Due 11/12 – 5/13)			53,477				53,363				53,363
			Common Stock (180 shares)							673				4,897
			Warrants							—				3,703
York Insurance Services Group, Inc.			Subordinated Debt (14.5%, Due 1/14)			44,693				44,503				44,503
	(Business Services)		Common Stock (15,000 shares)							1,500				2,400
Other companies			Other debt investments(6)			223				94				89
			Other equity investments							8				—
Total companies less than 5% owned									$	2,197,112			$	2,219,839
Total private finance (143 portfolio companies)									$	4,419,354			$	4,348,256

	(1)			Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.
	(2)			Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.
	(3)			Public company.
	(4)			Non-U.S. company or principal place of business outside the U.S.
	(5)			Non-registered investment company.
	(6)			Loan or debt security is on non-accrual status and therefore is considered non-income producing.

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Commercial Real Estate Finance
(in thousands, except number of loans)

												June 30, 2007
				Interest				Number of				(unaudited)
				Rate Ranges				Loans				Cost				Value
Commercial Mortgage Loans
					Up to 6.99%				3			$	20,416			$	19,770
					7.00%–8.99%				9				26,118				26,118
					9.00%–10.99%				3				8,369				8,369
					11.00%–12.99%				1				10,450				10,450
				15.00% and above					2				3,970				3,970
		Total commercial mortgage loans(13)							18			$	69,323			$	68,677
Real Estate Owned												$	15,659			$	20,412
Equity Interests(2) — Companies more than 25% owned												$	15,823			$	33,715
	Guarantees ($6,871)
	Standby Letter of Credit ($1,295)
		Total commercial real estate finance										$	100,805			$	122,804
Total portfolio												$	4,520,159			$	4,471,060

				Yield				Cost				Value
Liquidity Portfolio(14)
	American Beacon Money Market Select FD Fund				5.2%			$	86,376			$	86,376
	Certificate of Deposit (Due September 2007)				5.5%				60,049				60,049
	American Beacon Money Market Fund				5.2%				20,157				20,157
	SEI Daily Income Tr Prime Obligation Fund				5.2%				34,150				34,150
		Total liquidity portfolio						$	200,732			$	200,732
Other Investments in Money Market Securities(14)
	Columbia Treasury Reserves Money Market Fund				5.2%			$	103,675			$	103,675

(1) Interest rates represent the weighted average annual stated interest rate on loans and debt securities, which are presented by nature of indebtedness for a single issuer. The maturity dates represent the earliest and the latest maturity dates.

(2)  Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted.

(3)  Public company.

(4)  Non-U.S. company or principal place of business outside the U.S.

(5)  Non-registered investment company.

(13)  Commercial mortgage loans totaling $19.1 million at value were on non-accrual status and therefore were considered non-income producing.

(14)  Included in investments in money market and other securities on the accompanying Consolidated Balance Sheet.

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	Valuation of Portfolio Investments

	Loans and Debt Securities

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	Equity Securities

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	Net Realized Gains or Losses and Net Change in Unrealized Appreciation or Depreciation

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	Fee Income

	Guarantees

	Financing Costs

	Dividends to Shareholders

	Stock Compensation Plans

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				For the Three								For the Six
				Months Ended								Months Ended
				June 30,								June 30,
				2007				2006				2007				2006
($ in millions, except per share amounts)
Employee Stock Option Expense:
	Previously awarded, unvested options as of January 1, 2006			$	3.3			$	3.3			$	6.5			$	6.7
	Options granted on or after January 1, 2006				6.2				1.3				6.7				1.5
		Total employee stock option expense		$	9.5			$	4.6			$	13.2			$	8.2
		Per basic share		$	0.06			$	0.03			$	0.09			$	0.06
		Per diluted share		$	0.06			$	0.03			$	0.09			$	0.06

		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
Expected term (in years)			5.0				5.0				5.0				5.0
Risk-free interest rate			4.6	%			5.0	%			4.6	%			4.8	%
Expected volatility			26.5	%			29.6	%			26.5	%			29.6	%
Dividend yield			9.0	%			9.0	%			9.0	%			9.0	%
Weighted average fair value per option		$	2.98			$	3.65			$	2.98			$	3.54

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	Federal and State Income Taxes and Excise Tax

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	Per Share Information

	Use of Estimates in the Preparation of Financial Statements

	Recent Accounting Pronouncements

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	Private Finance

				2007												2006
				Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Loans and debt securities:
	Senior loans			$	451.9			$	409.8				8.3	%		$	450.0			$	405.2				8.4	%
	Unitranche debt(2)				686.4				681.4				11.4	%			800.0				799.2				11.2	%
	Subordinated debt				1,996.1				1,892.2				12.5	%			2,038.3				1,980.8				12.9	%
		Total loans and debt securities (3)			3,134.4				2,983.4				11.7	%			3,288.3				3,185.2				11.9	%
Equity securities					1,285.0				1,364.9								1,209.1				1,192.7
		Total		$	4,419.4			$	4,348.3							$	4,497.4			$	4,377.9

(1)	The weighted average yield on loans and debt securities is computed as the (a) annual stated interest on accruing loans and debt securities plus the annual amortization of loan origination fees, original issue discount, and market discount on accruing loans and debt securities less the annual amortization of loan origination costs, divided by (b) total loans and debt securities at value. At June 30, 2007, and December 31, 2006, the cost and value of subordinated debt included the Class A equity interests in BLX and the guaranteed dividend yield on these equity interests, to the extent it was accrued, was included in interest income. During the fourth quarter of 2006, the Class A equity interests were placed on non-accrual status. The weighted average yield is computed as of the balance sheet date.
(2)	Unitranche debt is a single debt investment that is a blend of senior and subordinated debt terms.
(3)	The total principal balance outstanding on loans and debt securities was $3,157.0 million and $3,322.3 million at June 30, 2007, and December 31, 2006, respectively. The difference between principal and cost is represented by unamortized loan origination fees and costs, original issue discounts, and market discounts totaling $22.6 million and $34.0 million at June 30, 2007, and December 31, 2006, respectively.

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			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Interest income			$	2.1			$	2.4			$	4.1			$	5.3
Fees and other income				0.1				0.1				0.2				0.3
	Total interest and related portfolio income		$	2.2			$	2.5			$	4.3			$	5.6

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			For the
			Three								For the Six
			Months								Months
			Ended								Ended
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
Interest income on subordinated debt and Class A equity interests			$	—			$	4.0			$	—			$	7.8
Fees and other income				1.3				2.0				2.8				4.3
	Total interest and related portfolio income		$	1.3			$	6.0			$	2.8			$	12.1

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				2007												2006
				Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Bonds(2):
Callidus Debt Partners CDO Fund I, Ltd.				$	28.4			$	28.5				14.3%			$	28.4			$	28.4				14.3%
Callidus MAPS CLO Fund I LLC					17.0				17.1				10.9%				17.0				17.2				10.9%
	Total bonds				45.4				45.6				13.0%				45.4				45.6				13.0%
Preferred Shares/ Income Notes(3):
Callidus Debt Partners CLO Fund III, Ltd.					22.2				23.0				15.1%				23.3				23.0				12.7%
Callidus Debt Partners CLO Fund IV, Ltd.					12.5				12.1				13.0%				13.0				13.0				13.8%
Callidus Debt Partners CLO Fund V, Ltd.					14.1				14.1				15.8%				13.8				13.8				15.8%
Callidus MAPS CLO Fund I LLC					50.5				44.7				11.6%				51.0				47.4				15.9%
Callidus MAPS CLO Fund II, Ltd.					17.4				17.4				14.8%				—				—				—
	Total preferred shares/ income notes				116.7				111.3				13.5%				101.1				97.2				14.8%
		Total		$	162.1			$	156.9							$	146.5			$	142.8

(1)	The yield on these securities is included in interest and dividend income in the accompanying statement of operations.
(2)	These securities are included in private finance subordinated debt.
(3)	These securities are included in private finance equity securities.

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			2007				2006
($ in millions)
Bonds			$	268.0			$	245.4
Syndicated loans				2,136.4				1,769.9
Cash(1)				33.3				59.5
	Total underlying collateral assets		$	2,437.7			$	2,074.8

(1)	Includes undrawn liability amounts.

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				2007				2006
($ in millions)
Loans and debt securities in workout status
	Companies more than 25% owned			$	20.4			$	51.1
	Companies 5% to 25% owned				27.5				4.0
	Companies less than 5% owned				22.7				31.6
Loans and debt securities not in workout status
	Companies more than 25% owned				171.0				87.1
	Companies 5% to 25% owned				18.3				7.2
	Companies less than 5% owned				19.1				38.9
		Total		$	279.0			$	219.9

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			2007				2006
Industry
Business services				39	%			39	%
Consumer products				23				20
Financial services				12				9
Industrial products				10				9
Retail				4				6
CDO/CLO funds(1)				4				3
Consumer services				3				6
Healthcare services				1				3
Energy services				1				2
Other				3				3
	Total			100	%			100	%
Geographic Region(2)
Mid-Atlantic				36	%			31	%
Midwest				30				30
Southeast				17				18
West				15				17
Northeast				2				4
	Total			100	%			100	%

(1)	These funds invest in senior debt representing a variety of industries and are managed by Callidus Capital, a portfolio company of Allied Capital.
(2)	The geographic region for the private finance portfolio depicts the location of the headquarters for the Company’s portfolio companies. The portfolio companies may have a number of other locations in other geographic regions.

	Commercial Real Estate Finance

			2007												2006
			Cost				Value				Yield(1)				Cost				Value				Yield(1)
($ in millions)
Commercial mortgage loans			$	69.3			$	68.7				6.6%			$	72.6			$	71.9				7.5%
Real estate owned				15.7				20.4								15.7				19.6
Equity interests				15.8				33.7								15.2				26.7
	Total		$	100.8			$	122.8							$	103.5			$	118.2

(1)	The weighted average yield on the commercial mortgage loans is computed as the (a) annual stated interest on accruing loans plus the annual amortization of loan origination fees, original issue discount, and market discount on

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	accruing loans less the annual amortization of origination costs, divided by (b) total interest-bearing investments at value. The weighted average yield is computed as of the balance sheet date.

			2007				2006
Property Type
Hospitality				47	%			45	%
Office				21				20
Retail				17				19
Recreation				13				1
Housing				—				13
Other				2				2
	Total			100	%			100	%
Geographic Region
Mid-Atlantic				36	%			35	%
Southeast				34				36
Midwest				23				21
Northeast				7				8
West				—				—
	Total			100	%			100	%

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				2007												2006
												Annual												Annual
				Facility				Amount				Interest				Facility				Amount				Interest
				Amount				Drawn				Cost(1)				Amount				Drawn				Cost(1)
($ in millions)
Notes payable and debentures:
	Privately issued unsecured notes payable			$	1,041.8			$	1,041.8				6.1%				$1,041.4				$1,041.4				6.1%
	Publicly issued unsecured notes payable				880.0				880.0				6.7%				650.0				650.0				6.6%
		Total notes payable and debentures			1,921.8				1,921.8				6.4%				1,691.4				1,691.4				6.3%
Revolving line of credit(4)					922.5				—				—%	(2)			922.5				207.7				6.4%	(2)
	Total debt			$	2,844.3			$	1,921.8				6.6%	(3)			$2,613.9				$1,899.1				6.5%	(3)

(1)	The weighted average annual interest cost is computed as the (a) annual stated interest on the debt plus the annual amortization of commitment fees, other facility fees and amortization of debt financing costs that are recognized into interest expense over the contractual life of the respective borrowings, divided by (b) debt outstanding on the balance sheet date.
(2)	There were no amounts drawn on the revolving line of credit at June 30, 2007. The annual interest cost at December 31, 2006, reflects the interest rate payable for borrowings under the revolving line of credit. In addition to the current interest payable, there were annual costs of commitment fees, other facility fees and amortization of debt financing costs of $3.8 million and $3.9 million at June 30, 2007, and December 31, 2006, respectively.
(3)	The annual interest cost for total debt includes the annual cost of commitment fees, other facility fees and amortization of debt financing costs on the revolving line of credit regardless of the amount outstanding on the facility as of the balance sheet date.
(4)	At June 30, 2007, $886.0 million remained unused and available on the revolving line of credit, net of amounts committed for standby letters of credit of $36.5 million issued under the credit facility.

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			Amount				Maturity Date
($ in millions)
6.625% Notes due 2011			$	400.0				July 15, 2011
6.000% Notes due 2012				250.0				April 1, 2012
6.875% Notes due 2047				230.0				April 15, 2047
	Total		$	880.0

Year			Amount Maturing
			($ in millions)
2007			$	—
2008				153.0
2009				269.3
2010				408.0
2011				472.5
Thereafter				619.0
	Total		$	1,921.8

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	Revolving Line of Credit

	Covenant Compliance

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			Total				2007				2008				2009				2010				2011				After 2011
(in millions)
Guarantees			$	220.9			$	3.3			$	3.0			$	208.3			$	—			$	4.4			$	1.9
Standby letters of credit(1)				36.5				3.9				32.6				—				—				—				—
	Total(2)		$	257.4			$	7.2			$	35.6			$	208.3			$	—			$	4.4			$	1.9

(1)	Standby letters of credit are issued under the Company’s revolving line of credit that expires in September 2008. Therefore, unless a standby letter of credit is set to expire at an earlier date, it is assumed that the standby letters of credit will expire contemporaneously with the expiration of the Company’s line of credit in September 2008.
(2)	The Company’s most significant commitments relate to its investment in Business Loan Express, LLC (BLX), which commitments totaled $228.8 million at June 30, 2007. At June 30, 2007, the Company guaranteed 50% of the outstanding total obligations on BLX’s revolving line of credit, which expires in March 2009, for a total guaranteed amount of $205.8 million and had also provided four standby letters of credit totaling $20.0 million in connection with four term securitizations completed by BLX. In addition, the Company has agreed to purchase the $3.0 million of Class A equity interests purchased by the chief executive officer of BLX at fair value in the event that BLX amends or otherwise restructures its existing senior credit facility or he is terminated for any reason. See Note 3.

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			2007				2006
(in millions)
Number of common shares				3,325				3,000
Gross proceeds			$	97,256			$	87,750
Less costs, including underwriting fees				(3,472	)			(4,780	)
	Net proceeds		$	93,784			$	82,970

		For the Six
		Months Ended
		June 30,
		2007				2006
(in millions, except per share amounts)
Shares issued			0.3				0.2
Average price per share		$	30.23			$	29.63

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		For the Three								For the Six
		Months Ended								Months Ended
		June 30,								June 30,
		2007				2006				2007				2006
(in millions, except per share amounts)
Net increase in net assets resulting from operations		$	89.2			$	33.7			$	222.2			$	133.3
Weighted average common shares outstanding — basic			152.4				140.0				150.9				139.4
Dilutive options outstanding			3.7				3.2				3.5				3.1
Weighted average common shares outstanding — diluted			156.1				143.2				154.4				142.5
Basic earnings per common share		$	0.59			$	0.24			$	1.47			$	0.96
Diluted earnings per common share		$	0.57			$	0.24			$	1.44			$	0.94

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			For the Three								For the Six
			Months Ended								Months Ended
			June 30,								June 30,
			2007				2006				2007				2006
($ in millions)
IPA contributions			$	2.4			$	2.1			$	4.9			$	3.8
IPA mark to market expense (benefit)				2.4				(1.5	)			(1.6	)			(0.6	)
	Total IPA expense (benefit)		$	4.8			$	0.6			$	3.3			$	3.2

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						Weighted				Weighted
						Average				Average				Aggregate
						Exercise				Contractual				Intrinsic
						Price Per				Remaining				Value at
		Shares				Share				Term (Years)				June 30, 2007(1)
(in millions, except per share amounts)
Options outstanding at January 1, 2007			23.2			$	24.92
Granted			6.4			$	29.58
Exercised			(0.5	)		$	25.02
Forfeited			(0.5	)		$	28.94
Options outstanding at June 30, 2007			28.6			$	25.89				5.97			$	145.2
Exercisable at June 30, 2007(2)			22.0			$	24.95				5.61			$	132.5
Exercisable and expected to be exercisable at June 30, 2007(3)			28.1			$	25.83				5.94			$	144.2

(1)	Represents the difference between the market value of the options at June 30, 2007, and the cost for the option holders to exercise the options.
(2)	Represents vested options.
(3)	The amount of options expected to be exercisable at June 30, 2007, is calculated based on an estimate of expected forfeitures without consideration of the Company’s tender offer completed in July 2007 discussed below.

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				At and for the								At and for the
				Six Months Ended								Year Ended
				June 30,								December 31,
				2007(1)				2006				2006
Per Common Share Data
Net asset value, beginning of period				$	19.12			$	19.17			$	19.17
	Net investment income(2)				0.42				0.64				1.30
	Net realized gains(2)(3)				0.66				3.74				3.66
		Net investment income plus net realized gains(2)			1.08				4.38				4.96
	Net change in unrealized appreciation or depreciation(2)(3)				0.36				(3.44	)			(3.28	)
Net increase in net assets resulting from operations (2)					1.44				0.94				1.68
Net decrease in net assets from shareholder distributions					(1.27	)			(1.19	)			(2.47	)
Net increase in net assets from capital share transactions(2)					0.30				0.25				0.74
Net asset value, end of period				$	19.59			$	19.17			$	19.12
Market value, end of period				$	30.96			$	28.77			$	32.68
Total return(4)					(1.2	)%			1.9	%			20.6	%
Ratios and Supplemental Data ($ and shares in thousands, except per share amounts)
Ending net assets				$	2,991.1			$	2,690.0			$	2,841.2
Common shares outstanding at end of period					152.7				140.3				148.6
Diluted weighted average common shares outstanding					154.4				142.5				145.6
Employee, employee stock option and administrative expenses/average net assets(5)					3.11	%			2.66	%			5.38	%
Total operating expenses/average net assets(5)					5.31	%			4.39	%			9.05	%
Net investment income/average net assets(5)					2.20	%			3.41	%			6.90	%
Net increase in net assets resulting from operations/average net assets(5)					7.57	%			4.97	%			8.94	%
Portfolio turnover rate(5)					14.68	%			21.20	%			27.05	%
Average debt outstanding				$	1,904.4			$	1,395.8			$	1,491.0
Average debt per share(2)				$	12.33			$	9.80			$	10.24

(1)	The results for the six months ended June 30, 2007, are not necessarily indicative of the operating results to be expected for the full year.
(2)	Based on diluted weighted average number of common shares outstanding for the period.
(3)	Net realized gains and net change in unrealized appreciation or depreciation can fluctuate significantly from period to period. As a result, quarterly comparisons may not be meaningful.
(4)	Total return assumes the reinvestment of all dividends paid for the periods presented.
(5)	The ratios for the six months ended June 30, 2007 and 2006, do not represent annualized results.

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,
Portfolio Company					Credited								2006				Gross				Gross				June 30, 2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Companies More Than 25% Owned
Alaris Consulting, LLC			Senior Loan(5)										$	—			$	572			$	(572	)		$	—
	(Business Services)		Equity Interests											—				1,025				(1,025	)			—
AllBridge Financial, LLC			Equity Interests											—				800				—				800
	(Financial Services)
Allied Capital Senior Debt Fund, L.P.			Equity Interests											—				19,252				—				19,252
	(Private Debt Fund)
Avborne, Inc.			Preferred Stock											918				54				(45	)			927
	(Business Services)		Common Stock											—				—				—				—
Avborne Heavy Maintenance,   Inc.			Preferred Stock											—				—				—				—
	(Business Services)		Common Stock											—				—				—				—
Border Foods, Inc.			Preferred Stock											—				—				—				—
	(Consumer Products)		Common Stock											—				—				—				—
Business Loan Express, LLC			Class A Equity
	(Financial Services)		Interests(5)											66,622				29,200				—				95,822
			Class B Equity Interests											79,139				—				(9,116	)			70,023
			Class C Equity Interests											64,976				—				(10,028	)			54,948
Calder Capital Partners, LLC			Senior Loan(5)						$	49				975				1,026				(49	)			1,952
	(Financial Services)		Equity Interests											2,076				78				(1,616	)			538
Callidus Capital Corporation			Senior Loan		$	40								—				2,100				(1,400	)			700
	(Financial Services)		Subordinated Debt			554								5,762				530				—				6,292
			Common Stock											22,550				25,791				—				48,341
Coverall North America, Inc.			Unitranche Debt			2,156								36,333				18				(1,446	)			34,905
	(Business Services)		Subordinated Debt			456								5,972				4				—				5,976
			Common Stock											19,619				2,891				—				22,510
CR Holding, Inc.			Subordinated Debt			3,361								39,401				698				—				40,099
	(Consumer Products)		Common Stock											25,738				12,784				—				38,522
Direct Capital Corporation			Subordinated Debt			1,936								—				36,058				—				36,058
	(Financial Services)		Common Stock											—				19,250				(2,084	)			17,166
Financial Pacific Company			Subordinated Debt			6,300								71,362				740				—				72,102
	(Financial Services)		Preferred Stock											15,942				1,634				—				17,576
			Common Stock											65,186				5,287				—				70,473
ForeSite Towers, LLC			Equity Interests			1,269								12,290				356				(11,733	)			913
	(Tower Leasing)
Global Communications, LLC			Senior Loan(5)											15,957				—				—				15,957
	(Business Services)		Subordinated Debt (5)											11,237				—				(8,016	)			3,221
			Preferred Equity
			Interest											—				—				—				—
			Options											—				—				—				—
Gordian Group, Inc.			Senior Loan(5)			(9	)							—				172				(172	)			—
	(Business Services)		Common Stock											—				—				—				—
Healthy Pet Corp.			Senior Loan			1,309								27,038				6,350				(33,388	)			—
	(Consumer Services)		Subordinated Debt			2,893								43,579				580				(44,159	)			—
			Common Stock											28,921				14,897				(43,818	)			—
HMT, Inc.			Preferred Stock											2,637				—				(2,637	)			—
	(Energy Services)		Common Stock											8,664				21,509				(30,173	)			—
			Warrants											3,336				8,281				(11,617	)			—
Hot Stuff Foods, LLC(7)			Senior Loan			1,969								—				49,670				(220	)			49,450
	(Consumer Products)		Subordinated Debt			3,647								—				61,294				(13,139	)			48,155
			Subordinated Debt (5)											—				8,461				(8,461	)			—
			Common Stock											—				—				—				—
Huddle House, Inc.			Senior Loan			426								19,950				—				(19,950	)			—
	(Retail)		Subordinated Debt			4,447								58,196				668				(178	)			58,686
			Common Stock											41,662				1,545				(137	)			43,070
Impact Innovations Group, LLC			Equity Interests in
	(Business Services)		Affiliate											873				1				(554	)			320

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,
Portfolio Company					Credited								2006				Gross				Gross				June 30, 2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Insight Pharmaceuticals			Subordinated Debt		$	2,914							$	43,884			$	685			$	—			$	44,569
	Corporation		Subordinated Debt (5)											15,966				2,111				(1,620	)			16,457
	(Consumer Products)		Preferred Stock											7,845				209				(7,845	)			209
			Common Stock											—				—				—				—
Jakel, Inc.			Subordinated Debt (5)											6,655				500				(7,155	)			—
	(Industrial Products)		Preferred Stock											—				—				—				—
			Common Stock											—				—				—				—
Legacy Partners Group, Inc.			Senior Loan (5)											4,843				—				(1,000	)			3,843
	(Financial Services)		Equity Interests											—				613				(45	)			568
Litterer Beteiligungs-GmbH			Subordinated Debt			21								692				14				—				706
	(Business Services)		Equity Interest											1,199				1,707				—				2,906
Mercury Air Centers, Inc.			Subordinated Debt			4,063								49,217				1,035				—				50,252
	(Business Services)		Common Stock											195,019				74,867				—				269,886
MVL Group, Inc.			Senior Loan			2,120								27,245				3,378				—				30,623
	(Business Services)		Subordinated Debt			2,581								35,478				3,886				—				39,364
			Common Stock											—				2,013				—				2,013
Old Orchard Brands, LLC			Senior Loan			347								—				23,500				(23,500	)			—
	(Consumer Products)		Subordinated Debt			601								—				19,206				—				19,206
			Common Equity											—				18,767				—				18,767
Penn Detroit Diesel Allison, LLC			Subordinated Debt			3,005								37,994				589				—				38,583
	(Business Services)		Equity Interests											25,949				3,567				(1,984	)			27,532
Powell Plant Farms, Inc.			Senior Loan(5)											26,192				3,950				(17,394	)			12,748
	(Consumer Products)		Subordinated Debt (5)											962				18,261				(19,223	)			—
			Preferred Stock											—				—				—				—
			Warrants											—				—				—				—
Service Champ, Inc.			Subordinated Debt			2,193								27,619				363				—				27,982
	(Business Services)		Common Stock											16,786				4,706				(298	)			21,194
Staffing Partners Holding
	Company, Inc.		Subordinated Debt (5)											486				63				—				549
	(Business Services)
Startec Global Communications
	Corporation		Senior Loan			689								15,965				—				(4,790	)			11,175
	(Telecommunications)		Common Stock											11,232				5,877				—				17,109
Sweet Traditions, Inc.			Senior Loan(5)			1,088								35,172				580				—				35,752
	(Retail)		Preferred Stock											400				550				—				950
			Common Stock											50				—				—				50
Triview Investments, Inc.			Senior Loan			723								14,747				11				—				14,758
	(Broadcasting & Cable/		Subordinated Debt			3,274								56,008				19,108				—				75,116
	Business Services/		Subordinated Debt (5)			1,288								4,342				745				—				5,087
	Consumer Products)		Common Stock			37								31,322				16,924				(1,184	)			47,062
Total companies more than 25% owned					$	55,697							$	1,490,180											$	1,709,770
Companies 5% to 25% Owned
Advantage Sales &
	Marketing, Inc.		Subordinated Debt		$	9,260							$	151,648			$	1,583			$	—			$	153,231
	(Business Services)		Equity Interests											11,000				—				—				11,000
Air Medical Group Holdings LLC			Senior Loan			125								1,763				4,239				(4,273	)			1,729
	(Healthcare Services)		Subordinated Debt			1,931								35,128				55				(35,183	)			—
			Equity Interests											5,950				3,250				—				9,200
Alpine ESP Holdings, Inc.			Preferred Stock											602				94				—				696
	(Business Services)		Common Stock											—				100				—				100
Amerex Group, LLC			Subordinated Debt			507								8,400				—				—				8,400
	(Consumer Products)		Equity Interests											13,823				8,002				(38	)			21,787
BB&T Capital
	Partners/Windsor
	Mezzanine Fund, LLC		Equity Interests											5,554				54				—				5,608
	(Private Equity Fund)
Becker Underwood, Inc.			Subordinated Debt			1,792								24,163				314				—				24,477
	(Industrial Products)		Common Stock											3,700				—				(100	)			3,600
BI Incorporated			Subordinated Debt			2,076								30,135				239				—				30,374
	(Business Services)		Common Stock											4,100				2,700				—				6,800
CitiPostal, Inc. and Affiliates			Senior Loan			1,141								20,569				720				(776	)			20,513
	(Business Services)		Equity Interests											4,700				2,253				(53	)			6,900

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					Amount of Interest or
					Dividends
PRIVATE FINANCE													December 31,
Portfolio Company					Credited								2006				Gross				Gross				June 30, 2007
(in thousands)			Investment(1)		to Income(6)				Other(2)				Value				Additions(3)				Reductions(4)				Value
Creative Group, Inc.			Subordinated Debt		$	480							$	13,656			$	30			$	(2,488	)		$	11,198
	(Business Services)		Warrants											1,387				—				(1,387	)			—
Drew Foam Companies, Inc.			Preferred Stock(5)											722				—				(294	)			428
	(Business Services)		Common Stock											7				—				(7	)			—
MedBridge Healthcare, LLC			Senior Loan(5)											7,164				—				—				7,164
	(Healthcare Services)		Subordinated Debt (5)											1,813				316				—				2,129
			Convertible
			Subordinated Debt (5)											—				—				—				—
			Equity Interests											—				110				(110	)			—
MHF Logistical Solutions,Inc(8)			Subordinated Debt (5)											—				27,518				(10,241	)			17,277
	(Business Services)		Subordinated Debt (5)											—				—				—				—
			Common Stock											—				—				—				—
			Warrants											—				—				—				—
Multi-Ad Services, Inc.			Unitranche Debt			1,139								19,879				13				(100	)			19,792
	(Business Services)		Equity Interests											2,000				—				(1,060	)			940
Nexcel Synthetics, LLC			Subordinated Debt			610								10,978				199				(11,177	)			—
	(Consumer Products)		Equity Interests											1,486				269				(1,755	)			—
PresAir LLC			Senior Loan(5)						$	81				2,206				—				(124	)			2,082
	(Industrial Products)		Equity Interests											—				5				(5	)			—
Progressive International
	Corporation		Subordinated Debt			615								7,533				80				—				7,613
	(Consumer Products)		Preferred Stock											1,024				44				—				1,068
			Common Stock											2,300				2,000				—				4,300
			Warrants											—				—				—				—
Regency Healthcare Group, LLC			Senior Loan			72								1,232				1				—				1,233
	(Healthcare Services)		Unitranche Debt			1,103								19,908				41				(8,000	)			11,949
			Equity Interests											1,616				104				—				1,720
SGT India Private Limited			Common Stock											3,346				149				(419	)			3,076
	(Business Services)
Soteria Imaging Services, LLC			Subordinated Debt			1,169								17,569				1,092				(5,000	)			13,661
	(Healthcare Services)		Equity Interests											2,541				51				—				2,592
Universal Environmental
	Services, LLC		Unitranche Debt(5)			717								10,211				—				(4,201	)			6,010
	(Business Services)		Equity Interests											—				15				(15	)			—
Total companies 5% to 25% owned					$	22,737							$	449,813											$	418,647

(1)	Common stock, preferred stock, warrants, options, and equity interests are generally non-income producing and restricted. The principal amount for loans and debt securities and the number of shares of common stock and preferred stock is shown in the consolidated statement of investments as of June 30, 2007.
(2)	Other includes interest, dividend, or other income which was applied to the principal of the investment and therefore reduced the total investment. These reductions are also included in the Gross Reductions for the investment, as applicable.
(3)	Gross additions include increases in the cost basis of investments resulting from new portfolio investments, paid-in-kind interest or dividends, the amortization of discounts and closing fees, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company into this category from a different category. Gross additions also include net increases in unrealized appreciation or net decreases in unrealized depreciation.
(4)	Gross reductions include decreases in the cost basis of investments resulting from principal collections related to investment repayments or sales, the exchange of one or more existing securities for one or more new securities and the movement of an existing portfolio company out of this category into a different category. Gross reductions also include net increases in unrealized depreciation or net decreases in unrealized appreciation.
(5)	Loan or debt security is on non-accrual status at June 30, 2007, and is therefore considered non-income producing. Loans or debt securities on non-accrual status at the end of the period may or may not have been on non-accrual status for the full period.
(6)	Represents the total amount of interest or dividends credited to income for the portion of the year an investment was included in the companies more than 25% owned or companies 5% to 25% owned categories, respectively.
(7)	In the first quarter of 2007, the Company exercised its option to acquire a majority of the voting securities of Hot Stuff Foods, LLC (Hot Stuff) at fair market value. Therefore, Hot Stuff was reclassified to companies more than 25% owned in the first quarter of 2007. At December 31, 2006, the Company’s investment in Hot Stuff was included in the companies less than 5% owned category.
(8)	In the second quarter of 2007, the Company obtained a seat on the board of directors of MHF Logistical Solutions, Inc. (MHF). Therefore, MHF was reclassified to companies 5% to 25% owned in the second quarter of 2007. At December 31, 2006, the Company’s investment in MHF was included in the companies less than 5% owned category.

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