Community ImpactCommunity SupportCommunity InvolvementCommunity InvestmentCommunity Leadership Report 2007

Dear Community Colleague:

Piper Jaffray is a capital markets business and our primary goal is to create profitable and sustainable value. As we continue to advance our business objectives, we recognize that our activities—or “corporate impact”—have a critical effect on the communities where we do business.

We are committed to the core value that our firm will give back to the communities where our employees live and work. It is important that our clients, our business, our employees and members of the broader community prosper within healthy, sustainable environments.

In 2007, our community impact allowed us to donate time, talent and resources to some very exciting and worthwhile social initiatives across the country, bringing to life our mission in tangible and beneficial ways.

We at Piper Jaffray are privileged to incorporate community involvement and outreach into the work we do. Our initiatives this year included incredible employee support to rebuild a New Orleans neighborhood torn by Hurricane Katrina; to record setting participation in our annual employee giving campaign; to major grants supporting innovative youth leadership programs; to community investment in low-income neighborhoods needing small business support.

I proudly invite you to review the detail behind our community leadership in the 2007 Piper Jaffray Community Report.

Sincerely,

Andrew S. DuffChairman and CEO

A LETTER FROM ANDREW DUFF

As evidence of our commitment, Piper Jaffray contributes 5 percent of its pre-tax earnings to the community as part of the Minnesota Keystone Program, a voluntary initiative promoting corporate support for communities, founded more than 25 years ago. That translates into nearly $10 million in community contributions and more than $2 million in employee volunteer hours at Piper Jaffray in the past five years alone.

HISTORYFor more than a century, Piper Jaffray has been evolving as a leading financial services company. We pride ourselves on our guiding principles and believe that contributing our talents and resources to serve the communities where we live and work is a fundamental part of smart business.

A HISTORY OF COMMUNITY LEADERSHIP

Over the years, we’ve kept our company solidly rooted

in our time-tested core values. These values, modeled

by our founders in the late 19th century and embraced

by our managers and employees today, include strong

industry leadership and community partnership. Our

values guide us and help us make a positive impact. And

as we grow, we remain committed to our clients, our

colleagues and the communities where we do business.

1895 Today

RE-ENERgIzINg THE FIRM’S COMMUNITY FOCUS

In 2007, updated grant-making guidelines were announced and implemented to better reflect our company’s transition to a focused capital markets business and middle market investment bank.

Community Leadership

Mission: Piper Jaffray

works to build vibrant and

sustainable communities.

Through leadership and

partnership, we will continue

to make

a positive

impact.

Piper Jaffray Foundation, corporate giving and sponsorship dollars are primarily focused on the following:

· Community investment in neighborhood-based, small business programs in low-income areas that promote sustainable employment.

· Economic education which deepens knowledge of the economy, with emphasis on economics and emerging industries.

· Major arts and cultural organizations that enhance the quality of life in the community, supported through sponsorships.

· Other Priorities: ~ Innovative health programs that develop and track

new techniques and advances addressing children’s chronic health concerns.

~ Initiatives that encourage civic engagement of young people.

~ Youth leadership development, with an emphasis on access to higher education and development of diverse leaders who are considering careers in science, technology, engineering and math (STEM).

In addition, 2007 marked the expansion and introduction of several robust employee programs to encourage and support community participation. Nearly 25 percent of employees took advantage of the firm’s enhanced community employee programs this year.

· Matching Gift Program: maximizes employees financial contributions to the community through a company match of $50 dollars or more, with a $1,500 annual maximum.

· Volunteer Program: encourages and supports employee volunteer efforts by providing financial support to nonprofit organizations where an employee volunteers.

· Community Leader Program: encourages and supports sustained volunteerism for Piper Jaffray leaders who contribute more than 40 hours annually to a nonprofit and serve as a member of its board of directors. A leader may qualify to apply for funding support for the qualifying non profit.

BY THE NUMBERS: PIPER JAFFRAY COMMUNITY gIvINg IN 2007: $3.14 Million

59%Corporate Giving and Employee Programs

31%CommunityInvestment

17%Health

15%Arts andCulture

11%United Way

11%Other

25%Volunteerism

9%Foundation

7%Administrative

9%Youth Leadership and Civic Engagement

6%Economic Education

Piper Jaffray 2007 Total Giving

Piper Jaffray 2007 Foundation and Corporate Giving by Focus Area

gIvINg HIgHLIgHTS:COMMUNITY NEEDS. JOINT COMMITMENT TO CREATE SOLUTIONS.

Behind every grant, every committed employee volunteer, every sponsorship, is a story. Here are highlights of 2007 giving activity, by focus area.

Community Investment, Small BusinessCommunity Reinvestment Fund, Minneapolis, MN CRF is the national leader in bringing capital to community-development lenders through the secondary market for loans. Beginning in 1988, CRF has injected hundreds of millions of dollars into low-income and economically disadvantaged communities across the country to help stimulate job creation and economic development, provide affordable housing and construct community facilities. The $300,000 Piper Jaffray grant provided support to attract at least $9 million in additional capital including program-related investments, equity-equivalent investments and market rate capital for its USA Community Reinvestment Program, targeting underserved communities in the area of small business.

Neighborhood Development Center (NDC), Minneapolis/St. Paul, MN Piper Jaffray is proud of its multi-year relationship with NDC to help revitalize a commercial section of the Lake Street area of Minneapolis. Following years of employee mentoring and consulting in small business minority start-ups, as well as multi-year grant funding, the 2007 grant continues to focus on entrepreneurship and community development. The grant is to be used specifically at Plaza Verde and Midtown Global Market, both on Lake Street in the Phillips neighborhood of South Minneapolis.

California Redevelopment Association Foundation, Sacramento, CAPiper Jaffray provided support for an innovative public TV series created to inform California citizens of the benefits of community redevelopment activities. The California Redevelopment Association Foundation supports and promotes redevelopment in California through strategic planning, education and legislative advocacy.

gIvINg HIgHLIgHTS:

Economic EducationBestPrep, Brooklyn Park, MNPiper Jaffray worked in tandem with BestPrep’s eMentors and Minnesota Business Venture program to provide grant funds supporting students in grades 4-12 as they prepare Minnesota students with business, career and financial literacy skills through experiences that inspire success in work and life. Through eMentors, business volunteers tutored students weekly via a structured e-mail program, providing students with economic skills. Minnesota Business Venture allows students to interact with business volunteers while developing a career and business plan.

Arizona Council on Economic Education, Scottsdale, AZACEE helps K-12 students develop economic ways of thinking and problem-solving that they can use in their lives as consumers, savers, investors, workers, citizens and participants in a global economy. The Council reaches over 300,000 students annually, including 80 percent of schools with low income students. Students learn about the economy in which they will function and they develop economic, financial, math and decision-making skills they will use every day on the job, in their careers, in their personal lives and as citizens. A Piper Jaffray grant supported development and delivery of workshops, curriculum and classroom lessons.

Arts and CultureWalker Art Center, Minneapolis, MNAs a premier partner of the Walker Art Center, Piper Jaffray demonstrates its commitment to arts and culture through an ongoing relationship with one of the most prominent art institutions in the nation.

The Frick Collection, New York, NYPiper Jaffray provided support to The Frick Collection, which includes some of the best-known paintings by European artists, major works of sculpture, eighteenth-century French furniture and porcelains, Limoges enamels, Oriental rugs, and other works of remarkable quality.

The Children’s Museum, Seattle, WAPiper Jaffray provided sponsorship support to the Children’s Museum for the “Passport to Play” membership program. Through collaboration with social service organizations, the museum offers free family memberships to low income, homeless and distressed families.

MOSAIC, A Festival of Arts Celebrating Cultural Diversity, Minneapolis, MNPiper Jaffray has been a sponsor of Minneapolis MOSAIC since its inception in 2004. This celebration of cultural diversity through the arts provides an opportunity for the community to experience a wide spectrum of cultural and artistic activities in Minneapolis. The festival fosters opportunities between organizations and promotes community visibility of the richness and diversity of arts and cultures in the city.

Georgia O’Keeffe, Minneapolis Institute of Arts, Minneapolis, MNPiper Jaffray was the proud sponsor of “Georgia O’Keeffe, Circling Around Abstraction”, at the Minneapolis Institute of Arts. This exhibition sponsorship provided a platform to highlight our firms arts and cultural commitment to the community and our clients during the 2007 holiday season.

gIvINg HIgHLIgHTS:

OtherMinneapolis Heart Institute Foundation, Minneapolis, MNA grant from Piper Jaffray supported new clinical research internships for three students (high school, undergraduate or medical students) interested in cardiovascular medicine. Through direct hands-on research and exposure to sub-specialties, the program seeks to build interest in cardiology careers in a community that faces a shortage of cardiologists, especially those in clinical research. This program coincides with the Piper Jaffray Youth Leadership Development program in the areas of science, technology, economics and math (STEM) education.

Admission Possible, Saint Paul, MNThis non-profit makes college admission possible for promising low-income young people by providing them with free ACT/SAT test preparation, admissions and financial aid consulting, and guidance in the transition to college. Ninety-eight percent of Admission Possible students earn admission to college. The organization served 1,200 high school juniors and seniors at 15 high schools in 2007-08. A Piper Jaffray grant made this program a reality for ten low-income students this year.

Denver Public Schools Foundation, Denver, COThis two-year partnership with the Denver Public Schools Foundation will fund the implementation of a new elementary-school level, hands-on science curriculum called TRACKS. The curriculum engages students in science while they are young, helping them build a strong foundation in key science concepts so they are more proficient and prepared when they reach high school. The new science curriculum was a top priority in the strategic plan for education reform that Denver Public Schools launched in 2005.

Initiative for Renewable Energy and the Environment (IREE), University of Minnesota, St. Paul, MNPiper Jaffray provided sponsorship support of E3 2007: The Midwest’s Premier Energy, Economic and Environmental Conference, which focused on the intersection between innovative technologies, visionary policies, environmental benefits and emerging market opportunities as they relate to developments in the renewable energy sector. In addition, Piper Jaffray provided funding for the University of Minnesota’s first endowed scholarship supporting students interested in pursuing careers in renewable energy and the environment.

gIvINg HIgHLIgHTS

EMPLOYEE PROgRAMS

Hurricane Katrina Volunteer BlitzOn Friday, February 2, 2007, more than 100 Piper Jaffray Public Finance employees and their guests partnered with the Hands On Network in a revitalization project in New Orleans, a city still suffering from the destruction of Hurricane Katrina. Volunteers worked on three houses and a park area in a neighborhood severely distressed by the storm. The Public Finance group installed dry wall, primed, painted and more to ensure that three families could once again live in their homes and the community could begin to reclaim the neighborhood.

Public Finance Volunteers Dig Into Community Landscaping ProjectNearly 50 Piper Jaffray Public Finance employees and their family members dug in and completed a landscaping project for Cityview Performing Arts Magnet School in Northeast Minneapolis. This public school enrolls more than 600 students, most of which live at or close to poverty income levels. Piper Jaffray employees completed the project as part of the “Corporate Month of Service,” a national initiative designed to increase community impact through volunteer leadership and community involvement.

2007 Employee Giving Campaign Marks Highest Participation Rate EverUnited Way support is a strong tradition at Piper Jaffray, a way to meet human services needs in Piper Jaffray communities nationwide. In 2007, a full 66 percent of employees participated in the employee giving campaign to United Way and employee gifts increased 25 percent over 2006.

“Most of us had seen the reports and images of the devastation that Hurricane Katrina caused, but until we all got in the midst of the destruction, I don’t think we truly understood

the impact this tragedy still has. This project had a tremendous impact on our group, and we are grateful to be able to give back to the three families and the Gentilly community.”

Frank Fairman, Head of Public Finance Services

“As we began another year of employee giving with the United Way campaign, we were reminded of the unique opportunity we have to join together and improve the

lives of people within our communities. Piper Jaffray employees surpassed our 2007 challenge grant goal–achieving 119 percent of the goal and establishing a new standard

of excellence in employee giving. I am so proud of our commitment to supporting the larger community as a firm and making a difference in the lives of those in need.”

Andrew Duff, Chairman and CEO

2007 non-profiT parTners

2007 Piper Jaffray grant recipientsIn its annual grant round completed in June of 2007, Piper Jaffray Companies and the Piper Jaffray Foundation awarded gifts and grants to more than 50 non-profit organizations across the country, including the following:

A Better Chance Admission Possible American Heart Association American Red Cross Arizona Council On Economic Best Prep Bond Market Foundation Cal-ICMA Program of Southern CA California Redevelopment Association Center for Neighborhoods Common Bond Communities Community Reinvestment Fund Denver Public Schools Franklin Library Goodwill Easter Seals Pen Pals/Library Foundation of Hennepin County Local Initiatives Support Corp (LISC) Lutheran Alliance to Create Housing (LATCH) Metropolitan Economic Development Association Minneapolis Consortium of Community Developers Minneapolis Heart Institute Minnesota Institute for Talented Youth Minnesota Landmark Center Minnesota Zoo Foundation Neighborhood Development Center Phillips Community Television Technology Access Foundation United Way, Various Regional Chapters University Of MN, Carlson School Weisman Art Museum Wilder Foundation WomenVenture Women’s Initiative for Self Employment

2007 Piper Jaffray sponsorship partners Every year, Piper Jaffray sponsors select charitable causes and events, including arts and cultural institutions. These win-win relationships enhance the quality of life in our communities and include:

Arts and Science Council Chicago Children’s Theater The Children’s Museum Children’s Theater Company Minneapolis Institute of Arts Minnesota Opera Minneapolis MOSAIC Oregon Zoo Pen Pals, Hennepin County Library Foundation St. Paul Chamber Orchestra Twin Cities Marathon Vocal Essence Walker Art Center

ABOUT PIPER JAFFRAY

Piper Jaffray is a leading,

international middle market

investment bank and institutional

securities firm, serving the needs

of middle market corporations,

private equity groups, public

entities, nonprofit clients and institutional investors.

Founded in 1895, Piper Jaffray provides a comprehensive

set of products and services, including equity and debt

capital markets products; public finance services; asset

management; mergers and acquisitions advisory services;

high-yield and structured products; institutional equity

and fixed-income sales and trading; and equity and

high-yield research. With headquarters in Minneapolis,

Piper Jaffray has 25 offices across the United States

and international locations in London, Hong Kong and

Shanghai. (nyse: pjc) (www.piperjaffray.com)

Since 1895. Member SIPC and FINRA. © 2008 Piper Jaffray & Co. 5/08 CC-08 piperjaffray.com