Morley absolute growth investment company raises £226m

Investment Management by Morley Fund Management -

Morley Absolute Growth Investment Company Limited ('MAGIC'), the recently launched split capital closed ended investment vehicle incorporating a hedge fund element, has closed having raised in excess of initial expectations. Ł226m has been committed to the new fund, predominantly by UK institutional investors. The shares were listed last week on the Dublin and Guernsey Stock Exchanges.

The Company, sponsored by UBS Warburg, has the objective of delivering a high and growing income whilst maintaining capital value. The portfolio will be divided into two parts. Approximately 55%, or Ł122m, will be invested in the Morley Alternative Strategy Fund PCC Ltd., a Pan European long/short strategy hedge fund concentrating primarily on the FTSE 350 and FTSE World Europe ex UK Indices. The balance will be invested in an Income portfolio consisting primarily of Investment Trust geared ordinary shares.

Commenting on the success of MAGIC, David Keen, Head of Investment Trusts, at Morley Fund Management, said:

"I am delighted with the sum received for this new and innovative product, particularly given the difficult market background. It underlines the level of interest in hedge funds by institutional investors and positions Morley as a significant player in this new and exciting market."

~Ends~

For further information please contact:

David Keen, Head of Investment Trusts Morley Fund Management
020 7809 6007

John Korwin Szymanowski UBS Warburg Ltd
020 7568 4219

Louise Hatch/Gay Collins Penrose Financial
020 7786 4888

Notes to Editors

Morley Absolute Growth Investment Company Limited - Key Features:

• Seeks to eliminate the risk of capital erosion normally associated with other high yield products through investment in a hedge fund.
• A defined risk profile designed to meet the needs of the Investment Company with a permitted level of gearing significantly below the average for the hedge fund industry.
• Single fund strategy avoids double charging whilst delivering high levels of investment transparency. This is the first split capital closed ended investment company to incorporate a hedge fund exposure available to the market.
• The performance related fee will only be payable once a total return of 10% per annum has been achieved. The fee will then be 20% of the excess return.
• Management fee: The overall management fee will be approximately 1.55% per annum made up of 1% per annum on income assets outside the hedge fund (approximately 45% of total assets), 2% on the hedge fund itself (approximately 55% of total assets).
• Fully qualifying for Isas with qualifying for Peps in the next financial year
• Planned winding up date of 10 years from Launch (2011)
• Will be incorporated in Guernsey with Dublin and Channel Islands listings. Will be listed from Wednesday 28th March 2001.
• The capital structure of the split capital closed ended investment company (Morley Absolute Growth Investment Company) will consist of:
• • 42.5% income shares, yielding 9.7%
  • 7.5% capital shares
    (These are also available in units of one capital share and one income share, yielding 8.25%)
  • 7.5% zero dividend preference shares with a gross redemption yield of 8.75% with a 10 year life
  • 10.0% synthetic bank finance, 5 years
  • 32.5% bank debt, 7 years
  • The income shares, capital shares and units will all be quoted separately
    The invested assets will be deployed 55% in the hedge fund and 45% in an income portfolio of investment trust shares.

Morley Fund Management:

Morley Fund Management is an independently managed, London based, asset management business with Ł106 billion under management. It has investment professionals based in Boston, Tokyo, Singapore and Dublin.

Morley is a wholly owned subsidiary of the CGNU Group and manages institutional funds under the Morley brand. It also acts as investment manager for a range of retail investment funds, marketed under the Norwich Union brand.

CGU plc and Norwich Union plc merged on 30 May 2000 to create CGNU plc, the UK's largest insurance group and one of the top-five insurers in Europe with substantial positions in other markets around the world, making it the world's sixth largest insurer based on gross worldwide premiums.

From October 2000, the combined life and pensions, general insurance and retail fund management businesses in the UK operate under the Norwich Union brand, while the institutional investment business operates under the Morley Fund Management brand.

Issued by Morley Fund Management and UBS Warburg Ltd.

UBS Warburg Ltd. is a subsidiary of UBS AG, for the purposes of S.57 of the Financial Services Act 1986. UBS Warburg Ltd. is regulated in the UK by the Securities and Futures Authority. The value of an investment may go down as well as up. Individuals should seek advice from an independent financial adviser as to the suitability of the product.

Morley Fund Management is a business name of Morley Fund Management Limited (incorporated in England with Registered No. 1151805 and Registered Office 1 Poultry London EC2R 8EJ) and Norwich Union Investment Management Limited (incorporated in England with Registered No. 2152949 and Registered Office 8 Surrey Street Norwich NR1 3NG) both regulated by IMRO and members of the CGNU Group.