Woolwich Plan Managers launch Global Distribution Bond

On 30 September, Woolwich Plan Managers (WPM) will launch a Global Distribution Bond, the first of a new generation of products for income seeking investors. Returns from the bond are linked to a new fund managed by Morley Fund Management (Morley).

The bond aims to deliver a gross income yield of 7% per annum or 2.5% above the Bank of England’s base rate, if higher. WPM and Morley have specifically designed the fund to deliver a stable and comparatively high level of income by giving up excess capital growth potential for enhanced income now.

Some of the key features of the bond are:

• Targets a particularly high level of income – comparable to that of a corporate bond fund – but also offers the potential for capital growth.
• Income paid quarterly.
• Income reinvestment option.
• Minimum investment of just Ł5,000.

Morley will actively manage a balanced portfolio with a traditional mix of 60% equities and 40% bonds.

• The equity element of the portfolio will be invested in approximately 100 lower risk, higher yielding, global stocks from the MSCI universe.
• The bond portfolio will be invested in global convertible bonds, convertible preference shares and cash with the bonds having a bias towards investment grade issues.

This portfolio mix is expected to yield around 3.5%. Additional income will come from an active programme of selling covered call options on approximately 80% of the equity portfolio, thus giving up excess capital growth potential and using the premium earned to enhance income now.

Testing has shown that call options will typically have quarterly strikes of between 105% and 110% of current prices thus giving the potential further portfolio growth, albeit restricted.

The Global Distribution Bond is a medium term note security or ‘MTN’ with a 20-year open-ended term and issued by a financial institution, which holds at least a ‘AA’ Standard & Poors’s credit rating.

The bond is available on a fixed price basis through to 18 October after which the price will change in line with fund performance. Dealing in the Bond is daily with the price determined using a mid-day forward valuation point. Please note the Global Distribution Bond is not a capital protected product and income is not guaranteed.

Commenting on the launch of the bond, Colin Dickie, director of Woolwich Plan Managers, said: "The demand for equity income funds has never been greater but often starting yields are too low and left investors with the conundrum of eroding capital and hoping that subsequent equity returns will restore order. The Global Distribution Bond specifically addresses this – investors receive a high yield without destroying capital growth prospects. The last few years have been difficult for investors as they try to find returns in uncertain markets. In a market where future growth expectations remain modest but with high volatility, the Bond is well suited to this environment. The active management link with Morley is a significant and welcome addition to the investor proposition as it can clearly demonstrate the skill of an enhancing active call option strategy."

Tom Wills, lead investment manager at Morley Fund Management, said: "By using the options market, we are able to generate an income from each stock and sell excess upside to provide a downside cushion - ideal for lower risk investors. The balanced portfolio is well diversified across global markets and sectors and we are confident that we can achieve the target income yield for investors."

Intermediaries can contact Woolwich Plan Managers on 0800 085 7929 for further details or go to www.wpmdownloads.com. Retail investors should contact their financial advisers for further details on the Woolwich Global Distribution Bond.-ends-

For further information please contact:
Woolwich Plan Managers

For product and structuring related queries: Emma Rees 020 7699 2434

Morley Fund Management
For investment related queries: Monina Villaroman 020 7809 8618
For road show schedules and information, please contact Woolwich Plan Managers.

Notes to Editors

*About Call Options – Definition and Example

A call option gives the holder the right to buy a stock at a specific price (the strike price) at a future point in time. A covered call option is a call option that is sold on a stock that is held by the seller. Buyers of calls hope that the stock will increase before the option expires. If the call option is exercised the seller of the option is covered because he/she holds the stock (i.e. the liability on the call option is fully offset by the increase in the stock price above the strike price).

Example: If the fund managers decide that L’Oreal is a good buy, they might buy the stock at one euro and then sell a call option (or the right to buy it in three month's time at €1.10) for 2 cents. This means that if the share price rises to €1.20 euros, the third party can buy it for €1.10. The fund managers will have made not only 2 cents income from the call option but also 10 cents in capital growth from the market.

WPM Global Distribution Bond - KEY INFORMATION

Investments into the Global Distribution Bond can be made via a Maxi ISA or outside of an ISA from Ł5,000. The maximum one can invest in an ISA is restricted by the annual allowance and the minimum top-up is Ł2,000. Any existing ISAs and PEPs can be transferred into the Global Distribution Bond without losing any tax advantages.

The value of an investment in the Global Distribution Bond and any income from it can go down as well as up. Investors may not get back the original amount invested.

Woolwich Plan Managers

Woolwich Plan Managers (WPM) is one of the major providers of structured investment products in the UK and draws upon the strength and market knowledge of the Barclays Group to deliver investment opportunities for investors. WPM is widely known for its expertise in producing competitive and near constant term based structures, most recently its new Capital Plus, Capital Growth and Accelerated Growth Plans all of which target specific market segments on a risk rated basis.

Woolwich Plan Managers Limited is authorised and regulated by the Financial Services Authority.

Further information about Woolwich Plan Managers can be found at www.wpmdownloads.com.

Morley Fund Management

Morley is one of the largest derivatives managers in the UK with over Ł15 billion derivatives positions.

The Global Distribution Bond portfolio will be managed by four members of Morley's team: Tom Wills, David Clott, Iyad Farah and Ed Wiltshire. Wills and Clott manage Morley’s convertible bond funds and will supervise the investing of convertible bonds and convertible preferred shares in the portfolio. Farah and Wiltshire lead on the equities and call overwrites.

Morley Fund Management (‘Morley’) is an independently managed, London based, asset management business with over Ł114 billion* under management (as at 30.06.04). It actively manages a diverse range of asset classes and employs in the region of 900 staff worldwide based in London, Singapore and an associate office in Boston**.

Morley is a wholly owned subsidiary of the Aviva Group and manages both institutional and retail funds under the Morley brand. It also acts as investment manager for a range of retail investment funds, marketed in the UK by Norwich Union, and international funds marketed under the Aviva Funds brand.

*Not including mortgage assets

**Morley Fund Management International Limited, an Aviva company

Awards to Morley Fund Management:

• Property Week Awards 2004 - Best Property Fund Manager
• Pensions Management Provider Awards 2003 - Best Property Fund Manager
• Fund Manager of the Year - Pensions Week Awards 2002
• Specialist Manager of the Year - UK Pensions Awards 2002
• Insurance Fund Manager of the Year (awarded to Norwich Union) – S&P’s 2002
• Sustainable and Ethical Investment and Asset Management Award - Liveable City Awards 2002