Morley absolute growth investment company raises £226m

Article date: 4 April 2001

Investment Management by Morley Fund Management -

Morley Absolute Growth Investment Company Limited ('MAGIC'), therecently launched split capital closed ended investment vehicleincorporating a hedge fund element, has closed having raised inexcess of initial expectations. £226m has been committed to the newfund, predominantly by UK institutional investors. The shares werelisted last week on the Dublin and Guernsey Stock Exchanges.

The Company, sponsored by UBS Warburg, has the objective ofdelivering a high and growing income whilst maintaining capitalvalue. The portfolio will be divided into two parts. Approximately55%, or £122m, will be invested in the Morley Alternative StrategyFund PCC Ltd., a Pan European long/short strategy hedge fundconcentrating primarily on the FTSE 350 and FTSE World Europe ex UKIndices. The balance will be invested in an Income portfolioconsisting primarily of Investment Trust geared ordinaryshares.

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

"I am delighted with the sum received for this new andinnovative product, particularly given the difficult marketbackground. It underlines the level of interest in hedge funds byinstitutional investors and positions Morley as a significantplayer in this new and exciting market."


For further information please contact:

David Keen, Head of Investment Trusts Morley FundManagement
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 - KeyFeatures:

  • Seeks to eliminate the risk of capital erosion normallyassociated with other high yield products through investment in ahedge fund.
  • A defined risk profile designed to meet the needs of theInvestment Company with a permitted level of gearing significantlybelow the average for the hedge fund industry.
  • Single fund strategy avoids double charging whilst deliveringhigh levels of investment transparency. This is the first splitcapital closed ended investment company to incorporate a hedgefund exposure available to the market.
  • The performance related fee will only be payable once a totalreturn of 10% per annum has been achieved. The fee will then be20% of the excess return.
  • Management fee: The overall management fee will beapproximately 1.55% per annum made up of 1% per annum on incomeassets outside the hedge fund (approximately 45% of total assets),2% on the hedge fund itself (approximately 55% of totalassets).
  • Fully qualifying for Isas with qualifying for Peps in the nextfinancial year
  • Planned winding up date of 10 years from Launch (2011)
  • Will be incorporated in Guernsey with Dublin and ChannelIslands listings. Will be listed from Wednesday 28th March2001.
  • The capital structure of the split capital closed endedinvestment 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 oneincome share, yielding 8.25%)
    • 7.5% zero dividend preference shares with a gross redemptionyield 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 bequoted separately
      The invested assets will be deployed 55% in the hedge fund and45% in an income portfolio of investment trust shares.

Morley Fund Management:

Morley Fund Management is an independently managed, Londonbased, asset management business with £106 billion undermanagement. It has investment professionals based in Boston, Tokyo,Singapore and Dublin.

Morley is a wholly owned subsidiary of the CGNU Group andmanages institutional funds under the Morley brand. It also acts asinvestment manager for a range of retail investment funds, marketedunder the Norwich Union brand.

CGU plc and Norwich Union plc merged on 30 May 2000 to createCGNU plc, the UK's largest insurance group and one of the top-fiveinsurers in Europe with substantial positions in other marketsaround the world, making it the world's sixth largest insurer basedon gross worldwide premiums.

From October 2000, the combined life and pensions, generalinsurance and retail fund management businesses in the UK operateunder the Norwich Union brand, while the institutional investmentbusiness 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 ofS.57 of the Financial Services Act 1986. UBS Warburg Ltd. isregulated in the UK by the Securities and Futures Authority. Thevalue of an investment may go down as well as up. Individualsshould seek advice from an independent financial adviser as to thesuitability of the product.

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

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