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LONDON & CAPITAL’S MARKETGRADER ENHANCED INDEX RETURNS 181.5% OVER THREE YEARS

Merit-based US Equity Index Outperforms NASDAQ, S&P 500 and Dow Jones

London, 17 May 2006 – London & Capital, a boutique, UK-based asset manager, today announced that MarketGrader, the first merit-based US equity index available in the UK, has returned 181.5% over the past three years. The rules-based, quant-driven index, which re-evaluates more than 5,700 US equities every quarter to select a basket of 40 stocks, has consistently outperformed the NASDAQ, the S&P 500 and Dow Jones equities indices. During the past 12 months, MarketGrader has returned 46.5% – more than double that of the highest return of the key US indices.

The computer-generated MarketGrader index uses quantitative filters based around four key variables (growth, value, profit and cash flow) to constantly re-evaluate US equities in line with companies’ quarterly results. Since its launch in early 2003, the index has trounced the performance of the NASDAQ, the S&P 500 and Dow Jones, which have returned 62.7%, 45.5% and 36.5% respectively for the same three year period. Against MarketGrader’s 46.5% over the past twelve months, the NASDAQ has returned 19.6%, the S&P 500 12.6% and Dow Jones 10.7%.

Unlike standard indices, MarketGrader rebalances every quarter to ensure the changing circumstances of companies are constantly considered, and to encourage the prospect of alpha being repeated.

Ashok Shah, London & Capital’s Chief Investment Officer, comments: “MarketGrader does more than follow the market. This enhanced index undergoes a pronounced self- correction every quarter, ensuring that holdings which have experienced a particularly strong price upside in the preceding quarter are likely to be disposed of, in favour of undervalued opportunities. This is in marked contrast to the S&P and Dow Jones, which do not select stocks on the basis of fundamentals. Using quantitative filters based around key variables, MarketGrader introduces an ‘actively-managed’ quality to an otherwise passive competitive landscape.”

Shah continues: “MarketGrader’s performance over the past twelve months speaks for itself. However, it has also demonstrated its ability to deliver strong returns in a range of market environments, with a five-year period of back testing producing figures that consistently outperformed the key US equity indices. In the current climate, balanced portfolios are reaping the benefits of investment in equities. MarketGrader’s proven track record makes it an obvious choice when building equities into a portfolio.”

Through MarketGrader, all companies are given a short-term grade between zero and 100, based upon an evaluation of key parameters. Every quarter, following earnings submissions, MarketGrader re-assesses more than 5,700 companies and adjusts the basket’s contents as appropriate. Secondary filters ensure that holdings are diversified across key sectors. Typically, at least half the index’s holdings change every quarter.

London & Capital, which has USD 2 billion under management, has offered institutional clients access to the MarketGrader Index via a European medium-term Note since February 2005. The company launched a Fund in November 2005, opening up the index to high net worth investors.