The Friends First Insight Equity Fund is a single premium policy investing in a European Equity Hedge Fund.

Friends First is offering investors an opportunity to invest in a hedge fund, managed by Thames River Capital, a UK based fund management company, regulated by the UK industry regulator; IMRO.

The fund will hold short as well as long positions in european equities allowing it to achieve positive returns even when the underlying stock market prices fall.

The Thames River Kingsway Fund has consistently outperformed the FTSE Eurotop 300 since its launch in March 1999.

Consistent High Returns*

TR Kingsway NAV Share Performance (net - after fees) and FTSE Eurotop 300 rebased to 100 on 8 Mar-99

*Past performance is not necessarily a reliable guide to the future.
Source: Citco Fund Managers (Dublin) Ltd. Bloomberg.

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Exclusive Access

This type of investment is normally only available to professional investors and institutions with very large sums to invest.

However; by pooling individual investors together in a fund, the critical mass necessary to participate in this asset class can be achieved.

You can invest any amount from €50,000 upwards in the Friends First insight Equity Fund and have your money managed by one of the top European Equity Hedge Fund Managers.

The Opportunity for Exceptional Performance

Long and short positions

The ability to take long and short positions gives the fund an edge over traditional funds.

The fund can sell a security that it has borrowed (i.e. does not own), with a view to buying the security back at a lower price; thus enabling investors to make a positive return in falling markets. This strategy is known as holding a short position or 'shorting' a stock.

The fund can borrow to leverage the portfolio to increase the market exposure beyond the value of the underlying assets. This is known as 'gearing' the fund.

The Thames River Kingsway fund has returned 34.84% in calendar year 2000 and annualised growth of 56.12% since launch in March 1999.

This consistent outperformance was made possible because of the opportunities presented by active management in stock markets increasingly dominated by tracker funds.

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Source: Citco Fund Services (Dublin) Ltd, Bloomberg
Note: Figures are since inception (8 March 1999) to 31st December 2000

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Friends First and Thames River Kingsway

Thames River Capital is a Fund Management company founded in 1998 to provide specialist investment management services to professional investors and institutions.

Five alternative investment funds have been launched to date. Thames River Capital also manages a number of segregated mandates for institutions.

Thames River Capital (UK) Limited currently employs 28 permanent staff, of which eleven are fund managers.

The European division is headed by Tony Zucker and with Neville Reeves, John Ferrano and Jonathan Parsons, they have a combination of complementary skills and many years investment experience. They are essentially fundamental stock pickers with a great depth of experience but also have specialist skills in quantitative analysis.

Diversification of Risk

Increased globalisation means that stock markets are ever more closely correlated and true diversification is harder to achieve.

Because its returns are less dependant on favourable (or unfavourable) market conditions than traditional equity and bond funds, the Friends First Insight Equity Fund presents an opportunity for diversifying risk when used as part of a wider portfolio.

Investors managing large portfolios increasingly focus as much on risk-adjusted return as they do on return in isolation.

* Sharpe Ratio, a well defined US market measure,relates to the risk return profile of the fund. A high figure means that more return is being generated for each unit of risk.
The Correlation coefficient measures the extent to which returns are independent. The higher the figure the more returns are linked.
Source: Management Annual Reporting

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Risk Control

The high profile volatility of some hedge funds has given such funds a reputation for risk but not all hedge funds incur the same risk levels. The volatility of the Friends First Insight Equity Fund is controlled by its choice of investment style and explicit risk control strategies.

Nonetheless, the Friends First Insight Equity Fund is a specialist investment Fund. It is not suitable for risk averse investors. Unit prices can go down as well as up.

Liquidity is also an important consideration and the fund invests in predominately large blue chip european companies. The investment brief also includes opportunities to invest long and short in smaller and mid-sized companies but these will normally be limited to less than 15 percent of the Fund's Net Asset Value.

Two measures used by investment professionals to assess risk are Maximum Drawdown and Downside Volatility.

Maximum Drawdown is the largest loss in any one month that the fund has experienced to date. Downside Volatility is a measure of the probability of a loss. The higher the figure the greater the probability.

Source: Pectrac Indices, Management Annual Reporting (MAR)

Thames River has a unique style sector based approach to risk control. Its employment of a range of risk control strategies is an important factor in Friends First Asset Management selecting the Thames River Kingsway fund as suitable for the Friends First Insight Equity Fund.

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Fund Details

Bid/Offer Spread
There is no bid/offer spread on this contract.

Investment Charge
There is an initial charge of 3.25% of the amount invested.

Fund Management Charge
To cover the cost of actively managing the Thames River Kingsway European Equity Fund, an annual management charge applies. This is currently 1.5% p.a. of the value of the fund, and is built into the unit prices we quote.

Performance Fee
A performance fee of 20% of the gain in the portfolio will be charged. This gain is defined as the difference between the price at which your investment was made and the highest unit price since that date.

Unit Pricing
Unit prices are calculated monthly. All unit transactions are effected on the next unit pricing date immediately following the date on which the transaction request is received by Friends First.

Taxation
Friends First Insight Equity Fund is an insurance policy and incurs no tax on income or capital gains within the fund.

You only pay tax when you encash your units. This exit tax is currently charged on the growth element of any encashment at the standard rate of tax +3%.

Your Next Move

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