FERRO CAPITAL AND MERRILL LYNCH INTERNATIONAL LAUNCH STRUCTURED PRODUCT PROGRAM LINKED TO THE FERRO ABSOLUTE RETURN INDEX - 12/04/02

NEW YORK, December 4, 2002 ? Ferro Capital LLC, a New York-based fund-of-hedge funds manager, has cooperated with Merrill Lynch International to launch the Merrill Lynch Alternative Investment Index Certificate, a structured product program that provides individual and institutional investors in Europe with access to the performance of the newly-formed Ferro Absolute Return Index. The Ferro Absolute Return Index provides investors with exposure to a well-diversified fund-of-hedge funds portfolio pursuing a market neutral investment profile.

The Ferro Absolute Return Index seeks to generate consistent positive returns with low volatility compared with major equity markets and low correlation with both equity and bond markets. Ferro Capital?s absolute return strategy is distinguished from many competing programs by the firm?s disciplined adherence to a ?market neutral? investment strategy and Ferro Capital?s techniques for actively managing the portfolio of hedge funds in order to ensure a consistent risk/return profile.

?We are very excited to be working with Merrill Lynch International to develop hedge fund products that offer investors a tool through which to diversify their traditional equity and bond portfolios,? said Ferro Capital founder Kevin Ferro. ?We feel that our strong experience in building and managing rigorously market-neutral funds-of-hedge funds, together with Merrill Lynch?s unrivalled excellence in providing structured solutions for its clients, will enable us to provide state-of-the-art products that strongly enhance investors? portfolios.?

The addition of a relatively uncorrelated investment program, such as the Ferro Absolute Return Index, to a conventional investment portfolio may over the long-term improve the risk-adjusted performance of an investor?s total investment portfolio by increasing diversification and reducing overall portfolio volatility. ?Many of Ferro Capital?s clients use the absolute return strategy precisely for this purpose?to diversify and improve the overall risk-adjusted return profile of their traditional portfolios,? explained Mr. Ferro.

The Ferro Absolute Return Index is expected to comprise 20-30 individual hedge funds representing multiple hedge fund strategies, including equity arbitrage, convertible bond arbitrage, fixed-income arbitrage, event-driven strategies and systematic futures strategies. Importantly, the Ferro Absolute Return Index does not intend to allocate to global macro or primarily net directional long/short hedge funds. A large portion of the Ferro Absolute Return Index will be invested with hedge fund managers that are no longer accepting capital from other investors. ?Make no mistake about it?the hedge fund industry is definitely capacity constrained?and the constraint is access to the highest quality hedge fund managers,? said Kevin Ferro. The Ferro Absolute Return Index and thus the Merrill Lynch Alternative Investment Index Certificates will benefit from Ferro Capital?s long-standing relationships with many of the most talented managers in the hedge fund industry.

The Ferro Absolute Return Index and the Merrill Lynch Alternative Investment Index Certificate are aimed principally at individual and institutional investors in Europe, and are not offered or sold to United States investors or within the United States. The Certificate can be purchased and sold each trading day on the Luxembourg stock exchange and the over-the-counter exchanges in Frankfurt and Stuttgart.


Ferro Capital LLC

Ferro Capital LLC is an independent alternative investment management firm specializing in the development and management of funds-of-hedge funds for a select group of clients around the world. The Ferro Capital team has extensive experience in the hedge fund industry and has worked together for many years designing, structuring and managing highly successful funds-of-hedge funds and structured products involving alternative investments. Ferro Capital employs a rigorous due diligence methodology, sophisticated quantitative analysis and its extensive network within the hedge fund community to offer ?super-premium? hedge fund capacity to its clients.

Contact:        Kara Frye
(212) 308-7500
info@ferrocapital.com