RNS Number:2921P
Dexion Absolute Limited
02 September 2003

Dexion Absolute Limited ("the Company")


July Net Asset Value


The net asset value per ordinary share as of 31 July 2003 was 105.10 pence.


This valuation, which has been prepared in good faith by the Company's
investment manager, is based principally on formal valuations supplied to the
Company by the administrators of the Company's underlying investments. In the
case of 3 of the Company's 39 investments, where no such formal valuation has
been received by today's date, an estimated valuation prepared by the Company's
investment advisor or by the manager or administrator of the underlying funds
has been used. Such valuations or estimates are unaudited and may not comply
with generally accepted accounting or valuation principles.


Performance Review

The U.S. equity markets posted another positive month fuelled by a flood of
encouraging corporate earnings reports and positive economic news, including
stronger-than-expected GDP growth. As a result, the dollar strengthened against
several major currencies, and in the high-yield market, a declining default rate
coupled with the stronger economic and earnings data led to a narrowing in
spreads. In the fixed-income markets, however, Alan Greenspan's speech to
Congress led many to believe the Fed was more sanguine in regards to deflation
and was no longer considering purchasing Treasuries. The resulting sell-off sent
prices tumbling and yields on 10-year Treasuries experienced their largest
monthly increase since 1987. Against this backdrop, Dexion Absolute lost 0.48%
in June and is now up 6.98% year to date.


Dexion's hedged equities strategy declined in July with mixed performance from
our sector specialists. A technology-focused manager and a financial services
specialist were the best performers. The financial services specialist turned in
a solid month due to the strong performance of the financial sector as a whole
and select investments, including several market-makers and brokers, which
directly benefit from the improved equity markets. Dexion's healthcare sector
specialist struggled and the resulting losses more than offset the other
managers' gains. The short selling strategy was down as investors continued to
flock to high-beta, speculative names that are a staple for our managers.
Dexion's tactical trading strategy also lost ground as U.S. and European
fixed-income positions went against some of the managers. On a positive note,
the sector's commodity-focused manager enjoyed gains in agricultural futures, as
well as, several short equity positions. Equity market strength did provide a
fertile backdrop for Dexion's equity strategies managers. One manager's
positions in a healthcare-software firm benefited from strong earnings and the
company's intent to further deleverage its balance sheet. An investment in a
biotechnology-toolkit firm appreciated on news it would purchase another company
specializing in molecular labelling, further strengthening the firm's position
as a key partner in the drug discovery and development process. The distressed
securities strategy continued to perform well, although returns assumed a more
normalized pattern as compared to the large returns exhibited in the first half
of the year. The bonds of a large healthcare services firm contributed further
gains in July when its new management team estimated higher-than-expected
current earnings and indicated that significant growth was possible. Our
managers also benefited from continued improvement in the business prospects of
several cable operators and the subsequent appreciation of the firms' debt.
Dexion's relative value strategy was positive for the month as volatility
arbitrage, relative value equity investments, and capital structure arbitrage
trades picked up the slack for convertible bond arbitrage which declined due to
the decreasing equity volatility, the back-up in U.S. treasuries, and continued
concerns over dividends. The opportunistic strategy was up slightly for the
month with value equity positions and emerging market investments providing the
bulk of the upside. Finally, the positive returns in the event-driven strategy
resulted from credit investments and a merger in the Canadian insurance
industry. Although merger arbitrage activity has increased in July, most deal
spreads remain tight and, therefore, unattractive to our managers.


      Strategy          Allocation       Number of        Performance attribution %
                                         managers
                                                            July               YTD
Distressed                  18%              4             1.04%             35.45%
Equity strategies           5%               2             4.92%              7.69%
Hedged equities             32%             12             -1.64%             7.49%
Event driven                2%               1             0.29%              9.00%
Opportunistic               14%              5             0.05%              6.39%
Relative value              13%              5             0.13%              5.54%
Short selling               10%              7             -4.00%            -18.67%
Tactical trading            7%               3             -0.62%            11.26%


Strategy returns are net of underlying manager fees only and not inclusive of
Dexion Absolute's fees and expenses.


Outlook

The U.S. economy appears poised for growth, but a weak labour market and
under-utilized manufacturing capacity makes any recovery a heavy burden for the
interest-rate-sensitive consumer. Current corporate earnings reports are
encouraging, but visibility into future quarters is poor.





                      This information is provided by RNS
            The company news service from the London Stock Exchange
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