Gazebo Inc. Introduces New Issue-Based Investing Vehicles To Institutional Community; Innovative Equity-Based Investment Portfolios Address Risk In Any Market Cycle.

Business Editors

SAN MATEO, Calif.--(BUSINESS WIRE)--Oct. 9, 2002

Gazebo Inc., a financial products company, today officially launched an innovative series of Issue-Based Investing (IBI) vehicles for the institutional marketplace. These products provide investors with a derivative-free, long-equity means to capitalize on the movement of various economic, market, industry and company indicators.

Each product contains a unique, periodically updated collection of securities that correlate to a specific market-moving signal in either a "bullish" or "bearish" direction, which can be employed in any market cycle to strengthen or lessen exposure for investors. For example, investors who believe that a certain issue will rise or fall, such as short-term interest rates, the price of oil or gold or the semiconductor sector, can now invest on either side of the issue using all long equities.

Invented by Gazebo, IBI is based on a proprietary, multi-factor model that permits institutional investors to either leverage or hedge against the movement of an array of market elements. In total, the company has initially developed 100 products that track issues related to the economy, overall stock market trends, commodities, foreign economies, industry sectors and specific market-influencing equities. Gazebo considers its quantitative model to be flexible enough to allow the company to quickly customize or build additional products based on new IBI demands in the market.

"IBI offers a valuable screening tool for identifying securities that show a virtually indisputable, time-tested correlation - in one direction or the other - to a variety of specific powerful market drivers," said Roy McDonald, chairman and founder of Gazebo. "The proprietary data produced by Gazebo for its IBI portfolios can be an invaluable quantitative layer for an equity mutual fund or private hedge fund. We believe this versatile model will provide investment professionals with a powerful and flexible new means to participate in market movement, direct risk and minimize market noise."

Gazebo is able to regularly generate a list of quantitatively selected stocks that demonstrate market sensitivity to a particular issue for institutional investors. "Our IBI vehicles can hold a broad array of applications for the institutional investor," Gazebo President Laurie Conner explained. "Gazebo's multi-factor model can act as a natural, diversified hedge on existing portfolio holdings and/or it can be used to take weighted advantage of particular factors and market elements on the upside."

Gazebo expects institutional investors will find IBI useful for a host of activities, including:

-- Leveraging their existing knowledge of a specific market trend and capitalizing on it whether it's heading up or down

-- Hedging current portfolio positions without use of derivatives or short-selling

-- Identifying specific investments that have real, market-driven, relationships to specific risk factors

-- Enhancing a hedging strategy by going long on the bull and short on the bear side of an issue

-- Deploying a market neutral strategy by taking positions on both the bullish side and the bearish side of a particular issue

Time-Tested Investing Record

Gazebo IBI portfolios have generated impressive returns through the first 6 months of 2002. On average, Gazebo's bear portfolios have returned 13% at the same time the S&P 500 has fallen 15%. The stocks selected in Gazebo portfolios have historically moved more dramatically than the indicator, both up and down.

"We can provide institutional asset management firms with an extraordinary variety of issues-driven equity "baskets" or ranked equity lists on either the bullish or bearish side, as well as help broker/dealers enhance their offerings to their institutional customers by providing our stock data," Ms. Conner indicated. "As a firm, we are seeking partners within the institutional community to expand the marketing and distribution of Gazebo's proprietary IBI data and to identify innovative uses for our model."

Don Camillo, president of BrokerageAmerica, a new Gazebo client, said "We are currently providing retail customers with bullish and bearish IBI portfolios along with basket trading, and institutional clients with a proprietary Sector Ranking Report. We anticipate that clients will be attracted to this unbiased, technically-driven approach to identify investment opportunities."

Gazebo definitely sees IBI products appealing to the retail marketplace, especially news-savvy individual investors. Ms. Conner noted, "Most individuals have learned that picking single stocks is not the best investing strategy and will be looking for more diversified investments in the future. Gazebo's IBI portfolios offer a unique way for the retail investor to diversify."

To learn about how IBI products, portfolios and performance data, please visit http://www.gzfinancial.com for institutional information or http://www.gazebo.com for retail information.

About Gazebo Inc.

Gazebo Inc. is an innovative financial products company serving the institutional and retail communities. It has pioneered Issue-Based Investing (IBI), a series of unique issue-based investing products that enable institutions, financial professionals and individual investors to track and exceed the positive and negative movements of specific issues or market indicators. IBI is based on a proprietary multi-factor model that analyzes complex economic factors to produce two weighted bullish and bearish stock portfolios or two stock lists for each investment element covered. The company is headquartered in San Mateo, California and was founded in 1999. For additional information on Gazebo and IBI, visit http://www.gazebo.com.