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Thursday 07 October, 2004

Gartmore Balanced

Statement re Proposed Voluntary Winding-up


Gartmore Balanced Assets Trust PLC

GBAT Securities PLC

Proposed Voluntary Winding-up

Introduction

The Boards of the Company and GBAT Securities (together, the 'Board') announce
recommended Proposals for the winding-up of the Company and GBAT Securities on
the planned date of 1 November 2004.

Background to and reasons for the Proposals

The Company was launched in 1999 to invest principally in the securities of
split capital investment trusts. It was set up with gearing in the form of bank
debt and zero dividend preference shares, the latter being issued by a
subsidiary, GBAT Securities.

The fall in the UK stock market from 2000, and the collapse in the split
capital investment trust market, combined with the Company's gearing in the
form of bank debt, led to a sharp fall in the value of the Company's assets. In
September 2002, shareholders approved changes to the Company's investment
policy, and a change of name, in connection with a change in the investment
policy to focus on mainstream UK equity securities instead of split capital
investment trusts.

The ZDP Shareholders are due to be repaid on the winding-up of GBAT Securities
on 1 November 2004, and under the arrangements put in place when the Company
was established, the net assets of the Company and of GBAT Securities are
effectively available to meet the ZDP Shareholders' final capital entitlement.
The total amount due to the ZDP Shareholders on that date is £47.75 million,
but the total assets of the Company, after providing for the repayment of the
bank debt which ranks ahead of the obligation to the ZDP Shareholders,
currently amount to only £17.77 million.

In the light of the size of this shortfall, there is no realistic possibility
of the ZDP Shareholders being repaid in full, and therefore there will be no
assets attributable to the ordinary shares of the Company.

In view of the loss of value sustained by the Company and in order to minimise
expenses, the Directors have concluded that resolutions for a simple winding up
of the Company and of GBAT Securities should be put to shareholders on 1
November, 2004. The purpose of this document is to give you notice of the
Extraordinary General Meetings required for this purpose and to explain the
procedures involved.

Entitlements under the Proposals

ZDP Shareholders

ZDP Shareholders are entitled to the surplus assets of GBAT Securities, after
payment of all debts and satisfaction of all liabilities of GBAT Securities up
to a full capital entitlement of £1.4935 per ZDP Share. On the basis of the NAV
of the ZDP Shares as at the close of business on 5 October 2004, the net assets
of GBAT Securities available for distribution on a liquidation (assuming that
monies payable by the Company under the Loan Note and the Subscription
Agreement are fully paid) would be approximately £l7.77 million (equivalent to
approximately 55.58p per ZDP Share). This assumes the successful realisation of
materially all the investments of the Company in split capital investment
trusts at bid prices, the Retention not being utilised, the deduction of the
estimated costs of the Proposals and no unforeseen circumstances.

The Liquidators expect to make an initial liquidation distribution in the week
commencing 1 November 2004 to ZDP Shareholders on the Register at the close of
business on 29 October 2004. It is currently expected that the initial
liquidation distribution will comprise cash from the Group's existing cash
resources (including cash to be realised prior to 1 November 2004 from the
disposal of the Group's readily realisable assets) and available to the
Liquidators (after paying all creditors and deducting the Retention) at the
time of making the distribution.

On the assumption that bid prices quoted in the market for the remaining
realisable assets as at the close of business on 5 October 2004 are achieved,
and subject to there being no unforeseen circumstances, it is calculated (for
illustrative purposes only) that this initial capital distribution will be
55.35p per ZDP Share. There is no guarantee that bid prices will in fact be
obtained.

Any balance remaining in the Liquidation Fund after payment of liabilities
would potentially be available for future distributions to ZDP Shareholders,
although any such distributions representing realisation proceeds of the
Company's less liquid assets are likely to be small.

It is proposed that when the Company and GBAT Securities are placed into
liquidation, the Liquidators will seek to realise the Group's remaining
investments as soon as possible, consistent with achieving the best price
reasonably obtainable. To the extent that, in the opinion of the Liquidators,
the price obtainable for an investment does not fairly reflect its underlying
value, the Liquidators may choose to hold that investment for a longer period,
or to maturity, except where this would unduly prolong the liquidation process.

ZDP Shareholders should note that the amount finally distributed in the
liquidation of GBAT Securities may be different from the current carrying value
of the underlying investments due to a variety of factors including movement in
the value of the underlying assets, the values at which assets can be realised
and ongoing costs associated with the running of GBAT Securities and the
realisation process itself. ZDP Shareholders should also note that no assurance
can be given that the Group will be able to dispose of its entire portfolio of
readily realisable assets prior to the Liquidators making the initial
liquidation distribution.

Ordinary Shareholders

The Ordinary Shareholders are entitled on a winding-up to the assets of the
Company after all liabilities to creditors (including the entitlements of the
ZDP Shares) have been met. The Board of the Company does not believe that there
is a realistic prospect of any current net asset value becoming attributable to
the Ordinary Shares in a winding-up of the Company.

If any distribution otherwise payable to a Shareholder is of an amount of £3.00
or less, such distribution will not be made to such Shareholder but will
instead be carried forward and if not ultimately distributed will be paid by
the Liquidators to Macmillan Cancer Relief (registered charity number 261017).

Matters for Consideration

Under the Proposals, both the Company and GBAT Securities will be wound up by
means of members' voluntary liquidations. As Shareholders may be aware, the
Financial Services Authority (the 'FSA') is investigating a number of fund
managers and brokers in connection with its enquiry into the split capital
investment trust market. It is not clear when the FSA will publish its
findings, but at that point the Company, with the Liquidators acting on its
behalf, will be in a better position to assess whether it has any claim against
any third parties. Further, the FSA is currently seeking agreement from fund
managers and other companies (which does not include the Company or GBAT
Securities) under investigation to enter into a settlement process in relation
to its split capital investment trust investigations. It is not possible to say
at this time whether any such settlement process may lead to compensation
payable to the Company or GBAT Securities or their Shareholders. The Retention
is currently estimated to be £50,000 plus the value of any receivables as at
the date of liquidation. Should the Liquidators consider that the circumstances
may justify incurring legal expenses in the future, they would consult with the
principal Shareholders as to whether they felt that legal action was
appropriate and, if so, whether they would be willing to provide funding. It
would not be the intention of the Liquidators to embark on any major litigation
against a third party without prior consultation with Shareholders.

The existing agreement for investment management services between the Company
and the Manager will terminate on the appointment of the Liquidators (save to
the extent that Gartmore can assist in the orderly liquidation of the Company).
The Manager has waived its right to receive any compensation in respect of its
contractual notice period and the waiver will be effective if the Proposals are
approved.

Benefit of the Proposals

The Board, while regretting that the performance of the Company has not made it
possible to extract greater value from its investments, believes that the
proposed liquidation of the Group is the most cost effective way to realise the
Company's assets and to return cash to ZDP Shareholders as soon as is
efficiently possible.

In relation to Ordinary Shareholders, the Board does not believe there is a
realistic prospect of any current Net Asset Value becoming attributable to
their Shares as the intra group loan arrangements mean that it is almost
certain that all of the assets of the Group are to be used to repay the ZDP
Shareholders.

Consequences of Shareholders not approving the Proposals

Ordinary Shareholders

If Ordinary Shareholders vote against the Resolutions proposed at the Company
EGM, the Company will remain in existence but the Board firmly believes that on
any subsequent winding up of the Company there will be no assets attributable
to the Ordinary Shares as the intra group arrangements put in place when the
Company was established mean that, given that the assets available to meet the
repayment of the ZDP Shares are currently only £17.77 million compared with the
amount of £47.75 million which would be required to repay the ZDP Shareholders,
it is most likely that all of the assets of the Group will be required to repay
the ZDP Shareholders. Accordingly the Board would intend to petition the High
Court for the winding-up of the Company. This would have no material impact on
the position of ZDP Shareholders or the amount they will receive.

ZDP Shareholders

The Articles of Association of GBAT Securities contain provisions designed to
ensure that a resolution to wind up GBAT Securities on 1 November 2004 is
passed, and in particular provide that on a poll those holders of ZDP Shares
and of ordinary shares of GBAT Securities who vote in favour of such resolution
will collectively have such total number of votes as is one more than the
number of votes which are required to be cast for the resolution to be carried.
As referred to below, the Board intends that the votes attributable to the
ordinary shares of GBAT Securities held on behalf of the Company are voted in
favour of the Resolutions and this should ensure that the winding-up resolution
is passed. If the Extraordinary Resolution set out in the notice of the GBAT
Securities EGM is not passed, GBAT Securities will nevertheless be wound up, as
the Liquidators will be empowered to wind up the Company regardless and there
would be no material effect on the ZDP Shareholders or the amount they will
receive.

Extraordinary General Meetings

The implementation of the Proposals will require an Extraordinary General
Meeting for each of GBAT Securities and the Company. These have been convened
for 11.00 a.m. and 11.05 a.m. respectively, on 1 November 2004.

Dealings and Settlement

It is expected that the Registers will close at the close of business on 29
October 2004. Transfers lodged with the Registrar before this time, accompanied
by documents of title, will be registered in the normal way. Transfers received
after that time will be returned to the person lodging them and the original
holder will receive any proceeds from distributions made by the Liquidators.
The last date for dealings on the London Stock Exchange on a normal rolling
three-day settlement basis will be 26 October 2004. The Shares are expected to
be disabled in CREST at the close of business on 26 October 2004. Application
has been made to the UK Listing Authority for suspension of the listing of the
Shares on the Official List and to the London Stock Exchange for suspension of
dealings in the Shares, from 7.30 a.m. on 27 October 2004, and for the
cancellation of the listing of the Shares on the Official List and trading of
the Shares on the London Stock Exchange, such cancellation to take effect by no
later than 27 October 2005, subject to the passing of the Resolutions at the
Meetings.

EXPECTED TIMETABLE

Suspension of ZDP Shares and Ordinary Shares 7.30 a.m. on 27 October 2004      
from trading on the London Stock Exchange                                      
and suspension of listing on the Official                                      
List of the UK Listing Authority                                               
                                                                               
Latest time and date for receipt of Voting   5.00 p.m. on 28 October 2004      
Direction Form from Gartmore Savings Schemes                                   
participants                                                                   
                                                                               
Registers close                              close of business on 29 October   
                                             2004                              
                                                                               
Latest time and date for receipt of Form(s)                                    
of Proxy for use at the:                                                       
                                                                               
- Extraordinary General Meeting of GBAT      11.00 a.m. on 30 October 2004     
Securities                                                                     
                                                                               
- Extraordinary General Meeting of the       11.05 a.m. on 1 November 2004     
Company                                                                        
                                                                               
Effective Date of winding-up the Company and 1 November 2004                   
GBAT Securities                                                                
                                                                               
Extraordinary General Meeting of GBAT        11.00 a.m. on 1 November 2004     
Securities                                                                     
                                                                               
Extraordinary General Meeting of the Company 11.05 a.m. on 1 November 2004     
                                                                               
Initial liquidation distribution1 of GBAT    week commencing 1 November 2004   
Securities *                                                                   
                                                                               
Initial liquidation distribution to Gartmore week commencing 1 November 2004   
Savings Schemes participants                                                   

* The distribution will take the form of a cheque or a credit to the
Shareholder's Crest account, as applicable.

A document containing full details of the proposals is being posted to
shareholders. The document will be available for inspection at the Document
Viewing Facility, 25 The North Colonnade, Canary Wharf, London E14 5HS.

7 October 2004

Enquiries

Ian Williams Lansons 07939 543 587

Howard Myles Ernst & Young 0207 951 5324


                                                                                                                       

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