Results to 31 March 2000

Guinness Flight Geared Inc&Gwth Tst
24 May 2000

CHAIRMAN'S STATEMENT


This is the Company's first Annual Report following its launch at the end of
October 1998 and this report, therefore, covers the seventeen month period to
31 March 2000. At launch the Company raised a total of £40.9 million net of
issue expenses, which added to the bank loan of £18.1 million, gave starting
gross assets of £59 million. Subsequently, and as set out in the Prospectus
dated 27 August 1999, new shares were issued through a Placing and the Scheme
of Reconstruction of The City of Oxford Investment Trust PLC, which together
raised a total of £63.2 million net of expenses; in order to maintain the
Company's gearing, a further bank loan of £29.4 million was taken out, thereby
increasing gross assets by £92.6 million. Investments and proceeds from the
Scheme of Reconstruction, the Placing and the Bank loan were received between
29 September 1999 and 5 October 1999. Full details of the Company's current
Capital Structure and borrowings are set out in Notes 16 and 17 to the
Accounts.

Looking now at the Revenue Account, post tax revenue return for the period
amounted to £5.2 million, a satisfactory outcome which has enabled the Company
to pay dividends slightly ahead of the assumptions in the original Prospectus.
Your Board has declared a fifth interim dividend of 3.0p per Geared Ordinary
Share and 2.150376p per Income Share, giving a total declared for the period
of 15.72p and 11.265307p per Geared Ordinary Share and Income Share
respectively. At the issue price of 100p, this equates to an approximate
annualised net dividend yield of 11.1% and 8% per respective share class, as
compared to an annualised net dividend yield of 10.9% and 7.8% assumed in the
original Prospectus.

As for capital performance, net asset value (excluding revenue) per Geared
Ordinary Share increased by 2.3% over the period, from an opening value of
76.14p, after initial expenses, to 77.91p at 31 March 2000. This derives from
a gross asset increase equivalent to 1.47% over the period, which compares to
an increase of 8.5% for the FTSE 350 Higher Yield Index and 24.2% for the FTSE
All Share. On the face of it, this looks pretty dull, but if you look under
the surface you will see that, because of the gearing, the NAV oscillated
quite dramatically between a high of 202.23p and a low of zero. Geared
Ordinary shareholders should not be overconcerned about these oscillations in
NAV per share since this is inevitable given the structural and financial
gearing. The share price in the short term is not much influenced by these
factors and has valuation characteristics more akin to an income paying option
(if such a thing were to exist), being supported by a combination of yield and
time value. As far as the gross asset performance is concerned, this was a
particularly difficult period for the managers because of the temporary and
artificial constraints under which they found themselves in the inter-regnum
period between the announcement of the City of Oxford reconstruction and the
date on which all the transferring assets and new cash were finally in place.
We could perhaps have been slightly less prudent last autumn and assumed a
fully invested position immediately, but on balance I feel that, although
technically correct with hindsight, it would not have been a sensible decision
to do this. The short term downside risk appeared to be far greater than the
upside potential and with a geared portfolio we have to be that much more
careful.

This period has been one of considerable volatility for equity markets
generally and, particularly in recent months, there has been a widely
divergent performance between the so-called 'new economy' and 'old economy'
stocks. By the nature of your Company's yield requirement, the portfolio is
biased towards high yielding shares which have performed relatively weakly,
particularly over the last six months. Further comment and explanation of the
performance of the portfolio is set out in the Manager's Report.

Looking ahead, I am reasonably optimistic about our prospects. We regularly
compare our NAV against three other investment trusts with broadly similar
characteristics and it is encouraging to see a marked improvement in relative
performance since February. At a broader level, the UK market seems to have
digested its extraordinary volatility rather well, and although new technology
is here to stay, some sense of proportion and value seems to have returned,
which will benefit portfolios like ours.

You will see in the Schedule of Resolutions that one of the Special
Resolutions is the proposal to change the name of the Company to The City of
Oxford Geared Income Trust PLC. I have written a separate letter to you,
enclosed with these accounts, in which I set out the reasons behind this
proposal, and so will not go into the details here. If you have any comments
about this proposal, or indeed any of the others, please do not hesitate to
write to me with your views or any questions you may have, particularly if you
are unable to attend the AGM.

Finally, I would like to thank the shareholders for their support, and my
fellow directors and the managers for their commitment since the Company's
flotation and through The City of Oxford rollover transaction. I look forward
to seeing those of you who can attend the Annual General Meeting on 19th July.

Fred Carr
24 May 2000



CONSOLIDATED STATEMENT OF TOTAL RETURN (incorporating the Revenue Account*)
for the period from 29 October 1998 to 31 March 2000 
                                      
                               
                            Revenue     Capital    Total       
                            £'000s      £'000s     £'000s      

Gains on 
investments                       -       1,872    1,872                 

Income                        6,647           -    6,647         

Investment 
management fee                 (280)       (655)    (935)

Other expenses                 (141)          -     (141)       
                           --------    --------   ---------   
Net return before 
finance costs
and taxation                  6,226       1,217    7,443

Interest payable               (839)     (1,956)  (2,795) 
                           --------    --------   ---------

Return on ordinary
activities before 
taxation                      5,387        (739)   4,648

Taxation                       (236)        214      (22) 
                           --------    -------- --------- 
Return on ordinary 
activities after 
taxation                      5,151        (525)   4,626
 
Dividends and other 
appropriations in respect 
of non-equity shares         (3,548)     (2,758)  (6,306)
                           --------     -------   -------
Return attributable to 
Geared Ordinary
shareholders                  1,603      (3,283)  (1,680)

Interim dividends paid
to Geared Ordinary
shareholders                 (1,597)          -   (1,597)
                           --------     --------  -------
Transfer to reserves              6      (3,283)  (3,277)
                           ========     ========  =======
Return per Geared Ordinary
Share                         16.19p     (33.15)p (16.96)p

Return per Income Share       11.54p                11.54p
                         
* the revenue column of this statement is the profit and loss account of the  
  Group. All principal activities of the Group are continuing operations as 
  defined by Financial Reporting Standard 3. No operations were acquired or 
  discontinued in the period


CONSOLIDATED BALANCE SHEET
As at 31 March 2000

                                    31 March 2000
                                 £'000         £'000
Listed investments                           145,894
             
Current Assets                                             
Debtors                          1,432   
Cash at bank                     6,266
                             ---------    
                                 7,698                                    
Creditors:Amounts falling 
due within one year             (2,404)
                            ---------- 
Net current assets                             5,294
                                           ---------
                                             151,188

Creditors: amounts falling
due after more than one year                 (47,550)
                                           ---------
Net assets                                   103,638
                                           =========
Capital and reserves
Called up share capital                        5,152
Share premium                                 98,994
Redemption reserve                             2,758
Capital reserve - realised                    (2,133)
Capital reserve - unrealised                  (1,150)
Revenue reserve                                   17
                                           ---------
Total shareholders' funds                    103,638
                                           =========

Total shareholders' funds 
comprise equity and non-equity
interests as follows:
Equity   - Geared Ordinary
           shareholders                       13,522
Non-equity - Income shareholders              49,281
           - Zero dividend preference 
             shareholders                     40,835
                                           ---------
                                             103,638
                                           =========

CONSOLIDATED CASH FLOW STATEMENT
for the period from 29 October 1998 to 31 March 2000

                                                Period ended
                                                31 March 2000
                                            £'000           £'000

Cash flow from operating activities                         4,368

Taxation
Advance Corporation Tax paid                                  (22)

Return on investments and servicing 
of finance                                        
Interest paid                                              (2,253)

Capital expenditure and financial
investment
Purchases of investments                 (164,410)
Sales of investments                       46,202
                                         --------
                                                         (118,208)
Dividends paid - non equity                (2,478)
Dividends paid - equity                    (1,076)
                                         --------
                                                           (3,554)
                                                         --------
Cash outflow before management of
liquid resources and financing                           (119,669)

Management of liquid resources
Money market deposits placed                               (4,530)

Financing
Gross proceeds from issue of shares        81,939
Issue expenses paid                        (3,567)
Bank loans drawn down                      47,550
                                         --------
                                                          125,922
                                                         --------
Increase in cash                                            1,723
                                                         ========

Reconciliation of net cash flow to
movement in net debt

Increase in cash                                            1,723
Cash used to increase liquid resources                      4,530
Bank loans drawn down                                     (47,550)
                                                         --------
Change in net debt                                        (41,297)

Net funds at beginning of period                               13
                                                         --------
Net debt at end of period                                 (41,284)
                                                         ========