Interim Results

Capital Gearing Trust PLC
19 November 2001

CAPITAL GEARING TRUST plc

INTERIM REPORT

FOR THE SIX MONTHS ENDED 5 OCTOBER 2001




CONTENTS                                                                 PAGE
Chairman's Interim Statement                                             1
Distribution of Invested Funds at 5 October 2001                         1
Major Investments of the Company at 5 October 2001                       2
Statement of Total Return                                                3
Balance Sheet                                                            4
Cash Flow                                                                5
Notes                                                                    6


        CHAIRMAN'S INTERIM STATEMENT

It has been a difficult and testing time for equity investors, culminating in
the terrorist attacks in America on 11th September. Over the six months to 5th
October the FTSE Investment Trust Index fell by 21% and the FTSE All Share
Index by 11%. The FTSE All Stocks Gilt Index held steady reflecting investors'
preference for liquidity and security in uncertain times and central bankers'
aggressive moves to cut interest rates and bolster confidence. It is therefore
a matter of professional satisfaction to be able to report a small rise in NAV
of 1% to 1115p on an AITC basis or to 1121p including undistributed income for
the year to date. The relatively good performance results from the defensive
stance adopted by the Board, to which I have previously drawn shareholders'
attention. The current distribution of invested funds is shown in the table on
page 1.

As a committed long-term investor in investment trusts it has given no
pleasure to see the problems that have arisen for some of the more
highly-geared trusts and their shareholders in falling markets. The concern is
that these problems, which are not widespread, may nevertheless tarnish the
hard-won reputation of the investment trust industry more generally. The
warning signs were evident and noted in my Chairman's Statement last May.
Although the zero dividend preference share market has been adversely
affected, our portfolio has stood up well to the buffeting as it is mostly
short-dated and reasonably covered. It is however, becoming more difficult to
find value in this sector which has served us so well. Our exposure to
overseas government index-linked bonds has been increased.

Towards the end of the period we became aware of an unfilled demand for the
company's shares and agreed to the issuance of 55,000 shares at £11.50,
offering, at the time, a reasonable premium to net asset value for existing
shareholders.

Mark Cornwall-Jones


        19 November, 2001

        DISTRIBUTION OF INVESTED FUNDS

        Percentage of underlying assets

                                                               As at   As at 5/
                                                                           4/01
                                                             5/10/01

                                   North              Emerging
                              UK America Europe  Asia  Markets Total      Total
                               %       %      %     %        %     %          %

Investment Trust            10.0     2.0    3.0   2.0      3.0  20.0       25.6
Ordinary Shares

Investment Trust Capital     8.0       -      -     -        -   8.0       13.0
/Growth Shares

Investment Trust Stepped
and Zero

Dividend Preference         39.0       -      -     -        -  39.0       42.4
Shares

Fixed interest stocks        1.0     5.0   15.0   7.0        -  28.0       19.0

Cash                         5.0       -      -     -        -   5.0          -

                            63.0     7.0   18.0   9.0      3.0 100.0      100.0


                                     -1-


        MAJOR INVESTMENTS OF THE COMPANY AT 5 OCTOBER 2001



INVESTMENT TRUST PREFERENCE SHARES

Fleming Income and Capital Investment Trust - Zero Dividend           1,462,500
M&G Income Investment Trust - Zero Dividend                           1,370,250
Jos Holdings - Zero Dividend                                          1,113,875
Jupiter Split Trust - Zero Dividend                                   1,092,080
Henderson Euro Trust - Zero Dividend                                    933,375


INVESTMENT TRUST ORDINARY SHARES

London & St Lawrence                                                    603,680
American Opportunities Trust                                            593,966



INVESTMENT TRUST CAPITAL SHARES

Aberforth Split Level                                                 1,373,750



INDEX LINKED SECURITIES AND FIXED INTEREST

Asia High Yield Bond Fund                                             1,794,029
USA Treasury Notes 3.625% inflation indexed 15 April 2028             1,297,644
Germany (Federal Republic) 5.625% Bonds 4 January 2028                  862,661
Germany (Federal Republic) 4.75% Bonds 4 January 2028                 1,407,769


Total detailed above representing 57% of the market value of the     13,905,579
investments




                                   - 2 -

STATEMENT OF TOTAL RETURN (UNAUDITED)

FOR THE SIX MONTHS ENDED 5 OCTOBER 2001



                      (Unaudited)              (Unaudited)          (Audited)
                  6 months to 5 October    6 months to 5 October    Year to 5   
                                                                   April 2001
                           2001                     2000
         Revenue Capital  Total   Revenue Capital  Total   Revenue Capital Total

           £'000   £'000  £'000     £'000   £'000  £'000     £'000  £'000  £'000

Gains on       -     390    390         -     969    969         -  2,395 2,395
investments

Income from  205       -    205       182       -    182       383      -   383
investments

Bank interest 19       -     19        22       -     22        42      -    42

GROSS RETURN 224     390    614       204     969  1,173       425  2,395 2,820

Management  (18)    (73)   (91)      (16)    (64)   (80)      (44)  (178) (222)
expenses

Other       (77)       -   (77)      (85)       -   (85)     (141)    (4) (145)
administrative
expenses
             (95)    (73)  (168)     (101)    (64)  (165)    (185)  (182) (367)


RETURN ON
ORDINARY
ACTIVITIES   129     317    446       103     905  1,008       240 2,213  2,453
BEFORE TAX

Tax on return
on ordinary
activities      -       -      -       (4)       -    (4)      (12)  12       -


RETURN ON
ORDINARY
ACTIVITIES   129     317    446        99     905  1,004       228 2,225   2,453
AFTER TAX
ATTRIBUTABLE TO
EQUITY SHAREHOLDERS

DIVIDENDS      -       -      -         -       -      -     (181)    -   (181)

TRANSFER TO  129     317    446        99     905  1,004       47  2,225   2,272
RESERVES

RETURN PER
ORDINARY
SHARE      5.69p  13.98p 19.67p     4.25p  38.90p 43.15p    9.92p 96.83p 106.75p



                                     -3-

BALANCE SHEET (UNAUDITED)

AS AT 5 OCTOBER 2001



                                          (Unaudited)   (Unaudited)   (Audited)
                                            5 October     5 October     5 April
                                                 2001
                                                               2000        2001
                                                £'000         £'000       £'000

FIXED ASSETS

Investments                                    24,415        24,156      24,980


CURRENT ASSETS

Debtors                                         1,768           801         572
Bank                                              103            96         172


                                                1,871           897         744

CREDITORS: amounts falling due within           (258)         (582)       (773)
one year


NET CURRENT ASSETS (LIABILITIES)                1,613           315        (29)


NET ASSETS                                     26,028        24,471      24,951




CAPITAL EMPLOYED

Called up share capital                           580           568         567
Share premium account                           1,610           991         991
Capital reserve                                23,535        22,687      23,219
Revenue reserve                                   303           225         174


TOTAL EQUITY SHAREHOLDERS' FUNDS               26,028        24,471      24,951


NET ASSETS PER ORDINARY SHARE                1,121.7p      1,076.1p    1,101.1p




                                     -4-

CASH FLOW (UNAUDITED)

FOR THE SIX MONTHS ENDED 5 OCTOBER 2001


                                          (Unaudited)   (Unaudited)   (Audited)
                                          6 months to   6 months to     Year to
                                            5 October     5 October     5 April
                                                 2001          2000        2001

                                                £'000         £'000       £'000

Cash in/outflow from operating activities     (1,473)         (115)         103

Taxation received                                   -            13          40

Capital expenditure and financial
investment:

Purchase of investments                       (4,716)       (5,278)    (11,456)
Sales of investments                            5,669         6,139      12,147

Equity dividends paid                           (181)         (163)       (163)

Financing - issue new shares/purchase of          632         (605)       (605)
own shares

                                                 (69)           (9)          66

Cash and cash equivalents:

Balance 6 April                                   172           105         105
Net cash                                         (69)           (9)          67

Balance at end of period                          103            96         172

Operating cash flows:

Profit before tax                                 129           103         240
Expenses charged to capital                      (73)          (64)       (182)
Change to accrued income and sundry           (1,196)         (145)         (5)
debtors
Change to sundry creditors                      (333)           (9)          50

                                              (1,473)         (115)         103



                                     -5-

NOTES


1.     Status of financial statements


        The financial information for the six months to 5 October 2001 and 5
        October 2000, which is unaudited and does not constitute statutory
        accounts, has been prepared using accounting policies consistent with
        those set out in the Company's 5 April 2001 statutory accounts.

        The implementation of FRS 18 'Accounting policies' has not resulted in
        changes to company accounting policies or techniques.

        The abridged financial information for the year ended 5 April 2001 has
        been extracted from the Company's statutory accounts for that year,
        which have been filed with the Registrar of Companies. The report of
        the auditors on those accounts was unqualified.

2.      Earnings per share


        The calculations of earnings per share is based on results after tax
        divided by the weighted average number of shares in issue during the
        period of 2,267,108 (2000: 2,326,512).


                                     -6-