Interim Management Statement
CAPITAL GEARING TRUST p.l.c
Interim Management Statement
for the period 6 October 2009 to 5 January 2010
In accordance with the UK Listing Authority's Disclosure and Transparency Rule
4.3, Capital Gearing Trust p.l.c (the 'Company') announces its interim
management statement which relates to the period from 6 October 2009 to 5
January 2010 and contains information that covers this period, and up to the
date of publication of this interim management statement, unless otherwise
specified.
Investment Objective
The Company aims to achieve capital growth in absolute terms principally
through investment in quoted closed ended and other collective investment
vehicles, invested in equities or property, with a willingness to hold cash,
bonds, index linked securities and commodities when appropriate.
Review of the period
> Over the period from 6 October 2009 to 5 January 2010, the Company's Net
Asset Value ('NAV') increased by 0.7% to 2,371.5p. As a comparator, the FTSE
Equity Investment Instruments Index increased by 7.5%, although as an absolute
return fund, the actual performance benchmark is cash.
> The share price has risen to 2,593p per Ordinary Share, an increase of 4.8%
from 5 October 2009.
> The Company published its Half-Year Financial Report for the six months ended
5 October 2009 on 17 November 2009.
Material events and transactions
The portfolio made modest progress in the quarter. Sterling once again
confounded our long term expectations by rising by 2% against the Euro and the
bond markets were weak; but the main reason for underperforming the equity
markets was our continued low allocation to that sector, although what we did
have outperformed. Equities still look overpriced in our view.
There were realisations in Tapestry, Active Capital, Directors' Dealing
Investment Trust, Barclays Global Endowment Fund, Premier Energy & Water and
Invesco Perpetual European Absolute Return; all were satisfactory. Some sales
were made in funds where the discount had narrowed, including Cazenove Absolute
Equity, Henderson Global Property, Jupiter Primadona and Melchior Japan.
Purchases at attractive discounts were possible in Mithras, North Atlantic
Smaller Companies, Monks, SR European and Vision Opportunity China. This last
is a fund that invests in unquoted Chinese companies and then achieves a quote,
usually in the US. Rather surprisingly, this policy has worked well, but some
forced sellers had pushed the discount, to a now entirely quoted portfolio, to
30% plus.
More zeros were bought, constrained only by liquidity. Finally a further US
TIP, the 1.75% 2028, was bought; yields are good at 2% and the outlook for the
Dollar appears favourable.
Ten Largest Investments
Name % of Portfolio % of portfolio
at 5 January at 5 October
2010 2009
Treasury 2.5% Index Linked 2013 6.60 6.61
Switzerland (Govt of) 2% Bonds 2014 6.26 6.31
Switzerland (Govt of) 3% Bonds 2018 5.00 5.09
France (Govt of) 5.5% OAT 2029 4.82 5.05
Germany (Fed Rep) 4.75% Bonds 2028 4.46 4.70
USA Treasury 1.375% Index Linked Bonds 2018 4.29 4.22
USA Treasury 2.0% Index Linked Bonds 2016 4.28 4.25
USA Treasury 2.0% Index Linked Bonds 2026 3.14 3.17
USA Treasury 1.75% Index Linked Bonds 2028 2.83 -
Allianz Dresdner 2nd Endowment Policy Trust 2.69 2.59
2009
The ten largest investments at 5 January 2010 represent 44.37% of the portfolio
compared to 44.52% at 5 October 2009.
Distribution of Investment Funds of £65,650,069 at 5 January 2010.
Name UK North Europe Elsewhere 5 5
America January October
2010 2009
Total Total
% % % % % %
Investment Trust
Assets:
Ordinary Shares 10.1 2.2 2.7 4.7 19.7 21.1
Endowment Funds 3.0 3.0 3.3
Zero Dividend 12.1 12.1 12.8
Preference Shares
Other Assets:
Fixed Interest 2.7 24.1 26.8 27.5
Index Linked 11.5 21.2 1.0 33.7 30.6
Floating Interest 0.7 0.7 0.7
Cash 4.0 4.0 4.0
Performance
At 5 At 5 At 5 At 5
January October April October
2010 2009 2009 2008
NAV per Ordinary Share 2,371.5 2,355.8p 2,125.4p 2,040.7p
Share Price per Ordinary 2,593.0p 2,475.0p 2,370.0p 2,098.0p
Share
FTSE Equity Investment 5,295.6 4,927.3 3,824.2 4,849.8
Instruments Index
Past performance is not a guide to future performance. The Board is not aware
of any significant events or transactions which have occurred between the 'as
at' date of the financial information and the date of publication of the IMS
which would have a material impact on the financial position of the Company.
Further information is available on the Company's website,
www.capitalgearingtrust.com.
Please contact company.secretary@capitalgearingtrust.com or,
CG Asset Management Limited at 25 Moorgate, London, EC2R 6AY.