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Gartmore Monthly (GMS)

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Thursday 22 November, 2001

Gartmore Monthly

Interim Results

Gartmore Monthly Income Tst PLC
22 November 2001

                         STOCK EXCHANGE ANNOUNCEMENT

                         GARTMORE MONTHLY INCOME TRUST PLC

                       Announcement of Interim Results
                   for the six months to 31st October 2001

The Directors announce the Group's unaudited results for the six months to
31st October 2001 as follows:-

Features

-     Total Return on Total Assets, before interest payments, of minus 16.8%
for the six months to 31st October 2001, compared with a total return of minus
22.1% on the benchmark index

-     Total Return on the Equity Portfolio of minus 13.1% for the six months
to 31st October 2001, compared with a total return of minus 14.8% on the FTSE
All-Share Index

-     Total Return on the Income Share Portfolio of minus 29.9% for the six
months to 31st October 2001, compared with a total return of minus 30.9% on
the HSBC Income Share Index

-     Revenue return per Ordinary share of 5.9p and total equity dividends
paid for the period of 6.0p per share

-     Zero Dividend Preference shares covered 0.7 times for repayment on 30th
April 2007 at 172.66p

-     Zero Dividend Preference shares covered 1.2 times for repayment on 30th
April 2002 at 109.37p

Chairman's Statement

Following the reconstruction in February 2001, the Company now has two share
classes in issue - Ordinary shares with an indefinite life and Zero Dividend
Preference shares issued by a new subsidiary, GMIT Securities PLC. The zeros
are repayable in April 2007 or, at the option of the holders, in April 2002.
The Company also has bank borrowings of £72.5 million.

The Company's objectives are to provide holders of the Ordinary shares with a
high and increasing level of monthly dividend income and capital growth,
whilst maintaining a satisfactory level of cover on the Zero Dividend
Preference shares. To meet these objectives, the Company's assets are invested
in an Equity Portfolio comprising principally large capitalisation UK
companies and an Income Share Portfolio comprising geared ordinary shares.

Holders of the Zeros will be aware that there will be an opportunity to redeem
for cash at 109.37p in April 2002. As stated in the Prospectus dated 18th
January 2001, if a significant proportion of the Zeros are repaid in April
2002 and the gearing provided by such shares cannot be replaced on acceptable
terms, the ability of the Company to achieve its investment objectives would
be affected.  In such circumstances the Directors may consider recommending a
change in investment policy and/or the proportions in which the Company's
finance costs and management expenses are allocated between the capital
account and the revenue account.  The level of dividends payable in the future
is also dependent on the Company's capital structure, specifically the
borrowings remaining in place and the continued gearing being provided to the
Group in the form of Zeros.

Performance

During the six months under review, the Company's assets produced a total
return, before interest payments, of minus 16.8%. This compares with a total
return of minus 22.1% for the Company's composite benchmark, being 55% of the
total return on the FTSE All-Share Index and 45% of the total return on the
HSBC Income Share Index. In relative terms, the Company has benefited from
holding a higher proportion of its portfolio in equities as opposed to income
shares, which fell sharply over the period.

The Equity Portfolio produced a total return of minus 13.1% in comparison with
a return of minus 14.8% for the FTSE All-Share Index. The Equity Portfolio has
been focused on some of the more defensive higher-yielding sectors of the UK
equity market, such as utilities and tobacco, which have performed well given
their relative earnings stability.  In addition, a significant overweight
position in construction stocks was a positive factor, as the strength of the
UK housing market and interest rate reductions triggered sustained earnings
upgrades and consequently strong performance from this sector.  Moreover, the
portfolio held relatively low exposure to the telecoms, media and technology
sectors, which were the worst performing areas of the UK equity market over
the period.

The Income Share Portfolio produced a total return of minus 29.9% in
comparison with a return of minus 30.9% for the HSBC Income Share Index. Since
the adoption of the current investment objectives on 15th February 2001, the
Income Share Portfolio has returned minus 35.5% in comparison with a return of
minus 39.1% for the HSBC Income Share Index. The Income Share Portfolio has
focused on shares issued by well managed split capital trusts, with limited
exposure to those funds which have been worst affected by difficult market
conditions and high levels of gearing. Nevertheless, the disappointing
absolute returns reflect the weak performance of the income shares of split
capital trusts in general. Due to their gearing, these shares tend to perform
poorly when equity markets are falling. Moreover, a number of split capital
investment trusts have reduced or suspended dividend payments and are being
reconstructed in order to raise fresh capital, which has further undermined
investor sentiment towards the sector.

At 31st October 2001, capital cover in respect of those Zero Dividend
Preference shares being redeemed in April 2002 was 1.2 times their repayment
value of 109.37p. During the six months under review, the mid-market share
price of the GMIT Securities zeros fell by 10.4% to 92.75p, an 11% discount to
their net asset value. This reflects the sharp fall in the UK equity market
and erosion in asset cover, which has depressed zero share prices throughout
the sector.

The mid-market price of the Ordinary shares fell by 24.3% during the period to
68.5p at 31st October 2001. The net asset value of the Ordinary shares, after
allowing for the entitlement of the Zero Dividend Preference shares, fell by
69.0% to 25.27p. The steep fall in the net asset value of the Ordinary shares
reflects the gearing effect of the bank loan and the Zero Dividend Preference
shares in a falling market. Conversely, the high income yield on the Ordinary
shares has supported the share price in difficult market conditions during the
period.

Revenue

A sixth monthly dividend of 1.0p per Ordinary share has been declared, payable
on 12th December 2001, to shareholders on the register on 30th November 2001.
Dividends totalling 6.0p per Ordinary share have been declared for the six
months to 31st October 2001.

In line with the prospectus and in the absence of unforeseen circumstances,
the Directors expect dividends totalling 12.5p per Ordinary share, comprising
seven monthly dividends of 1p and five monthly dividends of 1.1p, will be paid
for the current year to 30th April 2002.

Future Prospects

Since the end of the period, there have been further interest rate reductions
in the US, Europe and the UK, where base rates of 4% mark the lowest level
since 1964. Whilst the global economic background remains unfavourable for
equities, the significant reductions in interest rates should prompt a
recovery in economic activity during 2002. Looking forward, this should
provide a more positive backdrop for the UK equity market, and be of benefit
to the valuation of many of the securities in which the Company invests and
consequently the asset value of the Company's Equity and Income Share
Portfolios.

Managers' Review

Economic Background

The period just ended proved extremely challenging for investors in the UK
equity market. Growing pessimism over the state of the global economy and a
marked deterioration in the earnings background were the principal factors
behind equity market weakness. Prior to September's terrorist attacks on the
US, the risk of recession in the US appeared to be growing and following the
attacks, the consensus moved rapidly to the view that a US recession was all
but inevitable, as confidence amongst US consumers is likely to be seriously
undermined.

The principal feature of the UK equity market over the period was the
sustained weakness of the technology, telecoms, and media sectors against a
background of a slowdown in US economic growth and a spate of profit warnings
from leading companies in the US and the UK.  In contrast, the more defensive
areas such as tobacco, beverages and food producers, performed strongly as
investors became more pessimistic on the global economic outlook.

The Bank of England's Monetary Policy Committee opted to lower base rates from
5.5% in May to 4.5% by the end of October.  These reductions were largely a
pre-emptive series of measures against the impact of the US slowdown, as the
UK economy has remained relatively robust.  The preliminary third quarter GDP
figures showed the economy expanding at 2.2% on an annualised basis, broadly
in line with the long-term trend. Data releases throughout the period
reflected the increasingly 'two-speed' nature of the UK economy, highlighting
the contrast between a strong consumer and a beleaguered manufacturing sector.

Equity Portfolio

Against a deteriorating global economic background, we continued to focus on
those companies with the strongest franchises, superior management and the
greatest scope to provide earnings growth ahead of expectations. We continue
to believe that these characteristics form a powerful defence against any
cyclical economic downturn.

Accordingly, we added to a number of defensive holdings including drinks group
Diageo and tobacco company Gallaher. Prospects for the latter company have
been improved by the recent purchase of Austria Tabak, which provides
significant scale in manufacturing and greater geographic breadth. In the
utilities sectors, we purchased water company Severn Trent, which is expanding
through acquisition in businesses such as waste management. Other more
defensive acquisitions included diversified business services group Rentokil.
The company operates a range of services from security to hygiene.  It has
strong cash flow and organic growth is set to rise further, an attractive
combination given the current uncertain economic environment.  We also
purchased beverages group Scottish & Newcastle. Within the financial sectors,
we purchased Halifax, prior to the merger with Bank of Scotland to form HBOS,
which provides scope for cost-savings and enhanced shareholder value.

We took profits on a number of holdings in the general retailing sector,
including GUS, Next and Selfridges, which had benefited from the strength of
the UK consumer sector. We reduced the portfolio's exposure to the media
sector as the deteriorating background in the advertising industry has
impacted on earnings growth prospects.  We sold the holdings in Capital Radio,
Carlton Communications, EMI, and WPP.  We also sold a number of holdings in
the technology sectors, disposing of Informa, Misys, and Staffware.  Recent
months have highlighted the ongoing vulnerability of the IT sectors to
earnings downgrades, and with industry overcapacity and falling demand
earnings prospects for these companies are unlikely to improve in the
foreseeable future.

Towards the end of the review period, we switched out of ordinary share
holdings in building materials group AMEC and travel company Airtours into
convertible issues, maintaining exposure to these stocks whilst boosting the
income stream. We began to add selectively to more cyclical stocks, which had
fallen back sharply after the terrorist attacks on the US in September,
purchasing holdings in auto components group GKN and transport operator
Go-Ahead.

Income Share Portfolio

The investment process for the Income Share Portfolio has focused on
establishing a diversified range of income shares issued by split-capital
investment trusts. The aim has been to identify those income shares that not
only offer the prospect of a high and growing income, but also the best scope
for capital growth.

In particular, we have favoured split-capital investment trusts with a
relatively conservative capital structure but still offering an attractive
yield providing good long-term investment opportunities, run by established
fund managers with a proven track record. A number of these funds, such as
Investors Capital and Jupiter Dividend and Growth focus on UK equities, with a
bias towards higher yielding blue-chip stocks which have performed relatively
well over the period under review.

Although the Income Share Portfolio has not been immune from the problems that
have beset the split-capital investment trust sector, we have held limited
exposure to those trusts which have been worst affected. Only 10% of the
Income Share Portfolio is invested in split capital trusts with a 'fund of
funds' structure - defined as those with more than 50% of their own portfolios
in other split capital trusts, given their highly geared capital structure and
exposure to the knock-on effect of cross holdings.

Outlook

Political uncertainty and the deteriorating global economic background cloud
the outlook for the UK equity market. In the short term, the market is likely
to remain vulnerable to further profit downgrades and disappointing earnings
announcements.

Over the coming months, we are likely to see further interest rate reductions
in the US, UK and in Europe.  Moreover, the UK government is committed to
significantly increasing public expenditure in real terms, which should help
to underpin the domestic economy. We anticipate that investors will begin to
look beyond the immediate earnings environment and factor in a recovery in the
profits cycle, as significant monetary loosening and expansionary fiscal
policy is expected to boost economic activity in 2002.

Group Total Return


                                              Six months to 31st October 2001

                                              Revenue      Capital Total Return
                                                £'000       £'000.        £'000
Income and Gains
  Dividends and other income                    8,237            -        8,237
  Net loss on
    investments                                     -     (54,373)     (54,373)
                                         ------------ ------------ ------------
Return before expenses, interest
   and taxation                                 8,237     (54,373)     (46,136)

Expenses
  Management fees                               (294)        (294)        (588)
  Other expenses                                (132)        (743)        (875)
                                         ------------ ------------ ------------
Return before interest and taxation             7,811     (55,410)     (47,599)

Interest payable
  Bank loan interest                          (1,331)      (1,331)      (2,662)
                                         ------------ ------------ ------------
Return to Shareholders                          6,480     (56,741)     (50,261)


Appropriated to minority interests
   GMIT Securities Zero:
     Repayment premium reserve                      -      (4,908)      (4,908)
                                         ------------ ------------ ------------
Return on ordinary activities to Equity
Shareholders                                    6,480     (61,649)     (55,169)

                                                
Appropriated to Equity Shareholders
Dividends:
  On the Ordinary shares - 6.0p               (6,592)            -      (6,592)
                                         ------------ ------------ ------------
Transferred to/(from) Reserves:
  Ordinary shares                               (112)     (61,649)     (61,761)
                                         ------------ ------------ ------------

Total Return per Ordinary share                5.9p       (56.1)p       (50.2)p

Note

Management fees and financing costs are allocated 50% to revenue and 50% to
capital.

Group Total Return (comparative)

                                              Six months to 31st October 2000

                                              Revenue      Capital Total Return
                                                £'000        £'000        £'000
Income and Gains
  Dividends and other income                    4,885            -        4,885
  Net loss on
    investments                                     -        5,657        5,657
                                         ------------ ------------ ------------
Return before expenses, interest
   and taxation                                 4,885        5,657       10,542

Expenses
  Management fees                               (259)        (259)        (518)
  Other expenses                                 (67)         (67)        (134)
                                         ------------ ------------ ------------
Return before interest and taxation             4,559        5,331        9,890

Interest payable
  Bank loan interest                          (1,228)      (1,228)      (2,456)
                                         ------------ ------------ ------------
Return to Shareholders                          3,331        4,103        7,434

Appropriated to Non-Equity Shareholders
  Repayment premium reserves:
    Zero Dividend Preference shares                 -      (4,362)      (4,362)
                                         ------------ ------------ ------------
Return on ordinary activities to Equity
Shareholders                                    3,331        (259)        3,072

Appropriated to Equity Shareholders

Dividends:
  On the Geared Ordinary Income
    shares - 5.4p                          (3,584)             -       (3,584)
                                      ------------  ------------  ------------
Transferred to/(from) Reserves:
  Geared Ordinary Income shares              (253)         (259)         (512)
                                      ------------  ------------  ------------

Total Return per share
  Geared Ordinary Income shares               5.0p        (0.4)p          4.6p


Note

Expenses and financing costs are allocated 50% to revenue and 50% to capital.

Group Balance Sheet                                     At                   At
                                              31st October           30th April
                                                      2001                 2001
                                                     £'000                £'000
Fixed Assets
Investments at valuation:
  Listed investments                               203,199              256,311

Current Assets
Debtors                                              2,769                7,529
Short-term deposits                                  7,630                7,926
Cash at bank                                            73                   77
                                              ------------         ------------
                                                    10,472               15,532
Creditors: amounts falling due
 within one year                                   (4,708)              (5,877)
                                              ------------         ------------
Net Current Assets                                   5,764                9,655

                                              ------------         ------------
Total Assets,
 less Current Liabilities                          208,963              265,966

Creditors: amounts falling due
 after more than one year                         (72,056)             (72,016)
                                              ------------         ------------
Net Assets                                         136,907              193,950

                                              ------------         ------------

Capital and Reserves
Called-up share capital                              1,098                1,098
Other reserves:
  Special reserve                                  159,993              159,993
  Capital reserve - realised                      (81,349)             (65,728)
  Capital reserve - unrealised                    (52,726)              (6,508)
  Revenue reserve                                      737                  849
Equity Shareholders' Funds:                   ------------         ------------
  Ordinary shares                                   27,753               89,704
Minority interests:

  GMIT Securities Zero                             109,154              104,246
                                              ------------         ------------
Capital Employed                                   136,907              193,950

                                              ------------         ------------

Net Asset Value per share:
GMIT Securities Zero                                104.5p                99.8p
Ordinary shares                                      25.3p                81.7p


Group Cash Flow                                     Six months to Six months to
                                                     31st October  31st October
                                                             2001          2000
                                                            £'000         £'000
Revenue Activities
Dividends and other income received                         8,809         6,799
Expenses paid, allocated to revenue                         (338)         (363)
                                                     ------------  ------------
                                                            8,471         6,436
                                                     ------------  ------------

Servicing of Finance
Interest paid, allocated to revenue                       (1,382)       (1,228)
                                                     ------------  ------------
Taxation
Income tax recovered                                            -           153
                                                     ------------  ------------
Investment Activities
Acquisitions of investments                              (77,386)      (86,763)
Disposals of investments                                   77,887        85,190
Expenses and interest paid, allocated to capital          (1,559)       (1,591)
                                                     ------------  ------------
                                                          (1,058)       (3,164)
                                                     ------------  ------------

Equity Dividends paid
Ordinary shares                                           (6,371)       (3,535)
                                                     ------------  ------------
Net Cash Outflow                                            (340)       (1,338)

                                                     ------------  ------------

Reconciliation of Net Cash Outflow

To Movement in Net Debt
Balance brought forward                                  (64,013)      (49,309)
Net cash outflow                                            (340)       (1,338)
                                                     ------------  ------------
Balance at 31st October                                  (64,353)      (50,647)
                                                     ------------  ------------
Comprising:
Fixed loan                                               (72,056)      (52,000)
Short-term deposits                                         7,630             -
Bank balances                                                  73         1,353
                                                     ------------  ------------
                                                         (64,353)      (50,647)
                                                     ------------  ------------

Notes to the Accounts

The accounts comprise the unaudited results of the Group, for the six months
to 31st October 2001, and do not constitute statutory accounts under the
Companies Act 1985.  Full statutory accounts for the year to 30th April 2002
included an unqualified audit report and were filed with the Registrar of
Companies on 16th August 2001.

There have been no changes in accounting policies since 30th April 2001.
Management fees and loan interest payable are allocated 50% to revenue and 50%
to capital.

Total return per Ordinary share has been calculated on the negative return to
equity shareholders of £55,169,000 (positive return of £3,072,000) and
109,842,768 Ordinary shares (66,386,876 Geared Ordinary Income shares) in
issue throughout the period.

Listed investments are all listed in the UK.

Interest payable on the £72,500,000 bank loan has been fixed at 7.17% per
annum through to the repayment date of 30th April 2007.

Net Asset Values per share have been calculated on attributable assets and
shares in issue at the period end as follows:
                                                                At           At
                                                      31st October   30th April
                                                              2001         2001
                                                             £'000        £'000

109,842,768 Ordinary shares                                109,154      104,246
104,423,106 GMIT Securities Zeros                           27,753       89,704

                                                      ------------ ------------

                                                           136,907      193,950
                                                      ------------ ------------

Sixth Monthly Dividend

It was resolved to declare the sixth monthly dividend of 1.0p per Ordinary
share in respect of the year ending 30th April 2002, payable on 12th December
2001 to Shareholders on the Register on 30th November 2001.  The shares will
be marked ex-dividend on 28th November 2001.

Interim Report

The Interim Report for the six months to 31st October 2001 will be posted to
shareholders shortly.  Copies will be available from the Registered Office of
the Company: Gartmore House, 8 Fenchurch Place, London EC3M 4PH.

Gartmore Monthly Income Trust PLC
Gartmore Investment Limited - Secretaries

22nd November 2001



                                                                                
                                                                                
                                                                          

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