Interim Results

Capital Gearing Trust PLC
20 November 2002

CAPITAL GEARING TRUST plc

INTERIM REPORT

FOR THE SIX MONTHS ENDED 5 OCTOBER 2002




CONTENTS                                                                                        PAGE

Chairman's Interim Statement                                                                       1
Distribution of Invested Funds at 5 October 2002                                                   2
Major Investments of the Company at 5 October 2002                                                 3
Statement of Total Return                                                                          4
Balance Sheet                                                                                      5
Cash Flow                                                                                          6
Notes                                                                                              7

CHAIRMAN'S INTERIM STATEMENT



Over the six months to 5th October 2002 the Trust's net asset value per share
(excluding accrued income of 7.15p) fell by 4.6% to 1153p. We have not been
wholly immune from the savage bear market extending now for three years - a bear
market which has indeed intensified in the period under review. However, our
cautious stance has again stood us in good stead when compared with falls in the
FTSE All Share Index of 27.9% and in the FT Investment Trust Index of 33.8%. By
contrast the FTSE All Stocks Gilt Index has risen by 4.0%.

The malaise in the split capital investment trust sector of the market continues
to take its toll and has in turn damaged the image of investment trusts more
generally, although there are of course many well-managed companies and values
to be found. The corollary of our increased exposure to fixed interest
securities as our zero dividend preference holdings are redeemed is that our
revenue account is relatively buoyant. Shareholders should recognise that this
state of affairs might not persist should there be a change in investment
tactics.

It is a daunting time for investors with the US economy teetering on the brink
of recession, with the threat of renewed war in the Middle East and the fall in
equities exposing the weak links in the financial system hidden by the years of
excess. We are not yet out of the woods and Wall Street particularly looks to
have some more downside risk, and this prospect inevitably sets the tone
elsewhere. However, we should remind ourselves that stock markets are also a
discounting mechanism and we must be ready to take a contrary view when we feel
it appropriate.



One of the encouraging developments over the last six months has been the
evident support for the policy we have pursued. To meet market demand we have
issued in two tranches a total of 105,000 shares on a non-preemptive basis at a
premium to NAV. As these issues largely exhausted the powers previously granted
by shareholders we sought and received authority at an Extraordinary General
Meeting on 18th November to replenish the stock available. This accords with our
stated policy of expanding the Trust's capital base if this is of benefit to
existing shareholders and equally being ready to buy back stock should a
discount emerge.

Mark Cornwall-Jones

20 November 2002

                                      -1-




        DISTRIBUTION OF INVESTED FUNDS

        Percentage of assets

                                                                                                      As at     As at 
                                                                                                                   
                                                                                                    5/10/02    5/4/02
                                                North
                                     UK       America       Europe        Asia       Elsewhere        Total        Total
Investment Trust Assets:

Ordinary Shares                    12.8           0.2                      0.9             1.1         15.0         24.5
Capital/Growth Shares              14.2           2.0                                                  16.2         10.2
Zero Dividend Preference           29.3           0.2                                                  29.5         34.5
Shares
Other assets:
Fixed interest stocks               1.2                       21.3                                     22.5         14.2
Index linked                                      6.5          9.8                                     16.3         12.3
Cash                                0.5                                                                 0.5          4.3
                                   58.0           8.9         31.1         0.9             1.1        100.0        100.0


                                     - 2 -




        MAJOR INVESTMENTS OF THE COMPANY AT 5 OCTOBER 2002




                                                                                                         £'000
INVESTMENT TRUST ORDINARY SHARES

American Opportunities Trust                                                                               526
Electra Investment Trust                                                                                   589
London & St Lawrence Investment Trust                                                                      515
Martin Currie Portfolio                                                                                    634


INVESTMENT TRUST CAPITAL SHARES

Aberforth Split Level Trust                                                                                937

INDEX LINKED SECURITIES AND FIXED INTEREST

Canada (Govt of)4.0% Index Linked 01/12/31                                                                 502
France (Govt of) 3.0% OATi 25/07/12                                                                        1,313
France (Govt of) 3.4% OATi 25/07/29                                                                        1,393
France (Govt of) 5.5% OAT 25/04/29                                                                         667
Germany (Federal Republic) 4.75% Bonds 04/07/2028                                                          2,123
Germany (Federal Republic) 5.625% Bonds 04/01/2028                                                         929
Sweden (Kingdom of) 3.5% Inflation Linked Bonds 01/12/2028                                                 1,935
USA Treasury Notes 3.625% Inflation Indexed 15/04/2028                                                     1,411

INVESTMENT TRUST PREFERENCE SHARES

Aberdeen Development - Zero Dividend                                                                       1,179
Henderson Eurotrust - Zero Dividend                                                                        1,186
Jos Holdings - Zero Dividend                                                                               1,148
JP Morgan Fleming Income and Capital Investment Trust - Zero Dividend                                      1,248
Jupiter Split Investment Trust - Zero Dividend                                                             1,501
Leggmason Investment International Utilities Investment Trust - Zero Dividend                              675
Leggmason Investment European Utilities Investment Trust - Zero Dividend                                   816


Total detailed above representing 79% of the market value of the investments                               21,227



                                      -3-
STATEMENT OF TOTAL RETURN (UNAUDITED)
FOR THE SIX MONTHS ENDED 5 OCTOBER 2002

                                                                                                                      
                              (Unaudited)                        (Unaudited)                        (Audited) 
                       6 months to 5 October 2002         6 months to 5 October 2001             Year to 5 April 2002 
                      Revenue   Capital     Total        Revenue    Capital    Total      Revenue    Capital    Total 

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

  (Losses)/Gains             -   (1,238)   (1,238)              -        390      390            -      2,559    2,559
  on                                                                                                                  
  investments                                                                                                         

  Income from              289         -       289            205          -      205          467          -      467
  investments                                                                                                         

  Bank interest             12         -        12             19          -       19           33          -       33
 

                                                                                                                      
  GROSS                    301  (1,238)       (937)          224       390       614          500        2,559    3,059
  RETURN                                                                                                             

  Management              (23)    (90)       (113)          (18)       (73)      (91)        (43)         (165)  (208)
  expenses                                                                                                          

  Other                   (95)     -          (95)          (77)         -       (77)       (185)           -    (185)
  administrati                                                                                                      
  ve expenses                                                                                                         
                         (118)    (90)       (208)          (95)       (73)      (16)      (228)          (165)  (393)
                                                                                                                   
  RETURN ON                                                                                                           
  ORDINARY                                                                                                            
  ACTIVITIES              183   (1,328)     (1,145)         129        317       446         272          2,394  2,666
  BEFORE TAX                                                                                                

  Tax on                                                                                                              
  ordinary                                                                                                            
  activities             (16)      16           -            -          -         -          (13)           13     -

  RETURN                                                                                                              
  ATTRIBUTABLE                                                                                                        
  TO EQUITY               167    (1,312)   (1,145)          129        317       446         259          2,407  2,666
  SHAREHOLDERS                                                                                              
                                                                                                                      
  DIVIDENDS                -        -         -              -          -         -         (209)           -   (209)
                                                                                                                     
  TRANSFER TO             167    (1,312)   (1,145)          129        317       446          50          2,407  2,457
  RESERVES                                                                                          

  RETURN PER                                                                                                          
  ORDINARY                                                                                                            
  SHARE                 7.15p   (56.15)p   (49.00)p        5.69p     13.98p     19.67p     11.30p       104.97p  116.27p
                                                                                             


                                      -4-

BALANCE SHEET (UNAUDITED)

AS AT 5 OCTOBER 2002








                                                                     (Unaudited)       (Unaudited)          (Audited)
                                                                       5 October       5 October             5 April
                                                                            2002            2001               2002
                                                                                                                 
                                                                                            

                                                                           £'000              £'000                £'000

FIXED ASSETS

Investments                                                               27,034             24,415               26,793


CURRENT ASSETS

Debtors                                                                    1,060              1,768                1,455
Bank                                                                         144                103                  159

                                                                           1,204              1,871                1,614

CREDITORS: amounts falling due within one year                              (95)              (258)                (366)

NET CURRENT ASSETS                                                         1,109              1,613                1,248

NET ASSETS                                                                28,143             26,028               28,041



CAPITAL EMPLOYED

Called up share capital                                                      606                580                  580
Share premium account                                                      2,831              1,610                1,610
Capital reserve                                                           24,315             23,535               25,627
Revenue reserve                                                              391                303                  224

TOTAL EQUITY SHAREHOLDERS' FUNDS                                          28,143             26,028               28,041

NET ASSETS PER ORDINARY SHARE                                           1,160.1p           1,121.7p             1,208.2p
                                                                                       




                                      -5-

CASH FLOW (UNAUDITED)

FOR THE SIX MONTHS ENDED 5 OCTOBER 2002




                                                                (Unaudited)              (Unaudited)           (Audited)
                                                                6 months to              6 months to             Year to
                                                             5 October 2002           5 October 2001        5 April 2002

                                                                      £'000                    £'000               £'000

Cash inflow/outflow from operating activities (see below)                24                  (1,473)                  14

Taxation recovered                                                       39                        -                   -

Capital expenditure and financial investment:

Purchase of investments                                             (4,284)                  (4,716)            (13,518)
Sales of investments                                                  2,804                    5,669              14,239

Equity dividends paid                                                 (209)                    (181)               (181)

Management of liquid resources - cash paid to brokers                   363                        -             (1,199)
awaiting investment

Financing - issue of new shares                                       1,248                      632                 632

                                                                       (15)                     (69)                (13)
Cash and cash equivalents:

Balance at beginning of period                                          159                      172                 172
Net cash                                                               (15)                     (69)                (13)
Balance at end of period                                                144                      103                 159

Operating cash flows:

Profit before tax                                                       183                      129                 272
Expenses charged to capital                                            (90)                     (73)               (165)
Change to accrued income and sundry debtors                             (7)                  (1,196)                (52)
Change to sundry creditors                                             (62)                    (333)                (41)

                                                                         24                  (1,473)                  14

                                      -6-



NOTES



1.     Status of financial statements


             The financial information for the six months to 5 October 2002 and
        5 October 2001, 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 2002 statutory accounts.

             The abridged financial information for the year ended 5 April 2002
        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 2,336,675 (2001: 2,267,108).




 3. Issue of new shares


        On 24th July 2002, 35,000 ordinary shares of 25p were issued for a
        consideration of £417,550 and on the 4th October 2002, 70,000 ordinary
        shares of 25p were issued for a consideration of £830,900.



                                      -7-


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