Final Results

New Star Investment Trust PLC
19 September 2001



NEW STAR INVESTMENT TRUST PLC

PRELIMINARY ANNOUNCEMENT OF RESULTS

      
The Directors announce the unaudited statement of consolidated results for the
period ended 30 June 2001 as follows:

   
CONSOLIDATED STATEMENT OF TOTAL RETURN
*  (incorporating the revenue account) of the group


                                       6 May 2000 to         5 April 2000 to
                                       30 June 2001            5 May 2000
                                  Revenue Capital  Total  Revenue Capital Total
                                                   
                                   £'000   £'000   £'000  £'000   £'000  £'000


(Losses)/gains on investments          -  (2,992) (2,992)      -   1,142  1,142

Dividend and interest income       5,476       -   5,476      72       -    72
Losses on index futures contracts      -    (921)   (921)      -       -     -
Investment management fees          (761)      -    (761)     (7)      -    (7)
Other expenses                      (388)      -    (388)    (17)      -   (17)

Return on ordinary activities       4,327 (3,913)    414      48   1,142  1,190
before finance costs and

taxation
Interest payable                      (9)      -      (9)      -       -     -

Return on ordinary activities      4,318  (3,913)    405      48   1,142  1,190
before taxation
Taxation on ordinary activities   (1,174)      -  (1,174)    (14)   (253) (267)

Return attributable to equity      3,144  (3,913)   (769)     34     889   923
shareholders
Dividends in respect of equity    (2,416)      -  (2,416)      -       -     -

shares

Transfer to/(from) reserves          728  (3,913) (3,185)     34     889   923


*  The revenue column of this statement is the consolidated revenue account of
the group.


                                   pence   pence   pence   pence   pence   pence

Return per ordinary share           2.89   (3.60)  (0.71)   0.04    0.95    0.99



CONSOLIDATED BALANCE SHEET

                                                            As at        As at
                                                     30 June 2001   5 May 2000
                                                            £'000        £'000
Fixed assets
Investments                                               106,934       21,298

Current assets
Debtors                                                     3,101           32
Cash at bank                                                  710       94,043
                                                            3,811       94,075
Creditors:  amount falling due within one year              3,046       21,681

Net current assets                                            765       72,394

Total assets less current liabilities                     107,699       93,692

Capital and reserves:
Called up share capital                                     1,098          932
Share premium account                                     108,863       91,837
Capital reserve                                            (3,024)         889
Revenue reserve                                               762           34

Equity shareholders' funds                                107,699       93,692

Net asset value per share
Ordinary shares                                             98.07p      100.57p



CONSOLIDATED STATEMENT OF CASHFLOWS


                                                6 May 2000 to  5 April 2000 to
                                                 30 June 2001       5 May 2000
                                                        £'000            £'000

Net cash inflow from operating activities               3,138               40

Servicing of finance
Interest paid                                              (9)               -
                                                           (9)               -
Taxation
Taxation paid                                            (739)               -
                                                         (739)               -
Capital expenditure and financial investment
Purchase of investments                              (174,436)         (92,813)
Disposal of investments                                62,831           93,657
Losses on index futures contracts                        (921)               -
                                                     (112,526)             844

Net cash (outflow)/inflow before financing           (110,136)             884

Financing
Issue of loan notes                                         -           92,813
Issue of share capital                                 17,222              346
Expenses of issue                                        (419)               -

Net cash inflow from financing                         16,803           93,159

(Decrease)/increase in cash                           (93,333)          94,043




Returns per share


The Group net revenue on ordinary activities after taxation amounted to £
3,144,000 (2000: £34,000).  The basic revenue return per Ordinary share is
based on this figure and a total of 108,788,593 (2000:  93,158,804) shares,
being the weighted average number of Ordinary shares in issue during the
period.


The capital return per Ordinary share is based on net capital losses for the
period of £3,913,000 (2000: gains of £889,000) and on 108,788,593 (2000:
93,158,804) shares, being the weighted average number of Ordinary shares in
issue during the period.


The Directors have recommended a final dividend of 2.2p net per Ordinary share
to be paid on 21 November 2001 to shareholders on the register at the close of
business on 26 October 2001.


Net asset value per share


The net asset value per share of 98.07p (2000:  100.57p) has been calculated
by reference to net assets of £107,699,000 (2000: £93,692,000) and 109,820,026
(2000:  93,158,804) Ordinary shares, being the number of shares in issue at
the end of the period.


The above financial information for the period ended 30 June 2001 does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985.  This preliminary statement of results has been agreed with our
auditors, Ernst & Young.  The comparative financial information is based on
the statutory financial statements for the period ended 5 May 2000.  Those
financial statements, upon which the auditors issued an unqualified opinion,
have been delivered to the Registrar of Companies.  Statutory financial
statements for the period ended 30 June 2001 will be delivered to the
Registrar.


The annual report will be sent to shareholders in September and will be
available to members of the public from the Registered Office at 23 Cathedral
Yard, Exeter EX1 1HB.  The Annual General Meeting of the Company will be held
on 24 October 2001 at 10.00 am at 90 Long Acre, London WC2E 9TT.


CHAIRMAN'S STATEMENT


The total assets of your Company, after adjusting for the further issue of
Ordinary Shares at net asset value on 2nd June 2000, fell by 2.1% to £107.7
million over the period from inception, 5th April 2000, to 30 June 2001.  This
compares to a fall in the FTSE All-Share Index of 9.8% over the same period.


Net revenue after tax for the period was £3,144,000.  Your Directors are
recommending the payment of a dividend of 2.2p net per Ordinary share.  The
level of revenue was influenced by the high level of liquidity retained
throughout the period.  Dividends do not form a central part of your Company's
policy so this level of dividend should not be taken as an indication of your
Company's ability to pay dividends in the future and the dividend may well be
lower next year.


At the time of your Company's incorporation in April 2000, share prices in the
technology, media and telephone sectors (TMT), the so-called new economy, were
riding high after the surge in the previous year, while many old economy
stocks were languishing.  The consensus view then was that internet and new
media developments would transform the profitability of TMT companies while
the profits of companies in traditional manufacturing and service sectors
would be undermined.


During the period under review there has been a profound change in sentiment.
TMT companies have been heavily downgraded.  Initially investors were
concerned about over-investment.  In particular, bidding for the third
generation of European mobile phone licences reached far higher levels than
expected leaving telecoms service companies with high debts that were later
refinanced by big share issues.  More recently many TMT companies have
produced disappointing results.


By contrast many old economy stocks surged, with profits buoyed up by strong
consumer demand.  This was partly the result of a progressive lowering of
interest rates in the first half of 2001.  However, TMT losses outweighed
rises in old economy stocks to leave the FTSE All-Share Index down 9.6% during
the period under review.


The short-term outlook is uncertain with corporate results continuing to
disappoint.  However, share prices are likely to recover once investors look
beyond the slowdown and discount the impact of lower interest rates on
corporate profits and economic growth.  In such circumstances your Directors
believe your Company's investment strategy will continue to produce
out-performance.  This involves managing the Company in a more aggressive way
than many investment trusts are managed, for example - when it is believed
appropriate - having a large cash position or adding investments in hedge
funds and unlisted securities, for example in the financial sector, to
equities and traditional pooled funds.


Nearly all shareholders will be aware that the Board of your Company, many
shareholders and myself have been in discussion during the course of the last
year concerning a possible reconstruction of your Company.  The object of such
a reconstruction would be to give shareholders a choice of continuing to be
shareholders in the present company, managed by New Star Asset Management, or
transferring their investment into a new investment fund of some sort, which
would be managed by Jupiter Asset Management.  Jupiter Asset Management was of
course the manager of your Company from its inception last year until January
this year.


On 22nd November 2000 I entered into a Settlement Agreement with Jupiter
International Group which, inter alia, included a clause about one possible
type of split of your Company.


Your Board, including me, has always been in favour of giving shareholders a
choice providing that it could be done in such a way that no detriment will be
suffered by those shareholders who do not wish to make a change.
Specifically, this would mean that the remaining shareholders could remain
invested in an investment trust without suffering any material tax
disadvantages and any other material detriment.


In February 2001, four individual shareholders, including three directors of
Jupiter International Group, requisitioned an Extraordinary General Meeting of
your Company and proposed a resolution that sought to secure the splitting of
your Company into two unit trusts.  The first that your Board knew of this
proposal was when they read in the newspapers what the requisitionists had
proposed.  The proposal was defeated at the EGM, which was held on 10th April
2001.  The cost of the EGM to your Company was approximately £100,000.


Jupiter International Group and I have both now prepared proposals and your
Board believes that, subject to Inland Revenue clearance, there is a good
chance that either may produce a satisfactory outcome.  The main difference in
practice is costs.


All the Directors of your Company, including myself, are of the opinion that
it is fair that those shareholders who wish to transfer their investment in
your Company to some other vehicle should pay for the cost of the
reconstruction.  Your Board can see no reason why a minority of shareholders
should impose its wishes on the remainder and expect those shareholders who
wish to continue with their investment in your Company to pay for the
reconstruction.


Jupiter International Group does not agree with your Board's view and believes
that the costs should be borne by your Company - i.e. effectively by all
shareholders pro-rata.  Jupiter has commenced litigation against me in the
High Court to attempt to impose its wishes.  I have opposed that. The estimate
of the cost of my suggested reconstruction is £400,000-£450,000 (although no
guarantee can be given of that).  Jupiter claims to speak for about 38% of the
Company's shares.  The litigation is, therefore, about who pays the remaining
62% of £400,000-£450,000 i.e. £248,000-£279,000.


Jupiter has already accepted in discussion that the shareholders it claims to
speak for will bear 38% of the greater costs of its own proposed
reconstruction which are estimated by your Board at £1,000,000-£1,500,000  -
i.e. it is willing to see the shareholders it speaks for pay £380,000-£
570,000.  Your Board is surprised that Jupiter appears to be willing to pay £
380,000-£570,000 towards its own scheme - but not £400,000-£450,000 for an
alternative proposal which produces a similar, if not identical, result.


It was agreed in the Settlement Agreement, referred to above, that I would
support the appointment of two Jupiter nominees as Directors of your Company.
Mr Baker and Mr Stevenson, both Directors of Jupiter subsidiaries, were
elected Directors of your Company on 22nd November 2000.  In March 2001 Mr
Stevenson admitted to your Board that he had disclosed confidential
information regarding your Company to outsiders.  Your Board is considering
what action to take about this.


In May 2001 Mr Baker and Mr Stevenson submitted a large bill to your Company
for their personal legal costs incurred in their capacity as Directors of your
Company.  Your Board considers this bill excessive and that it should not be
met by your Company.


In July 2001 both Mr Baker and Mr Stevenson resigned as Directors of your
Company.  Your Board is considering the appointment of a replacement Director
to be nominated by Jupiter.  The independent Directors do not consider it
appropriate with the present number of Directors (three independent Directors
and myself) that Jupiter should nominate more than one Director for
appointment to your Board.


The unaudited net asset value of your Company's shares at 31st August 2001 was
94.8p.  This is a fall of 4.8% from inception compared to a fall in the FTSE
All-Share Index of 14.4% over the same period.  This is a highly creditable
first period of your Company and I congratulate Alan Miller, our investment
manager, on this performance.


John Duffield
Chairman
New Star Investment Trust PLC
19th September 2001


INVESTMENT MANAGER'S REPORT


The period to 30th June 2001 produced poor returns for equity investors.  In
the United Kingdom, the FTSE All-Share Index fell 9.6%.  In the United States,
the Dow Jones Industrial Ordinary Average was virtually unchanged at 0.7%
lower but the technology-heavy Nasdaq Composite fell 43.4%.  Continental
European markets, as measured by the Eurotop 300 Index ex UK, fell 17.4%.


The dominant feature of the early part of the period under review was the fall
in the Nasdaq market, reflected in a similar fall in London's FTSE TechMARK
Index, as the 'dotcom' boom collapsed.  The weakness began among recently
floated new media and internet start-up companies but then spread into
providers of information technology and telecommunications hardware and
software, as well as telecoms carriers.  In the UK and Europe the share prices
of telecoms carriers were particularly badly hit as they made highly ambitious
bids for the new government licences to operate third generation mobile
telephony.


Across the world, investors retreated from technology, media and
telecommunications (TMT) stocks that had been discounting huge profit growth
from new media and internet developments, growth that has subsequently not
materialised.  In addition, the sharp slowdowns in economies more generally
and the drop off in advertising and information technology-related spending
have put the profit margins of many companies under pressure.


In London, shares were only modestly weaker in the first half of the period
under review but the declines were more severe in the second half with TMT
companies being particularly badly hit.  The worst performing sectors were
information technology hardware, down 72.4%, software and computer services,
down 67.2%, and telecoms services, down 51.7%.  By contrast the personal care
and household products sector rose 55.4%, tobacco rose 49.2% and insurance
rose 37.3%.  Such disparities of returns are unusual, yet the evidence of a
two-tier market was overwhelming with new economy stocks, the strong
performers of 1999, falling sharply and old economy stocks tending to rise.
Bigger companies did worse than mid-cap and smaller ones:  against a 9.6% fall
in the FTSE All-Share, the FTSE mid 250 was virtually unchanged at 0.3%
higher, while the Cazenove Small Companies Index was down just 0.8%.


Companies that issued disappointing profit statements or profit warnings
suffered particularly big share price falls as bear market psychology grew
more entrenched.  By contrast, companies that issued good news were largely
ignored.  Investor liquidity was adversely affected by three factors:  the
decline in cash takeovers, a drop in the volume of share buybacks and special
dividends and a big rise in equity issues.  In the year to the end of June the
amount of new equity issued through flotations, rights issues and other equity
issues rose 65% to £29 billion.


The central banks of both the US and the UK responded to the rapid slowdown in
economic growth spreading out from the depressed TMT sectors by cutting
interest rates.  Mr Alan Greenspan, the Federal Reserve Board Chairman, began
easing monetary conditions in early January with a half-point cut in the
Federal Funds rate to 6%.  There followed a further five more cuts in the
Federal Funds rate, taking it to 3.75% at the end of June and a further cut in
August to 3.5%.  In the UK, the Bank of England's monetary policy committee
made its first cut in interest rates in January - from 6% to 5.75% - and made
two further quarter point cuts to take the rate to 5.25% in May.


Such reductions in interest rates have helped to keep consumer spending in the
US and UK strong.  UK retail sales growth began the period at 3.5%, but then
accelerated, particularly in the second half, to reach an annualised rate of
5.7% in June.  Unemployment continued to fall with the headline count down
from 3.7% of the UK labour force to 3.2%.


Yet while interest rate cuts had an effect on consumer spending, they did
little to improve the outlook for many companies.  Towards the end of the
period margins remained under pressure with the pace of decline, if anything,
increasing.  The problems for companies were evident from the economic growth
slowdown.  UK gross domestic product grew 0.8% in the first quarter, eased
during the winter and early spring and ended the period at 0.3%, with the full
impact of the foot-and-mouth crisis being felt in the three months to the end
of June.


At the same time there was evidence of inflation picking up in the second half
of the period.  Underlying inflation, excluding mortgage interest, fell from
2.0% in May 2000 to 1.8% in January 2001 but then rose to 2.4% in May.  At
this level inflation is a tenth of a percentage point below the Bank of
England's target rate, limiting the scope for further interest rate cuts to
restore confidence in industry.


When your Company was launched a cautious view was taken of the markets.  It
was feared that the euphoria of the previous 18 months would not last and that
valuations could not be sustained, particularly among TMT stocks.  As a
result, more than half the portfolio was invested in short term gilts,
something that helped to limit the decline in your Company's total assets
during the reporting period from 6 May 2000, to 2.9%, having adjusted for the
new issue of shares during the period.


Some funds were invested in TMT sectors but the exposure was kept modest
relative to the representation of TMT stocks within the FTSE All-Share Index,
reducing the impact on your Company of declines in these areas.  In addition
to the listed portfolio, three investments were made in unlisted TMT
companies, representing less than 1.5% of the assets.  Given the prevailing
market conditions, it was prudent to write down the value of these assets.


Unlike many investment trusts, your Company chose to invest in hedge funds and
these investments have produced positive returns despite the difficult
markets.  Significant gains were made from holdings in New Star Hedge Fund and
Hyde Park Hedge Fund.  More recently we have invested in the HSBC European
Absolute fund of hedge funds and in WorldInvest's Asia Renaissance Hedge Fund.


Close to the market's low point in March, your Company bought FTSE All-Share
Index futures, increasing its equity exposure, and it increased its direct
exposure to a number of undervalued stocks such as Elan Pharmaceuticals,
Persimmon, the housebuilder, and British Energy.


Towards the year-end, work began on developing a long-term strategic
investment philosophy for your Company with the aim of managing it in a more
aggressive way than many investment trusts are managed.


The strategy includes investing in unlisted securities, primarily in the
financial sector.  The first investment was made in April when your Company
bought a stake in the New Star Asset Management Group, the parent company of
your investment management company.  This investment represents approximately
2.5% of the total assets of New Star Investment Trust.


At the year-end, 43% of the portfolio was invested in UK equities, both direct
and through futures and pooled funds, 41% was in gilts and corporate bonds, 7%
was in hedge funds, 4% was in European equities and pooled funds, 3% was in
unlisted securities, 1% was in a global technology pooled fund and 1% was in a
Far East pooled fund.


Short-term prospects for equity markets look cloudy with corporate profits
likely to remain under pressure.  However, stock markets typically anticipate
the future and it is likely that share prices will recover once the investors
start to discount current trading difficulties and look to the benefits to
come from the impact of lower interest rates on corporate profits and economic
performance.


The aim is to continue to invest in undervalued listed companies and
attractive pooled funds and hedge funds and to use New Star's expertise in the
management of financial companies to increase significantly the exposure to
interesting unlisted businesses capable of long-term growth.


New Star Asset Management
19th September 2001