Cater Allen Equity - Interim Results

RNS No 9797d
CATER ALLEN EQUITY GROWTH FUND LIMITED
27th November 1997

Directors

Ian Donald Cameron (Chairman)
New Broad Street House, 35 New Broad Street, London EC2M INH.
Mr. Cameron is a Director of Panmure Gordon & Co. Limited, a Member of the
London Stock Exchange and The Securities and Futures Authority Limited.

Burtt R Ehrlich (United States of America)
20 Brynwood Lane, Greenwich, Connecticut 06831, U.S.A.
Mr. Ehrlich is a Director of Armor Holdings Inc., Katz Digital Printing Inc.,
Bassett Management Company and the Reserve Group of Funds.  He has been
associated with the U.S. investment industry for over 30 years.

Peter John Hungerford Morgan
La Battue, Candie Road, St. Peter Port, Guernsey, Channel Islands.
Mr Morgan is a retired Conseiller of the States of Guernsey

Jeremy Paul Norfolk
Cater Allen House, Commercial Street, St. Helier, Jersey JE4 8UP, Channel
Islands. Mr. Norfolk is Managing Director of Cater Alien Investment Management
(C.I) Limited and a Director of Cater Alien Holdings Plc.  He has worked in
banking and investment for over 20 years.

Roger Maurice Berkeley
New Broad Street House, 35 New Broad Street, London EC2M 1NH.
Mr Berkeley is a Director of Panmure Gordon & Co. Limited, a Member of the
London Stock Exchange and The Securities and Futures Authority Limited.

Secretary and Manager
Cater Allen Investment Management (C.I.) Limited
(Incorporated in Jersey, Channel Islands on 12th June 1978)
P.O. Box 372, Cater Allen House, Commercial Street, St. Helier,
Jersey JE4 8UP, Channel Islands.
Telephone: Jersey 44 1534 828200
Fax: Jersey 44 1534 828202

Custodian
The Royal Bank of Scotland Trust Company (Jersey) Limited
(Incorporated in Jersey, Channel Islands on 3rd November 1972)
Capital House Building, Bath Street, St. Helier, Jersey JE4 8TL, Channel
Islands.

Registrar
R & H Fund Services (Jersey) Limited
(Incorporated in Jersey, Channel Islands on 29th November 1988)
Ordnance House, 31 Pier Road, St. Helier, Jersey JE4 8PW, Channel Islands.

Investment Adviser
Panmure Gordon & Co. Limited
New Broad Street House, 35 New Broad Street, London EC2M 1NH
Member of the London Stock Exchange and The Securities Association.

Bankers
Cater Alien Bank (Jersey) Limited
(Incorporated in Jersey, Channel Islands on 17th October 1984)
Cater Allen House, Commercial Street, St. Helier, Jersey JE4 8WU, Channel
Islands.

The Royal Bank of Scotland Plc
(Incorporated in Scotland on 31st October 1984)
Royal Bank Building, Jersey JE4 8ZA, Channel Islands.

Auditors
Reads & Co. (Chartered Accountants)
P.O. Box 641, No 1 Seaton Place, St. Helier, Jersey JE4 8YJ, Channel Islands.

Advocates and Solicitors to the Fund in Jersey
Mourant du Feu & Jeune
22 Grenville Street, St. Helier, Jersey JE4 8PX, Channel Islands.

Solicitors to the Fund in England
Macfarlanes
10 Norwich Street, London EC4A 1BD.

Registered Office
Cater Alien House, Commercial Street, St. Helier, Jersey JE4 8UP, Channel
Islands. 

Directors' Report for the
half year ended 31st July 1997

Introduction

The Fund is limited by shares and is incorporated in Jersey, Channel
Islands under the Companies (Jersey) Law 1991.

The Fund is governed by the Collective Investment Funds (Jersey) Law,
1988, as amended, which governs the operation of unit trusts and
open-ended investment companies in Jersey.

Jersey Company Law requires the Directors to prepare accounts covering
a period of not more than eighteen months starting from the date of the last
accounts or the date of the company's incorporation.  The accounts must be
in accordance with generally accepted accounting principles and show a
true and fair view of the company's profit or loss for the half year, and the
state of the company's affairs at the end of the half year.

As with the exercise of their other duties, the Directors must, in
preparing the accounts, act honestly and in good faith; with a view to the
best interest of the company; and with the care, diligence and skill that a
reasonably prudent person would exercise were he in their position.

The Directors are responsible for ensuring the company maintains
adequate accounting records explaining its transactions and disclosing its
financial position from which proper accounts can be drawn.

Activities

The main aim of the Fund is to provide investors with long term
capital growth from a portfolio of equity share investments.  The
Participating Redeemable Preference Shares ("Participating Shares") are
listed on the London Stock Exchange.

Directors

The Directors, all of whom have served throughout the period are
listed above.

Directors' Shareholdings

According to the Register of Directors' Interests, none of the Directors
are beneficially interested in Participating Shares of the Fund with the
exception of Mr. I. D. Cameron who has an interest in 12,202.22 shares.

These interests have not changed since 31st July 1997.

Dividend

The Directors of the Fund have not declared an Interim Dividend in
respect of the half year ended 31st July 1997.  Subsequently the net
income earned in the full year ending 30th January 1998 will be
distributed by way of a dividend at the end of February 1998.

On 6th August 1997, the first Subscription Day following the end of the
accounting period, the Offer Price of a Participating Share was #7.35 and
the Bid Price #6.92.

Taxation

The Fund is a Jersey Exempt Company and is not a close company within
the provisions of the Income and Corporation Taxes Act 1988 of the
United Kingdom.

Distributor Status

The Fund has been certified for the purposes of Chapter V of Part XVII
of the U.K. Income and Corporation Taxes Act 1988 ("Offshore Funds")
as a "distributing fund" in respect of the "account" periods ended 30th
January 1997.

The Directors intend, in so far as they are able, to continue conducting
the affairs of the Fund so as to obtain certification in the future.

Accounts

The Directors present their report to the Members together with the
unaudited accounts for the half year ended 31st July 1997.

Shareholdings

As at 31st July 1997 the Directors are aware of the following holdings
which represents three per cent or more of the Participating Shares in
issue:

                                        Number of
                                        Participating         %
Name                                    Shares             of Fund
Pershing Keen Nominees Limited
A/C PG                                  487,034            38.65
BT Globenet Nominees Limited A/C 6      120,000             9.52
Matheson Nominees Limited A/C PMA        60,000             4.76
Alexander L. Stewart                     46,260             3.67
Montagu Nominees (Jsy) Ltd
 A/C 047014428                           45,000             3.57

Cater Allen House                              By order of the Board
Commercial Street                              Cater Allen Investment
St. Helier                                     Management (C.I.) Limited
Jersey JE4 8UP
Channel Islands                                Secretary

7th August 1997

Investment Adviser's Report

The first half of 1997/98 has seen a further improvement in the Net Asset Value
of the Fund against the general background of falls generally in the share
prices of the smaller to medium sized companies in which the Fund is largely
invested.  The rise of 0.79% is therefore a favourable outcome compared with
Indices such as the FTSE 250 and the Smaller Capitalisation Index which over the
same period to 30th July had declined by 1.63% and 4.53% respectively.  While
the FTSE 100 Index as a whole has shown strong appreciation this year, this has
been largely due to the share performance of only ten companies.  If these were
excluded, this benchmark index would have shown little change in the last six
months. 

The outstanding sectors during the first part of the year, as indeed they were
in 1996, have been oils, pharmaceuticals and financials, with the Fund being
represented in each.  Of the three, however, it is oils in which the Fund is
most strongly represented, this sector presently accounting for about 12 1/2%,
of the investment portfolio, split between Shell Transport & Trading and three
other leading exploration and production companies. However, while retaining
these and other core FTSE 100 holdings such as Rio Tinto, Pearson, Great
Universal Stores, P&O, Cable & Wireless and General Accident, we are looking to
improved performances from the medium sized and smaller companies during the
coming months. 

Since Sterling began to weaken, indices such as the FTSE 250 and  Smaller
Capitalisation have shown distinct signs of reversing their negative trends.
This can be attributed to indications by the Bank of England, following the
fourth interest rate increase in recent months, that a further rise should not
be necessary.  Fears that interest rates could reach 8%, within the next year
have been lessened with favourable implications for smaller companies which are
relatively more vulnerable to higher rates. 

This year the UK Stockmarket has  underperformed Wall Street and many European
bourses, a fact recognised by foreign investors at a time when Sterling was
rising and the consequent injection of substantial liquidity from overseas has
driven the FTSE 100 index as much as the perceived strong rises in company
profitability and dividend payments at a time of restrained inflation.  UK
Equities still appear reasonable value against other world markets, with which
more frequent comparisons are now being drawn given the increasing
internationalisation of world stock markets. 

The Labour Government has soothed fears in its first three months of office
concerning its attitudes to the business community, with the impact of the
windfall tax on utilities no greater than expected, the Budget proposals
generally not increasing the burden of taxation to any marked extent and the
abolition of ACT on pension funds being offset by a reduction in Corporation
Tax. 

The price of gold has seen a lower trend this year, the principal cause
for the latest slide in the bullion price being the disposal by the Reserve
Bank of Australia of about two thirds of its tonnage, although this also carries
a favourable message for world inflationary expectations.  A profit in this
sector is being established through the current takeover of General Oriental
Investments at 590p per share, and this will reduce the Fund's exposure to
gold. 

Against this general background, we look for continued helpful conditions
for equity markets throughout the world for the foreseeable future.  The
appreciation in share value is however likely to be at a slower rate than in the
past year or two, given that an easing of economic growth rates seems likely in
1998, and some nervousness may be anticipated in the near future as the 10th
anniversary of the 1987 crash approaches.

Balance Sheet

                                        31st July 1997     31st July 1996
                                               #                   #
ASSETS
Investments                               8,258,008            7,617,969
Cash and Deposits                           484,982              518,092
Income receivable                            19,475               23,872
Debtors                                       3,890               17,176

                                          8,766,355            8,177,109

LIABILITIES
Creditors and accrued liabilities           149,314               22,500

NET ASSETS                              # 8,617,041         #  8,154,609
Representing #6.85 (#6.56) per share on
outstanding Participating Shares

Represented by:
SHARE HOLDERS'EOUITY
1,000 Management Shares of #1 each            1,000                1,000
1,258,609 Participating Redeemable
Preference Shares of 1p each (1,242,145)     12,586               12,421
3,600 Second Preference Shares of
1p each (0)                                      36                   -

RESERVES
Share Premium                             4,355,371            4,240,531
Capital Reserves                          4,167,391            3,815,695
Revenue Reserves                             80,657               84,962

                                         #8,617,041           #8,154,609

I.D. CAMERON Director
J.P. NORFOLK Director

Approved by the Board of Directors.
7th September 1997

Revenue Account

                                        Six Months to           Six Months to
                                        31st July 1997          31st July 1996
                                        #           #          #          #
INCOME
Deposit interest                    13,453                  13,408
Investment income                  111,370                 114,463
Underwriting commission              1,560                   5,985

                                                126,383                133,856

EXPENSES
Administration expenses              5,000                   2,600
Audit fee                            1,560                   1,880
Custodian fee                        4,390                   4,211
Directors' fees                      2,614                   2,660
Management fee                      43,499                  42,109
Registrar fee                        1,546                   1,500

                                                 58,609                 54,960

NET REVENUE FOR THE PERIOD                       67,774                 78,896
Net Equalisation                                   (533)                   669
Net revenue brought forward                      13,416                  5,396

NET REVENUE CARRIED FORWARD                    # 80,657               # 84,962

The Investment Portfolio

31st July 1997
                                                Market
                                                 Value            % of
Holding            Stock                           #          Net Assets

Fixed Interest
           Convertibles
200,000    Emess
           6.25p (Net) Cnv Cm Rd Pref 5p          113,000              1.31

Equities
           Banks
 50,000    Allied Irish Bank Ord IEP 0.25         266,750              3.10

           Distributors
 40,000    Inchcape Ord 25p                       114,400              1.33
149,950    Young (H) Holdings Ord 25p             216,678              2.51
100,000    Mid-States Ord 10p                      17,000              0.20

           Diversified Industrials
200,000    Lonrho Ord 25p                         242,000              2.81 
 70,714    Wassail 'A' Shares Ord 5p              204,010              2.37 
 18,750    Hanson Ord 25p                          57,188              0.66

           Electronic & Electric Equipment
200,000    Industrial Control Services Ord 10p    287,000              3.33

           Engineering
 40,000    Johnson Mathey Ord #1                  232,400              2.70
 25,000    Siebe Ord 10p                          275,125              3.19

           Extractive Industries
 10,000    Ashanti Goldfields Ord NPV              71,500              0.83
 10,000    GFSA Ord R0.05                           1,200              0.01
 30,000    Rio Tinto Plc Ord 10p                  300,300              3.48

           Healthcare
150,000    Celsis International Ord 1p            135,000              1.57
100,000    ML Laboratories Ord lp                 147,500              1.71
 80,000    Chiroscience Ord 5p                    184,400              2.14
 75,000    Isotron Ord 25p                        273,000              3.17

           Insurance
 30,000    General Accident Ord 25p               271,500              3.15

           Investment Trusts
200,000    Fleming Indian Ord 25p                 116,000              1.35
200,000    Mercury World Mining Trust Plc
           Ord 25p                                175,000              2.03
100,000    Thompson Clive Investments Ord 50p     341,500              3.96

                                                    Market
                                                    Value            % of
Holding               Stock                           #          Net Assets

            Life Assurance
  7,500     Norwich Union Ord 10p                  23,775              0.28

            Media
500,000     Osprey Communications Ord 25p          95,000              1.10
 60,000     Tele-Cine Cell Ord 5p                  24,000              0.28
 30,000     Pearson Ord 25p                       208,350              2.42

            Oil Exploration & Production
 30,000     Enterprise Oil Ord 25p                204,450              2.37
600,000     Premier Oil Plc Ord 5p                280,500              3.26
 80,000     Lasmo Ord 25p                         214,800              2.49

            Oil, integrated
 90,000     Shell Transport & Trading Ord 25p     403,650              4.68

            Property
637,500     Aukett Associates Ord 5p               22,313              0.26
100,000     Wood (J D) Ord 10p                    143,500              1.67

            Retailers, General
200,000     Partridge Fine Arts Ord 10p           150,000              1.74
 20,000     Dixon Group Ord 10p                   119,100              1.38
 30,000     Great Universal Stores Ord 25p        187,050              2.17

            Alcoholic Beverages
 50,000     Allied Domecq Ord 25p                 218,000              2.53

            Tobacco
 15,000     Imperial Tobacco Group Plc Ord #1      55,650              0.65

            Telecommunications
 30,000     Cable and Wireless Ord 25p            183,900              2.13
150,000     GEO Interactive Media Group Ltd
            Ord                                   132,750              1.54

            Transport
500,000     Goode Durrant Ord 5p                  212,500              2.47
 40,000     P & O Dfd Ord #1                      242,000              2.81

            Building & Construction
 22,000     Gleeson (M J) Ord 10p                 202,950              2.36

Overseas Equities

            Asia
200,000     Edinburgh Tiger Trust Warrants          9,500              0.11

            South Africa
 20,000     Randfontein Est Gold Mining R0.20      24,500              0.28

            USA
150,000     Blairmore Holdings Inc,
            Common Stock                          393,750              4.57
  1,000     Cisco System Common Stock NPV          48,420              0.56

            Jersey
 25,510     PMG Eagle Fund Limited                164,149              1.90
100,000     Thompson Clive Growth Industries
            Fund                                   15,000              0.17

            Cayman Islands
 40,000     General Oriental Investments
            US$0.10                               236,000              2.74

Total Securities                              # 8,258,008             95.83

Cash and other Net Assets                         359,033              4.17

Total Net Assets                              # 8,617,041            100.00%


Price and Dividend
Performance Record
(adjusted for scrip issues)

                              Highest           Lowest           Dividends
Year                       Offer Price       Bid Price              Paid

1987                          #3.92             #3.30               23.3p
1988                          #4.21             #3.47               13.3p
1989                          #5.34             #3.83               12.6p
1990                          #5.24             #3.73                9.3p
1991                          #4.77             #3.52               15.0p
1992                          #4.56             #3.18               14.0p
1993                          #6.31             #4.23               11.0p
1994                          #6.31             #4.98                8.5p
1995                          #6.62             #4.91                6.5p
1996                          #7.46             #6.26                6.5p
1997 (to date)                #7.35             #6.59                8.0p

Net Asset History

                                                               Net Assets
                                        Participating                 per
                              Net       Shares in           Participating
Date                        Assets       Issue                    Share

30th January 1992         #6,967,627      1,806,105             #3.86
30th July 1992            #5,964,130      1,688,744             #3.53
28th January 1993         #6,022,655      1,404,787             #4.29
29th July 1993            #6,694,181      1,344,980             #4.97
27th January 1994         #7,856,917      1,347,013             #5.83
28th July 1994            #7,086,304      1,330,052             #5.33
26th January 1995         #6,688,533      1,319,844             #5.07
27th July 1995            #6,932,893      1,264,183             #5.49
1st February 1996         #7,916,110      1,231,431             #6.43
31st July 1996            #8,154,609      1,242,145             #6.56
30th January 1997         #8,638,400      1,274,259             #6.78
31st July 1997            #8,618,540      1,258,609             #6.85


END

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