Interim Results

Herald Investment Trust PLC
27 July 2006

                    PRELIMINARY STOCK EXCHANGE ANNOUNCEMENT

                          HERALD INVESTMENT TRUST plc

                 Results for the six months ended 30 June 2006

                                  27 July 2006



                              CHAIRMAN'S STATEMENT



Disappointingly and somewhat surprisingly the net assets declined 5.8% in the
first half. Surprising because the trading performance has continued to be
strong for most companies in the portfolio, and in general they have delivered
the strong earnings growth that was expected. In aggregate the Trust's
underlying earnings estimates for 2006 have declined by a similar percentage to
the assets, but still represent a strong increase on 2005. In fact a 36%
increase on the level of profits is estimated for 2005 for the portfolio at the
start of the year. Arguably the market was discounting an even higher level of
growth, but this argument seems difficult to accept when earnings growth
exceeded share price growth in 2004 and 2005 by around 80%. In reality investor
attention has continued to focus elsewhere, particularly oil, gas and other
commodities. Herald's UK portfolio, which accounts for nearly two thirds of the
portfolio, was the principal drag, returning -5.1%. In contrast the HGSC Index,
which is 2/3rds of our benchmark, grew 6.1% in total return terms, albeit the
weighted average of the most relevant sectors for our remit showed a decline of
6.6%. The software and computer services sector in the UK, which is important to
Herald, was one of the worst performing sectors in the HGSC benchmark declining
12.5%. In contrast this sector within the Herald portfolio declined 7.8%. Most
of this decline came from three holdings Alterian, Northgate and SDL, with very
little justification in terms of their operational performance, albeit it was
totally unforeseen that Northgate should find its head office and data centre
demolished by the explosion of its neighbouring oil terminal in Hemel Hempstead,
and management should be congratulated on delivering unaffected operational
earnings.  The three UK holdings that have had material earnings downgrades for
2005 and 2006 were Imagination, Plasmon and Screen FX. The latter two had
material disappointments. The US return was adequate with the Russell 2000
Technology  index up 5.3%, and the Trust's US portfolio up 7.0%, however the $
gains were obliterated in £ by the $ weakness. The European return was modestly
positive, having been strongly up in Q1, but having a poor Q2. The Far East
returns disappointingly gave back last year's gains.



Total return by geography from 31 December 2005 to 30 June 2006

UK Equities                              -5.1%
US Equities                              -0.7% (+7.0% in US$)
European Equities                        +2.0%
Far East Equities                        -17.6%



The p/e based on consensus earnings estimates for 2006 for the profitable stocks
in the portfolio, which account for 84% of the portfolio, has fallen from 14.6x
at the start of the year (as in last year's accounts) to 14.1x reflecting
declines in share prices, but minimal changes in earnings estimates. In contrast
the p/e of the overall portfolio has risen slightly to 16x. This reflects a
combination of downgrades in estimates for certain loss making holdings, who are
delivering profits slower than previously envisaged, as well as the sale of
certain profitable stocks and the acquisition of loss making stocks. In
particular three long standing holdings have been sold - Informa and Taylor
Nelson in the UK and RSA in the US. The original purchases were all made at
least eight years ago and were sold for multiples of the original purchase
price. None can now be described as small companies any more - Herald's
definition being less than £750m market capitalisation at time of purchase. RSA
was sold following the announcement of a cash bid from EMC. It demonstrates that
the Manager's style is to invest in growing businesses for long term growth.
These funds will be recycled into the plethora of emerging opportunities.



Valuations in terms of p/es in the US are now lower than they have been for many
years. On the basis of brokers' estimates for 2007, the p/e on the portfolio
will decline to just over 12x from 16x. This reflects a further 18.7% growth in
earnings for the consistently profitable companies, which account for 84% of the
portfolio giving an average 2007 p/e of 11.9% on those holdings. The overall
earnings growth will be faster than that reflecting the kicker from loss making
companies reaching profitability.



There are a number of macro clouds such as Middle East instability, rising
commodity prices and the scale of interest rate rises, which seem to imply a
forthcoming slowdown in economic growth. Much of the growth in the portfolio
reflects structural shifts to new business models or new products, so most of
the holdings are expected to make progress even if world GDP growth slows. One
explanation for the poor UK performance in spite of continued excellent profits
growth is the technical factor associated with the plethora of AIM issues. There
have been 53 new issues in the period in the Herald remit, raising some £530m.
There have also been a number of very poor share price performances masked by a
few stronger returns from companies with a larger weighting. On balance
selection is very important, and the flood of issues must abate if there is to
be any secondary market performance or liquidity even in the worthwhile
companies. Offsetting this there have been a few exits from corporate acquirers
at significant premiums e.g. TRL, WILink, ADIC, RSA and since the end of June
ADVO. This will accelerate if valuations remain at these levels. On balance it
is fulfilling to see a number of companies blossoming from an investment made at
a much riskier stage, albeit frustrating that it has not been reflected in
valuations. In the long term we remain optimistic that that will benefit Herald
Investment Trust shareholders too.

                                                                    Martin Boase

                                                                        Chairman

                                                                    26 July 2006

Statistics and Performance Report

                            At inception              At            At   Performance since     Performance
                        16 February 1994 31 December 2005 30 June 2006    31 December 2005 since inception
NAV per share                      98.7p          409.2p        385.4p              (5.8%)          290.5%
Share price ++                     90.9p          379.8p        345.8p              (9.0%)          280.4%
FTSE 100 Index                   3,417.7         5,618.8       5,833.4                3.8%           70.7%
HGSC Index plus AIM              1,750.0        3,218.7+      3,370.0+                4.7%           92.6%
(capital gains ex.
investment companies)
Russell 2000 (small cap)           83.2*            71.0          69.3              (2.4%)         (16.7%)
Technology Index (in
sterling terms)

++ Mid market price.

+ From 1 January 2006 the benchmark was changed from 2/3 Hoare Govett Smaller
  Companies Index (extended capital gains ex. investment companies) and 1/3
  Russell 2000 (small cap) Technology Index (in sterling terms) to 2/3 Hoare
  Govett Smaller Companies Index plus AIM (capital gains ex. investment companies)
  and 1 /3 Russell 2000 (small cap) Technology Index (in sterling terms).

* At 9 April 1996 being the date funds were first available for international 
  investment.



Past performance is no guarantee of future performance.



                                    - ends -



For further information please contact:



Ms Katie Potts, Manager
Herald Investment Trust plc               020 7553 6300

Baillie Gifford & Co
Secretaries                               0131 275 2000



                          HERALD INVESTMENT TRUST plc



The following is the interim statement for the six months ended 30 June 2006
which has been neither reviewed nor audited by the auditors.  This statement is
being printed and will be sent to all shareholders on 7 August 2006.  Copies
will be available for inspection at the Registered Office of the Company or may
be obtained on request from the Manager or Secretary after that date.



                              INCOME STATEMENT*

                                  (unaudited)


                                For the six months ended       For the six months ended        For the year ended
                                      30 June 2006                    30 June 2005              31 December 2005
                                Revenue   Capital   Total*    Revenue   Capital   Total*   Revenue   Capital     Total*
                                  £'000     £'000   £'000       £'000     £'000   £'000      £'000     £'000     £'000
(Losses)/gains on investments        -    (20,134)(20,134)          -    (9,946) (9,946)         -    27,708    27,708
Losses on loans                      -         -        -           -    (1,753) (1,753)         -    (1,989)   (1,989)
Currency (losses)/gains              -      (181)    (181)          -        (7)     (7)         -        70        70
Income                           2,128         -    2,128       2,839         -   2,839      5,368         -     5,368
Investment management fee       (1,985)        -   (1,985)     (1,828)        -  (1,828)    (3,741)        -    (3,741)
Other administrative expenses     (127)        -     (127)       (118)        -    (118)      (275)        -      (275)
Net return before finance
costs and taxation                  16   (20,315) (20,299)        893   (11,706)(10,813)     1,352    25,789    27,141
Finance costs of borrowings          -         -        -        (392)        -    (392)      (724)        -      (724)
Return on ordinary
activities before taxation          16   (20,315) (20,299)        501   (11,706)(11,205)       628    25,789    26,417
Tax on ordinary activities         (31)        -      (31)        (40)        -     (40)       (72)        -       (72)
Return on ordinary
activities after taxation          (15)  (20,315) (20,330)        461   (11,706)(11,245)       556    25,789    26,345
Return per ordinary share       (0.02p)  (23.20p) (23.22p)      0.53p   (13.37p)(12.84p)     0.64p    29.45p    30.09p
(note 2)
Weighted average number of
ordinary shares in issue
during each period          87,556,010                     87,556,010                   87,556,010


   * The total column of this statement is the profit and loss account of the
     Company.

     All revenue and capital items in this statement derive from continuing
     operations.

     A Statement of Total Recognised Gains and Losses is not required as all 
     gains and losses of the Company have been reflected in the above statement.



                        HERALD INVESTMENT TRUST plc

                         SUMMARISED BALANCE SHEET

                                (unaudited)


                                               At 30 June         At 30 June      At 31 December
                                                     2006               2005                2005
                                                    £'000              £'000               £'000
Fixed assets
Investments                                       313,620            317,723             348,774

Current assets
Debtors                                            13,059              1,225                 786
Cash and short term deposits                       11,859             29,887               9,089
                                                   24,918             31,112               9,875
Creditors: Amounts falling due within 1 year                                     
(excluding short-term borrowings)                  (1,100)            (1,716)               (356)
Total assets (before deduction of bank            337,438            347,119             358,293
loans)
Bank loans (note 3)                                     -            (26,416)                  -
Total net assets                                  337,438            320,703             358,293

Capital and Reserves
Called-up share capital                            21,889             21,889              21,889
Share premium                                      73,738             73,738              73,738
Capital redemption reserve                             63                 63                  63
Capital reserve - realised                        226,923            209,754             209,639
Capital reserve - unrealised                       12,710             12,699              50,309
Revenue reserve                                     2,115              2,560               2,655
Equity Shareholders' Funds                        337,438            320,703             358,293

Net asset value per ordinary share                385.40p            366.28p             409.22p
                                                                                  
Ordinary shares in issue (note 4)              87,556,010         87,556,010          87,556,010







          SUMMARISED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
                                     (unaudited)



                                                     Six months to       Six months to                  Year
                                                      30 June 2006             30 June                    to
                                                             £'000                2005      31 December 2005
                                                                                 £'000                 £'000
Shareholders' funds at 1 January                           358,293             332,211               332,211
Return on ordinary activities after taxation               (20,330)            (11,245)               26,345
Dividends paid during the period (note 5)                     (525)               (263)                 (263)
Shareholders' funds at 30 June/31 December                 337,438             320,703               358,293




                          HERALD INVESTMENT TRUST plc

                        SUMMARISED CASH FLOW STATEMENT
                                (unaudited)


                                                               For six          For six         For year
                                                          months ended     months ended           ended
                                                                                             31 December
                                                          30 June 2006     30 June 2005             2005
                                                                 £'000            £'000            £'000
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES              (136)              828            1,322

NET CASH OUTFLOW FROM SERVICING OF FINANCE                          -             (328)            (841)
FINANCIAL INVESTMENT
Purchase of investments                                       (47,141)         (31,889)         (75,037)
Sale of investments                                            50,572           26,632           75,653
NET CASH INFLOW/(OUTFLOW) FROM FINANCIAL INVESTMENT             3,431           (5,257)             616
EQUITY DIVIDEND PAID                                             (525)            (263)            (263)
NET CASH INFLOW/(OUTFLOW) BEFORE  FINANCING                     2,770           (5,020)             834
FINANCING
Loans drawn down                                                    -           24,771           24,771
Loans repaid                                                        -          (24,771)         (51,423)
NET CASH OUTFLOW FROM FINANCING                                     -                -          (26,652)

INCREASE/(DECREASE) IN CASH                                     2,770           (5,020)         (25,818)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS
Increase/(decrease) in cash in period                           2,770           (5,020)         (25,818)
Decrease in bank loans                                              -                -           26,652
Exchange movement on loans                                          -           (1,753)          (1,989)
MOVEMENT IN NET FUNDS IN PERIOD                                 2,770           (6,773)          (1,155)
NET FUNDS AT 1 JANUARY                                          9,089           10,244           10,244
NET FUNDS AT 30 JUNE/31 DECEMBER                               11,859            3,471            9,089


RECONCILLIATION OF NET REVENUE BEFORE FINANCE COSTS AND
TAXATION TO NET CASH (OUTFLOW)/INFLOW FROM OPERATING
ACTIVITIES
Net return on ordinary activities before finance costs
and taxation                                                  (20,299)         (10,813)          27,141
Losses/(gains) on investments                                  20,314           11,706          (25,789)
Changes in debtors and creditors                                   61              (14)             (53)
Income tax (suffered)/repaid                                        -               (4)              25
Overseas tax suffered                                             (31)             (40)            (72)
Realised currency (loss)/profit                                  (181)              (7)              70
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES              (136)              828           1,322



                          HERALD INVESTMENT TRUST plc

                             DISTRIBUTION OF ASSETS

                                   (unaudited)



                                                                                                   At 31
                                                            At 30 June       At 30 June         December
                                                                  2006             2005             2005
                                                                     %                %                %
Equities:         United Kingdom                                  60.1             61.3             63.9
                       Continental Europe                          7.1              6.2              7.0
                       Americas                                   16.0             15.7             15.6
                       Japan                                         -                -                -
                       Asia Pacific                                9.7              8.3             10.8
                                                                  92.9             91.5             97.3
Net liquid assets                                                  7.1              8.5              2.7
Total assets (before deduction of bank loans)                    100.0           100.00            100.0



                                             HERALD INVESTMENT TRUST plc
                                                        NOTES




1.    The financial statements for the six months to 30 June 2006 have been prepared on the basis of the
      accounting policies set out in the Company's Annual Financial Statements at 31 December 2005.


2.    Return per ordinary share            Six months ended          Six months ended            Year ended
                                               30 June 2006              30 June 2005      31 December 2005
                                                      £'000                     £'000                 £'000
      Revenue return                                   (15)                       461                   556
      Capital return                               (20,315)                  (11,706)                25,789

      The return per ordinary share is based on the above totals of revenue and capital and on 87,556,010
      ordinary shares being the weighted average number of ordinary shares in issue during each period.


 3.   The Company had no outstanding bank loans at 30 June 2006 and 31 December 2005. At 30 June 2005 the
      Company had a 364 day £30 million multi-currency loan facility with ING Bank N.V. which expired on 25
      October 2005, there were outstanding drawings of US$47.35 million at that date.


 4.   At the AGM held on 12 April 2006 the Company's authority to buy back shares was renewed in respect of
      13,124,645 Ordinary shares (equivalent to 14.99% of its issued share capital at that date).  No
      shares have been bought back during the period and therefore at 30 June 2006 the Company's authority
      to buy back shares remains unchanged at 13,124,645.


5.    The amount recognised as a distribution in the six months to 30 June 2006 was the final dividend for
      the year ended 2005 of 0.60p (£525,000) which was paid on 19 April 2006 (six months to
      30 June 2005 and year to 31 December 2005 was the final dividend for the year ended 2004 of 0.30p
      (£263,000) which was paid on 19 April 2005).



      No interim dividend will be declared.


 6.   Transaction costs incurred on the purchase and sale of investments are added to the purchase cost or
      deducted from the sale proceeds, as appropriate. During the period transaction costs on purchases
      amounted to £251,000 (30 June 2005 - £143,000; 31 December 2005 - £241,000) and transaction costs on
      sales amounted to £267,000 (30 June 2005 - £62,000; 31 December 2005 - £153,000).


 7.   The financial information contained within this interim report does not constitute statutory accounts
      as defined in section 240 of the Companies Act 1985.  The financial information for the year ended 31
      December 2005 has been extracted from the statutory accounts which have been filed with the Registrar
      of Companies and which contain an unqualified Auditors' Report and do not contain a statement under
      sections 237 (2) or (3) of the Companies Act 1985.


 8.   The Interim Report was approved by the Board on 26 July 2006.










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