Performance at Month End

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 December 2008 (unless otherwise stated) and
unaudited.

DATA AND PERFORMANCE


  Data                                 Pricing and Performance
                                                          IEM   MSCI
                                                          Net   World
                                                         Asset  Small
  Share price (pence)            85.13                   Value  Cap*
  Warrants (pence)            GBP 21.5
  Total fund size (m)        GBP 301.9       Diluted NAV 98.69   n/a
                                                 (pence)
  Market capitalisation      GBP 302.2  Premium/discount -13.7
(m)                                                  (%)
  Management fee (%)               1.0     Undiluted NAV 98.86
                                                 (pence)
  Established              22 February     Performance**
                                  2002
  Fund structure            Investment       1 month (%) +12.4  +11.9
                                 Trust
  Number of holdings                93      3 months (%) -11.3  -8.2
  (including unlisted)
  Exchange                      London        1 year (%) -23.9  -20.6
  Currency                         GBP       3 years (%)  +6.8  -18.1
  ISIN number             GB0031232498       5 years (%) +49.1  +23.0
  Sedol                        3123249
  Reuters RIC code               IEM.L * Performance data is in Total
                                       Return.
                                       ** Performance data is for
                                       undiluted NAV.
  Bloomberg code                IEM LN


TOP TEN HOLDINGS


Company       Holding %   Description                     Country
Regal Beloit        3.0   High efficiency electric motors US
Clean Harbors       2.7   Hazardous waste                 US
Pall Corp           2.7   Filtration                      US
Ormat               2.7   Geothermal                      Israel/US
Itron               2.6   Meters & utility software       US
Kurita              2.4   Water treatment & desalination  Japan
Covanta             2.4   Waste to energy incineration    US
Mayr-Melnhof        2.3   Cartonboard                     Austria
Mueller Water       2.3   Water Infrastructure            US
Pentair             2.3   Water treatment                 US

TOTAL              25.4



PORTFOLIO ANALYSIS*



  Geographical            Company Size
  US and Canada      42%  >$2bn        18%
  EU and EFTA        42%  $200-2bn     70%
  Rest of the World  14%  <$200m       10%
  Cash                2%  Cash         2%

  Sectoral                PE ratios
  Energy             40%  PER >20x     19%
  Water              26%  PER  15-20x  17%
  Waste              32%  PER <15x     60%
Cash                  2%  Unprofitable 2%
                          Cash         2%
* of funds invested as of 31 December 2008

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (December 2008)


As markets rallied during the month, the Company NAV increased by
12.4% compared to the MSCI World Small Cap which increased by 11.9%.

In early December, UN representatives gathered to continue discussion
of a post-2012 global climate change agreement scheduled for
ratification in 2009. Little progress was made although agreements to
continue negotiations in 2009 were formalised. In the US, Obama
announced plans for a fiscal stimulus package early in 2009. The
environmental component of the plan will cost at least $15bn a year,
involving expanded tax breaks or subsidies for clean energy projects
plus infrastructure spend in the water and energy sectors. In Europe
formal approval was given to a 20% CO2 emission reduction target by
2020, including specifics for Phase III of the Emissions Trading
Scheme. Formal approval was also given to a 20% renewable energy
target by 2020. In the Water Treatment & Pollution Control sector,
European institutions agreed a deal to cut CO2 emissions from cars.
The final compromise gives manufacturers an extra two years to meet a
target of 120g/km of CO2 than originally proposed. In the Waste
Technology & Resource Management sector a report by the Institute of
Mechanical Engineers found that using waste as a source of energy has
the potential to supply 20% of UK electricity by 2020. The UK still
sends around 60% of its waste to landfill, and although recycling
rates have risen to 34%, just 6% of waste is being turned into
energy. The European Commission launched a green paper asking for
stakeholder views on supporting the use of biowaste to generate
energy, with a view to a legislation proposal in 2010.

In the Alternative Energy & Energy Efficiency sector wind turbine and
component manufacturers performed well: China High Speed
Transmissions (Hong Kong) was up 54%, and Vestas (Denmark) was up
16%. Anticipation of a stimulus package in the US drove positive
sentiment on energy efficiency, supporting strong performance by
Itron (advanced metering, US) up 35%, and Regal Beloit (energy
efficient motors, US) up 13%. In the Water Treatment & Pollution
Control sector, perceived exposure to impending government stimulus
packages benefited a number of stocks, most notably Mueller Water
(water infrastructure, US) which rose 42%. In the Waste Technology &
Resource Management sector, a marginal recovery in commodity prices
helped Sims Group (recycled metal, US) rise 35%. Following a
sustained period of disappointing performance based on its relatively
high levels of debt, Transpacific Industries (waste management,
Australia) also rose 20% during the month. Kingspan (insulation
materials, Ireland) disappointed due to the negative outlook for
European construction, and Lassila & Tikanoja (consultancy, Finland)
was also weak following a profit warning.








Latest information available at:


http://www.impax.co.uk/impax/funds/listed_funds/environmental_plc/

19 January 2009

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