Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 December 2005 and unaudited

DATA AND PERFORMANCE


Data                               Pricing & Performance
                                                     IEM  MSCI  Impax
                                                     Net  World ET50
                                                    Asset
Share Price (pence)             94                  Value
Total Fund Size (m)      GBP 106.9 Pence (31.12.05) 92.5*  n/a   n/a
Market Capitalisation    GBP 108.6 Premium/discount +1.6
(m)
Management fee                1.0%
Established            22 February      Performance
                              2002
Fund structure          Investment      1 month (%) +2.0  +3.0  +4.1
                             Trust
Number of stocks held           72     3 Months (%) -2.1  +5.9  -1.7
Exchange                    London       1 year (%) +20.9 +20.3 +23.3
Currency                       GBP       3 year (%) +70.1 +48.9 +53.1
ISIN Number           GB0031232498 Year to date (%) +20.9 +20.3 +23.3
Sedol                      3123249
Reuters RIC Code             IEM.L
Bloomberg Code              IEM LN


* To comply with the new guidelines issued by the AITC, portfolio
valuation has moved to bid from mid price with effect from 31
December 2005. The NAV as at 31 December 2005 was 93.0p on a mid
market basis, a 2.5% rise over the month.

TOP TEN HOLDINGS


Company        Holding %   Description                     Country
Canadian Hydro       2.7   Renewable energy IPP            Canada
LKQ                  2.6   Automotive recycling            US
Esco Tech            2.6   Filtration & meters             US
Itron                2.6   Meters & software               US
Kurita Water         2.5   Water treatment                 Japan
Pall Corp            2.4   Filtration                      US
Stericycle           2.4   Clinical waste                  US
RPS Group            2.4   Environmental consulting        UK
Regal Beloit         2.4   High efficiency electric motors US
Gamesa               2.3   Wind                            Spain

Total               24.7


PORTFOLIO ANALYSIS*


Geographical            Company Size
North America      49%  >£500m         44%
Europe             44%  £100-500m      39%
Rest of the World   7%  <£100m         17%

Sectoral                Profitability
Energy             40%  Profitable     89%
Water              28%  Pre-Profitable 11%
Waste              31%
Cash                2%
* of funds invested as of 31 December 2005






MANAGER'S COMMENTARY (December 2005)

The Company NAV was up 2.0% over the month compared to the MSCI World
which gained 3.0%, and the Impax ET50, which rose 4.1% over the same
period.  Within the broader equity markets, non-energy resources and
small cap stocks in general were the best performers.

During the month the UN climate change conference in Montreal
concluded with agreements to consider post-2012 commitments for
industrialised countries under the Kyoto Protocol, and for a dialogue
on long-term action to address climate change.  In the US, despite
continued resistance from the Bush administration, seven
north-eastern states signed the Regional Greenhouse Gas Initiative,
with participating states agreeing to curb emissions from 2009. On
the west coast, the California Public Utilities Commission proposed a
$2.8 billion programme, aiming to install 3,000 MW of solar power
over 11 years.

Legislation is a key driver of Environmental Markets, along with
market liberalisation and the falling cost of technology, and the
month saw developments on this front in both the US and Europe.  In
the water sector, the US Environmental Protection Agency announced
the finalisation of the Long Term 2 Enhanced Surface Water Treatment
Rule (LTII), that will require utilities to treat drinking water for
harmful microorganisms.  Ultraviolet disinfection and membrane
filtration are the most likely beneficiaries due to their
effectiveness and lack of byproducts.  In Europe, the European
Commission approved plans for public bodies to spend at least a
quarter of their expenditure for buses, garbage trucks and other
heavy vehicles on clean technology utilising biofuels, electric
motors or natural gas.  It also agreed on rules to curb pollution
caused by waste from mines and quarries.  In a separate speech
Stavros Dimas, the European Commissioner for the Environment, noted
that municipal waste had risen by 19% between 1995 and 2003, and
called on member states to meet standards for waste recycling which
are expected to enter force in 2008.  Within the corporate sector,
Honeywell International offered to acquire First Technology (gas
sensors and automotive safety, UK), to expand the gas-sensing
business it acquired through BW Technologies in 2004.  There were
interesting changes to the Impax ET50 at the quarterly rebalancing of
the index, as four solar companies were included, with fuelcell
companies no longer among the fifty largest companies within the
Environmental Markets universe.

The main contributors to performance were First Technology which rose
53%, and Amiad Filtration (water filtration, Israel), which climbed
37% after making its debut on AIM.  On the downside, Questair
(hydrogen purification systems, US) declined by 23% after its annual
results, and Zenon (membranes, Canada) fell by 18% on a profit
warning.

During the month we participated in the IPO of CMR Fuel Cells (UK).

Latest information available at: www.impax.co.uk/asset/iemdown.htm

18 January 2005




---END OF MESSAGE---