Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 May 2006 and unaudited

DATA AND PERFORMANCE


Data                          Pricing & Performance
                                                  IEM    MSCI  Impax
                                                  Net   World   ET50
Share Price                                      Asset
(pence)                 107.5                    Value
Warrants (pence)         40.0
Total Fund Size     GBP 137.3        Diluted NAV 105.7   n/a    n/a
(m)                                      (pence)
Market              GBP 137.2   Premium/discount  +1.7
Capitalisation                               (%)
(m)
Management fee            1.0      Undiluted NAV 107.5
(%)                                      (pence)
Established       22 February        Performance
                         2002
Fund structure     Investment        1 month (%)  -6.6   -6.5  -11.9
                        Trust
Number of stocks           76       3 Months (%)  +0.7   -5.5   -6.7
held
Exchange               London         1 year (%) +40.9  +12.9  +33.0
Currency                  GBP         3 year (%) +95.8  +35.0  +64.1
ISIN Number      GB0031232498   Year to date (%) +16.1   -3.6  +11.7
Sedol                 3123249
Reuters RIC Code        IEM.L NB1 Performance data is for undiluted
                              NAV.
                              NB2 To comply with guidelines issued by
Bloomberg Code         IEM LN the AITC, portfolio valuation moved to
                              bid from mid price with effect from 31
                              December 2005.


TOP TEN HOLDINGS


Company             Holding %   Description                   Country
Itron Inc                 2.7   Meters & software             US
                                High efficiency electric
Regal Beloit              2.7   motors                        US
Vestas Wind Systems       2.4   Wind                          Denmark
Gamesa                    2.3   Wind                          Spain
RPS Group Plc             2.3   Environmental consulting      UK
Chloride Group            2.3   UPS systems                   UK
Canadian Hydro            2.3   Renewable energy IPP          Canada
Esco Tech Inc             2.2   Filtration & meters           US
LKQ Corp                  2.2   Automotive recycling          US
Kurita Water Ind          2.2   Water treatment               Japan

Total                    23.7


PORTFOLIO ANALYSIS*


Geographical          Company Size
North America     46% >£500m         46%
Europe            47% £100-500m      39%
Rest of the World 7%  <£100m         15%

Sectoral              Profitability
Energy            40% Profitable     88%
Water             29% Pre-Profitable 12%
Waste             31%
Cash              0%
* of funds invested as of 31 May 2006














MANAGER'S COMMENTARY (May 2006)


The Company NAV was down 6.6% over the month compared with the MSCI
World, which decreased by 6.5%, and the Impax ET50, which fell 11.9%
over the same period.  In the broader markets, information technology
and energy services and equipment were the worst performing sectors,
with small cap stocks in general particularly affected by the market
correction.

During the month, a UK water utility was granted the first drought
order in England and Wales in eleven years.  The order by Sutton and
East Surrey Water extends an existing hosepipe ban to add
restrictions on sports grounds, parks, car washes and window
cleaners, affecting 650,000 people.  This coincided with the start of
a five week public enquiry into Thames Water's plan to build a £200
million desalination plant to treat tidal river water in East
London.  The plan is being seen as a test case for desalination
plants in the UK.  Desalinating sea water is now ten times cheaper
than in the 1990s according to the World Water Council.  In the waste
sector, the European Union agreed on new rules for collecting and
recycling batteries to limit the pollution caused when they are
incinerated or sent to landfill.  By 2012, a quarter of all batteries
sold must be collected once they run out, a target that will rise to
45 percent by 2016.  An estimated 800,000 tonnes of automotive
batteries, 190,000 tonnes of industrial batteries and 160,000 tonnes
of consumer batteries are sold in the EU market annually.  Within the
energy sector, former Soviet president Mikhail Gorbachev marked the
twentieth anniversary of the Chernobyl disaster by calling on the G8
nations to establish a $50 billion global solar fund to support
installation of solar energy plants, particularly in developing
countries.  Global energy security is expected to be a key topic at
the G8 summit, which takes place in St Petersburg in July.  In the
UK, Mayor Ken Livingstone announced new targets for the construction
of more energy efficient homes in London, which will include
requirements for on-site renewable energy generation.  In the
corporate sector, Norwegian solar manufacturer Renewable Energy
Corporation (REC) came to the market in the largest ever renewable
energy IPO, with a valuation of NOK 46.9 billion ($7.7 billion).

Stocks that contributed to the reduction in the Company NAV included
water treatment companies BWT (Austria, -27%) and Christ Water
(Austria, -23%), following impressive gains in 2006.  In addition
Amiad Filtration (water treatment, Israel) fell 35% after broker
downgrades, and Aixtron (LED deposition equipment, Germany) fell 27%
on disappointing orders in Q1.  In contrast, Impco (clean engines,
US) rose by 48% following impressive news coverage on the back of
strong Q1 results.

During the month we reduced our exposure to unprofitable companies,
and participated in the IPO of Basin Water (contaminated groundwater
treatment, US) and a placing for Plant Health Care (microbial
biotechnology, US).


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

14 June 2006

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