Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 30 September 2008 (unless otherwise stated) and
unaudited.

DATA AND PERFORMANCE


  Data                            Pricing and Performance
                                                       IEM     FTSE
                                                       Net    Global
  Share price                                         Asset  All Cap
(pence)                    111.50                     Value
  Warrants (pence)      GBP 30.75
  Total fund size       GBP 338.8        Diluted NAV  110.5    n/a
(m)                                          (pence)
  Market                GBP 338.9   Premium/discount  +0.9
capitalisation (m)                               (%)
  Management fee (%)          1.0      Undiluted NAV  111.5
                                             (pence)
  Established         22 February       Performance*
                             2002
  Fund structure       Investment        1 month (%)  -14.1   -10.8
                            Trust
  Number of holdings           91       3 months (%)  -10.9    -7.3

  (including
unlisted)
  Exchange                 London         1 year (%)  -11.3   -18.2
  Currency                    GBP        3 years (%)  +17.9    -1.4
  ISIN number        GB0031232498        5 years (%)  +77.1   +28.6
  Sedol                   3123249
  Reuters RIC code          IEM.L * Performance data is for undiluted
                                  NAV.
  Bloomberg code           IEM LN


TOP TEN HOLDINGS


Company        Holding %   Description                     Country
Clean Harbors        2.7   Hazardous waste                 US
Itron                2.6   Meters and utility software     US
Pall Corp            2.4   Filtration                      US
Pentair              2.4   Water treatment                 US
Regal Beloit         2.4   High efficiency electric motors US
Chloride Group       2.2   UPS                             UK
Ormat                2.2   Geothermal                      Israel/US
Gamesa               2.2   Wind turbines & development     Spain
Clarcor              2.1   Filtration                      US
Transpacific         2.0   Waste management                Australia
TOTAL               23.2



PORTFOLIO ANALYSIS*



  Geographical            Company Size
  US and Canada      42%  >$2bn         24%
  EU and EFTA        44%  $200-2bn      65%
  Rest of the World  11%  <$200m        8%
  Cash                3%  Cash          3%

  Sectoral                PE ratios
  Energy             39%  PER >20x      24%
  Water              27%  PER  15-20x   22%
  Waste              31%  PER <15x      49%
Cash                  3%  Unprofitable  2%
                          Cash          3%
* of funds invested as of 30 September 2008

IMPAX ENVIRONMENTAL MARKETS plc

MANAGER'S COMMENTARY (September 2008)


Amidst extraordinary events in the financial sector and strained
efforts by US lawmakers to agree on a rescue package for the American
financial system, the Company NAV decreased by 14.1% over the month
compared with the FTSE Global All Cap which decreased by 10.8%.

During the month, within the Alternative Energy & Energy Efficiency
sector the Spanish Cabinet approved a decree setting a cap for solar
PV installations at 500MW in 2009, and 460MW in 2010. This
long-awaited announcement sets a 2009 cap 200MW above previously
rumoured figures, and a feed-in tariff for ground-mounted plants
slightly higher than expected. We expect to see a dramatic slowdown
in the Spanish market, despite this incrementally positive news.
Offsetting this uncertainty, in the US long-awaited extensions to the
tax credits for renewable energy passed into law at the beginning of
October. The bill extends the Investment Tax Credit for solar by
eight years, removing a $2,000 cap for residential projects, and for
the first time allows utilities to access the subsidy. The Production
Tax Credit for wind was renewed for one year.

In Water Treatment & Pollution Control, the European Parliament's
Environment Committee unexpectedly voted against a compromise
proposal that would have diluted EU ambitions to cut cars' average
CO2 emissions, and given carmakers three years breathing space to
implement CO2 emission reductions. The strengthened proposal must now
be approved by the full Parliament and national governments before
entering into force.

In Waste Technologies & Resource Management, the US division of
Samsung Electronics announced a commitment to take back and recycle
consumer electronics across all of its product lines from October
2008. The move represents a strengthening of momentum towards federal
waste electronic equipment standards as an increasing number of
states, cities, and now multinational companies implement programmes.

During an extremely volatile month, the best performing companies in
the Alternative Energy & Energy Efficiency sector were Ricardo
(vehicles energy efficiency, UK) up 12%, and Nibe Industrier (heat
pumps, Sweden) up 8%. Wind turbine manufacturers, Vestas (Denmark),
and Gamesa (Spain) disappointed on heightened concerns that the
industry is exposed to the rising cost of credit and its reduced
availability, and concerns over US tax credits. In Water Treatment &
Pollution Control, there was a de-rating across the sector with few
companies immune. Horiba (analytical equipment, Japan) performed well
after a difficult August, up 8.5%. In the Waste Technologies &
Resource Management sector, companies with strong market positions
and visibility of earnings outperformed, e.g. Stericycle (medical
waste, US) and Transpacific Industries (waste management, Australia).
Stocks with exposure to falling commodity prices such as metals
recyclers Sims Group (Australia), and Metalico (US) suffered, as did
those with high debt levels, e.g. Lee & Man (paper recycling, China).



Latest information available at:


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

14 October 2008

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