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Independent Inv Tst (IIT)

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Tuesday 10 July, 2001

Independent Inv Tst

Interim Results

Independent Investment Trust PLC
10 July 2001


          Results for the period from 30 August 2000 to 31 May 2001

                                 10 July 2001


                             Report to 31May 2001

This report covers the period from 30 August 2000, when the Company was
incorporated, to 31 May 2001, but funds did not become available for
investment until October 2000. Over the period from 18 October 2000, the day
before we started investing, to 31 May 2001, the net asset value per share
rose from 98.4p to 115.8p, a gain of 17.7%. The All-Share Index fell by 4.5%
over the same period. Earnings for the period amounted to 2.15p and from these
we intend to pay a dividend of 1p on 5 September to holders on the register at
10 August. It is still too early to make any prediction about the dividend for
the full year.

It is obviously encouraging that our initial figures make good reading, but we
must point out that they provide no conclusive evidence of either our future
prospects or the efficacy of our approach. Investment performance over periods
as short as this is heavily influenced by the fashions of the market, which
are much more variable than is our approach of looking for good businesses at
attractive valuations. On this occasion, our approach found favour with the
market, but there will undoubtedly be periods when the opposite will apply.

Three major factors have dominated the stockmarket background: the
deteriorating prospects for global economic activity; the improving outlook
for interest rates on the back of this deterioration; and the painful
adjustment of investors' expectations in the fields of telecommunications and
technology. The net effect of these was a modest decline in the UK market, but
this apparently dull outcome masked big daily movements in both directions and
widely disparate sector performances. Our portfolio was relatively well
protected from the first factor, was a major beneficiary of the second and
suffered from the third, albeit to a lesser extent than the indices on which
some investors like to model themselves.

As foreshadowed in our letter to shareholders last December, we have taken
advantage of the freedom to gear by drawing on our £20m facility with The Bank
of New York Europe. At 31 May, some £12m of the facility had been drawn down,
giving us gearing (after netting off cash balances) of 16%. The investments
against which our borrowing has been earmarked all had generous yields at the
time of purchase and were chosen more for their solidity than for their
capacity to excite. An ironic satisfaction can therefore be derived from the
fact that, as a group, they have performed significantly better than the
portfolio as a whole.

Our big investment in housebuilders has proved rewarding. A combination of
good trading, industry rationalization (two of our holdings, Beazer and
Bryant, were bid for) and falling interest rates all helped to stimulate
investor interest in the industry. We continue to be enthusiastic about the
industry's prospects, both immediate and long term, but are conscious of the
historical tendency for its stockmarket valuation to be disproportionately
influenced by perceptions of the interest rate outlook.

Our retailing investments have proved to be more of a mixed bunch. DFS and
Signet have produced good results and have seen their shares perform well. We
have sold our holding in Matalan at a loss following its disappointing trading
performance over Christmas. New Look has also produced disappointing results
and we have reduced our holding, but the share price has recovered well as
investors have warmed to the company's strategy for recovery. Finally,
Carphone Warehouse has registered a disappointing share price performance
despite strong figures and a confident statement on prospects.

Our investments in the telecommunications and technology industries have
disappointed us, but we retain the view that our companies are coping
relatively well with a tough trading environment. As long as this remains the
case, we expect to continue with an investment in the two industries.

Elsewhere in the portfolio, holdings in Whitbread and Cattles have been sold
at a handsome profit, and businesses as diverse as easyJet, Greene King, IMI,
Tomkins, United Utilities, Aggregate Industries, Bank of Scotland and Wolseley
have all delivered good share price performances. We must however admit to a
brief and notably unsuccessful investment in Claims Direct; a significant loss
was also incurred, but not realized, in Robert Walters.

We are happy with the businesses represented in the portfolio and, for the
most part, with the valuations commanded by their shares in the stockmarket.
It is likely, however, that some adjustment to the weightings of individual
companies and industries will be necessary to anticipate a changing economic

Douglas McDougall


9 July 2001


The following is the unaudited initial statement for the period from 30 August
2000 to 31 May 2001 which was approved by the Board on 9 July 2001. This
statement is being printed and will be sent to all shareholders on 31 July
2001. Copies will be available for inspection at the Registered Office of the
Company or may be obtained on request from the Secretaries after that date.

                          STATEMENT OF TOTAL RETURN

              (unaudited and incorporating the revenue account*)

              For the period from 30 August 2000 to 31 May 2001

                                                   Revenue    Capital     Total

                                                     £'000      £'000     £'000
Realised gains on investments                            -        974       974
Unrealised appreciation on investments                   -      7,472     7,472
Currency losses                                          -        (9)       (9)
Income                                               1,651          -     1,651
Administrative expenses                              (252)          -     (252)
Net return before finance costs and taxation         1,399      8,437     9,836
Finance costs of borrowings                          (226)          -     (226)
Return on ordinary activities before taxation        1,173      8,437     9,610
Tax on ordinary activities                            (38)          -      (38)
Return on ordinary activities after taxation         1,135      8,437     9,572
Dividends in respect of equity shares                (531)          -     (531)
Transfer to reserves                                   604      8,437     9,041
Return per ordinary share (note 1)                   2.15p     15.97p    18.12p
Dividend per ordinary share (note 2)                 1.00p

* The revenue column of this statement is the profit and loss account of the

All revenue and capital items in the above statement derive from continuing


                           SUMMARISED BALANCE SHEET

                                at 31 May 2001



Fixed tangible assets                                                        20
Fixed asset investments                                                  71,090
Net liquid assets                                                         2,305
Total assets (before deduction of bank loans)                            73,415
Bank loans                                                             (12,000)

Called-up share capital                                                  13,263
Capital reserves                                                         47,548
Revenue reserve                                                             604
EQUITY SHAREHOLDERS' FUNDS                                               61,415

NET ASSET VALUE PER ORDINARY SHARE                                       115.8p

Ordinary shares in issue                                             53,050,000


                        SUMMARISED CASH FLOW STATEMENT

               For the period from 30 August 2000 to 31 May 2001

                                                              £'000       £'000

NET CASH INFLOW FROM OPERATING ACTIVITIES                                   898

NET CASH OUTFLOW FROM SERVICING OF FINANCE                                (201)


Acquisitions of tangible assets                                (25)

Acquisitions of investments                                (77,293)

Disposals of investments                                     14,649

Realised currency loss                                          (9)

NET CASH OUTFLOW FROM FINANCIAL INVESTMENT                             (62,678)

NET CASH OUTFLOW BEFORE FINANCING                                      (61,981)


Issue of shares                                              53,141

Expenses of share issue                                       (778)

Bank loans drawn down                                        12,000

NET CASH INFLOW FROM FINANCING                                           64,363

INCREASE IN CASH                                                          2,382


Increase in cash in the period                                            2,382

Bank loans drawn down                                                  (12,000)

NET DEBT AT 31 MAY 2001                                                 (9,618)



                                                                    31 May 2001

1.     Return per ordinary share

         Revenue return
         Capital return

                Return per ordinary share is based on the above returns of
                revenue and capital and on 52,834,347 ordinary shares, being
                the weighted average number of shares in issue during the
                period from 18 October 2000 when the proceeds of the share
                flotation were received.

        2.     The interim dividend will be paid on 5 September 2001 to all
        shareholders on the register at the close of business on 10 August