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LMI Income & Growth (LIG)

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Wednesday 21 November, 2001

LMI Income & Growth

Interim Results

Leggmason Inv Inc & Grwth Tst PLC
20 November 2001


                LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC

Chairman's statement

Overview

The challenging environment on which I reported to you in the last report has
remained somewhat of a theme. The terrorist attack on the World Trade Centre
in New York accelerated the decline in global stock markets over the period
and left the major indices in the UK languishing at the lowest levels for many
years.

At the end of October the total assets less liabilities of your Company were 
£134.4m which compares with £103.4 at the Company's year end. This includes the
net proceeds of £73.9m referred to below in the reconstruction. During this
period the total return on gross assets was -23.1%. Your Company's progress
has been affected by the decline in world markets which has had a direct
effect on its split capital holdings which are mostly geared. This has
translated through to the NAV per ordinary share being 19.8p at the end of the
period compared with 60.0p at the year end. The share price total return has
fared somewhat better, reflecting the high yield on which your Company's
shares trade. During the period under review, it produced a total return of -
12.1% compared with a total return on the FTSE100 of -14.6%. The NAV of the
recently issued Zero Dividend Preference shares rose to 101.97p and the NAV of
the redeemable preference shares rose to 50.14p as expected.

Dividend


Ordinary shareholders have received a first interim dividend of 2.25p, in line
with that of the equivalent period last year and a second interim dividend of
2.25p has been declared payable on 29 December 2001 to shareholders on the
register at the close of business on 30 November 2001. Despite the turmoil in
world stock markets, the Company's revenue position was in good shape at the
end of the period, having revenue reserves of £915,000. However, it is
apparent that some companies both in the split capital sector and elsewhere in 
the UK equity market have cut or failed to pay dividends. If this trend 
continues this could have an important bearing on your company's
revenue base. The Directors believe, given these uncertain times, that they
should continue the process of monitoring the dividend outlook for the market
and the Company's investments with even greater intensity than normal.


Restructuring


Following sharp falls in equity markets and your Company's portfolio, the
Board took advice from the Company's broker, Collins Stewart and decided to
issue new shares to increase the assets of your Company. This was done with
the aim of putting the Company in a position where it can seek to restore the
ordinary shareholders' funds and to help to strengthen further the revenue
position of the Company. Furthermore, it distanced the Company further from
its banking covenants. I am pleased to say that on 7 August 2001, the Group
raised gross proceeds of £75m in the form of £60m new preference shares and 
£15m of zero dividend preference shares. As outlined in the recent circular to
shareholders, both of these share classes rank ahead of the ordinary
shareholders for repayment of capital but the ordinary shareholders have the
benefit of any excess return generated after their entitlement is repaid.

Asset Allocation

The most important change affecting your company's allocation of assets was
the decision to hold around £20m of cash - a higher than normal amount. This
position was taken in the wake of the events of September 11th and in light of
the high degree of uncertainty surrounding world equity markets and was
derived mainly by reducing the UK equity holdings.


Outlook


The outlook for the UK economy and the UK stock market remain uncertain but is
highly correlated with that of the US. The US slowdown is the most significant
worry for the world's stock markets at the present time. Even before September
11th, the US economy was slowing down after an unprecedented period of
economic growth during the 1990s. However, one consequence of the terrorist
attacks was to deepen and prolong a profits decline, another was probably to
catalyse a bottom in the stock market. Markets normally bottom when things
appear bleakest. The most important investment question is always 'what is
discounted?'. The Federal Reserve, the ECB and the Bank of England have all
been proactive with their monetary policies and interest rates have now been
reduced to historically very low levels to provide some liquidity in the
economy. In addition, George W Bush's tax cutting proposals should add a
further boost to the economy and help consumer confidence. However, we shall
have to wait to see if these shoots of economic revival appear in the
short-term or if we are in for a more protracted period of economic
difficulty.

Ken Greatbatch
Chairman


              LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
        Unaudited interim results for the half year to 31 October 2001

Group Statement of total return (unaudited)
(incorporating the revenue account)
for the half year ended 31 October 2001
                                               For the half year ended
                                                   31 October 2001
                                       Revenue        Capital            Total
                                         £'000          £'000            £'000

  Total capital losses                       -        (41,571)         (41,571)
  on investments                                                              
  Income from fixed                      5,652              -            5,652
  asset investments                                                           
  Other interest                           211              -              211
  receivable and                 -------------   ------------     ------------
  similar income                                                              

  Gross revenue and                      5,863        (41,571)         (35,708)
  capital losses                                                              
  Management fee                          (192)          (449)            (641)
  Other administrative                    (193)             -             (193)
  expenses                       -------------   ------------    -------------

  Net return/(loss) on                   5,478        (42,020)         (36,542)
  ordinary activities                                                         
  before interest                                                             
  payable and taxation                                                        
  Interest payable                        (607)        (1,416)          (2,023)
                                 -------------   ------------    -------------
  Net return/(loss) on                   4,871        (43,436)         (38,565)
  ordinary activities                                                         
  before taxation                                                             
  Taxation on net                          (25)             -              (25)
  return/(loss) on               -------------   ------------    -------------
  ordinary activities                                                         

  Net return/(loss) on                   4,846        (43,436)         (38,590)
  ordinary activities                                                         
  after taxation                                                              
  Provision for                              -           (296)            (296)
  redemption of ZDP                -----------    -----------     ------------
  shares                                                                      

  Attributable to                        4,846        (43,732)         (38,886)
  ordinary shares and                                                         
  redeemable preference                                                       
  shares                                                                      
  Provision for                              -           (142)            (142)
  redemption of                  -------------   ------------   --------------
  redeemable preference                                                       
  shares                                                                      

  Net return/(loss)                      4,846        (43,874)         (39,028)
  before dividends                                                            
  Dividends on                                                                
  redeemable preference                                                       
  shares                                                                      
  First interim                           (300)             -             (300)
  dividend of 0.3p                ------------   ------------    -------------

  Net return/(loss)                      4,546        (43,874)         (39,328)
  attributable to                                                             
  ordinary shareholders                                                       
  Dividends on ordinary                                                       
  shares                                                                      
  First interim                         (1,928)             -           (1,928)
  dividend of 2.25p                                                           
  (2000: 2.65p includes                                                       
  0.4p special)                                                               
  Second interim                        (1,928)             -           (1,928)
  dividend of 2.25p                                                           
  (2000: 2.25p)                                                               
  Third interim                              -              -                -
  dividend of 2.25p                                                           
  Fourth interim                             -              -                -
  dividend of 2.25p               ------------   ------------    -------------
                                        (3,856)             -           (3,856)
                                       =======        =======          =======
  Transfer to/(from)                       690        (43,874)         (43,184)
  reserves                                                                    
                                         pence          pence            pence
  Return per ordinary                     5.30         (51.19)          (45.89)
  share                                =======        =======          =======
  Return per redeemable                   0.30              -                -
  preference share                     =======        =======          =======  
                                         

The revenue column of this statement represents the revenue account of the
Group.

              LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
        Unaudited interim results for the half year to 31 October 2001

                                                            (Audited)
                For the period 15 February 2000  For the period 15 February 2000
                        to 31 October 2000              30 April 2001     
                 Revenue   Revenue    Capital    Revenue    Capital       Total 
                   £'000     £'000      £'000      £'000      £'000       £'000
Total capital          -    (7,895)    (7,895)         -    (23,193)    (23,193)
losses on                                                     
investments
Income from        4,361         -      4,361      9,051          -       9,051
fixed asset                         
investments
Other interest       592         -        592        605          -         605
receivable and
similar income                  
                --------- --------- ---------- ---------- ----------- ----------
Gross revenue      4,953    (7,895)    (2,942)     9,656    (23,193)    (13,357)
and capital                                                      
losses
Management fee      (214)     (499)      (713)      (375)      (876)     (1,251)
Other               (125)        -       (125)      (309)         -        (309)
administrative
expenses       
                --------- --------- ---------- ---------- ----------- ----------

Net return/        4,614    (8,394)    (3,780)     8,972    (24,069)    (15,097)
(loss) on
ordinary                                                                        
activities                                
before
interest
payable and
taxation
Interest            (634)   (1,479)    (2,113)    (1,225)    (2,857)     (4,082)
payable
                --------- --------- ---------- ---------- ----------- ----------

Net return/        3,980    (9,873)    (5,893)     7,747    (26,926)    (19,179)
(loss) on                            
ordinary
activities
before
taxation
Taxation on            -         -          -        (17)         -         (17)
net return/                                       
(loss) on
ordinary      
activities
                --------- --------- ---------- ---------- ----------- ----------

Net return/
(loss) on          3,980    (9,873)    (5,893)     7,730    (26,926)    (19,196)
ordinary
activities
after taxation
Provision for          -         -          -          -          -           -
redemption of                    
ZDP shares
                --------- --------- ---------- ---------- ----------- ----------

Attributable       3,980    (9,873)    (5,893)     7,730    (26,926)    (19,196)
to ordinary
shares and
redeemable                       
preference
shares
Provision for          -         -          -          -          -           -
redemption of                   
redeemable
preference   
shares
                --------- --------- ---------- ---------- ----------- ----------

Net return/        3,980    (9,873)    (5,893)     7,730    (26,926)    (19,196)
(loss) before                        
dividends
Dividends on
redeemable
preference
shares
First interim          -          -         -          -          -           - 
dividend of
0.3p 
                --------- --------- ---------- ---------- ----------- ----------

Net return/        3,980    (9,873)    (5,893)     7,730    (26,926)    (19,196)
(loss)                            
attributable
to ordinary
shareholders
Dividends on
ordinary
shares
First interim     (2,067)        -     (2,067)    (2,067)         -      (2,067)
dividend of
2.25p (2000:
2.65p                                      
including 0.4p
special)
Second interim    (1,755)        -     (1,755)    (1,755)         -      (1,755)
dividend of                               
2.25p (2000:
2.25p)
Third interim          -         -          -     (1,755)         -      (1,755)
dividend of
2.25p
Fourth interim         -         -          -     (1,928)         -      (1,928)
dividend of
2.25p         
                --------- --------- ---------- ---------- ----------- ----------
                  (3,822)        -     (3,822)    (7,505)         -      (7,505)

                ========= ========= ========== ========== ==========  ==========
Transfer to/         158    (9,873)    (9,715)       225    (26,926)    (26,701)
(from)
reserves

                   pence     pence      pence      pence      pence       pence
Return per          5.28    (13.10)     (7.82)     10.02     (34.89)     (24.87)
ordinary share
                ========= ========= ========== ========== ==========  ==========
Return per             -         -          -          -          -           -
redeemable                 
preference
share    
                ========= ========= ========== ========== ==========  ==========
        


          LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
        Unaudited interim results for the half year to 31 October 2001

Group balance sheet (unaudited)
As at 31 October 2001
                                                                      (Audited)
                                   At 31 October  At 31 October     At 30 April
                                            2001           2000            2001
                                           £'000          £'000           £'000
Fixed asset investments
Listed in United Kingdom                 115,453        117,164         103,629

Current assets
Debtors                                    1,717          1,675           1,487
Cash at bank                              20,101              -             890

                                   -------------  ------------- ---------------
                                          21,818          1,675           2,377

                                        ========       ========        ========
Current liabilities
Creditors: amounts falling due
within one year                          (2,835)        (2,814)         (2,558)

                                   ------------- --------------   -------------
Net current assets/(liabilities)          18,983        (1,139)           (181)

                                        ========       ========        ========

Total net assets less current            134,436        116,025         103,448
liabilities
Creditors: amounts falling due
after more than one year                (52,000)       (52,000)        (52,000)

                                    ------------   ------------   -------------
Total net assets                          82,436         64,025          51,448

                                         =======        =======         =======

Capital and reserves
Called-up share capital                   22,425         19,500          21,425
Share premium account                     97,050         36,690          39,174
Special reserve                           17,550         17,550          17,550
Capital reserve (realised)              (15,217)          (911)         (4,910)
Capital reserve (unrealised)            (55,583)        (8,962)        (22,016)
Revenue reserve                              915            158             225

                                   -------------   ------------   -------------
Shareholders' funds                       67,140         64,025          51,448

                                   -------------   ------------   -------------
Minority interest - ZDP's                 15,296              -               -

                                   ------------- --------------  --------------
                                          82,436         64,025          51,448

                                        ========       ========        ========

Attributable to ordinary shares           16,998         64,025          51,448
Attributable to redeemable
preference shares                         50,142              -               -
Attributable to minority interest         15,296              -               -

                                    ------------   ------------    ------------
                                          82,436         64,025          51,448

                                         =======        =======         =======

                                           pence          pence           pence

Net asset value per ordinary share         19.84          82.08           60.03

                                          ======         ======    ------------

Net asset value per redeemable preference
share                                      50.14              -               -

                                          ======         ======    ============

Net asset value per zero dividend 
preference share in subsidiary            101.97              -               -

                                          ======         ======    ============

This report was approved by the Board of Directors on 19 November 2001.


Ken Greatbatch
Chairman



              LEGGMASON INVESTORS INCOME & GROWTH TRUST PLC
        Unaudited interim results for the half year to 31 October 2001

Group cash flow statement (unaudited)
For the half year ended 31 October 2001

                   For the half year      For the period       For the period
                               ended     15 February 2000      15 February 2000 
                     31 October 2001     to 31 October 2000    to 30 April 2001 
                      £'000    £'000      £'000    £'000      £'000      £'000

Net cash                       4,462               3,158                 7,348
inflow from                                                    
operating
activities
Returns on
investments
and
servicing
of finance
Interest paid                 (2,001)             (1,948)               (4,070)

Capital
expenditure
on
financial
investment

Purchases           (85,592)           (162,211)           (185,257)
of
investments
Sales of             32,322              37,446              58,283
investments
                   --------            --------            --------

Net cash                     (53,270)           (124,765)             (126,974)
outflow                      
from
financial
investment

Equity                        (3,856)             (2,067)               (5,577)
dividend
paid

Financing
Gross                75,000              78,000              82,409
proceeds
from issue
of shares
Issue                (1,124)             (4,250)             (4,246)
expenses
paid
Loan drawn                -              51,857              52,000
down
                   --------            --------            --------

Net cash
inflow from                   73,876             125,607               130,163
financing
                             -------             -------               -------
Increase/
(decrease)                    19,211                 (15)                  890
in cash
                             =======             =======               =======


The financial information contained in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985.

The statutory accounts for the half year ended 31 October 2001, have not been
delivered to the Registrar.

The Company's Auditors have not made a report under Section 235 of the
Companies Act 1985 on the statutory accounts for the half year ended 31
October 2001.