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Perpetual Inc&Growth (PLI)

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Tuesday 25 November, 2008

Perpetual Inc&Growth

Half-yearly Report


               Perpetual Income and Growth Investment Trust Plc                

      Half-Yearly Financial Report for the Six Months to30 September 2008      

Key Facts

Perpetual Income and Growth Investment Trust plc (`the Company') is a UK
investment trust company listed on The London Stock Exchange. The Company is
managed by Invesco Asset Management Limited.

Objective of the Company

The objective of the Company is to generate capital growth with a higher than
average income from investment in the UK equity market. It is intended that the
Company will provide real dividend growth over the medium term.

Full details of the Company's investment policy and risk and investment limits
can be found on pages 14 and 15 of the Company's Annual Financial Report for
the year ended 31 March 2008.

Performance Statistics

                                           At         At           
                                                                   
                                 30 September   31 March          %
                                                                   
                                         2008       2008     Change
                                                                   
Assets                                                             
                                                                   
Shareholders' funds (£'000)           451,157    501,840      -10.1
                                                                   
Diluted net asset value per                                        
share:                                                             
                                                                   
- per Balance Sheet                    217.7p     240.3p       -9.4
                                                                   
- with net income reinvested                                   -9.0
                                                                   
FTSE All-Share Index - capital                                -15.1
return                                                             
                                                                   
- total return                                                -13.5
                                                                   
Mid-market price:                                                  
                                                                   
- ordinary shares                      206.0p     222.5p       -7.4
                                                                   
- subscription shares                   37.5p      45.5p      -17.6
                                                                   
Discount per ordinary share              5.4%       7.4%           
                                                                   
Actual gearing                            115        117           
                                                                   
Asset gearing                             117        116           

                                    Six months ended               
                                                                   
                                 30 September         30           
                                               September           
                                                                   
                                         2008       2007           
                                                                   
Revenue                                                            
                                                                   
Diluted revenue return per share         5.0p       4.7p           
                                                                   
Dividends per share                      3.3p       3.1p       +6.5

INTERIM MANAGEMENT REPORT INCORPORATING CHAIRMAN'S STATEMENT

Chairman's Statement

Performance

During the six months to 30 September 2008, the total return for the period
(comprising the movement in the net asset value (`NAV') plus net income
reinvested) was -9% compared to the -13.5% return from the FTSE All-Share
Index. The mid-market price per share fell by 7.4% to 206p and the discount to
NAV per ordinary share narrowed from 7.4% to 5.4%.

Dividend

The Board has declared an interim dividend of 3.3p per share in respect of the
six months to 30 September 2008. This dividend is payable on 29 December 2008
to shareholders registered at the close of business on 12 December 2008. This
increase in dividend of 6.5% continues the Board's policy of sustained real
increases in dividend.

VAT on Management Fees

As I reported in the last annual financial report, in late 2007 a test case
found that investment trust management fees were exempt VAT. Following this the
current Manager ceased to charge VAT on management fees and it became possible
for your Board to take steps to recover at least part of this back VAT from the
Manager. Due to some remaining uncertainty over the amounts that the Company
will eventually recover, no adjustment has been put through these financial
statements. Your Board will continue to monitor the situation and advise
shareholders as the position develops.

Subscription Share Exercise and Issued Share Capital

During the period under review, subscription shareholders had their third
opportunity to exercise their right to subscribe for one ordinary share of the
Company at a price of 218.94p. The subscription period ended on 31 August 2008.
As a result, 46,099 ordinary shares were allotted in mid-September 2008.
Subscription shareholders will have further opportunities to convert their
holdings in each of the years 2009 to 2013. As a result of this subscription
share exercise, the issued share capital of your Company at the period end was
207,276,080 ordinary shares of 10p each and 17,720,924 subscription shares.

Since the period end, 250,000 ordinary shares were issued at a price of 205p
per share on 13 November 2008 and 150,000 ordinary shares were issued at a
price of 197p per share on 17 November 2008. As a result, the issued share
capital of your Company as at the time of writing is 207,676,080 ordinary
shares of 10p each and 17,720,924 subscription shares.

William Alexander

Chairman

17 November 2008

Investment Management Report

Market Review

The UK equity market, as measured by the FTSE All-Share Index, fell by 13.5%
during the six months to September 2008. Market declines were widespread, with
over 85% of all FTSE All-Share Index constituents in negative territory,
although large-cap companies fared better than small and mid-cap ones.

During the period, the UK economy continued to face a number of significant
challenges: a much weaker residential housing market; upward pressure on
domestic inflation from rising fuel, electricity and food prices; and latterly,
an increase in the level of unemployment. However, this economic news was
overshadowed by the paralysis that was witnessed in the banking system. The
ability and willingness of the banks and building societies to extend credit
has progressively diminished, to the point where the mortgage market has seen a
substantial fall in new loans created and a number of these financial
institutions suffered a crisis of confidence. In fact, we have recently faced
the very real possibility of a systemic banking collapse following similar
problems in the United States and Continental Europe. It is not too strong to
say that these events are unprecedented in recent economic history.

In response to the deteriorating economic outlook, the Bank of England lowered
UK interest rates to 5% in April. Despite widespread calls for further
reductions, interest rates remained at this level to the end of the period,
with the Monetary Policy Committee citing the difficulty of balancing increased
risks to economic growth with concerns over stoking further inflationary
pressures. Since the period end, the Bank of England have lowered interest
rates by a further 2% to the current level of 3%.

Portfolio Strategy & Review

The Company's NAV, including income reinvested, fell by 9% during the six
months to the end of September 2008, compared to a fall in the total return of
13.5% from the FTSE All-Share Index.

Given the difficult market conditions described above, your Manager was unable
to avoid posting a negative return during this time. Returns relative to the
benchmark, however, showed a respectable out-performance which resulted from a
defensive strategy for the portfolio, motivated by an increasingly cautious
view of the economic outlook. The portfolio is focused towards resilient
businesses, such as GlaxoSmithKline and AstraZeneca in the pharmaceuticals and
biotechnology sector, power generators Drax and British Energy, and outsourcing
company Capita. Operationally, all of these businesses have performed robustly
as expected and this allowed their share prices to rise during the period
despite the broad-based declines elsewhere in the market. Meanwhile, minimal
exposure towards cyclical sectors such as banks, retailers and house builders
has also assisted relative returns, as many shares within these sectors have
suffered steep declines.

Portfolio activity was even lower than usual during the period under review, as
your Manager felt that the strategy in place at the start of the year continued
to be appropriate for the deteriorating economic environment. Elsewhere, your
Manager added to existing positions in Centrica, Imperial Tobacco and BG during
periods of share price weakness.

Outlook

Since the Company's period end, the UK stock market and economic environment
has deteriorated much further. The Bank of England has participated in a
globally co-ordinated 0.5% interest rate cut followed by two further cuts
totalling 2%; the Treasury has launched a partial nationalisation of several of
the major UK clearing banks; the UK economy has recorded its first negative
quarterly GDP number for 16 years; and, as I write, the FTSE 100 is down a
further 23%. The speed and severity of these events is unprecedented and does
not make the job of your Manager any easier in predicting the future.

In a period of such uncertainty and volatility in a world which has suffered
from too much complexity, it is important to remain true to the principles and
processes which have worked well in the past. Your Manager remains a
fundamental investor, focused on identifying undervalued businesses which can
be bought and held for the long-term. Your Manager is looking for companies
that can maintain and grow dividends into the future and are led by directors
who can share their vision for the businesses they manage and who view the
equity in their companies as a precious and rare resource. Above all, your
Manager believes that patience is an essential component in stock market
investing, as the value of a company almost never emerges in the time frame
which is originally envisaged. With this in mind, it is therefore worthwhile
looking at the current fear in the UK market as an opportunity.

There are some extremely good opportunities to buy shares in undervalued
companies in this market. These businesses will be able to withstand the
recessionary conditions that are developing in the major economies. They share
a number of similar characteristics: they offer geographical diversification;
they operate in defensive industries such as tobacco, pharmaceuticals,
telecommunications and oil; they carry minimal financial risk due to proven
cash generative business models and strong balance sheets; and they have
attractive valuations with dividend yields in excess of the market average with
little or no risk of dividend cuts. These companies are virtually all to be
found in the large cap end of the market and are the type of investments which
will dominate the structure of the portfolio for the foreseeable future.
Indeed, your Manager's conviction in these opportunities is reflected in the
Company's level of gearing, which at the time of writing, stands at 116.

Given the current extent of undervaluation in these sectors, your Manager
believes that it is not necessary to increase the risk profile of the portfolio
in order to generate attractive returns over the medium term.

Mark Barnett

Investment Manager

17 November 2008

Related Party

Invesco Asset Management Limited (`IAML'), a wholly owned subsidiary of Invesco
Limited, acts as Manager and Company Secretary to the Company. Details of
IAML's services and fee arrangements are given in the latest annual financial
report, which is available on the Company's website.

Principal Risks and Uncertainties

The principal risks and uncertainties that could affect the Company's business
can be divided into various areas:

• Investment Objective and Policy;

• Investment Process;

• Market Movements and Portfolio Performance;

• Ordinary Shares;

• Gearing; and

• Regulatory.

A detailed explanation of these principal risks and uncertainties can be found
on pages 19 and 20 of the Annual Financial Report for the year ended 31 March
2008, which is available on the Company's website.

In the view of the Board, these principal risks and uncertainties are equally
applicable to the remaining six months of the financial year as they were to
the six months under review.

DIRECTORS' RESPONSIBILITY STATEMENT

In respect of the preparation of the half-yearly financial report

The Directors are responsible for preparing the half-yearly financial report
using accounting policies consistent with applicable law and UK Accounting
Standards.

The Directors confirm that to the best of their knowledge:

- the condensed set of financial statements contained within the half-yearly
financial report have been prepared in accordance with the Accounting Standards
Board's Statement "Half-Yearly Financial Report";

- the interim management report includes a fair review of the information
required by DTR 4.2.7R and DTR 4.2.8R of the FSA's Disclosure and Transparency
Rules; and

- the interim management report includes a fair review of the information
required on related party transactions.

The half-yearly financial report has not been audited or reviewed by the
Company's auditors.

Signed on behalf of the Board of Directors.

William Alexander

Chairman

17 November 2008

INVESTMENT PORTFOLIO STATEMENT AT 30 SEPTEMBER 2008

UK ordinary shares unless stated otherwise

                                                   Market          
                                                                   
                                                    Value      % of
                                                                   
Company           Sector                            £'000 Portfolio
                                                                   
Imperial Tobacco  Tobacco                          31,639       6.0
                                                                   
British American                                                   
                                                                   
 Tobacco          Tobacco                          26,835       5.1
                                                                   
British Energy    Electricity                      25,471       4.8
                                                                   
GlaxoSmithKline   Pharmaceutical and                               
                                                                   
                  Biotechnology                    25,017       4.8
                                                                   
Reynolds American                                                  
                                                                   
 (US Common       Tobacco                          24,013       4.6
stock)                                                             
                                                                   
BG                Oil & Gas Producers              22,719       4.3
                                                                   
BP                Oil & Gas Producers              22,054       4.2
                                                                   
Drax              Electricity                      20,645       3.9
                                                                   
Royal Dutch Shell Oil & Gas Producers                              
                                                                   
  - B Shares                                       15,465       2.9
                                                                   
  - A Shares                                        4,364       0.8
                                                                   
National Grid     Gas, Water and                   18,557       3.5
                  Multiutilities                                   
                                                                   
Top ten holdings                                  236,780      44.9
                                                                   
BT                Fixed Line Communications        18,350       3.5
                                                                   
AstraZeneca       Pharmaceutical and                               
                                                                   
                  Biotechnology                    18,031       3.4
                                                                   
Tesco             Food and Drug Retailers          17,964       3.4
                                                                   
Vodafone          Mobile Telecommunications        16,564       3.1
                                                                   
Capita            Support Services                 13,932       2.6
                                                                   
Scottish &                                                         
Southern                                                           
                                                                   
 Energy           Electricity                      12,426       2.5
                                                                   
Centrica          Gas, Water and                   11,507       2.2
                  Multiutilities                                   
                                                                   
Rolls Royce       Aerospace and Defence            10,974       2.1
                                                                   
Tui Travel        Travel and Leisure               10,109       1.9
                                                                   
Provident         Financial                         9,932       1.9
Financial                                                          
                                                                   
Top twenty                                        376,570      71.5
holdings                                                           
                                                                   
Pennon            Gas, Water and                    9,744       1.9
                  Multiutilities                                   
                                                                   
Sage              Technology Services               9,557       1.9
                                                                   
Hiscox            Insurance                         9,110       1.7
                                                                   
Informa           Media                             8,759       1.7
                                                                   
Tate & Lyle       Food Producers                    8,107       1.5
                                                                   
UK Coal           Mining                            7,387       1.4
                                                                   
Bunzl             Support Services                  6,781       1.3
                                                                   
Carnival          Industrial Transportation         6,555       1.2
                                                                   
BAE Systems       Aerospace and Defence             6,330       1.2
                                                                   
Petrofac          Oil & Gas Producers               6,046       1.2
                                                                   
Top thirty                                        454,946      86.5
holdings                                                           

                                                   Market          
                                                                   
                                                    Value      % of
                                                                   
Company           Sector                            £'000 Portfolio
                                                                   
Homeserve         Support Services                  5,491       1.0
                                                                   
Balfour Beatty    Construction and                  5,368       1.0
                  Materials                                        
                                                                   
Impax             Equity Investment                                
Environmental     Instruments                                      
                                                                   
  - Ordinary                                        5,004       0.9
                                                                   
  - Warrants                                          269       0.1
                                                                   
British Airways   Travel and Leisure                5,128       1.0
                                                                   
Rexam             Support Services                  5,082       1.0
                                                                   
Protherics        Pharmaceutical and                               
                                                                   
                  Biotechnology                     4,905       0.9
                                                                   
JUST Retirement   Insurance                         4,248       0.8
                                                                   
Climate Exchange  Equity Investment                 3,985       0.8
                  Instruments                                      
                                                                   
ITV               Media                             3,901       0.7
                                                                   
ARM               Technology Hardware               3,788       0.7
                                                                   
Top forty                                         502,116      95.4
holdings                                                           
                                                                   
Helphire          Financial                         3,384       0.6
                                                                   
Trading Emissions Equity investment                 3,328       0.6
                  instruments                                      
                                                                   
BTG               Support Services                  2,471       0.5
                                                                   
Vectura           Pharmaceutical and                               
                                                                   
                  Biotechnology                     2,465       0.5
                                                                   
Fusion            Oil & Gas Producers               2,278       0.4
                                                                   
XTL               Pharmaceutical and                               
Biopharmaceutical                                                  
                                                                   
                  Biotechnology                     1,892       0.4
                                                                   
Macau Property    Property                          1,755       0.3
                                                                   
Puricore          Personal Goods                    1,658       0.3
                                                                   
Landkom           Food Producers                    1,424       0.3
                                                                   
Renovo            Pharmaceutical and                               
                                                                   
                  Biotechnology                       982       0.2
                                                                   
Top fifty                                         523,751      99.5
holdings                                                           
                                                                   
Xcounter          Healthcare                          844       0.1
                                                                   
Napo              Pharmaceutical and                               
Pharmaceutical                                                     
                                                                   
- Warrants        biotechnology                       796       0.1
                                                                   
Lombard Medical   Healthcare                          435       0.1
                                                                   
William Hill      General Retailers                   433       0.1
                                                                   
Local Radio       Media                               254       0.1
                                                                   
Lombard Medical   Healthcare                          254       0.1
                                                                   
Mirada            Technology Software                  46       0.0
                                                                   
Total holdings                                    526,818     100.0
(58)                                                               

CONDENSED INCOME STATEMENT

                                                                              Year to
                                                                                     
                                 Six Months to            Six Months to      31 March
                                                                                     
                               30 September 2008        30 September 2007        2008
                                                                                     
                           Revenue  Capital    Total Revenue Capital   Total    Total
                                                                                     
                             £'000    £'000    £'000   £'000   £'000   £'000    £'000
                                                                                     
(Losses)/gains on                                                                    
investments at fair value                                                            
                                                                                     
through profit or loss           - (44,991) (44,991)       -   4,023   4,023 (71,059)
                                                                                     
Foreign exchange gains           -  (2,591)  (2,591)       -   1,234   1,234      286
                                                                                     
Income                                                                               
                                                                                     
UK dividends                11,719        -   11,719  11,921       -  11,921   20,407
                                                                                     
Overseas dividends             876        -      876     962       -     962    2,075
                                                                                     
Gross return                12,595 (47,582) (34,987)  12,883   5,257  18,140 (48,291)
                                                                                     
Investment management fee    (500)  (1,500)  (2,000)   (920) (2,146) (3,066)  (5,443)
- note 2                                                                             
                                                                                     
Performance fee - note 2         -  (1,678)  (1,678)       -       -       -        -
                                                                                     
Other expenses               (232)      (5)    (237)   (232)       -   (232)    (510)
                                                                                     
Net return before finance   11,863 (50,765) (38,902)  11,731   3,111  14,842 (54,244)
costs and taxation                                                                   
                                                                                     
Finance costs - note 2       (503)  (1,508)  (2,011) (1,110) (2,589) (3,699)  (6,720)
                                                                                     
Return on ordinary          11,360 (52,273) (40,913)  10,621     522  11,143 (60,964)
activities before taxation                                                           
                                                                                     
Tax on ordinary activities   (131)        -    (131)   (144)       -   (144)    (311)
- note 3                                                                             
                                                                                     
Return on ordinary                                                                   
activities after                                                                     
                                                                                     
  taxation for the          11,229 (52,273) (41,044)  10,477     522  10,999 (61,275)
financial period                                                                     
                                                                                     
Return per ordinary share                                                            
- note 4                                                                             
                                                                                     
Basic                         5.4p  (25.2)p  (19.8)p    5.0p    0.3p    5.3p  (29.6)p
                                                                                     
Diluted                       5.0p  (23.2)p  (18.2)p    4.7p    0.2p    4.9p  (27.2)p

The total column of this statement represents the Company's profit and loss
account prepared in accordance with UK Accounting Standards. The supplementary
revenue and capital columns are presented for information purposes as
recommended by the guidance note issued by the Association of Investment
Companies. All items in the above statement derive from continuing operations
and the Company has no other gains or losses and therefore no statement of
total recognised gains or losses is presented. No operations were acquired or
discontinued in the period.

CONDENSED BALANCE SHEET

                                          At         At          At
                                                                   
                                          30   31 March          30
                                   September              September
                                                                   
                                        2008       2008        2007
                                                                   
                                       £'000      £'000       £'000
                                                                   
Fixed assets                                                       
                                                                   
Investments held at fair value                                     
through                                                            
                                                                   
  profit or loss                     526,818    584,338     671,268
                                                                   
Current assets                                                     
                                                                   
Amounts due from brokers                   -      3,739       4,344
                                                                   
Tax recoverable                            -          -          81
                                                                   
Unrealised profit on forward                                       
currency                                                           
                                                                   
  contracts                                -        524           -
                                                                   
Prepayments and accrued income         1,735      2,795       2,147
                                                                   
                                       1,735      7,058       6,572
                                                                   
Creditors: amounts falling due                                     
                                                                   
  within one year                                                  
                                                                   
Bank overdraft                      (37,818)   (53,916)    (62,375)
                                                                   
Amounts due to brokers               (4,242)    (4,093)     (2,973)
                                                                   
Accruals and deferred income         (1,458)    (1,879)     (2,270)
                                                                   
Unrealised loss on forward                                         
currency                                                           
                                                                   
  contracts                          (2,514)          -           -
                                                                   
                                    (46,032)   (59,888)    (67,618)
                                                                   
Net current liabilities             (44,297)   (52,830)    (61,046)
                                                                   
Total assets less current            482,521    531,508     610,222
liabilities                                                        
                                                                   
Creditors: amounts falling due                                     
                                                                   
  after one year                                                   
                                                                   
RPI 5.06% Debenture Stock           (29,686)   (29,668)    (29,684)
                                                                   
Provision for performance fee        (1,678)          -           -
                                                                   
Net assets                           451,157    501,840     580,538
                                                                   
Capital and reserves                                               
                                                                   
Called-up share capital               20,728     20,723      20,723
                                                                   
Share premium account                180,656    180,560     180,560
                                                                   
Other reserves                                                     
                                                                   
  Capital reserve - realised         277,311    287,855     266,708
                                                                   
  Capital reserve - unrealised      (48,008)    (6,279)      94,682
                                                                   
Revenue reserve                       20,470     18,981      17,865
                                                                   
Total Shareholders' funds            451,157    501,840     580,538
                                                                   
Net asset value per                                                
                                                                   
Ordinary Share - note 5                                            
                                                                   
Basic                                 217.7p     242.2p      280.1p
                                                                   
Diluted                               217.7p     240.3p      275.3p

CONDENSED CASH FLOW STATEMENT

                                   Six months            Six months
                                                                   
                                           to   Year to          to
                                                                   
                                 30 September  31 March          30
                                                          September
                                                                   
                                         2008      2008        2007
                                                                   
                                        £'000     £'000       £'000
                                                                   
Net return before finance costs                                    
                                                                   
  and taxation                       (38,902)  (54,244)      14,842
                                                                   
Losses/(gains) on investments          44,991    71,059     (4,022)
                                                                   
Foreign exchange (gains)/losses         2,591     (286)     (1,232)
                                                                   
Decrease in debtors                     1,060     (121)         485
                                                                   
Increase in creditors and               1,550   (2,856)     (2,403)
provisions                                                         
                                                                   
Tax on unfranked investment             (131)     (311)       (144)
income                                                             
                                                                   
Net cash flow from operating                                       
                                                                   
  activities                           11,159    13,241       7,526
                                                                   
Servicing of finance                  (2,287)   (6,800)     (3,807)
                                                                   
Taxation                                    -         -         (1)
                                                                   
Capital expenditure and                                            
financial                                                          
                                                                   
  investment                                                       
                                                                   
Purchase of investments              (69,869) (236,375)   (129,198)
                                                                   
Sale of investments                    86,287   281,474     160,725
                                                                   
Equity dividends paid                 (9,740)  (14,388)     (7,964)
                                                                   
Net cash inflow before                                             
                                                                   
  management of liquid resources                                   
                                                                   
  and financing                        15,550    37,152      27,281
                                                                   
Financing                                                          
                                                                   
Exercise of Subscription shares           101       808         808
                                                                   
Increase in cash in the year           15,651    37,960      28,089
                                                                   
Exchange movements                        447     (186)       1,226
                                                                   
Debenture stock non-cash                 (18)       (3)        (19)
movement                                                           
                                                                   
Movement in net debt in the            16,080    37,771      29,296
period                                                             
                                                                   
Net debt at beginning of period      (83,584) (121,355)   (121,355)
                                                                   
Net debt at end of period            (67,504)  (83,584)    (92,059)
                                                                   
Analysis of changes in net debt:                                   
                                                                   
Brought forward:                                                   
                                                                   
  Overdraft                          (53,916)  (91,690)    (91,690)
                                                                   
  Debt due after 5 years             (29,668)  (29,665)    (29,665)
                                                                   
Net debt brought forward             (83,584) (121,355)   (121,355)
                                                                   
Movements in the period:                                           
                                                                   
  Cash inflow from bank                15,651    37,960      28,089
                                                                   
  Exchange movements                      447     (186)       1,226
                                                                   
  Debenture non-cash movement            (18)       (3)        (19)
                                                                   
Net debt at end of period            (67,504)  (83,584)    (92,059)

CONDENSED RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

                                              Capital    Capital                  
                                                                                  
                               Share   Share  Reserve    Reserve Retained         
                                                                                  
                             Capital Premium Realised Unrealised Reserves    Total
                                                                                  
                               £'000   £'000    £'000      £'000    £'000    £'000
                                                                                  
For the six months ended 30                                                       
September 2007                                                                    
                                                                                  
Shareholder's funds at 1      20,686 179,789  230,698    130,170   15,352  576,695
April 2007                                                                        
                                                                                  
Return for the period from         -       -   36,010   (35,488)   10,477   10,999
ordinary activities                                                               
                                                                                  
Second interim dividend for        -       -        -          -  (7,964)  (7,964)
2007                                                                              
                                                                                  
Subscription shares               37     771        -          -        -      808
conversion                                                                        
                                                                                  
At 30 September 2007          20,723 180,560  266,708     94,682   17,865  580,538
                                                                                  
For the year ended 31 March                                                       
2008                                                                              
                                                                                  
Shareholder's funds at 1      20,686 179,789  230,698    130,170   15,352  576,695
April 2007                                                                        
                                                                                  
Return for the year from           -       -   57,157  (136,449)   18,017 (61,275)
ordinary activities                                                               
                                                                                  
Second interim dividend for        -       -        -          - (14,388) (14,388)
2007 and first                                                                    
                                                                                  
interim for 2008                                                                  
                                                                                  
Subscription shares               37     771        -          -        -      808
exercised                                                                         
                                                                                  
At 31 March 2008              20,723 180,560  287,855    (6,279)   18,981  501,840
                                                                                  
For the six months ended 30                                                       
September 2008                                                                    
                                                                                  
Shareholder's funds at 1      20,723 180,560  287,855    (6,279)   18,981  501,840
April 2008                                                                        
                                                                                  
Return for the period from         -       - (10,544)   (41,729)   11,229 (41,044)
ordinary activities                                                               
                                                                                  
Second interim dividend for        -       -        -          -  (9,740)  (9,740)
2008                                                                              
                                                                                  
Subscription shares                5      96        -          -        -      101
conversion                                                                        
                                                                                  
At 30 September 2008          20,728 180,656  277,311   (48,008)   20,470  451,157

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

1. Accounting Policies

The condensed financial statements have been using the same accounting policies
as those adopted in the Annual Financial Report for 31 March 2008, which have
been prepared under the historical cost convention and are consistent with
applicable UK Accounting Standards and with the Statement of Recommended
Practice: `Financial Statements of Investment Trust Companies'.

2. Management Fees and Finance Costs

Investment management fees and interest payable on borrowings are allocated 70%
to capital and 30% to revenue. A provision for a performance-related fee is
recognised if the Company's performance exceeds the FTSE All-share Index. This
is allocated wholly to capital.

3. Tax

Any tax payable is based on taxable profit for the period. The current tax
charge is the withholding tax on overseas dividends. No tax liability exists to
the extent that the Company has excess management expenses to offset taxable
income.

4. Basis of Returns

                         Six months   Six months      Year to
                                 to           to             
                                                             
                       30 September 30 September     31 March
                                                             
                               2008         2007         2008
                                                             
Returns after tax:                                           
                                                             
Revenue                 £11,229,000  £10,477,000  £18,017,000
                                                             
Capital                           £     £522,000            £
                       (52,273,000)              (79,292,000)
                                                             
Total                             £  £10,999,000            £
                       (41,044,000)              (61,275,000)
                                                             
Weighted average                                             
number of                                                    
                                                             
   ordinary shares in                                        
issue                                                        
                                                             
during the period:                                           
                                                             
  - basic               207,068,259  206,896,966  207,063,473
                                                             
  - diluted             224,997,004  224,997,004  224,997,004

5. Basis of Net Asset Value per Ordinary Share

                         Six months   Six months      Year to
                                 to           to             
                                                             
                       30 September 30 September     31 March
                                                             
                               2008         2007         2008
                                                             
Shareholders' funds    £451,157,000 £580,538,000 £501,840,000
                                                             
Ordinary shares in                                           
issue at                                                     
                                                             
  period end:                                                
                                                             
  - basic               207,276,080  207,229,981  207,229,981
                                                             
  - diluted             224,997,004  224,997,004  224,997,004

6. Movements in Share Capital

                         Six months   Six months      Year to
                                 to           to             
                                                             
                       30 September 30 September     31 March
                                                             
                               2008         2007         2008
                                                             
Number of ordinary                                           
shares:                                                      
                                                             
Brought forward         207,229,981  206,860,637  206,860,637
                                                             
Subscription shares          46,099      369,344      369,344
exercised                                                    
                                                             
Carried forward         207,276,080  207,229,981  207,229,981

Subscription Shares

The subscription shares carry the right to subscribe for one ordinary share at
a price of 218.94p on 31 August in each of the years 2009 to 2013. During the
period 46,099 subscription shares were exercised leaving 17,720,924
subscription shares remaining at the period end.

7. Dividend

The Directors have declared an interim dividend of 3.3p (2007: 3.1p) per
ordinary share in respect of the year ending 31 March 2009 payable on 29
December 2008 to shareholders registered on 12 December 2008.

8. VAT

In late 2007, HMRC announced that investment management services supplied to
investment trusts are exempt VAT. This means that VAT is no longer charged on
investment management fees and that the Company is entitled to seek
reimbursement of VAT paid in the past. IAML ceased charging VAT on management
fees with effect from 1 October 2007 and IAML has filed protective claims for
the period subsequent to the date of the Company's incorporation on 2 February
1996.

The Board is in negotiations with IAML in order to recover this back VAT,
however, in the absence of definitive agreements with the Manager, there is not
yet certainty about either the amount or timing of any recovery. Accordingly,
no asset has been recognised in these financial statements.

9. Investment Trust Status

It is the intention of the Directors to conduct the affairs of the Company so
that it satisfies the conditions for approval as an investment trust company
set out in section 842 of the Income and Corporation Taxes Act 1988.

10. Status of Half-Yearly Financial Report

The financial information contained in this half-yearly report, which has not
been reviewed or audited, does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. The financial information for the half
years ended 30 September 2008 and 30 September 2007 have not been audited. The
figures and financial information for the year ended 31 March 2008 are
extracted and abridged from the latest published accounts and do not constitute
the statutory accounts for that year. Those accounts have been delivered to the
Registrar of Companies and included the Report of the Independent Auditors,
which was unqualified and did not include a statement under either section 237
(2) or 237(3) of the Companies Act 1985.

By order of the Board

Invesco Asset Management Limited

Company Secretary

17 November 2008

website address: www.invescoperpetual.co.uk/investmenttrusts


                        

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