Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 January 2005 and unaudited

DATA AND PERFORMANCE


Data                            Pricing & Performance
                                                  IEM    MSCI  Impax
                                                  Net   World   ET50
Share Price                                      Asset
(pence)                   71.25                  Value
Total Fund Size        GBP 38.1 Pence (31.01.05)  76.2   n/a    n/a
(m)
Market                 GBP 35.6 Premium/discount -6.7%
Capitalisation
Management fee             1.0%
Established         22 February      Performance
                           2002
Fund structure       Investment      1 month (%) -0.4%  -0.6%  +0.5%
                          Trust
Number of stocks             64     3 Months (%) +7.3%  +3.5%  +7.9%
held
Exchange                 London       1 year (%) +12.1% +4.8%  +2.9%
Currency                    GBP       2 year (%) +46.5% +29.7% +33.9%
ISIN Number        GB0031232498 Year to date (%) -0.4%  -0.6%  +0.5%
Sedol                   3123249
Reuters RIC Code          IEM.L
Bloomberg Code           IEM LN


TOP TEN HOLDINGS


Company             Holding %   Description                Country
Itron                     3.6   Meters & software          US
Casella Waste             3.5   Waste disposal & recycling US
Kurita Water              3.1   Water treatment            Japan
RPS Group                 3.1   Environmental consulting   UK
BWT                       2.7   Water treatment            Austria
CDS Technologies          2.6   Stormwater & wastewater    Australia
Vestas Wind Systems       2.5   Wind                       Denmark
Quantum Fuel              2.3   Fuelcells & hydrogen       US
Zenon Environmental       2.2   Membranes                  Canada
Horiba                    2.2   Env. Testing & monitoring  Japan

              Total      27.8


PORTFOLIO ANALYSIS*


+------------------------------------------------+
| Geographical            | Company Size         |
|-------------------------+----------------------|
| North America     | 50% | >£500m         | 22% |
|-------------------+-----+----------------+-----|
| Europe            | 40% | £100-500m      | 56% |
|-------------------+-----+----------------+-----|
| Rest of the World | 10% | <£100m         | 22% |
|-------------------------+----------------+-----|
|                         |                |     |
|-------------------------+----------------------|
| Sectoral                | Profitability        |
|-------------------------+----------------------|
| Energy            | 35% | Profitable     | 88% |
|-------------------+-----+----------------+-----|
| Water             | 32% | Pre-Profitable | 12% |
|-------------------+-----+----------------+-----|
| Waste             | 32% |                |     |
|-------------------+-----+----------------+-----|
| Cash              | 1%  |                |     |
|------------------------------------------------|
| * of funds invested as of 31 January 2005      |
+------------------------------------------------+














MANAGER'S COMMENTARY (January 2005)

From this month we are moving the Manager's Commentary to a more
concise and focused format divided into four paragraphs - overview;
news; performance attribution; and portfolio activity.

The Company NAV was down -0.4% during the month compared with the
MSCI World Index which decreased -0.6% and the Impax ET50 which
increased +0.5%.  In a reversal of last month, the energy and energy
equipment stocks were strongest as the oil price increased 13% with
Brent Crude rising to $46 per bbl.  In the Environmental Markets
sector the water treatment and pollution control stocks were weakest
after such a strong run in the last quarter of 2004.

Climate change was in focus during January.  On 1 January the EU
Emissions Trading Scheme ("ETS") came into operation marking a key
phase in the implementation of the Kyoto Protocol, and during the
month CO2 emissions credits traded at ¤6-7.5 per tonne.
Tony Blair addressed the World Economic Forum in Davos where he put
climate change at the top of the political agenda and sought to win
the backing of the United States for his proposals.  Finally,
scientists gathered from around the world in Exeter to debate key
climate change issues including likely impacts, gas stabilisation
levels and technological options.  While policy level climate news
does not typically drive share prices (and did not during January),
the increased awareness and internalisation of environmental impacts
in markets will inevitably make energy efficiency and low carbon
technologies increasingly competitive.

Other than the small correction in US water and filtration stocks,
there was no common sector theme to the performance of EM companies
other than the strength in UK small caps - Ricardo (clean engine
consultancy), Porvair (filtration & fuel cells), and Straight
(composting) all rose over 15%.  In Europe, the best performers were
Aixtron (LED deposition technology, Germany) as it moved towards
completing the acquisition of US company Genus and Abengoa (biofuels
& recycling, Spain) which received a number of large orders.  In
North America, Westport Innovations (clean engines) increased over
20% following a large order for its natural gas diesel engines in
China.  On the downside, Insituform (trenchless sewer repair, US)
fell over 30% as it announced losses in its tunnelling business.

In recent significant trades we have increased our exposure to
Xantrex (power electronics, Canada) and Pentair (water treatment, US)
and taken some profit in CDS Technologies (stormwater management,
Australia) and BWT (water treatment, Austria).


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

9 February 2005


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