Performance at month end

IMPAX ENVIRONMENTAL MARKETS plc

All information is at 31 January 2006 and unaudited

DATA AND PERFORMANCE


Data                         Pricing & Performance
                                                  IEM    MSCI  Impax
                                                  Net   World   ET50
Share Price                                      Asset
(pence)                103.5                     Value
Total Fund Size    GBP 122.4   Pence (31.01.06) 102.4*   n/a    n/a
(m)
Market             GBP 123.7   Premium/discount  +1.1
Capitalisation
(m)
Management fee          1.0%
Established      22 February        Performance
                        2002
Fund structure    Investment        1 month (%)  +10.6   +0.8  +15.2
                       Trust
Number of                 72       3 Months (%)  +17.3   +9.6  +22.5
stocks held
Exchange              London         1 year (%)  +34.1  +22.0  +41.4
Currency                 GBP         3 year (%)  +98.0  +58.2  +89.4
ISIN Number     GB0031232498   Year to date (%)  +10.6   +0.8  +15.2
Sedol                3123249
Reuters RIC            IEM.L * To comply with the new guidelines
Code                         issued by the AITC, portfolio valuation
                             moved to bid from mid price with effect
Bloomberg Code        IEM LN from 31 December 2005.


TOP TEN HOLDINGS


Company             Holding %   Description                   Country
LKQ                       2.8   Automotive recycling          US
Itron                     2.7   Meters & software             US
Kurita Water              2.6   Water treatment               Japan
Esco Tech                 2.3   Filtration & meters           US
RPS Group                 2.3   Environmental consulting      UK
Canadian Hydro            2.2   Renewable energy IPP          Canada
Gamesa                    2.2   Wind                          Spain
Pall Corp                 2.1   Filtration                    US
Vestas Wind Systems       2.1   Wind                          Denmark
                                High efficiency electric
Regal Beloit              2.0   motors                        US

Total                    22.4


PORTFOLIO ANALYSIS*


Geographical           Company Size
North America      49% >£500m         43%
Europe             44% £100-500m      42%
Rest of the World  7%  <£100m         15%

Sectoral               Profitability
Energy             40% Profitable     87%
Water              27% Pre-Profitable 13%
Waste              30%
Cash               4%
* of funds invested as of 31 January 2006






MANAGER'S COMMENTARY (January 2006)


The Company NAV was up 10.6% over the month compared with the MSCI
World, which gained 0.8% and the Impax ET50, which rose 15.2% over
the same period.  Energy services and equipment was the best
performing of all the equity market sectors, followed by energy.

During the month oil prices rose above $65 per bbl. to levels
experienced in August 2005 on fears of conflict in Nigeria and the
escalating row over Iran's nuclear programme, whilst gas supplies to
Europe were disrupted after Russia cut its supply to Ukraine.  In his
State of the Union address President Bush referred to America's
addiction to oil, before announcing the Advanced Energy Initiative, a
22% increase in clean energy research at the Department of Energy.
The increase in funding will cover solar and wind technologies,
hybrid car batteries and alternative fuels.  Earlier in the month
Energy Secretary Samuel Bodman allocated $119 million for research
into hydrogen fuel cells as part of the $1.7 billion hydrogen
research program first detailed in 2003.  Elsewhere the Chinese
government introduced a renewable portfolio standard, under which
large utilities will have to generate 5% of their power from
renewables by 2010, rising to 10% by 2020, as part of the new
Renewable Energy Law.  In contrast to the national target,
hydroelectric power is excluded, which will present opportunities for
wind and solar companies.  In the water sector, and following last
month's Long Term 2 Enhanced Surface Water Treatment Rule (LTII), the
US Environmental Protection Agency issued new guidance for cleaning
up contamination from perchlorate, an explosive in use since the
1940s.  Ion exchange systems stand to benefit if the current
reference dose of 24.5 parts per billion is adopted as a drinking
water standard.  Within the corporate sector, a private equity
consortium acquired Dutch waste management company AVR for ¤1.4
billion.  At a price of more than 10x EV/EBITDA, this raised the bar
on what constitutes fair value in the sector, and drove up valuations
in comparable companies.  BASF announced a tender offer for
Engelhard, the US surface and materials science business, which most
commentators attribute to the company's rapidly growing
emissions-control systems division.  In a development from last
month, Honeywell was forced to raise its bid for First Technology by
40% (gas sensors and automotive safety, UK) following a rival offer
from Danaher Corp.

The main contributors to performance were Polyfuel (fuel cells, UK),
which rose 89% on a positive trading update, and Quantum Fuel Cells
(hydrogen systems, US), which rose 87% following the delivery of
hydrogen-fuelled cars as part of California's South Coast Air Quality
Management District programme.  Q-Cells (solar, Germany) rose 72%, as
solar stocks continued to rally on investor sentiment.  On the
downside Energy Developments (landfill gas development, Australia)
fell by 5%, whilst Whatman (filtration, UK) declined by 3%.

During the month we established a position in Spice Holdings (utility
services, UK), and increased our holding in Ballard (fuel cells,
Canada), Dionex (testing & monitoring, US) and Polyfuel.  We exited
Calgon Carbon (water filtration, US) and took profits in Q-Cells.


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

21 February 2006




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