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Digging into the Acuity Clean Environment Fund

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

We look at the Acuity Clean Environment Fund today to examine its top stocks.

It's worth examining a fund's biggest holdings to get ideas, or gain comfort that a pro has bet money on a stock you are considering. You may even decide it's better to invest in the fund - especially when it comes to less liquid, smaller company stocks.

Acuity Funds Ltd. is among the companies that will release fund holdings monthly, and usually within a week. Investors can find a fund's top investments on a company's website, or at globefund.com. Some firms only disclose holdings quarterly.

MORE ABOUT THE FUND

The $129.6-million Acuity Clean Environment Fund is run by a team led by portfolio manager Martin Grosskopf, whose background includes a master's degree in environmental science.

The fund targets firms applying innovative solutions to critical environmental issues. It invests in companies involved in energy efficiency and alternative energy; water purification and waste water treatment; waste management and pollution control; and also health services and sanitation technologies.

Acuity Clean Environment Fund was the second best performer over one year in the Canadian focused small- to-mid-capitalization equity category. It posted a 12.2-per-cent return for the year ended March 31, compared with a 2.7-per-cent loss for the S&P/TSX completion total return index. Over three years, the fund has posted an average annual return of 13 per cent, compared with 10.8 per cent for the index.

WHAT DID WE FIND OUT?

Acuity Clean Environment holds Calgary-based Petrobank Energy and Resources Ltd., a hot energy stock that surged 238 per cent last year. It is a key player in the Bakken oil field in Saskatchewan, but its future may be tied to whether it can commercialize its so-called Thai heavy oil extraction technology. The company believes this process is more environmentally friendly than current technologies.

The fund has also invested in Alter Nrg Corp., a Calgary-based energy company that is developing technologies that will convert waste to energy instead of storing it in landfills.

Harsco Corp., a Camp Hill, Pa.-based industrial services and engineered products company, is also a top holding. It recycles scrap metal for the steel industry, and recycles electric utility coal into environmentally responsible products like roofing granules.

Names like Albemarle Corp., Foster Wheeler Ltd., TransCanada Corp. and Neo Material Technologies Inc. were not in the top 15 in February. It is not clear whether these are new investments, or whether they rose to the top because of price appreciation.

Top 15 holdings of Acuity Clean Environment Equity Fund as of March 31, 2008

Company nameSymbol$ Price April 2252-wk Low $52-wk High $P/E ratio% yieldYTD % Price chg% of net assets
5N PlusVNP-T12.443.9013.46103.70.056.33.0
Canadian Hydro DevelopersKHD-T5.884.858.0198.00.0-8.12.8
PraxairPX-N93.1063.9594.4825.71.65.02.6
Harsco Corp.HSC-N60.4946.1066.5120.01.3-5.62.5
Hanwei Energy ServicesHE-T4.372.707.4519.90.0-19.82.5
Alter Nrg Corp.NRG-X4.051.905.100.00.024.62.5
Universal Energy Group Ltd.UEG-T15.2513.0522.210.00.0-16.72.5
Petrobank Energy and ResourcesPBG-T53.0622.0163.0349.60.0-8.92.2
AlbemarleALB-N37.6331.9948.8415.71.3-8.82.1
AltaGas Income TrustALA.UN-T24.4422.7628.7514.08.6-7.62.0
Foster WheelerFWLT-Q68.4833.2785.6525.20.0-11.72.0
Itron Inc.ITRI-Q100.1864.57112.9236.00.04.41.9
Suncor EnergySU-T121.0781.83122.2019.70.312.21.9
TransCanada Corp.TRP-T36.9535.4340.9720.83.9-8.91.9
Neo Material TechnologiesNEM-T4.623.355.6013.20.0-8.01.8

SOURCE: ACUITY AND GLOBE INVESTOR

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