One very good, one somewhat disappointing: That’s my general read on the two Canadian Edge Aggressive Portfolio recommendations that reported fourth quarter and full-year 2007 earnings this week, Provident Energy Trust (NYSE: PVX, TSX: PVE-U) and AG Growth Fund (TSX: AFN-U, OTC: AGGRF), respectively.

Given the volatile market action we’ve seen this week, I’ll start with good news first from Provident. Note that there have been more developments on the Arctic Glacier Income Fund (TSX: AG-U, OTC: AGUNF) case. These are reported in this week’s Maple Leaf Memo (www.mapleleafmemo.com), which is complimentary with your Canadian Edge subscription just by signing up.

Also, for those still having trouble with US tax treatment of trusts, please read Tips on Trusts in the March issue of Canadian Edge. There are explicit instructions for how to file your trusts’ distributions as qualified dividends paid by qualified corporations, as well as the company links to go to for backup.

Finally, also in the good news department, we’ve finally seen some political fallout in Canada from the trust tax issue. A Conservative Member of Parliament was actually defeated in a by-election, with the government’s unpopular plan to tax trusts beginning in 2011 cited as a reason. We’ll have more on this in next week’s Maple Leaf Memo.

The key number for Provident Energy was its fourth quarter payout ratio, which plunged to just 57 percent from 89 percent in the third quarter. The lower percentage alone sets my mind at ease for now about the safety of the trust’s distribution. But it was also backed by very strong numbers at all three of the trust’s operating divisions: Canadian oil and gas production, Canadian midstream and US production/midstream, which is primarily operated by BreitBurn Energy Partners.

The trust reported strong gains in oil and gas production as well as reserve life on both sides of the border. Meanwhile, the midstream operations again proved they’ve remained strong despite extreme weakness in the Canadian natural gas patch over the past year.

Provident’s ongoing strategic review has created some uncertainty about its future direction. Management has long believed that its shares aren’t getting full value in the market place for the trust’s range of solid assets and is determined to take action to remedy the situation. The good news is whatever they do won’t hurt shareholder value and should actually give us a decent gain.

The bottom line is all parts of the underlying business are healthy here, and there’s a lot of upside for investors, if for nothing else than a rising realized price for oil and gas sold as the trust locks in higher-priced contracts. Provident Energy Trust remains a buy for those who don’t already own it up to USD14.

AG Growth’s earnings were strong for the year, reflecting the impact of recent acquisitions. Fourth quarter results, however, were disappointing, and the payout ratio ballooned out to 226 percent.

The good news is the high number is to some extent seasonal; last year’s payout ratio was 98 percent. Also, it was largely due to factors management has described as nonrecurring, such as the impact of efforts to boost the capacity of a facility that wound up constraining its high-margin output. That issue has apparently been settled this month but will likely have an impact on the first quarter results.

On the bright side, management maintains that demand is exceptionally strong and order backlog is at all-time highs. That’s a pretty good sign its current troubles aren’t related to the US economy’s travails, as the agricultural business remains a bright spot in the macro picture. It’s also promising for cash flow, which should rebound strongly in the second quarter at the latest.

On the other hand, trusts can’t fail to earn their distributions with cash flow indefinitely without cutting them. AG still seems to be a long way from that. Management expects assets added last year to provide a strong boost to 2008 cash flows and is also anticipating price increases for its products. And the full-year payout ratio of 2007 was only 72 percent, down from last year’s 86 percent despite an increase in shares.

AG is a member of the Aggressive Portfolio for several reasons, including operating a generally more volatile business than the Conservative Portfolio holdings. And despite the drop in shares this week following the results, I’m willing to stick with it on that basis.

I’m not a fan of doubling down on any investment, no matter how good it may look on paper. But its underlying business is still solid—despite these results. Given the strong growth in the agricultural commodities business, AG Growth Fund still a buy up to USD40 for more aggressive investors who don’t already own it.