Merrill Lynch Greater Europe IT PLC
16 June 2005
MERRILL LYNCH GREATER EUROPE INVESTMENT TRUST plc
All information is at 31 May 2005 and unaudited.
Performance at month end with net income reinvested
One Three Since launch
Month Months (20Sep04)
Net asset value 5.6% 0.0% 15.6%
Share price 4.0% 0.0% 9.7%
FTSE World Europe ex UK 6.1% 1.2% 14.4%
Sources: Merrill Lynch Investment Managers and Datastream.
At month end
Net asset value: 115.60p Includes net revenue of 1.59p
Share price: 109.75p
Discount to NAV: 5.1%
Gearing: 0.0%
Net yield: N/A
Total assets: £187.9m
Ordinary shares in issue: 164,841,285
Benchmark
Sector Analysis Total Assets (%) Index (%) Country Analysis Total Assets (%)
Financials 28.6 30.2 France 22.1
Non Cyclical Consumer Goods 9.5 15.9 Germany 12.0
Cyclical Services 8.7 6.1 Switzerland 11.0
Resources 8.5 9.6 Scandinavia 8.0
Basic Industries 6.3 7.1 Italy 5.3
Non Cyclical Services 4.7 1.3 Spain 5.2
Cyclical Consumer Goods 4.6 4.6 Sweden 4.1
Utilities 4.2 6.4 Russia 4.0
Capital Goods 3.7 5.7 Ireland 4.0
Telecoms 3.0 8.0 Turkey 2.5
Technology 2.5 5.1 Belgium 2.2
Other Investments 2.5 - Netherlands 2.0
Net Current Assets 13.2 - Israel 1.7
Poland 1.7
Greece 0.7
Other Countries 0.3
Net Current Assets 13.2
----- ----- -----
100.0 100.0 100.0
----- ----- -----
Ten Largest Equity Investments
Company Country of Risk
Total France
Sanofi-Aventis France
UBS Switzerland
Roche Holdings Switzerland
Ericsson Sweden
Repsol Spain
BBVA Spain
New Century Holdings Eagle Russia
Capitalia Italy
AXA France
Commenting on the markets, James Macmillan, representing the Investment Manager
noted:
European equity markets bounced back in spectacular style in May 2005 with the
FTSE World Europe ex UK and MSCI Emerging Europe up 6.1% and 7.3% in sterling
terms respectively. Investors shrugged off evidence of sharply decelerating
global economic growth and took heart instead from a retreating oil price and a
weaker Euro. The surprise announcement to bring forward the parliamentary
elections in Germany and the rejection in France and the Netherlands of the
proposed EU constitution did not have a negative impact on equity markets as
many were expecting. In fact the Turkish market has rallied post referenda
reflecting that to some extent markets had already priced the outcome.
The Company's NAV returned 5.6% during the month underperforming the reference
benchmark index. During the month both stock and sector selection were slightly
negative. The Company benefited from its exposure to Emerging Europe, with
strong performance from a number of holdings in Turkey and Russia.
During the period the best performing stocks were in Turkey with construction
group Enka Insaat up 17% due to anticipation in new contracts and positive
outlook for real estate and retail businesses in Russia, and Akbank up 18% after
Q1 results saw a rise in net profit. Other strong performers included Network
equipment maker Ericsson (+11%) after a better than expected Q1 trading update
and a bullish outlook statement; in Germany sportswear manufacturer Puma (+16%)
following news that a German private investor had started to build a stake; and
car maker Porsche (+13%) benefiting from the weaker Euro. Stock positions that
detracted from performance were chemical company Clariant (-6%) after announcing
disappointing sales and operating profit as result of slower demand and higher
raw material prices and Belgacom (-6%) after profit warning at mobile franchise.
Other poor performing stocks were healthcare company Fresenius, Hypo Real
Estate and investment bank UBS.
During May the Company purchased holdings in Spanish bank BBVA due to its
attractive domestic franchise and exposure to Mexico, and increased its exposure
to the telecoms sector by purchasing Polish telecom company Telekomunikacja and
adding to an existing position in Russian mobile operator Mobile Telesystems.
These positions were funded by selling Deutsche Telekom, Hypo Real Estate and
Unicredito, and in Emerging Europe, Alpha Bank and MA Industries which both
reached their target prices.
The main bias of the Company is towards financials and defensives at the expense
of cyclicals and growth. This is reflected at the sector level through banks,
diversified financials, energy, telecoms and pharmaceuticals. The main country
exposures are in France, Germany and Switzerland. Our exposure to Emerging
Europe was 9.9%.
At the end of May the Company offered to repurchase up to 20% of issued ordinary
shares through a tender offer. The offer was undersubscribed with 14.8% of
issued shares being tendered. The tender price was 98% of the tender NAV with
costs being deducted from the remaining 2% NAV. This resulted in a net uplift
to the NAV.
European equity markets are performing better than one could expect against a
backdrop of very weak economic growth in Europe, and uncertainty surrounding
France and the Netherlands rejection of the new EU constitution and prospect of
parliamentary elections in Germany. Generally speaking the corporate sector is
in good shape now following years of drastic cost cutting, restructuring and
financial re-engineering. Selectively we see good investment opportunities in
financials stocks where there continues to be significant scope for
consolidation and also within the energy sector which we think will continue to
benefit from the higher oil price.
Latest information is available by typing www.mlim.co.uk/its on the internet,
'MLIMINDEX' on Reuters, 'MLIM' on Bloomberg or '8800' on Topic 3 (ICV terminal).
16 June 2005
This information is provided by RNS
The company news service from the London Stock Exchange
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