Interim Management Statement

RNS Number : 1443I

Polar Capital Technology Trust PLC

05 March 2010

 



Polar Capital Technology Trust plc

Interim Management Statement for the 3 months to 29 January 2010 (unaudited)

The investment objective of Polar Capital Technology Trust PLC is to maximise capital growth for our shareholders through investing in a diversified portfolio of technology companies around the world.

Review of Material Events in Period

·    Performance over the period from 31 October 2009 to 29 January 2010 is shown below. The NAV per share has risen by 7.6% while the Dow Jones World Technology Index (£) rose 6.5%.

·    The shares have traded at discounts between -10.1% and -12.5%.

Manager's Comments

Market Performance

Global equities performed well over the quarter as improved risk appetite drove stocks higher. Whilst macroeconomic data remained decidedly mixed during November and December, the market chose to focus on positives such as the apparent peak in US unemployment and supportive rhetoric from both the G20 and the Fed. With interest rates likely to remain "exceptionally low" for "an extended period" risk appetite soared into year-end, US stocks registering their best annual return since 2003. However, sentiment rose commensurate with stocks such that in early 2010 sentiment readings were at their most complacent levels since 2007. As a result, the emergence of a series of new concerns - sovereign risk associated with Dubai and Greece, Chinese tightening of bank lending and financial sector regulation - presaged a meaningful risk contraction and a sell-off in most major markets. However, the strength of the US Dollar during the period (the trade weighted basket rising 4.1%) ameliorated returns for Sterling-based investors.

Technology Performance

The combination of strong fundamental improvement and improved risk appetite saw technology stocks outpace the broader market during the period, the Dow Jones World Technology index rising 6.5% in Sterling terms. The sector completed an outstanding calendar year of relative performance with the Dow Jones World Technology index outstripping the FTSE World Index on a price-return basis by more than 28% in Sterling terms. The strong close to 2009 occurred against a relatively quiet preannouncement season with positive off-quarter reports from Salesforce.com., Research in Motion and Oracle setting an appropriate tone ahead of Q4 reporting season. Whilst the sector underperformed during the January sell-off, this reflected profit-taking as most companies delivered earnings ahead of expectations. However, lacklustre stock action post strong reports reflected how expectations had risen with stock prices during the final months of 2009.

Outlook

Despite the recent pullback we are encouraged by the underlying strength of technology earnings and fundamentals. Demand appeared to have come in above expectations during the quarter and inventory levels remain healthy exiting the quarter which is likely to drive further restocking and a better than seasonal start to 2010. Furthermore, recent results appear to support our long-held 'new cycle' thesis with next-generation beneficiaries significantly outperforming their legacy peers in terms of organic revenue growth. The combination of earnings upgrades and falling stock prices have acted to compress technology valuations to a very modest premium versus the S&P 500. In addition, technology remains the only major sector with net cash on its collective balance sheet which is not only supportive of valuations but should also fund a new wave of strategic M&A and stock buybacks. Whilst mindful of the 'new' risks (and the potential for changes in financial regulations and/or tax regimes) - we have begun to tentatively reinvest some of the cash raised at the end of December.

March 2010

	29 January 2010	30 October 2009	Change (%)
Share Price (p)	238.8	216.0	10.6
NAV per Share (p)	265.6	246.8	7.6
Discount (%)	-10.1	-12.5	19.2
Total Investments (£m)	362	338	7.1
AIC Gross Gearing Ratio (%)*	108	109	-0.9
AIC Net Gearing Ratio (%)*	97	96	1.0
*Gearing calcultaions are exclusive of current year Revenue/Loss.

Performance (%)			3 Months	1Year				5 years
Share Price			10.6	64.1				38.4
NAV per Share			7.6	48.4				33.6**
Dow Jones World Technology Index			6.5	40.8				37.9
**Not adjusted for warrant exercise in September 2005. NAV per share performance is calculated on the basis of diluted NAV for the entire period.
Geographical Breakdown (%)	29 January 2010			30 October 2009
North America	69.2			71.3
Asia	13.2			10.7
Europe	9.1			8.5
Japan	5.3			5.5
Cash & Equivalents	3.2			4.0
Sector Breakdown (%)	29 January 2010				30 October 2009
Semiconductors	24.1				23.1
Software	19.1				22.2
Computing	18.9				17.0
Comms Equipment	18.5				20.7
Internet / Consumer	10.6				9.8
Services	3.6				1.8
Healthcare	1.5				2.1
Telecoms / Media	1.5				1.4
Electronic Components	1.1				1.1
Other Sectors	0.8				0.5
Clean Energy	0.2				0.2
Defence / Security	0.1				0.1
Top Ten Holdings (%)		29 January 2010				30 October 2009
Apple		6.2				5.9
Microsoft		5.2				4.8
Google		5.1				5.2
International Business Machines		3.7				3.0
Cisco Systems		3.2				3.8
Hewlett-Packard		2.9				3.0
Intel		2.8				2.9
Oracle		2.7				2.0
Samsung Electronics		2.6				2.5
Qualcomm		2.4				2.9
Total		36.8				36.0

Shares in issue
As at 30 October 2009		126,497,914
-     Shares bought back and cancelled		0
-     Shares held in treasury		0
As at 29 January 2010		126,497,914
General Information:	For further information please visit the company's website where a PDF version of this announcement is available.
	www.polarcapitaltechnologytrustplc.co.uk
This interim management statement has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party for any other purpose.

 

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