MFM Techinvest Technology Fund. Interim Report For the six month period ended 31 st October 2011 (Unaudited)

Transcription

1 MFM Techinvest Technology Fund Interim Report For the six month period ended 31 st October 2011 (Unaudited)

2 Registered Office Marlborough House 59 Chorley New Road Bolton BL1 4QP Authorised Corporate Director and Registrar Marlborough Fund Managers Ltd Marlborough House 59 Chorley New Road Bolton BL1 4QP Authorised and regulated by the Financial Services Authority Customer Support: (0808) (FREEPHONE) Intermediary Support: (0808) (FREEPHONE) Dealing: (0808) (FREEPHONE) Fax: (01204) Depositary: HSBC Bank plc 8 Canada Square London E14 5HQ Authorised and regulated by the Financial Services Authority Investment Adviser: Techinvest Ltd Merchants House 27/30 Merchants Quay Dublin 8 Republic of Ireland Authorised by the Central Bank of Ireland Auditors: Barlow Andrews LLP Carlyle House 78 Chorley New Road Bolton BL1 4BY

3 CONTENTS PAGE AUTHORISED INVESTMENT ADVISER S REPORT 1 AUTHORISED STATUS AND GENERAL INFORMATION 3 AUTHORISED CORPORATE DIRECTOR S STATEMENT 3 FUND INFORMATION Number of shares in issue/net asset value per share 4 Total expense ratio 4 Portfolio statement 5 Portfolio transactions 7 INTERIM FINANCIAL STATEMENTS Statement of total return 8 Statement of change in net assets attributable to shareholders 8 Balance sheet 9 Notes to the interim financial statements 9

4 AUTHORISED INVESTMENT ADVISER S REPORT For the six months ended 31 October 2011 Percentage change and sector position to 31 October 2011 Six months 1 year 3 years 5 years Since launch** MFM Techinvest Technology Fund % 4.00% % 34.05% % Quartile Ranking* *Based on ranking within IMA Technology & Telecommunications Sector. External Source of Economic Data: Morningstar ** Launched (performance calculated from first pricing point ) During the first half of its current year to 31 October 2011, the Fund turned in a disappointing performance, albeit against a background of very difficult market conditions. Over the six month period, the price of the shares declined by 11.94%. This compares with a fall in the FTSE 100 of 8.66% and one of 6.58% by the tech-rich Nasdaq Composite index. At October 31, holdings in US and Canadian tech stocks amounted to 54.2% of the Fund s value, down slightly from the 57.5% level at the end of the Fund year on April 30. Bearing in mind that the majority of holdings in the Fund are small-caps, it is worth noting that over the half year the FTSE Small-Cap index was down 13.69%, while the US equivalent, the Russell 2000, fell by 12.05%. Another useful relevant comparator for London is the performance of the AIM All-Share which declined by as much as 21.06%. Clearly, small cap stocks have underperformed the broad large-cap dominated market indices on both sides of the Atlantic during the period. This is typical bear market behaviour. Since its inception on 19 May 2003 the unit price of shares in the Fund has increased by %. This is well ahead of the 40.67% gain achieved by the FTSE 100, the 45.19% improvement in the FTSE Small-Cap and the AIM All-share s 19.63%. It is also comfortably ahead of the 79.83% advance by the Nasdaq Composite and the Russell 2000 s slightly better 86.37%. We believe this long term relative outperformance by your Fund justifies the Investment Adviser s continued focus on the small cap technology sector. The North American content of 54.2% is split between the US (39.7%) and Canada (14.5%). In fact, many of these holdings are viewed as micro-caps on the other side of the Atlantic. Nonetheless, all are far more liquid and easier to deal in than stocks of equivalent size in London. The fund ended the half year with a cash content of 3.4%. This is in line with our normal policy of remaining pretty much fully invested through all market conditions, based on two factors derived from several decades of stock market experience and of market history stretching back well beyond that. One is that the very long-term trend in markets is upwards, albeit with significant multi-year blips at times along the way. The second is that we have never come across anyone with a consistent record of accurately predicting market turns. In other words, we are largely indifferent to short-term fluctuations in the overall stockmarket. In this we are at one with renowned US market guru Warren Buffett. Admittedly, small cap stocks, especially those in the tech sector, have underperformed over recent months, not only in London but on the other side of the Atlantic too. A recent report issued by Minnesota-based Vermilion Technical Research noted that from the May 2 high to the October 4 low Small-Cap Technology plunged 33.2% compared to the S&P 500 s 21.6% drop. The report commented that the recent large-scale declines in Small-Cap Tech stocks are transitioning into attractive bottom-fishing opportunities. The ten largest holdings, in alphabetical order, at October 31 were: blinkx (we believe the recent sharp fall in the share price is overdone), IDOX (in the Fund almost from the beginning, emphasising our long-term approach), Microgen (ditto), March Networks (the video surveillance specialist is a likely takeover candidate), Miranda Technologies (the Fund s largest North American holding), Mitek Systems (leader in imaging technologies for remote bank deposits and bill payments, using mobile phones), Opnet Technologies (conservatively managed fastgrowing networking company), Towerstream (skyscraper-based data and Wi-Fi services provider in large densely populated US cities), Sandvine (service management products for operators of mobile data/video networks) and Wi- Lan (intellectual property licensor to communications and consumer electronics product manufacturers). 1

5 AUTHORISED INVESTMENT ADVISER S REPORT (CONTINUED) Looking forward, we continue to view business prospects for the technology sector in a very positive light and better than any other sector we can think of. The Mobile Internet continues to fuel explosive growth in data and video traffic, with social networking fanning the flames. In turn, this is creating huge demand for a very wide variety of supporting services and products. Nonetheless, ratings of so many stocks in the sector remain at very attractive levels. On top of that, there is the extraordinary strength of so many balance-sheets, a startling reverse-image of the struggling banking sector. We believe the Fund is the only UK authorised one of its type available to the general public that offers significant dual exposure to both London and North American small cap tech stocks. At October 31, over 90% was invested in these, with the majority in North America. The fund is valued once a week at p.m. each Wednesday. The latest price is normally posted by 5.30 p.m. that day on the Techinvest home-page at It can also be found in the Financial Times each day and at A fact-sheet updated each month with the latest data on the Fund can also be found on the Techinvest website, as can a sample copy of a recent issue of the monthly Techinvest newsletter. Techinvest Ltd. Investment Manager 25 November 2011 Material Portfolio Changes For the six month period ended 31 October 2011 Major Purchases Cost ( ) Major Sales Proceeds ( ) Openware Systems 271,202 Clearstream Technologies 425,000 Bigband Networks 267,992 Smartfocus Group 412,500 Immersion 249,162 Bridgewater Systems 366,990 S1 240,448 S1 319,000 Actuate Software 233,162 System C Healthcare 315,000 Tekelec 228,088 Bigband Networks 279,837 DDD Group 200,146 Blinkx 267,722 Digi International 179,262 Web.com Group 238,732 Antares Pharma 173,837 Sonus Networks 238,442 Cable & Wireless Worldwide 144,802 E2V Technologies 221,582 Aviat Networks 139,682 Silicon Graphics International 205,473 Sandvine 138,377 Falconstor Software 201,886 CEVA 134,441 Quepasa 186,815 Planet Payment 134,438 Progress Software 181,215 Pervasive Software 129,361 Avanir Pharmaceuticals 166,371 Towerstream 123,923 Xerox 159,737 Web.com Group 122,463 Radvision 153,492 dotdigital Group 120,230 Opnet Technologies 150,321 Sangamo Biosciences 99,955 Concurrent Computer 142,627 Quepasa 89,165 Depomed 138,698 Other purchases 809,247 Other sales 991,247 Total purchases for the period 4,229,383 Total sales for the period 5,762,687 2

6 AUTHORISED STATUS AND GENERAL INFORMATION Authorised Status: MFM Techinvest Technology Fund is an investment company with variable capital incorporated under the Open Ended Investment Company (OEIC) Regulations It is a UCITS scheme as defined in the Collective Investment Schemes Sourcebook (COLL). The Company is incorporated in England and Wales with the registration number IC and is authorised and regulated by the Financial Services Authority with effect from 28 March The shareholders are not liable for the debts of the Company. Nature and Objectives of the Scheme: The investment objective is to provide capital growth from capital appreciation and the accumulation of income through a globally invested portfolio of equities and bonds. Emphasis will be placed on technology-based businesses worldwide. It is envisaged that up to 75% of the total fund value will normally be in securities quoted on the London Stock Exchange, with the balance invested elsewhere, primarily North America. The technology sector includes, but is not necessarily limited to, companies providing products and services in electronic and electrical equipment, healthcare, information technology hardware, electronic games, media services, support services and telecommunication services. The FTSE techmark All-Share Index is the benchmark comparison against which the performance of the Fund is measured. Change in Prospectus: No changes have been made since the last report. Up to date simplified prospectus, the full prospectus and reports and accounts for any fund can be requested by the investor at any time. AUTHORISED CORPORATE DIRECTOR S STATEMENT This report has been prepared in accordance with the requirements of the Collective Investment Schemes Sourcebook (COLL) as issued and amended by the Financial Services Authority. J R HEAP CHIEF EXECUTIVE G R HITCHIN INVESTMENT DIRECTOR MARLBOROUGH FUND MANAGERS LTD 5 December

7 FUND INFORMATION Number of shares in issue/net asset value per share Net asset value Number of Net asset value of scheme accumulation per accumulation property shares in issue share at 30 April ,642,995 8,090, p at 30 April ,457,816 7,737, p at 30 April ,203,584 9,713, p at 31 October ,634,731 9,309, p Total expense ratio Total expense ratio 30 April % 31 October % The Total Expense Ratio (TER) is the total expenses paid by the fund in the period as a percentage of the fund s average net asset value. Past TER data can be found on our website 4

8 Portfolio statement as at 31 October 2011 Holding or Bid Percentage of nominal value value total net assets as at 31 Oct 11 % UNITED KINGDOM AUTOMOBILES & PARTS (0.07%, Apr %) 105,000 Enova Systems 12, Total Automobiles & Parts 12, ELECTRONIC & ELECTRICAL EQUIPMENT (0.60%, Apr %) 15,000 Dialight 111, Total Electronic & Electrical Equipment 111, FIXED LINE TELECOMMUNICATIONS (0.49%, Apr Nil) 325,000 Cable & Wireless Worldwide 90, Total Fixed Line Telecommunications 90, HEALTH CARE EQUIPMENT & SERVICES (Nil, Apr %) Total Health Care Equipment & Services MEDIA (0.69%, Apr Nil) 1,703,920 dotdigital Group 127, Total Media 127, MOBILE TELECOMMUNICATIONS (2.88%, Apr %) 63,000 Avanti Communications Group 194, ,545 Monitise 343, Total Mobile Telecommunications 538, OIL EQUIPMENT, SERVICES & DISTRIBUTION (0.73%, Apr %) 200,000 KBC Advanced Technologies 136, Total Oil Equipment, Services & Distribution 136, PHARMACEUTICALS & BIOTECHNOLOGY (0.08%, Apr %) 515,400 Cyprotex 14, Total Pharmaceuticals & Biotechnology 14, SOFTWARE & COMPUTER SERVICES (27.78%, Apr %) 1,500,000 Access Intelligence 41, ,165 Active Risk Group 141, ,672 Alterian 225, ,000 ANT 148, ,450,000 Arcontech Group 1, ,000 Avia Health Informatics 73, ,000 Bango 94, ,500 blinkx 1,046, ,000 Bond International Software 90, ,333 Corero Network Security 9, ,000 Craneware 168, ,000 DDD Group 195, ,000 First Derivatives 283, ,350,000 Globo 259, ,600,000 IDOX 591, ,676,470 Innovation Group 331, ,000 Invu 3, ,000 Maxima Holdings 19, ,000 Micro Focus International 169,

9 Portfolio statement as at 31 October 2011 Holding or Bid Percentage of nominal value value total net assets as at 31 Oct 11 % SOFTWARE & COMPUTER SERVICES (continued) 293,700 Microgen 434, ,000 NCC Group 261, ,000 Pilat Media Global 70, ,100,000 Servicepower Technologies 157, ,150,000 Sopheon 63, ,200 SQS Software Quality Systems 225, ,500,000 Vialogy 70, Total Software & Computer Services 5,177, SUPPORT SERVICES (2.26%, Apr %) 60,000 Planet Payment 123, ,000 Sagentia Group 297, Total Support Services 420, TECHNOLOGY HARDWARE & EQUIPMENT (4.41%, Apr %) 250,000 Amino Technologies 101, ,517 BATM Advanced Communications 45, ,000 Belgravium Technologies 59, ,000 MTI Wireless Edge 18, ,700,000 Pure Wafer 67, ,000 Sepura 62, ,205 Software Radio Technology 237, ,000 Telit Communications 90, ,000 Vislink 139, Total Technology Hardware & Equipment 822, TRAVEL & LEISURE (0.97%, Apr %) 300,000 Probability 180, Total Travel & Leisure 180, CANADA (14.57%, Apr %) 58,300 EXFO 219, ,100 March Networks 516, ,000 Miranda Technologies 720, ,000 Mitec Telecom 3, ,000 Peer 1 Network 130, ,000 Redknee Solutions 126, ,900 Ruggedcom 245, ,000 Sandvine 403, ,000 Wi-Lan 346, Total Canada 2,712, UNITED STATES (39.99%, Apr %) 60,000 Actuate Software 240, ,000 Antares Pharma 211, ,350 Apple 338, ,000 Audiocodes 177, ,000 Authentec 260, ,000 Aviat Networks 189, ,100 Avid Technologies 81, ,517 Calamp 49, ,800 CEVA 188,

10 Portfolio statement as at 31 October 2011 Holding or Bid Percentage of nominal value value total net assets as at 31 Oct 11 % UNITED STATES (continued) 52,000 ClickSoftware Technologies 319, ,000 Digi International 205, ,000 Ebay 295, ,201 Extreme Networks 183, ,800 Guidance Software 177, ,200 Harmonic 173, ,000 Ikanos Communications 193, ,000 Immersion 217, ,000 ipass 162, ,000 Mitek Systems 630, ,000 Move 85, ,000 MRV Communications 162, ,000 Ocean Power Technologies 34, ,600 Openwave Systems 185, ,000 Opnet Technologies 406, ,000 PC-Tel 221, ,983 Pervasive Software 117, ,000 Polycom 307, Proxim Wireless 1, ,000 Radware 213, ,624 Saba Software 286, ,000 Selectica 18, ,000 Sonus Networks 122, ,000 SRS Laboratories 108, ,000 Tekelec 274, ,800 Towerstream 388, ,000 Web.com Group 119, ,009 Zhone Technologies 103, Total United States 7,455, UNQUOTED SECURITIES (0.01%, Apr %) 500,000 Camaxys Group ,000 Infoserve Group 1, Multipower Total Unquoted Securities 1, Portfolio of investments 17,801, Net current assets 833, Net assets 18,634, The investments of the Fund have been valued using bid market values ruling on international stock exchanges at close of business on 31 October 2011, being the last valuation point of the period. Market value is defined by the SORP as fair value which is generally the bid value of each security. Where applicable investments are valued to exclude accrued income.where a stock is unlisted or where there is a non liquid market, a valuation for this stock has been obtained from marke tmakers where possible, and suspended stocks are normally valued at their suspension price. However, where the Manager believes that these prices do not reflect a fair value, or where no reliable price exists for a security, it is valued at a price which in the opinion of the Manager reflects a fair and reasonable price for that investment.camaxys and Multipower are delisted and any payment cannot be quantified at this stage. Infoserve Group is delisted and valued at the last trading price. Portfolio transactions for the six months ended 31 October 2011 Total purchases, including transaction charges 4,229,383 Total sales proceeds, net of transaction charges 5,762,687 7

11 INTERIM FINANCIAL STATEMENTS (unaudited) For the six months ended 31 October 2011 Statement of total return 31 October October 2010 Income: Net capital gains/(losses) (2,597,536) 1,637,825 Revenue 63,764 45,170 Expenses (182,130) (122,503) Finance costs: Interest (100) (52) Net revenue/(expense) before taxation (118,466) (77,385) Taxation (4,541) (2,279) Net revenue/(expense) after taxation (123,007) (79,664) Total return before distributions (2,720,543) 1,558,161 Finance costs: Distributions 2,458 (8,114) Change in net assets attributable to shareholders from investment activities (2,718,085) 1,550,047 Statement of change in net assets attributable to shareholders 31 October October 2010 Opening net assets attributable to shareholders * 22,203,584 13,457,816 Amounts receivable on issue of shares 193,448 3,282,925 Amounts payable on cancellation of shares (1,041,868) (802,295) (848,420) 2,480,630 Stamp duty reserve tax (2,348) (472) Change in net assets attributable to shareholders from investment activities (2,718,085) 1,550,047 Closing net assets attributable to shareholders 18,634,731 * 17,488,021 * These figures are not the same as the comparatives are taken from the preceding interim period and not the last final accounts. 8

12 INTERIM FINANCIAL STATEMENTS (unaudited) as at 31 October 2011 Balance sheet 31 October April 2011 Assets: Investment assets 17,801,486 21,923,902 Debtors 3,036 33,353 Cash and bank balances 953, ,663 Total other assets 956, ,016 Total assets 18,757,789 22,394,918 Liabilities: Investment liabilities 0 0 Creditors (32,732) (76,196) Bank overdraft (90,326) (115,138) Total other liabilities (123,058) (191,334) Total liabilities (123,058) (191,334) Net assets attributable to shareholders 18,634,731 22,203,584 Notes to the interim financial statements. Accounting policies The interim financial statements have been prepared under the historical cost convention, as modified by the revaluation of investments, and in accordance with the Statement of Recommended Practice for Authorised Funds issued by the Investment Management Association in October The accounting policies applied are consistent with those of the annual financial statements for the period ended 30 April 2011 and are described in those annual financial statements. 9

13 Marlborough Fund Managers Limited Marlborough House 59 Chorley New Road Bolton BL1 4QP Customer Support: Intermediary Support: Dealing: Fax: Website: Marlborough Fund Managers Limited Registered in England No Authorised and regulated by the Financial Services Authority and a member of IMA