Polar Capital Technology Trust plc

Artificial Intelligence sparks into life

Annual Report & Financial Statements

For the year ended 30 April 2023

Polar Capital Technology Trust plc Annual Report & Financial Statements for the year ended 30 April 2023

Contents

Purpose

The purpose of the Company is to provide a vehicle in

which investment is spread across a diversified portfolio

of technology companies which aim to deliver long term

capital growth to shareholders. The purpose is achieved

through the Investment Objective and by applying the

investment policy incorporating parameters to ensure

excessive risk is not undertaken.

Investment Objective

The Investment Objective is to maximise long-term capital

growth through investing in a diversified portfolio of

technology companies around the world. The investment

policy and investment guidelines are set out in full in the

Strategic Report on pages 54 to 56.

Management structure

The Company is an investment trust led by an experienced

Board of Independent non-executive Directors with extensive

knowledge of investment matters, and the regulatory and

legal framework within which your Company operates. The

role of the Board is to provide oversight of the Company’s

activities and to seek to ensure that the appropriate financial

resources and controls are in place to deliver the Investment

Objective and manage the risks associated with such

activities. The Directors have appointed various third-party

suppliers to provide a range of services including investment

management, depositary and administrative services to the

Company.

Polar Capital LLP has been the appointed Investment

Manager and AIFM throughout the year. Ben Rogoff, the

appointed portfolio manager, has been responsible for the

Company’s portfolio since 1 May 2006 and is supported

by Deputy Fund Manager, Alastair Unwin and a team of

technology specialists. Polar Capital LLP is authorised and

regulated by the Financial Conduct Authority.

Our Business at a Glance

* These narrative statements form part of the Strategic

Report section as required under The Companies Act 2006.

Overview

Our Business at a Glance IFC

Financial Highlights 1

Performance 3

Chair’s Statement* 4

Financial Performance Review 6

Board of Directors 8

Technology Investment Team 10

Manager’s Report

Investment Manager’s Report* 14

Investment Manager’s Core Themes 28

Portfolio Review 31

Environment, Social and

Governance Report (“ESG”)

ESG – Corporate Perspective* 40

ESG – Investment Perspective* 42

ESG Dashboard 51

Corporate Governance

Strategic Report* 54

Section 172 Statement* 66

Report of the Directors 72

Report on Corporate Governance 74

Audit Committee Report* 80

Directors’ Remuneration Report 85

Report of the Nomination Committee 90

Management Engagement Committee Report 92

Statement of Directors’ Responsibilities 93

Independent Auditor’s Report 94

Financial Statements

Statement of Comprehensive Income 100

Statement of Changes in Equity 101

Balance Sheet 102

Cash Flow Statement 103

Notes to the Financial Statements 104

Shareholder Information

Alternative Performance Measures (APMs) 128

Glossary of Terms 130

Corporate Information – AGM 133

Corporate Information – Other 136

Contact Information IBC

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

www.polarcapitaltechnologytrust.co.uk

Financial Highlights

2022: -7.7%

Net Assets Per Ordinary Share

Total Return

Benchmark Total Return

Share Price Total Return

2022: -0.9% 2022: -13.7%

Year ended 30 April 2023

-2.8% +2.9% -4.9%

Key Contents

Chair’s Statement 4

Investment Manager’s Report 14

Investment Manager’s Core Themes 28

Environmental, Social and Governance 40

Audit Committee Report 80

Financial Statements 100

Information for Shareholders 133

Polar Capital Technology Trust plc

Artificial Intelligence sparks into life

Notice of Annual General Meeting

Thursday 7 September 2023

2.30PM

AGM: 7 September 2023

at 2:30pm

See the separate Notice of AGM

also available on our website.

1 Alternative Performance Measure, see pages 128 to 129

2 Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal of relevant withholding taxes). See page 130 for further details.

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Financial Summary

As at

30 April 2023

Change %

As at

30 April 2022

Year Ended

2023

Year Ended

2022

Total net assets £2,828,141,000 £3,050,985,000 (7.3%)

(10.5%)

Net Asset Value (NAV) per ordinary share 2239.48p 2305.13p (2.8%)

(7.7%)

Benchmark

3604.43 3504.44 2.9%

(0.9%)

Price per ordinary share 1940.00p 2040.00p (4.9%)

(13.7%)

Discount of ordinary share price

to the NAV per ordinary share

(13.4%) (11.5%)

Ordinary shares in issue

126,285,544 132,356,426 (4.6%)

(3.1%)

Ordinary shares held in treasury 11,029,456 4,958,574 122.4% 543.8%

Key Data

For the year to 30 April 2023

Local Currency

Sterling Adjusted

Benchmark

Dow Jones Global Technology Index (TR) 3.0 2.9

Other Indices over the year (total return)

FTSE World 3.4 3.4

FTSE All-Share 6.1

S&P 500 Composite 2.7 2.7

Nikkei 225 10.0 4.9

Eurostoxx 600 7.3 12.3

Exchange Rates

As at 30 April 2023 2022

US$ to £ 1.2569 1.2555

Japanese Yen to £ 171.15 162.66

Euro to £ 1.1385 1.1901

Expenses

For the year to 30 April 2023 2022

Ongoing charges ratio

0.81% 0.84%

Ongoing charges ratio including performance fee

0.81% 0.84%

Data supplied by Polar Capital LLP and HSBC Securities Services.

1 Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal of relevant withholding taxes). See page 130 for further details.

2 Alternative Performance Measure see pages 128 to 129.

3 The issued share capital on 13 July 2023 (latest practicable date) was 137,315,000 ordinary shares of which 12,258,825 were held in treasury.

www.polarcapitaltechnologytrust.co.uk

Financial Highlights continued

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

As at 30 April 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Net Assets (£m) 528.8 606.6 793.0 801.3 1,252.5 1,551.6 1,935.6 2,308.6 3,408.8 3,051.0 2,828.1

Share price (pence) 398.5 442.0 592.0 566.0 947.0 1,148.0 1,354.0 1,774.0 2,364.0 2,040.0 1,940.0

NAV per share (pence) 412.4 458.4 599.2 605.5 945.4 1,159.7 1,446.4 1,715.6 2,496.4 2,305.1 2,239.5

Indices of Growth

Share price 100.0 110.9 148.6 142.0 237.6 288.1 339.8 445.2 593.2 511.9 486.8

NAV per share 100.0 111.2 145.3 146.8 229.2 281.2 350.7 416.0 605.3 559.0 543.0

Dow Jones Global Technology Index

100.0 113.1 146.4 146.2 224.3 262.5 318.8 376.5 551.0 546.3 561.8

The Company commenced trading on 16 December 1996 and the share price on the first day was 96.0p per share and the NAV per share was 97.5p.

Notes:

1 Rebased to 100 at 30 April 2013

2 Dow Jones Global Technology Index (total return, Sterling adjusted) with the removal of relevant withholding taxes.

All data sourced from Polar Capital LLP.

10 Year Performance Graph

Historic Performance

200

400

600

800

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Total Return (rebased to 100)

As at 30 April

Benchmark² Company ordinary share price Company NAV per share

www.polarcapitaltechnologytrust.co.uk

Performance

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

This report forms part of the Strategic report section

www.polarcapitaltechnologytrust.co.uk

Introduction

Dear Shareholder,

On behalf of myself and the Board I am pleased to share

with you the Annual Report of the Company for the year

to 30 April 2023. This is my first full year Chair Statement

following my appointment as Chair in September 2022.

The year under review and in particular the period since

my appointment as Chair, has been a tumultuous one

for markets, with the post-COVID settling down period,

the continuation of the Russia-Ukraine war and the

sizeable hikes in interest rates as the central banks sought

somewhat belatedly to tackle the surge in inflationary

pressures causing a global cost of living crisis. This has also

had a resultant negative impact on long-duration assets

such as technology stocks. To add to these, on the day of

my appointment we sadly marked the passing of Queen

Elizabeth II and of course more recently we celebrated the

coronation of our newest monarch, King Charles III.

Performance

The Manager’s report is provided on pages 14 to 27 and

gives an overview of the year past and the outlook for the

near future. Over the year under review, your Company’s

net asset value (NAV) per share fell from 2305.13p to

2239.48p, a decrease of 2.8%, while the Benchmark

increased 2.9% in Sterling terms over the same period.

I would like to be reporting more positive performance

numbers, but generally markets have not been constructive

and technology in particular has suffered in the post-Covid

reset and high interest rate environment. Furthermore, our

underweighting of “mega-cap” technology stocks which

now dominate the index and which continue to lead the

sector was a significant factor in our underperformance

relative to the benchmark. That said, the Company has

performed well against its technology investment trust peer

group. We believe that there are interesting and exciting

times ahead for our sector, particularly in the field of

Artificial Intelligence (“AI”) and this is discussed further in

the Manager’s Report.

Discount Management

The Board actively monitors the discount at which the

Company’s ordinary shares trade in relation to the

Company’s underlying NAV and, whilst the Board does

not have a formal discount policy or a fixed target level for

all times and circumstances, it will continue to exercise its

discretion to buy back shares at a discount. Equally, should

fortunes change, the Board will also use discretion to issue

shares at a premium as has been done in the past. The intent

when buying back shares is to seek to reduce the volatility of

the share price, to add a small amount to NAV per share and

to address significant imbalances in the supply and demand

for shares.

We have continued to buy back stock regularly, repurchasing

a total of 6,070,882 shares in the year under review at an

average price of 1932.28 pence per share and an average

discount of 11.95%. Following the year end and up to

13 July 2023, the Company has bought back a further

1,229,369 shares. While purchase levels have been relatively

low on an individual transaction basis, we should note that

this activity does not preclude the Manager determining

that a more significant amount than usual on any one day

should be purchased. Such a decision may be influenced by,

in the Manager’s view, there being a particular investment

opportunity best accessed through buying shares in the

Company rather than buying individual securities.

Board Composition

Outside of my appointment as Chair on the retirement

of Sarah Bates after 12-years, there have been no other

changes to the membership of the Board during the financial

year under review. Biographical details of all Directors are

available on the Company’s website and are provided on

pages 8 and 9.

Chair’s Statement

Catherine

Cripps

Chair

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

www.polarcapitaltechnologytrust.co.uk

The Board is aware of the FCA’s Diversity and Inclusion

Policy and notes that its current composition meets two of

the three ‘comply or explain’ targets with three of the six

members being female and two of the three senior positions

being occupied by females. However we do not meet the

recommended ethnicity requirements. While there are no

immediate plans to recruit to the Board, the Board has put

in place a succession plan based on the recommended nine-

year tenure of Directors. It is a priority of the Board to be

able to meet all aspects of the FCA’s Diversity policy as part

of these future succession plans. Of paramount importance

is having the correct mix of skills around the table, diversity

of thought and a constructive culture that engenders lively

discussion. When we next select our recruitment consultant

to assist us with a director search we will set parameters that

ensure potential candidates are sourced from a broad pool

such that the Board can consider candidates with minority

ethnic backgrounds, especially at the final round of the

recruitment process. Further information is provided in the

Nomination Committee Report on page 90.

Annual General Meeting

We are pleased to confirm that the Company’s AGM will be

held on 7 September 2023 at 2:30pm. We have considered

feedback from the prior few years AGM’s and analysed the

attendance levels pre, during and post-COVID. Due to the

previous lack of take up for the option of attendance on-line

we are opting this year to hold an in-person only meeting

and will not be providing a hybrid attendance option. We

have also considered comments from shareholders on

cost and location, and have this year decided to move the

meeting to a central City base. We will therefore be using

the auditorium at the offices of Herbert Smith Freehills,

Exchange House, Primrose Street, London, EC2A 2EG. We

look forward to welcoming shareholders to the meeting

who will receive a presentation from the Manager and his

team and shareholders will also have the opportunity to ask

questions and meet the Board; light refreshments will again

be available following the meeting.

The notice of AGM will shortly be provided to shareholders

and will also be available on the Company’s website.

Detailed explanations on the formal business and the

resolutions to be proposed at the AGM is contained within

the Shareholder Information section on pages 133 to 134 as

well as the Notice of AGM.

Environmental, Social and Governance (ESG)

We continue to keep abreast of ESG developments and

changes in the landscape. Through regular engagement

with the Manager, we have seen how ESG considerations

have been integrated into the overall house style, the

technology team investment approach and decision making

as well as the methodology behind this. As a Board, we

believe that the Manager is best placed to integrate ESG

factors into the investment decision-making process, with

the Board providing oversight and challenge, to ensure that

the process is being executed as expected. This challenge

is undertaken through regular reporting and engagement

with the Manager. The Board receives tailored ESG related

information including the ratings of investee companies and

is able to use this as a tool to inform discussions with the

Manager during Board meetings. As at 30 April 2023, based

on MSCI ESG ratings, the portfolio and the benchmark were

both rated A.

The Board also receives regular updates on the progress

that has been made on the corporate side of Polar Capital’s

business. Please refer to the ESG Report on pages 40 to 51

which incorporates both the investment and corporate

approaches.

Outlook

Given the recent breakthroughs in Artificial Intelligence

(“AI”), we remain positive on the outlook and the future

of technology, despite a challenging macro backdrop. We

look forward to the investment opportunities this brings

for the sector, which looks well placed to benefit from AI

disruption.

Finally, the Board is delighted to welcome Alastair (Ali)

Unwin formally as Deputy Fund Manager following his

recent promotion within Polar Capital. Ali joined the Polar

Capital Technology team in 2019, has worked closely with

Ben Rogoff since joining the team and has been a regular

presenter to the Board. This appointment formalises the

involvement that Ali has on the portfolio and the Board are

pleased to support this move. Ben and Ali are supported

by an experienced technology team who have significant

experience of investing in the sector. Shareholders will have

the opportunity to meet and talk with Ali, along with other

members of the technology team at the AGM.

Catherine Cripps

Chair

18 July 2023

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

www.polarcapitaltechnologytrust.co.uk

The NAV per share declined to 2239.48p as at 30 April 2023

from 2305.13p at the start of the year. The Company’s NAV

per share total return for the period was a loss of 2.8% and

finished the year with a total net assets of £2,828.1m. The

Investment Manager’s Report on pages 14 to 27 sets out

in detail the performance of the Company for the financial

year. The chart on the following page shows in greater

detail the movement in total net assets for the year.

Total Return

The Company generates returns from both capital growth

(capital return) and dividend income received (revenue

return). The total return from the portfolio for the year was

a loss of £105.2m (2022: £258.6m loss), of which there

was a £98.3m loss (2022: £241.9m loss) from capital and

a £6.9m loss (2022: £16.7m loss) on our income account

which offsets all expenses against dividend income. Full

details of the total return can be found in the Statement

of Comprehensive Income on page 100. We choose as

a matter of policy not to allocate our expenses between

capital and income, (any performance fee is the only

expense allocated to capital). The Company’s allocation of

expenses is described in Note 2(d) on page 105 and the

allocation methodology is considered on an annual basis, no

change to the policy is recommended (2022: no change).

The total net losses per share were 81.28p (2022: net losses

of 191.61p per share). The total net losses per share was

made up of 75.98p from capital return and a loss of 5.30p

from revenue return.

Capital Return

The investment portfolio was valued at £2,640.2m

(2022: £2,811.1m) at the year end 30 April 2023.

The investment portfolio delivered a realised loss on

disposals of £190.5m (2022: £121.2m loss) and valuation

gains on investment of £83.7m (2022: £132.5m loss) for

the year ended 30 April 2023. The Company’s valuation

approach is described in Note 2 (f) on pages 105 and 106.

The derivative gains of £0.03m (2022: £5.8m loss)

represent the call and put options which are used to

facilitate efficient portfolio management. Full details of the

derivatives are set out in the Investment Managers Report

on pages 14 to 27 and Note 6 on page 109.

Revenue Return

The total investment income of £16.2m (2022: £15.87m)

represents dividend income derived from listed investments.

The investment income, excluding any one-off special

dividends, increased by 0.7% for the year and this was

driven by changes in holdings, dividend rates, and FX rate

changes as the Company’s revenue is generally denominated

in currencies other than Sterling. The increase in interest

rates which started at the end of the 2022 financial year has

continued. This led banks and Money Market Funds (MMF)

to make higher interest income payments. As a result, during

the year under review, the Company received other operating

income of £3.8m (2022: £0.031m) which was derived from

bank interest and MMF interest. It should be noted, however,

that the MMF is held primarily as a cash diversification factor

rather than an income generating investment. As stated

above, as a matter of policy, all expenses (excluding the

performance fee) are charged to revenue and as a result,

expenses normally exceed the income received in any given

year. As has been the case for many years, the revenue

reserve therefore remains negative. The Company historically

has not paid dividends given the nature of its focus on

longer-term capital growth. The Board reviews this stance on

a periodic basis.

Expenses

The total expenses for the year under review amounted

to £24.7m (2022: £30.6m) and include investment

management fees of £21.9m (2022: £28.3m),

administrative expenses of £1.2m (2022: £1.3m) and

finance costs of £1.6m (2022: £1.0m). The Company’s

operating expenses comprise predominantly variable costs,

such as management, depositary and custody fees which

increase and decrease based on the net asset value. Other

expenses remained at a similar level to the last year. The

finance costs increased slightly due to the increase in

interest rates. As noted in last year’s Annual Report, the

agreement which was made with Polar Capital to amend

the base management fee tier levels came into effect from

1 May 2022, and this resulted in a 8.7% reduction in

management fees for the year when compared to the prior

management tiers calculation. There was no performance

fee accrued at the year ended 30 April 2023 (2022: £nil).

Ongoing Charges

Ongoing Charges Ratio (OCR) is a measure of the

ongoing operating costs of the Company. It is calculated

in line with the AIC recommended methodology,

represents the total expenses of the Company, excluding

finance costs, and is expressed as a percentage of the

average daily net asset value during the year. The OCR

demonstrates to Shareholders the annual percentage

reduction in NAV as a result of recurring operational

expenses, that is, the expected cost of managing the

portfolio. Whilst based on historical information, the OCR

provides an indication of the likely level of costs that will

be incurred in managing the Company in the future. The

OCR for the year to 30 April 2023 was 0.81% (2022:

Financial Performance Review

For the year ended 30 April 2023

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

0.84%). The OCR including the performance fee for the

year to 30 April 2023 was the same as no performance

fee was accrued at the year end. As noted above under

expenses, the reduction in the OCR is mainly due to the

reduction in management fee tier levels which came into

effect from 1 May 2022, and the change in the net asset

value during the year under review. See Alternative

Performance Measures on pages 128 to 129.

Cash and Cash Equivalents

As in the prior years, the Company’s cash level

remained relatively high, closing the year with £239.1m

(2022: £311.4m). As noted above, as part of the

Company’s cash diversification strategy, the Company

has taken a cautious approach and has chosen to invest

50% of its USD cash balance into a USD Treasury Money

Market Fund. As at 30 April 2023, the Company held the

BlackRock Institutional Cash Series – US Treasury Fund with

a market value at year end of £90.4m (2022: £92.0m).

Portfolio Turnover

Portfolio turnover (purchases and sales divided by two)

totalled £2,268.9m equating to 77% for the year to

30 April 2023 (2022: 84%) of average net assets over the

year. Details of the investment strategy and portfolio are given

in the Investment Manager’s Review on pages 14 to 27.

Gearing

The Company can use gearing for investment purposes

as stated on page 56. In September 2022, the Company

entered into replacement contracts with ING Bank N. V for

two, two-year fixed rate term loans (JPY 3.8bn and US$36m).

These loans replaced the previously held two-year loans of

JPY 3.8bn and US$36m which expired on 30 September

2022. Both loans fall due for repayment on 30 September

2024. The repayment of both loans, totalling approximately

£50.8m (2022: £52.0m), would equate to less than 2% of

the Company’s NAV as at 30 April 2023.

Foreign Exchange

The majority of the Company’s assets and revenue

are denominated in currencies other than Sterling and

are impacted by foreign exchange movements. As at the

year ended the other currency gains of £8.4m represents

the exchange gains on currency balances of £7.2m and

net gains on translation of loan balances of £1.2m.

The Company’s total return and net assets can be affected

by the currency translation and movements in foreign

exchange. Note 27 (a) (ii) on pages 119 to 122, analyses the

currency risk and the management of such risks.

Catherine Cripps

Chair

18 July 2023

£ million

Total net

assets at

30 April 2022

Valuation

gains on

investments

Losses on

disposal of

investments

Gains on

derivatives

Other

currency

exchange

gains

Total income Total expenses Tax Ordinary

repurchased

into treasury

Total net

assets at

30 April 2023

Increase

2,500

2,600

2,700

2,800

2,900

3,000

3,100

3,200

3,300

3,400

3,500

3,051.0

83.7

-190.5

0.0

8.4

20.0

-24.7

-2.1

-117.7

2,828.1

Decrease

Total

Contributors to the movement in total net assets for the year to 30 April 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Tim Cruttenden

Independent

Non-Executive Director

and Senior Independent

Director (“SID”)

Appointed to the Board in

March 2017 and as SID and Chair

of the Remuneration Committee

in July 2020.

Skills and Experience

Tim is currently Chief Executive

Officer of VenCap International

plc having been with the company

in various positions since 1994.

VenCap invests in venture capital

funds in the US, Asia and Europe,

with a primary focus on early stage

technology companies.

Other Appointments

NED, Chrysalis Investments Limited.

PCT Share Interests

1,000

Annual Remuneration

Financial - year ended 2023

£37,200

Rationale for re-election

Tim has extensive technology

private equity investment

experience and brings an

alternative investment perspective

to discussions on the portfolio.

The Board and Manager value the

investment debates at meetings

particularly where Tim focusses on

new themes and they welcome the

continued contribution from him.

Charlotta Ginman

Independent

Non-Executive Director and

Chair of the Audit Committee

Appointed to the Board in

February 2015 and as Audit Chair

in September 2015.

Skills and Experience

Charlotta qualified as a Chartered

Accountant at Ernst & Young

before spending a career in

investment banking and commercial

organisations, principally in technology

related businesses. She held senior

roles with JP Morgan, Deutsche Bank,

UBS and the Nokia Corporation.

Other Appointments

NED and AC Chair of Pacific

Assets Trust plc and Gamma

Communications plc, SID and AC

Chair of Keywords Studios plc, SID

of Unicorn AIM VCT PLC and NED

of Boku Inc.

PCT Share Interests

4,941

Annual Remuneration

Financial - year ended 2023

£40,000

Rationale for re-election

Charlotta has recent and relevant

financial and investment expertise

with a strong accounting background

which enables her to perform

in-depth analyses of the Company’s

Financial Statements in conjunction

with the external service providers.

Charlotta actively works with Polar

Capital and the Auditors to ensure a

smooth year-end process and audit.

She has brought her considerable

experience of audit, governance and

related regulatory matters as they

apply to the Company. Charlotta

will hand over the Chair of the

Audit Committee to Jane Pearce on

31 October 2023 but will remain

on the Board as a non-executive

Director.

Where there might be concern of

over-boarding, as three of Charlotta’s

roles are with investment companies

that typically have only five Board

meetings a year and the other

companies are all AIM listed, with less

regulatory burden than a premium

listing, Charlotta has sufficient time

to devote to each of her roles.

Charles Park

Independent

Non-executive Director

Appointed to the Board in

January 2018.

Skills and Experience

Charles has over 25 years of

specialist investment experience

and was a co-founder of Findlay

Park Partners, an investment firm

specialising in quoted American

equity investments. Prior to this,

he was a US fund manager at Hill

Samuel Asset Management.

Other Appointments

NED of North American Income

Trust plc and Evenlode Investments.

PCT Share Interests

1,840

Annual Remuneration

Financial - year ended 2023

£33,000

Rationale for re-election

Charles has extensive equity

investment experience and brings

to the Board current and active

knowledge of the industry from a

different, value based investment

approach which contributes to

Board and Manager discussions.

He also brings his understanding

of investment management firms,

fees and the private client wealth

management sector to Board

discussions. He has helped the

Board by bringing perspectives

from elsewhere to give context and

insight into investment markets. He

has also brought his interest in ESG

issues to our discussions.

Catherine Cripps

Independent

Non-Executive Chair

Appointed to the Board in

September 2021 and as Chair in

September 2022.

Skills and Experience

Catherine is a qualified Chartered

Accountant who has in excess

of 30 years’ senior investment

industry experience in a number

of trading, risk management and

investing roles including Investment

Director and Head of Research at

GAM. Previously, Catherine was

non-executive director of CQS

Management Limited, Merian

Global Investors and Nuclear

Liabilities Fund.

Other Appointments

NED and Board Risk Committee

Chair of Goldman Sachs International

and Goldman Sachs International

Bank and Member of the Audit

Committees. NED of Maniyar Capital

Advisors and Pool Re.

PCT Share Interests

481

Annual Remuneration

Financial - year ended 2023

£47,737

Rationale for re-election

Catherine joined the Board in 2021

and assumed the role of Chair in

September 2022. She brings to

the Board a wealth of investment

industry experience following

a number of roles including

Investment Director and Head of

Research at GAM International.

Since taking on the role of

the Chair, Catherine has been

proactive in engaging and building

relationships with the Manager

and continues the strong link with

Polar Capital, she has demonstrated

effective leadership skills.

Board of Directors

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Stephen White

Independent Non-Executive

Director

Appointed to the Board in

January 2018.

Skills and Experience

Stephen qualified as a Chartered

Accountant at PwC before starting a

career in investment management.

He has more than 35 years’

investment experience, most notably

as Head of European Equities at

F&C Asset Management, where he

was manager of F&C Eurotrust plc

and deputy manager of The F&C

Investment Trust plc, and as Head of

European and US equities at British

Steel Pension Fund.

Other Appointments

NED and Chair of Brown Advisory US

Smaller Companies Trust plc. NED

and AC Chair of BlackRock Frontiers

Investment Trust plc and NED of

Henderson EuroTrust plc.

PCT Share Interests

10,000

Annual Remuneration

Financial - year ended 2023

£33,000

Rationale for re-election

Stephen has many years of

investment and financial experience

including as an investment company

manager, which he brings to the

Board. He has been particularly

interested in our Manager’s individual

stock holdings and has encouraged

helpful debate. He also has wide

experience of the institutional and

investment company sector, of its

fees, clients and approaches. He also

holds other audit committee chair

positions which bring extra support

to our Audit committee.

Jane Pearce

Independent Non-executive

Director and Audit

Chair Elect.

Appointed to the Board in

September 2021.

Skills and Experience

Jane is an experienced

non-executive director and

Chartered Accountant with

over 20 years’ financial markets

experience. She has a number

of years’ experience as a

Technology Equity Analyst and

as an Equity Strategist at leading

investment banks including Lehman

Brothers and Nomura International.

Other Appointments

NED and AC Member of Shires

Income plc. NED of Morgan Stanley

Bank International Limited, Morgan

Stanley & Co International plc

and Morgan Stanley International

Limited.

PCT Share Interests

930

Annual Remuneration

Financial - year ended 2023

£33,00

Rationale for re-election

Jane is an experienced non-executive

director and Chartered Accountant

with over 20 years’ financial

markets experience including as a

technology equity research analyst.

She is a keen participant in meetings

often bringing a new perspective

to discussions. Jane will assume

the role of Chair of the Audit

Committee on 31 October 2023

ahead of the retirement of

Charlotta Ginman from the Board in

September 2024.

Company Secretarial &

Fund Accounting

(Provided by Polar Capital LLP)

Tracey Lago, FCG

Deputy Group Company Secretary &

Head of Investment Trust Secretariat

Jumoke Kupoluyi, ACG

Investment Trust Company Secretary

Mala Krishnasamy, FCCA

Investment Trust Fund Accountant

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Ben Rogoff

Partner

Lead Manager

Ben has been a technology specialist for 27 years.

He has been lead manager of Polar Capital

Technology Trust plc since 2006, and is a Fund

Manager of the Polar Capital Global Technology

Fund and Polar Capital Automation and Artificial

Intelligence Fund. Prior to joining Polar Capital,

he began his career in fund management at

CMI, as a global technology analyst. He moved

to Aberdeen Fund Managers in 1998 where he

spent four years as a senior technology manager.

Ben has a BA (Hons) in Modern History from

St Catherine’s College, Oxford.

Nick Evans

Partner

Nick joined Polar Capital in 2007 and has

25 years’ experience as a technology specialist. He

has been lead manager of the Polar Capital Global

Technology Fund since January 2008 and is also

a fund manager on the Polar Capital Technology

Trust and Polar Capital Automation and Artificial

Intelligence Fund.

Nick has a degree in Economics and Business

Economics from Hull University, has completed

all levels of the ASIP, and is a member of the CFA

Institute.

Xuesong Zhao

Partner

Focus areas: Semiconductors, Asia,

Internet, Industrial Automation and

Artificial Intelligence

Xuesong joined Polar Capital in 2012 and has

15 years’ investment experience. He is a lead

manager of the Polar Capital Automation and

Artificial Intelligence Fund and is a fund manager

on the Polar Capital Technology Trust and Polar

Capital Global Technology Fund. Xuesong holds

an MSc in Finance from Imperial College of

Science & Technology, a BA in Economics from

Peking University and is also a CFA Charterholder.

Alastair Unwin

Deputy Fund Manager

Focus areas: Software, Internet,

Fintech / Payments

Alastair joined Polar Capital in June 2019 and

has 12 years’ investment experience. Prior to

joining Polar Capital, Alastair co-managed the

Arbrook American Equities Fund. Between 2014

and 2018 he launched and then managed the

Neptune Global Technology Fund and managed

the Neptune US Opportunities Fund. Alastair has a

BA (1st Class Hons) in History from Trinity College,

Cambridge and is a CFA Charterholder.

Paul Johnson

Investment Analyst

Focus areas: Automotive (EV/AV), video

gaming and 3D printing

Paul joined Polar Capital in 2012 and has 10 years’

investment experience. Prior to joining Polar

Capital Paul helped manage a private investment

fund between 2010 and 2012. Paul holds a BA in

History and Politics and a Masters in History from

Keele University. Paul is also a CFA Charterholder.

Fatima Iu

Fund Manager

Focus areas: Cybersecurity, 5G, Clean

Energy and Medtech

Fatima joined Polar Capital in 2006 and has

16 years’ investment experience. She is a fund

manager on the Polar Capital Global Technology

Fund, Polar Capital Technology Trust and Polar

Capital Automation and Artificial Intelligence

Fund. Fatima holds an MSc in Chemistry with

Medicinal Chemistry from Imperial College of

Science & Technology in London. She is also a

CFA Charterholder.

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Nick Williams

Investment Analyst

Focus areas: Artificial Intelligence,

Healthcare and Clean Energy

Nick joined Polar Capital in June 2019 as an

analyst on the Polar Capital Technology team and

has 7 years’ investment experience. Prior to joining

Polar Capital, Nick worked at Neptune Investment

Management as the Assistant Fund Manager

on the US Opportunities Fund. Prior to that he

worked in academia at the University of Oxford.

Nick holds an MChem in Chemistry from Wadham

College, University of Oxford.

Patrick Stuff

Investment Analyst

Focus area: Artificial Intelligence and

Industrial

After graduating from the University of Warwick

with a BSc in Economics, Patrick joined Polar

Capital as an Operations Executive, where

he provided operational support to all fund

management teams at Polar, including the

Technology team. During this time Patrick

successfully passed all three levels of the CFA

program first time, and subsequently, after a

successful 8 months seconded to the technology

team, Patrick joined on a full-time basis in May

2021 as an investment analyst with a focus on

AI and Industrial companies. Patrick has 6 year’s

investment experience.

www.polarcapitaltechnologytrust.co.uk

Ben Rogoff

Fund Managers (x4)

Investment Analysts (x3)

Experience breakdown (years)

The team collectively manage

£6.7bn in assets

Polar Capital Technology Trust

Polar Capital Global Technology Fund

Automation and Artificial Intelligence Fund

£2.8bn

£3.6bn

£274.9m

As at 30 April 2023

Manager’s Report

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Market Review

As discussed in our last Annual Report, we believe 2022

is best understood as the year ‘risk was repriced’ as

central banks moved forcefully to rein in the economy,

defend their credibility and prevent inflation expectations

becoming unanchored. Proving anything but ‘transitory’,

inflation continued to surprise to the upside taking global

risk-free rates with it. In the US, consumer price inflation

(CPI) averaged 8.0% during the calendar year, while the

+9.1% reading in June was the largest year-on-year (y/y)

monthly gain since 1981. The inflation shock was hardly

unique to the US, with soaring energy and food prices,

labour markets with more jobs than available workers

and the release of pent-up demand combining to create

the most inflationary backdrop globally for 40 years. For

the full year, global inflation averaged 8.8% compared to

pre-pandemic levels of around 3.5%.

As a result of this persistent inflation, 2022 was also a

year of unprecedented interest rate rises, after an oddly

slow start by central banks. In the US, the Federal Reserve

(Fed; the US central bank) embarked on the steepest set

of rate hikes in 40 years as rates were raised by 450 basis

points (bps), including four 75bps hikes, in addition to

the resumption of quantitative tightening (QT) whereby

the Fed reduces its monetary reserves to ‘tighten’ its

balance sheet. Futures markets at the start of 2022 had

priced in expectations for Fed Funds (the key benchmark

rate targeted by the Fed) to be at c1% by June 2023;

by year end, this figure had risen to c5%. In Europe, the

decade-long experiment with negative interest rates ended

as the European Central Bank (ECB) raised rates by 250bps

despite a high likelihood of recession. Most other major

markets experienced tightening in excess of 200bps.

Sharply higher risk-free rates weighed heavily on asset

prices, not least bonds which experienced their worst

calendar year returns since at least the 1970s, the

Ben Rogoff

Partner, Technology

Bloomberg US Aggregate Float-Adjusted Index losing

13.1%. This theme was painfully echoed in equity markets

– the longer the duration, the worse the return. Ten-year

US Treasuries suffered their worst annual performance

since 1788 while record government bond losses were

recorded in Japan, Europe, and the UK with drawdowns

of 16.2%, 22% and c32% respectively. Having stood

at $10trn in January 2022, the global stock of negative-

yielding bonds had fallen to essentially zero by calendar

year end.

Higher sovereign yields weighed heavily on global equities,

which also had to contend with elevated recession risk

and negative earnings revisions. During the calendar year,

2yr-10yr Treasury yields fell to their most negative spread

(where 2-year yields are higher than 10-year yields) in

more than 40 years. Aggregate earnings estimates for

companies in the S&P 500 Index in 2023 fell from $245

to around $230, while 2024 forecasts fell to c$250,

essentially losing a year of growth. As measured by the

MSCI All-Country World Index (ACWI), global equities

fell by -18.4%, in dollar terms, their worst showing since

2008. The S&P 500 Index (-19.4%) also posted its biggest

fall since 2008 and its seventh worst year since 1926. The

unusual correlation between bond and equity markets,

courtesy of inflation, meant that 2022 will probably be

remembered for being the first year that both the S&P

500 (equities) and 10-year US Treasuries (bonds) each

registered losses of more than 10% on a total return basis.

It was also the worst year for combined total returns of

stocks and bonds since 1982.

A bad year for US equities proved a calamity for growth

stocks which suffered their worst year compared to value

stocks since 2000. Helped by energy’s record year (+59%)

versus the broader market, the Morningstar US Value

Index fell just c1% while the Morningstar US Growth Index

plunged by c37%.

This report forms part of the Strategic report section

Investment Manager’s Report

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Equities started strongly in 2023 as extreme pessimism and

bearish positioning were challenged by disinflationary data,

weaker energy prices and sharply lower real rates, as well

as a better than feared Q4 company earnings season and a

momentum / short squeeze. European equities and 60/40

portfolios recorded their best start to a year since at least

1987, while the tech-heavy NASDAQ Composite Index

enjoyed its strongest year-to-date performance since 2001.

However, sentiment turned more negative in February as

a slew of strong economic data for January challenged

the excitement that the interest rate tightening cycle was

largely complete. Investment grade global bond markets

gave back their year-to-date gains, while corresponding

equity market weakness has seen US indices either

approach or break 50-day moving averages as positioning

and sentiment tailwinds came to an end and stocks began

to fall on bad news or weak earnings reports.

The collapse of Signature Bank and then Silicon Valley Bank

(SVB) in March provided the most significant casualties of

aggressive Fed tightening. In order to prevent contagion,

the US Treasury, Federal Reserve and Federal Deposit

Insurance Corporation (FDIC) announced that all deposits

of SVB and Signature Bank would be insured, solving the

immediate risk to deposit holders, and helping to stem

rapid withdrawals which totalled $42bn in just four hours

at peak. However, concerns remained that these bank

failures were emblematic of wider issues in the banking

sector, prompting extreme bond volatility and a ‘flight to

safety’ with US 2-year yields falling by 130bps in just eight

trading days. Credit Suisse fell soon afterwards, when

actions by the Swiss central bank failed to stem client

outflows and counterparty de-risking. UBS Group agreed

to buy the 166-year-old lender for 3bn Swiss francs (40%

of its market value) in a historic government-brokered deal

aimed at containing the crisis.

Technology Review

In addition to the pressures felt by the broader market,

technology stocks also had to contend with the further

unwinding of perceived ‘Covid winners’ which weighed

on the sector’s relative growth and its companies’

valuations. However, marked outperformance by the

sector giants during early 2023 left the technology sector

(represented by the Dow Jones Global Technology Index)

modestly ahead of the broader market (MSCI ACWI) for

our full fiscal year to 30 April 2023, the Dow Jones Global

Technology Index returning +2.7% and the MSCI ACWI

+2.1% respectively, both in sterling terms.

However, overall index returns contrasted with those

enjoyed by the average stock, especially during 2022,

when just 30% of technology stocks outperformed. For

the 2022 calendar year (two-thirds of which fell within our

past fiscal year), the Dow Jones Industrial Average (DJIA)

outpaced the NASDAQ Composite Index by more than

2,400bps, the greatest divergence between the two since

2000. During this period, value significantly outperformed,

outpacing the most expensive quintile of technology

stocks by 35% in 2022. Perceived defensive businesses

such as Hewlett Packard Enterprise (+17%), IBM (+24%)

and Oracle (+7%) sidestepped the massive de-rating

of growth stocks that all but wiped out the EV/sales

valuation premium normally enjoyed by next-generation

software stocks over legacy incumbents, making it another

challenging year for growth-oriented technology investors,

us included.

As in 2021, the greatest weakness was reserved for the

longest duration assets with limited valuation support.

Tesla fell an incredible 65% during 2022, commensurate

with the decline experienced by MSCI Ukraine and Bitcoin,

revealing extreme cross-correlation. Weakness in category

leaders like Tesla presaged a collapse in ‘second liners’ such

as would-be electric vehicle (EV) makers Rivian (-82%) and

Lucid (-82%). The ARK Innovation fund fell a further 63%

in 2022 after declining 23% in 2021. Thankfully – and

something we have highlighted for the past two years –

the most pain was felt beyond listed equities as bubbles

in cryptocurrency, non-fungible tokens (NFTs) and Special

Purpose Acquisition Companies (SPACs) were destroyed.

Cryptocurrencies plunged in 2022, led by Solana (-94%),

Cardano (-81%) and Ethereum (-68%) leading to many

industry bankruptcies before engulfing FTX and Sam

Bankman-Fried. PCTT does not invest in either SPACs or

cryptocurrencies.

Thankfully the technology sector’s fortunes reversed with

the arrival of the new calendar year, covering the final four

months of our fiscal year, during which our benchmark

advanced +16.9% as compared to the MSCI ACWI’s

+4.7% gain. This was driven by better-than-expected

macroeconomic data which prompted optimism around

e-commerce and digital advertising growth against low

expectations, while Artificial Intelligence (“AI”) provided

a new growth outlet to many semiconductor companies

given the calculation (compute)-intensive nature of large

language model (LLM – see more below) training and

inference. However, this period also saw extraordinary

outperformance of large-cap companies, as measured

by the Russell 1000 Technology Index, which delivered

+22% while small-caps as measured by the Russell 2000

Technology Index, fell 1.9%, both in sterling terms. Mega-

cap technology stock performance has been even more

pronounced, benefitting from a ‘flight to quality’ amid the

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

collapse of SVB, money flowing from the financials and

energy sectors and excitement about and desire for AI

exposure.

At the technology subsector level, AI enthusiasm proved

an important driver for semiconductors, the Philadelphia

Stock Exchange Semiconductor Index (SOX) returning

+4.2%. This was impressive given weakness in other

end markets including smartphones and PCs. Earlier

widespread semiconductor shortages and price increases

scared customers who then scrambled to modify

procurement policies to secure supply at the expense

of inventory discipline, resulting in a severe inventory

correction. Auto and industrial markets were more stable

and datacentre spending remained relatively resilient as

the large cloud providers continue to invest in anticipation

of a compute-intensive AI future. These trends, together

with further evidence of ‘semiconductor sovereignty’

(epitomised by the $280bn CHIPS and Science Act) saw

wafer fabrication equipment (WFE) spending surpass

$100bn for the first time.

Despite enthusiasm about AI, there was a significant

slowdown in cloud revenue growth as customers optimised

spend following the pandemic-induced acceleration.

Aggregate cloud revenue growth slowed by 400-500bps

per quarter from +36% in Q2’22 and +31% in Q3 before

falling to +26% and +21% in Q4 and Q1 respectively. This

was a disappointment despite the public cloud’s vast scale

at >$170bn annualised revenue run rate.

The slowdown in cloud revenues reflected a broader

slowdown within software, especially at Software as a

Service (SaaS) companies. During the year, many software

companies highlighted greater deal scrutiny, longer sales

cycles, deal compression and in later months found it more

difficult to expand seat counts as customers retrenched.

While the Bloomberg Americas Software Index returned

4%, this largely reflected strong returns from legacy

players with limited growth profiles but generally strong

pricing power and undemanding valuation multiples.

Microsoft also delivered strong returns (+11.8%) as Azure

continued to grow well and customers consolidated spend

on the largest platforms. Conversely, diminished risk

appetite and a higher interest rate environment presaged

a material valuation reset in the higher growth parts of the

sector which saw the Goldman Sachs Expensive Software

basket return -27%.

In the internet sector, echoes of the pandemic period

continued to impact results, from still-slowing gross

merchandise value (GMV) growth at many e-commerce

companies, inventory issues at retailers and an ongoing

travel and entertainment spending boom, as consumer

spending continued to shift from goods to services. The

NASDAQ Internet Index returned +1.0% during the fiscal

year with a material divergence between mega-cap and

smaller-cap constituents.

Portfolio Performance

The Company underperformed its benchmark with the

net asset value (NAV) per share falling -2.8% during the

fiscal year versus an increase of 2.9% for the Dow Jones

Global Technology Index. The Company’s share price fell

by -4.9%, reflecting the additional impact of the discount

widening from 11.5% to 13.4% during the period. We

continue to monitor the discount and the Company

bought back 6.07 million shares during the fiscal year, at

an average discount of 12% to NAV.

The greatest headwind to the Company’s relative performance

was the dominance of large-cap technology stocks which we

are structurally underweight. The Russell 1000 Technology

Index (large cap) returned +5.5%, while the small-cap Russell

2000 Technology Index declined -13.8%, in sterling terms,

with divergence becoming more accentuated into the end

of the fiscal year following the collapse of SVB. Mega-cap

outperformance was even more striking as Goldman Sachs’

equal-weighted index of the six largest technology stocks

returned +10.2% during the fiscal year and +16.3% since

the end of February 2023. Within the growth part of the

technology market, the divergence in performance was even

more stark. The Russell 1000 Growth Technology Index

returned +6.3% while the Russell 2000 Growth Technology

Index returned -14.4% during the fiscal year. Unsurprisingly,

mega-cap technology companies were responsible for some

of the largest individual detractors to the Company’s relative

performance versus the benchmark. This included large

absolute but relative underweight positions in Meta Platforms,

Microsoft and Apple. Underweight positions in the largest five

index names were responsible for a little more than a fifth of

underperformance, with a larger portion of underperformance

due to compression of next generation valuations.

During the latter half of 2022 we looked to cautiously

rebuild the Company’s exposure to next-generation

software companies following significant valuation

compression. This proved premature and was responsible

for several of our largest detractors that included

CrowdStrike (-40%), CloudFlare (-45%), Atlassian (-34%)

and GitLab (-37%). Software proved our biggest detractor

at the subsector level as a period of extreme multiple

derating was followed by softer 2023 guidance as growth

slowed and customers looked to optimise their cloud and

software spending post-Covid. Less expensive software

Investment Manager’s Report continued

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companies fared little better as our positions in Elastic

(-25%), Five9 (-41%), CyberArk (-21%) and Tenable

(-33%) all contributed negatively to relative performance.

There were also a number of genuine disappointments

which impacted performance despite their modest

position sizes, including Snap (-69%), Bill.com (-55%),

Square (-39%) and Kornit Digital (-72%).

In terms of positives, our growth semiconductor

positions made a strong positive contribution given

ongoing strength in data centre demand and enthusiasm

around AI. This included Lattice Semiconductor (+66%),

Monolithic Power Systems (+18%), eMemory Technology

(+36%), Advanced Micro Devices (+5%) and the impact

of our zero-weight position in Intel (-29%), which made

up c1% of our benchmark. Leading networking company

Arista Networks (+39%) also benefitted from robust

hyperscale data centre spending. Strong automotive

demand and an inflection in electronic vehicle (“EV”)

adoption helped power semiconductor holdings Infineon

Technologies (+26%) and ON Semiconductor (+38%).

Semiconductor capital equipment players KLA Tencor

(+21%) and Disco (+40%) also delivered solid returns.

Given the weak performance of most major technology

subsectors (especially beyond the largest companies),

a number of positive contributors to our relative

performance came from peripheral areas including public

sector technology, MedTech and FinTech. They included

Axon Enterprise (+88%), Intuitive Surgical (+26%),

Dexcom (+19%) and Wise (+39%).

We are never happy when we underperform our

benchmark, even during periods when growth stocks are

deeply out of favour. However, we are heartened by the

fact that according to Lipper data, the performance of

the Company versus the broader technology peer group

remains first or second quartile over almost every period

which suggests that the challenge posed by a highly

concentrated benchmark firing on most cylinders is being

widely felt.

Market Outlook

Last year we observed how risk was being repriced as

the range of potential macroeconomic outcomes had

become unusually wide. Valuations were elevated,

earnings numbers at risk and early hopes that inflation

would subside proved sadly complacent. Twelve months

and 350bps of US rate hikes later, the range of potential

outcomes appears narrower. Tightening has weighed on

growth expectations: in its May update, the IMF forecast

global growth of 2.8% in 2023, a moderation from 3.4%

in 2022, and c10bps lower than it estimated in January.

The slowdown continues to reflect sharply higher central

bank rates necessary to combat inflation as well as the

conflict in Ukraine. While growth may be bottoming out

(aided by lower energy prices, robust private consumption,

and ongoing fiscal support), recent turmoil in the financial

sector following the collapse of several US regional banks is

a reminder that recovery is unlikely to be straightforward.

The end of China’s zero-Covid policy has already seen

emerging markets accelerate, led by China and India

which are forecast to grow 5.2% and 5.9% respectively

this year. In contrast, growth in advanced economies is

expected to slow to just 1.3% (2022: 2.7%). Risks to this

outlook appear skewed to the downside while inflation,

expected to fall to 5.6% this year and 3.7% in 2024, is

likely to continue to dictate the tenor of monetary policy.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

The good news for the market outlook is that most of

the world’s major central banks appear substantially

through their rate tightening cycles. At the beginning

of 2022, Fed Funds were near zero with futures markets

pricing in c70bps of rate hikes. Ten-year US Treasury yields

were 1.5% while real rates were negative. A little more

than a year later and following 500bps of rate hikes, the

Fed had begun to signal that the current rate-tightening

cycle might be over. However, recent central bank

rhetoric and/or action has become incrementally hawkish,

dampening earlier hopes of a more benign interest rate

environment.

With the Fed remaining ‘data dependent’, we are hopeful

that rate expectations will moderate given our view

that peak inflation is behind us. At the February Fed

press conference, Fed Chair Jerome Powell unexpectedly

declared it was “most welcome to be able to say that

we are now in disinflation”. While he offered many

caveats, Powell mentioned disinflation 15 times during

the press conference. While subsequent data has been

mixed; headline inflation almost certainly peaked last

summer. Others also appear to be past peak inflation

with c84% of countries expected to have lower headline

CPI in 2023 than in 2022. A key contributor to headline

disinflation has been sharply lower energy prices, as well

as falling goods prices as supply bottlenecks improve.

Without question, the faster-than-expected adjustment

in commodity prices to the shock from Russia’s invasion

of Ukraine represents the most constructive market

development during the past year. In Dollar terms, crude

oil has fallen by c.40% since its June highs while natural

gas prices (having risen to 18x their pre-crisis level) have

fallen precipitously, although they remain significantly

higher than before Russia began preparing to invade

Ukraine. The combination of a fortuitously warm winter,

an impasse in Ukraine and conservation measures recently

saw EU consumption of natural gas fall 25% below the

2017-21 average.

Although both core and service inflation remain

uncomfortably high, policymakers will likely be

encouraged by falling headline prices that may help

reduce wage pressure by feeding into lower wage

demands that are typically informed by headline rates.

Inflation expectations also remain well-anchored,

with market expectations of US inflation 5-10 years

out still around 2.5%, less than half the current level.

Policymakers may also regard recent bank failures as

evidence that the long and variable lag associated with

significant monetary tightening is beginning to show up,

with US regional bank turmoil acting like a further rate

hike transmitted through the credit creation channel.

According to the ECB, the negative impact on inflation

will increase from 0.2% in 2022 to 1.2% this year before

rising to 1.8% in 2024. Likewise, excess savings, which

have acted as a buffer for consumption, have also been

significantly depleted. In the US, an estimated $1.6trn of

the $2.5trn in Covid-related stimulus savings have been

spent while the personal saving rate is at its lowest in more

than 60 years (except for July 2005). These factors may

end up proving Powell right on disinflation, stock returns

have been strong following a peak in inflation as long as a

severe recession is avoided. Since 1948, the S&P 500 has

averaged a 59.2% price gain five years post-peak inflation,

including the negative 2008 and 1973-74 experiences.

While we do not anticipate a severe downturn, US

recession risk remains elevated as indicated by the spread

between two-year and 10-year Treasury yields. However,

this remains at odds with a US economy that, despite

record monetary tightening, still grew 1.1% y/y during

Q1, supported by an incredibly robust labour market,

sharply lower energy prices and “remarkably resilient”

consumer spending. While we expect the backdrop to

remain choppy, first-quarter reporting season has been

better-than-expected as 54% of S&P 500 firms have

beaten consensus earnings expectations by more than

one standard deviation of analyst estimates versus a

historical average of 46%, according to Goldman Sachs.

The downward slope of earnings per share (EPS) revisions

has also continued to improve, which could suggest the

steepest of the estimate cuts are behind us. This apparent

contradiction is in part explained by the fact that GDP

is measured in real terms while earnings estimates are

nominal. As such, inflation – which has been supportive

for (nominal) corporate revenues – continues to represent

a greater risk to valuations (via a higher discount rate/

lower multiple) than to corporate earnings, although cost

pressures have seen S&P net margins slip to 11.2% in

Q4’22 from 12.4% in Q4’21.

Against a more persistent inflationary backdrop and a

good start for markets this calendar year, valuations

appear relatively full, with the S&P 500 trading at

18.8x forward earnings (2022: 19x). This leaves US stocks

trading a little above both the five (18.6x) and 10-year

(17.4x) averages. Having previously lent on past data that

compares inflation to average PE ratios, history suggests

there is further valuation downside (to c.15x PE) should

inflation remain above 4%, and considerably more with

inflation above 6% (c.11x). However, significantly lower

valuation ranges may be more appropriate during periods

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where central banks are less able to curtail inflation

(as with the 1970s’ oil crisis) or when policymakers

choose to de-emphasise it. For now, central banks remain

highly credible and longer-term inflation expectations

well-anchored. Inevitably, equities will have to contend

with greater competition from bonds and cash than

during the era of ‘free money’, when long-term rates

averaged 2.3%. However, over the medium term

we can envisage many scenarios where equities

outperform bonds but very few where the opposite

is true. That said, we remain cautious of assets that are

illiquid, complex, or dependent on access to capital.

Upside risk will likely depend on the worst of inflation

being behind us and recession being avoided. A Fed

pause suggests that significantly tighter monetary policy

has begun to bite. This is evident not just in the banking

sector but also in waning consumer confidence, CEO

sentiment, housing affordability and the availability of

credit. However, should the Fed prove able to becalm

the labour market without causing a major spike in

unemployment, the most widely forecast recession in

history might still be averted. While history suggests this

is unlikely, there is little that is ‘normal’ about the current

cycle – the Fed has tightened substantially over the past

15 months without any significant impact on the labour

market while price inflation has declined. This unusual

combination – coined ‘immaculate disinflation’ – offers

hope the Fed is able to recalibrate price expectations

without causing an economic dislocation. With no

post-1950 precedent, economists are naturally dismissive,

but as Fed Governor Philip Jefferson, put it, “history is

useful, but it can only tell us so much, particularly in

situations without historical precedent”. Supply-chain

disruptions are improving, the labour participation rate

is recovering, and Fed credibility is high. While 1970s

throwbacks make good copy (“another winter of

discontent”), the US became a net exporter of energy in

2019 and union membership in the US stands at a third

of its 1960 peak. Even if the US cannot avoid a recession,

it does not have to be a disaster, just as a loss does not

have to be total. With investors said to be facing “the

worst backdrop for equities in over 40 years”, a mild

recession may not prove too bitter a pill. Also, absent a

recession, markets may have bottomed in October 2022.

If ‘immaculate disinflation’ seems fanciful, consider the

post WWII period when a temporary malalignment of

demand and supply saw CPI leap from 1.7% in February

1946 to a peak of 19.7% in March 1947, before

plunging to zero in 1949 with no lasting impact on

inflation expectations. Pent-up demand was part sated,

part choked by a modest Fed-induced recession while

supply recovered as factories retooled from armaments

to consumer goods. If this sounds oddly familiar, consider

how the rejection (or resignation) of ‘victorious’ pandemic

S&P 500 Information Technology Sector Forward P/E

Source: S&P Capital (Qand MSCl. Inc. (GICS)

Ratio of S&P 500 Information Technology Sector Forward P/E to S&P 500 Forward P/E

Source: S&P Capital IQ and MSCI, Inc. (GICS)

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2.6

+5 SD

+4 SD

+3 SD

+2 SD

+1 SD

Mean

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

-1 SD

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

+4 SD

+3 SD

+2 SD

+1 SD

Mean

-1 SD

S&P 500 Information Technology Sector Forward P/E

Source: S&P Capital (Qand MSCl. Inc. (GICS)

Ratio of S&P 500 Information Technology Sector Forward P/E to S&P 500 Forward P/E

Source: S&P Capital IQ and MSCI, Inc. (GICS)

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

2.6

+5 SD

+4 SD

+3 SD

+2 SD

+1 SD

Mean

2.4

2.2

2.0

1.8

1.6

1.4

1.2

1.0

0.8

0.6

-1 SD

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

+4 SD

+3 SD

+2 SD

+1 SD

Mean

-1 SD

S&P 500 Info Tech Forward PE (1992 – Present)

Ratio of S&P 500 Info Tech Forward PE (1992 – Present)

Source: Ned Davis Research

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

leaders – Ardern, Conte, Johnson, Merkel, Sturgeon, and

Trump – is also reminiscent of Churchill and De Gaulle’s

post-war experiences.

Market Risks

Except for Covid (which has diminished further as a risk,

thanks to a high level of immunity and lack of a new

variant), many of the key challenges posed to equities

are unchanged from last year. The principal risk faced

by most risk assets is inflation with central banks

focused on preventing relative price changes becoming

entrenched. However, calibrating monetary policy to

prevent “transitions from low to high inflation regimes”

is extremely challenging. Thankfully, the Fed’s preferred

measure – the personal consumption expenditures (PCE)

price index – has fallen back to 4.4%, from a high of 7%

in June 2022. However, services inflation and wage growth

remain at levels incompatible with central bank inflation

targets. Services inflation will not be easy to resolve due

to post-pandemic pent-up demand and the fact that it

has averaged c3.3% growth per annum between 1982-

2021. It will also be made more difficult by an extremely

tight US labour market with unemployment recently at its

lowest in over 50 years (3.4%) and only 0.6 unemployed

people available for every job opening. Although a weaker

economy should help, the market remains desynchronised

with sectors such as healthcare and leisure still operating

with fewer people than pre-Covid.

Should inflation fail to return to old ranges, policymakers

may adopt much more restrictive policy or admit defeat

and accept that the post-pandemic world is likely to

experience persistent higher levels of inflation. This

scenario envisages many of the same medium-term

inflationary headwinds we discussed last year: greener

but more expensive energy, deglobalisation and

supply-chain fragmentation. These (and others, such

as the loss of the peace dividend) may be incompatible

with present inflation targets that are “too low for such

a world and yet hard to revise given [the risk to] central

bank credibility”. However, we remain relatively sanguine

about inflation given potential productivity gains that

have yet to manifest themselves (especially related to

AI) that could offset some of these potential inflationary

headwinds. We are also encouraged by the fact that high

and persistent US inflation is rare, especially outside war.

While the overarching need for central banks to remain

credible means monetary policy will remain data

dependent, the risk of policy error is magnified by the

potential shift from a low to high inflation regime. The

Fed will also wish to avoid a repeat of the 1962-66 cycle

when aggressive easing in late 1966 was followed by “a

decade of engrained inflation”. If so, rates might stay

higher for longer, with the first rate cut arriving later

than the typical 7-9 months after the last hike. As such,

recession risk remains elevated; the economy might

‘slow dance’ into recession, as in 2000, or a ‘no landing’

scenario might force the Fed into inducing a recession

to bring inflation down. If history is any guide, markets

may retest lows if recession is not avoided. According

to Ned Davis Research, the broader market takes a

median of 5.3 months to reach its nadir following the

official declaration of a recession by the National Bureau

of Economic Research (NBER). Meanwhile the average

recessionary bear market has seen the market fall by

c33% over 17 months.

Recent financial sector stress has highlighted the

liquidity risk associated with unwinding record monetary

and fiscal pandemic stimulus. While we are hopeful that

recent bank failures have been contained, they – together

with the earlier cryptocurrency collapse and disfunction

last year in the UK pension market – are salient reminders

of the systemic risk posed by continued withdrawal

of liquidity. Likewise, the geopolitical risk remains

heightened too. While Ukraine no longer dominates the

headlines, war remains a key determinant of the ongoing

energy/cost of living crisis while continuing to pose

myriad risks. Despite both sides threatening major new

offensives, our base case assumes the current ‘impasse’ in

Ukraine persists as neither side looks capable of winning

the conflict nor acceding to peace terms this year. While

there remains a very serious risk of escalation, the conflict

has remained relatively well contained even as the

rhetoric has flared up on occasion. For now, stalemate

ahead of a ‘frozen conflict’ (as per Korea) rather than

a negotiated peace, looks the most likely outcome.

Beyond Ukraine, other key geopolitical risks include

US-Sino relations with the downing of three Chinese

spy balloons over US airspace earlier this year reminding

us of the risk associated with rising nationalism in both

countries. In the US, this has taken the form of economic

policy designed to frustrate Chinese technological

progress with recent export controls aimed at denying

Chinese access to advanced semiconductors representing

a notable escalation. While anti-China rhetoric is likely to

remain heightened ahead of US presidential elections, we

remain hopeful that further decoupling need not end in

acrimonious divorce. However, industrial policy is clearly

back in vogue, evidenced by greater subsidies, export

restrictions and content requirements such as the Inflation

Reduction Act, which collectively may unwind some of

the benefits of post-war globalisation.

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Finally, there are a number of tail risks. These include a

new deadlier Covid variant, a faltering Chinese recovery

or a particularly cold winter that might reignite energy

prices. Iran also represents an elevated tail risk with

a number of factors – domestic repression, nuclear

advances, military support for Russia and a Netanyahu-

led government in Israel – increasing the likelihood of

confrontation this year.

Technology Outlook

Earnings outlook

Having only increased 0.5% in 2022, worldwide IT

spending is expected to reach $4.6trn this calendar

year, representing an increase of 5.5%, in dollar terms.

However, this relatively sanguine forecast captures recent

dollar weakness; constant currency growth is likely to

prove considerably weaker. For 2023, the technology

sector is expected to deliver revenue and earnings growth

of 1.4% and 0.8% respectively. Although this compares

unfavourably with the market, which is forecast to grow

revenues and earnings 2.4% and 1.1% respectively,

the technology sector is expected to revert to more

typical above-market growth in 2024 with revenues

and earnings progress currently pegged at 8.7% and

16.3% y/y. Technology sector progress will likely be driven

by macroeconomic conditions; net profit margins remain

a key focus for earnings as they remain above long-term

averages, despite having fallen back to 22.6% from

26% last year. After two years of strength, recent dollar

weakness represents a potential tailwind for technology

estimates given the sector’s international exposure of 58%

(the highest of any sector) versus 40% for the market.

Valuation

The forward price to earnings (P/E – comparing a

company’s share price to its annual net profits) of the

technology sector continued to contract during the

past year. A year ago, valuations had fallen back to

24x forward P/E, having earlier made cycle highs of

c28x ahead of the Fed pivot in November 2021. Since

then, valuations have continued to compress against a

backdrop of higher risk-free rates and greater economic

uncertainty, with technology stocks ending the year at

c19x forward P/E. However, the calendar year to date

surge in large-cap technology stocks (against a backdrop

of falling estimates) has seen valuations recover to 27.1x

at the time of writing, ahead of both five (22.4x) and

10-year (19.2x) averages. The premium enjoyed by the

sector has also expanded during 2023 with technology

stocks today trading at 1.4x the market multiple in excess

of the post-bubble range of between 0.9-1.3x. While

current ebullience reflects understandable excitement

around AI, the recent recovery in valuations may leave

the sector vulnerable to near-term setbacks. However,

downside risk associated with full valuations should be

considered alongside actual progress made in AI, which

we believe represents a key moment for the technology

sector. It is also worth recalling that during the dot.com

period, the technology sector traded well in excess of

twice the market multiple.

No valuation premium for next-generation

stocks

While aggregate sector valuations have fully recovered,

next-generation stocks, particularly within software,

have not. Last year we referenced that valuations were

in “price discovery mode” but the correction proved far

more dramatic than we anticipated. What began as an

overdue reset has seen software valuations fall back to

c.6.3x forward EV/sales having peaked at c.14.8x in late

2020. According to KeyBanc, this leaves them 25% below

the trailing five year average (8.4x) and broadly in line with

the ten-year average (6.6x). This has also recently left next-

generation software stocks trading at a small discount to

legacy ones on a forward EV/sales metric.

Software: Cloud vs. legacy valuations EV/

trailing 12-month revenue multiples

Source: KeyBanc

Legacy Cloud

EV/ trailing 12 month sales

Feb

Nov

Feb

Nov

Sep

Aug

Jun

Mar

Jun

Mar

Jan

Oct

Jul

May

Dec

Oct

Jul

Apr

10x

15x

20x

25x

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

What pandemic?

The current situation is highly unusual, reflecting a

challenging investment backdrop as well post-pandemic

‘demand normalisation’ with many of the vestiges of

the pandemic period being swept away. Reopening has

not just challenged ‘new’ pandemic categories such as

home fitness and telehealth; it has also hurt existing

ones such as online dating and videogaming, while more

durable segments such as e-commerce and payments

have had to contend with decelerating demand and/or

increased competition. In more mature markets, earlier

working from home (‘WFH’)-related strength has been

followed by exceptionally weak demand. This is most

evident in the PC market where an extraordinary 2021

was followed by a dismal 2022 as units shipped declined

by the most year-on-year since Gartner began tracking

PC data. This dynamic has also played a part in slower

cloud and associated software demand as customers

moved to optimise their spending having earlier migrated

aggressively to the cloud. The impact on cloud spending

demonstrates the breadth of readjustment and why it

has been so difficult to avoid the miasma of post-Covid

demand normalisation.

Risk/reward much improved

We hope the largest part of any next-generation

valuation reset is behind us. In the absence of a recession,

it is highly likely we have already seen the valuation lows.

While the absence of strategic M&A remains something

of a headscratcher, we are encouraged by private

equity (PE) activity that has picked up significantly,

with Avalara, Coupa, Duck Creek and ForgeRock all

being taken private in recent months. These take-private

transactions were consummated between 6.9-8.9x

Enterprise Value/ next 12 months sales – well in excess of

where most software stocks trade today. As the recent

(and competitive) bid for Software AG attests, we expect

private equity to remain very active, providing software

valuations with something of a floor. Private equity

is said to have c$2trn of ‘dry powder’ available while

Thoma Bravo (an investor in more than 420 technology

companies over two decades) raised $32bn across PE

funds last year. In January, founder Orlando Bravo

revealed that despite the large fund raise, the selloff in

software stocks meant the opportunity to buy assets was

“many, many, many, many, many multiples of that”.

Adopting a slower growth playbook

In the meantime, companies are borrowing from the

so-called ‘PE playbook’ by recalibrating their businesses to

account for slower growth and earlier disruption-related

exuberance. The pivot towards profitability is evident

from widespread workforce reductions within the

technology sector that have intensified during 2023, with

activist investors such as Starboard helping drive the focus

on greater cost discipline. Epitomised by restructuring at

Salesforce (which announced a 10% headcount reduction

and increased operating margin targets), the unwinding

of erroneous extrapolation of pandemic-related demand

has seen layoffs move from growth-challenged companies

to high-flyers like Confluent and HubSpot. Cost-cutting

initiatives have shown positive early results: the median

software company operating margin has expanded by

nine percentage points over the past three quarters,

according to Goldman Sachs.

Nonetheless, revenue growth is slowing just as it did in

the recessions of 1990, 2002 and 2009 as well as during

the 2016 deflationary echo. While macroeconomics will

likely dictate the magnitude of the current slowdown, the

good news is the best companies should still grow, just as

the median SaaS company grew 18% in 2009 while, in

2002, median maintenance/subscription revenue growth

was 14%. Salesforce was still able to grow revenues 21%

in 2009 – impressive given the prevailing macroeconomic

conditions – and therein lies the even better news which is

that growth slowdowns should help us identify more

than our fair share of next-cycle winners. After all,

there is nothing like an ordeal to test strength. In 2009,

each of Baidu, Google, MercadoLibre, and Salesforce.

com were able to grow through a financial crisis before

becoming multi-baggers during the following cycle.

Artificial Intelligence

While the macroeconomic backdrop remains highly

uncertain, Chief Information Officer (CIO) spending

priorities still align well with many of our key themes

such as digital transformation (software), cloud and

cybersecurity. The portfolio also has several additional

core themes including connectivity/5G, digital advertising/

e-commerce and EV/energy transition as well as secondary/

emerging themes such as fintech/ payments. However

– as the theme of this year’s Annual Report attests –

2023 belongs to Artificial Intelligence (AI). We have

been excited about the potential of AI for many years,

highlighting the remarkable progress the technology has

made in narrow fields. This was led by Google’s DeepMind

acquisition which achieved ‘superhuman’ ability in games

such as Go (2016) and Chess (2017) before solving one

of the grand challenges in biology during 2021 when

AlphaFold was able to predict 3D models of protein

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structures described at the time as “the most important

achievement in AI ever”.

That lasted until ChatGPT used a transformer model trained

on 175Tb of text to generate human-like responses to

seemingly any question. Able to take on different personas,

write poems or programming code, even offer opinions,

ChatGPT is already the first AI to “viably compete with

humans”. This is likely to prove a pivotal moment for

AI with Microsoft’s $10bn investment in ChatGPT maker

OpenAI best understood as one of the ‘opening shots’ in

an AI war that has just commenced. We have long argued

that the semiconductor industry looks well positioned,

with McKinsey arguing this sector might capture as much

as 40-50% of the value associated with AI. This view was

seemingly supported following recent record-breaking

July quarter guidance from chipmaker Nvidia that was

more than 50% ahead of consensus driven by AI-related

strength. On the earnings call, CEO Jensen Huang spoke

to a $1trn opportunity over ten years to replace CPU-based

infrastructure with more efficient, accelerated computing

based around GPU architectures as generative AI becomes

the “primary workload of most of the world’s data centres”.

Nvidia stock rose 24% on the day, despite having already

gained 109% on a year-to-date basis prior to the report.

Source: https://blogs.nvidia.com/blog/2022/03/25/what-is-a-transformer-

model/

Of course, there are myriad risks associated with AI,

many of which are beyond the scope of this report.

However, the fact that ChatGPT makes mistakes (so-

called ‘hallucinations’) is not one of them; most disruptive

technologies begin as ‘good enough’ and trading

accuracy for speed worked wonders for the telegraph,

Encyclopaedia Britannica, and the biro. Moral and legal

questions posed by AI are more difficult to dismiss,

especially those regarding bias and the potential for it to

“industrialise plagiarism”. While eventual regulation of

AI seems inevitable, the industry would likely welcome

the introduction of legislative guardrails. However, this

will not be straightforward; rather than a restrictive set

of regulations applied suddenly, we believe regulation

may follow a ‘governance by accident’ approach that has

underpinned the development of the airline industry; if

aviation is any guide, it is possible that by reducing risk,

regulation actually accelerates the adoption of AI, rather

than stymies its progress.

As such, the focus on regulation – so soon after the advent

of generative AI – might say more about investor fatigue

around ‘technology disruption’ than it does about the

risk regulation poses to the development of this nascent

industry. This is understandable, following a period that

has witnessed more than its fair share of investment

hyperbole, much of which was catalysed by the pandemic.

In contrast with blockchain and the metaverse – early

stage technologies in search of a problem – artificial

intelligence might be “the most profound technology

humanity is working on”. From a historical perspective,

generative AI could prove another key moment in human

history when codification and dissemination of

knowledge is accelerated. In the ancient world, these

included the development of writing systems (such as

cuneiform and hieroglyphics) around 3500-3000 BCE, as

well as advanced mathematics and philosophy in Ancient

Greece from the eight century BCE onwards. Libraries,

historical record-keeping, and translation of ancient texts

were other key developments in the codification and

preservation of knowledge, aided by breakthroughs that

enabled information to be stored (e.g., papyrus, paper),

retrieved (e.g., cataloguing systems, encyclopaedia)

and distributed (e.g., libraries, printing press). Advances

in science, technology and communication during the

Modern Era have “led to the codification of knowledge on

an unprecedented scale” epitomised by the Internet which

has facilitated knowledge sharing and democratised access

to information in a manner that has changed the world.

Generative AI offers similar- if not greater - promise. Built

using ‘foundation’ models which contain “expansive

neural networks inspired by the billions of neurons

connected in the human brain”, generative AI applications

are able to process extremely large and varied sets of

unstructured data and perform more than one task. This

allows them to “augment human creativity, automate

labour-intensive tasks and generate novel solutions to

complex problems”. They can also understand natural

language which means that generative AI could “change

All Al Models Excluding Transformers: 8x / 2yrs

Transformer Al Models: 275x / 2yrs

Training Compute (petaFLOPS)

100

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

1,000,000

100,000

10,000

1,000

10,000,000

100,000,000

1,000,000,000

10,000,000,000

AlexNet

Seg250g

Resnet

InceptionV3

VGG-19

ResNeXt

ELMo

Transformer

GPT-1

BERT Large

Wav2Vec 2.0

XLNet

Megatron

GPT-2

GPT-3

Megatron-Turing

NLG 530B

Computational Requirements for Training Transformers

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

the anatomy of work” by automating activities that

today account for as much as 60-70% of employees’

time. However, in contrast with historic patterns of

technology automation, disruption is expected to be

disproportionately felt by knowledge workers. While

Goldman Sachs estimate that more than 300m jobs

could be at risk, we remain optimistic that humans will

graduate to higher value work just as 60% of workers

today are employed in occupations that did not exist in

1940. Furthermore, McKinsey forecast that generative AI

could deliver $2.6-4.4trn annually to global GDP driven

by productivity gains that could be as high as 3.3%

per annum when generative AI is combined with other

technologies. This would be remarkable given current

labour market tightness, ageing Western populations and

below-average productivity growth achieved during the

past twenty years.

Artificial intelligence also has the potential to become

a transformative ‘general purpose technology’ (GPT)

which -like electricity, steel, and the internet – may

“reshape economies, drive innovation and create new

opportunities”. If so, history suggests that bold, early

predictions about AI may prove extremely conservative.

Not just because humans struggle with non-linear change

(an observation that has long informed our investment

approach) but also because as yet unknown technology

improvements subsequently transform the opportunity

set. If early applications for steel were predictable (e.g.,

bridges, ships, rails), later and significantly larger market

opportunities represented by skyscrapers, cars and home

appliances could not be known in 1855 when Bessemer

perfected his steelmaking process. The same was true

for aviation when the jet engine (and other avionic

developments) transformed the cost and safety profile of

flight, resulting in passenger traffic growth compounding

by more than 10% per year between 1950-1970 and

helping travel and tourism become one of the world’s

largest sectors. More recently, the confluence of internet,

cloud and smartphone has presaged widespread disruption

and exponential change well beyond late 1990s predictions

that were only able to peer into a near and incomplete

future that was yet to feature Google, AWS, and iPhones.

Today, the app economy is worth c.$63trn, more than

60x times greater than the value of the handset market in

2007, the year that Apple introduced the iPhone.

The impact of generative AI is likely to be felt more

rapidly than either the internet or the smartphone. In

part, this reflects the role that both earlier pervasive

technologies will play as AI-enablers with access to

ChatGPT (and other natural language ‘chat’ interfaces)

only requiring an internet connection and a smartphone.

These low barriers to adoption have already supported

an unprecedented rate with ChatGPT taking just 2.5

months to reach 100m users, as compared to Instagram

which took 2.5 years (in itself extraordinary). Another

major difference between AI and prior technology shifts is

the astonishing speed of AI improvement. This is most

evident when comparing the capability of two OpenAI

large language models (LLMs) – GPT-4 (the latest version)

and the earlier GPT-3.5 (ChatGPT) released approximately

a year apart. While GPT-3.5 was trained on 175bn

parameters (akin to internal variables the model learns

during its training phase), the newer GPT-4 may have

been trained on as many as 170trn. In addition, GPT-4

also has a much larger context window – 25,000 words

vs. c.3,000 for its predecessor – which means it is able to

retain far more information from earlier conversations.

Aside from its “mastery of natural language”, GPT-4 “can

solve novel and difficult tasks that span mathematics,

coding, vision, medicine, law, psychology and more,

without needing any special prompting”. In all of these

tasks, model performance is “strikingly close to human-

level performance”, evidenced by consistently high exam

scores across a diverse range of disciplines (see chart).

The improvements in GPT-4 have been so remarkable that

Microsoft recently posited in a whitepaper (‘Sparks of

artificial general intelligence (“AGI”)) that the LLM “could

reasonably be viewed as an early version of AGI system”.

The concept of AGI was popularised in the early 2000s

to differentiate between ‘narrow AI’ being developed

at the time and “broader notions of intelligence”. Until

recently, AGI remained a popular science fiction topic and

long-term aspirational goal within AI. That is until the

range and depth of GPT-4’s capabilities “challenge(d) our

understanding of learning and cognition” with the model

said to “exhibit many traits of intelligence”. Naysayers

argue that large language models do not ‘understand’

concepts and are merely adept at ‘improvising on the fly’.

However, like Microsoft, we believe the question is moot.

After all, one might ask “how much more there is to true

understanding than ‘on-the-fly’ improvisation?”.

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GPT-4 Outperforms GPT-3.5 across multiple

exams

Estimated percentile lower bound (among test takers)

20%

40%

60%

80%

100%

GPT 3.5

GPT 4 (no vision)

GPT 4

AP Environmental Science

AP Calculus BC

AMC 12

Codeforces Rating

AP English Literature

AMC 10

Uniform Bar Exam

AP Chemistry

GRE Quantitative

AP Physics 2

AP English Language

AP Macroeconomics

AP Statistics

LSAT

GRE Writing

A Microeconomics

AP Biology

GRE Verbal

AP World History

SAT Math

AP US History

AP US Government

AP Psychology

AP Art History

SAT EBRW

USABO Semifinal 2020

Source: GPT3.5 vs 4 = Microsoft White Paper, ‘Sparks of Artificial General

Intelligence’

Technology Risks

As ever, there are multiple risks to our constructive

medium-term view. Many of these relate to

macroeconomics, particularly recession and inflation,

that are covered elsewhere in this report. As previously

highlighted, there remain downside risks to technology

spending should CEO confidence meaningfully deteriorate.

Similarly, earnings estimates are likely to remain subject

to macroeconomic turbulence; while cost-cutting has

ameliorated downward revisions to date, technology

margins may be at risk should things worsen materially.

Likewise, a weaker macroeconomic environment might see

the current semiconductor downturn extend, resulting in

delayed industry recovery and/or result in a disappointing

recovery trajectory for cloud spending which would

weigh on cloud-related sentiment.

Valuation is another key risk because the recent surge in

technology stocks has seen aggregate sector valuations

revisit their pandemic highs. While next-generation

valuations have already been meaningfully reset, a

steeper yield curve may delay any recovery in longer-

duration valuations.

As in previous years, regulation remains a key risk too,

although we are comforted by a divided Congress

(making sweeping legislation unlikely) and the fact that

the largest US technology companies represent the

vanguard in the emerging AI battleground with China.

However, deteriorating US-Sino relations represent

a more significant threat to supply chains, especially in

semiconductors. For now, the Chinese appear able to

work around US legislation, suggesting it is more for

domestic consumption ahead of elections, but if this is

the beginning of a new economic cold war, then Taiwan

– responsible for producing c90% of leading-edge

semiconductors – represents a critical fault line while a

meaningful escalation of tensions could weigh materially

on a large part of our portfolio.

Potential regulation could also stymie the explosive

growth of Generative AI which has been a key driver

of technology returns during 2023. Conversely, further

excitement about Generative AI might result in large-cap

technology stocks perceived as AI beneficiaries and

safe havens continuing to ‘crowd-out’ small-cap

companies. We must also acknowledge the risk posed

to all companies: should it become a general purpose

technology (GPT) as we suspect, history suggests there

will be far more losers than winners from today’s group

of companies within and beyond the technology sector.

Concentration risk

In addition to market and sector-specific risks, it would be

remiss of us not to remind our shareholders once again

about the concentration risk both within the Company

and the market-cap-weighted index around which we

construct the portfolio. At the year end our three largest

holdings – Apple, Microsoft, and Alphabet – represented

c27% and c41.9% of our NAV and benchmark (Dow

Jones Global Technology Index) respectively. Last year,

when these three positions accounted for 29.3% of

NAV and 40.7% our benchmark respectively, we argued

that concentration risk was justified because they were

unique, non-fungible assets that captured the zeitgeist

of this technology cycle. Following another year of

sustained outperformance from these stocks, as well as

several other outsized benchmark positions including

Nvidia, we are pleased to have retained large absolute

positions in them all even if their dominance of our

benchmark has meaningfully contributed to our relative

underperformance.

We remain comfortable with the strategy of moving to

materially underweight positions in the largest index

constituents should we become concerned about their

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

growth or return prospects, or should we find more

attractive risk/reward profiles elsewhere in the market.

However, this position is complicated by the fact that

concentration today does not obviously reflect outlandish

valuations as per the late 1990s; the top 10 positions

in the benchmark recently accounted for c55% of

constituent market capitalisation and an estimated 53%

of net income in calendar year 2023. Likewise, Apple

may have made headlines recently when its market-cap

exceeded that of the Russell 2000 (small-cap) Index, but

remarkably Apple also generates similar profits as those

2,000 companies combined. The emergence of AI also

plays well into mega-caps given the significant scale

(reach; data; cost) likely required to be competitive.

Unlike many of our competitors that are limited to a

maximum 10% in any individual position, PCT is able

to hold up to a full benchmark weight subject to a

maximum limit of 15%. While this gives us more room for

manoeuvre – and fewer excuses for underperformance

– we rarely exceed 10% in individual stocks, and when

we do, it is often via a smaller equity position held in

combination with a slither of call options designed to

ameliorate upside risk in exchange for a modest premium.

Having been very clear with shareholders that we do

not invest in certain types of stock (including private,

value and those likely to require capital) perhaps this is

a good opportunity to make it equally clear that we are

unlikely to hold individual positions much above 10%

even when they are as unique as Apple and Microsoft.

If this sounds at odds with our ‘benchmark-aware’

approach, it is worth recalling that this approach has

risk reduction at its core. It has helped us avoid hubris,

appropriately size overweight positions while helping

ensure the portfolio reflects the best the index has to

offer. However, benchmark concentration has begun

to create a tension between managing absolute

and relative risk. As stewards of your capital as well

as technology investors, we find it very difficult to argue

we are reducing risk by making the portfolio ever more

concentrated. While this may come at the expense of raw

performance and greater relative variance, we believe a

diversified portfolio of growth stocks and themes capable

of outperformance, but also constructed to withstand

investment setbacks will prove superior over the medium

term, particularly on a risk-adjusted basis.

Conclusion

Market conditions in early 2023 lend support to a wide

range of potential outcomes, both good and bad.

Macroeconomics will likely continue to lead the market in

the near term, although the primary debate has shifted

somewhat to the timing and magnitude of a recession

and its impact on revenue and earnings estimates,

rather than the extent of the central bank response

required to deal with inflation, as dominated last year.

However, the relative performance of the technology

sector – particularly after a strong run – may continue to

take its cue from real rates – a good reminder that we

are not out of the inflation woods yet, and the need to

remain pragmatic (and highly liquid) in terms of portfolio

positioning. While we typically avoid ‘value’ technology

stocks, we do own companies able to pass on inflation to

the consumer should it remain stubbornly high, even if

this is not our base case.

There are two principal reasons for being more

constructive on technology this year: more attractive

risk/reward and the rapid adoption of artificial

intelligence. Despite continued near-term

macroeconomic uncertainty and the likelihood of

further estimate cuts, the explosion of interest in AI

has been a powerful reminder of why we remain so

excited about our sector over the medium term. We

also know that market narratives can change quickly

should macroeconomic headwinds and/or exogenous

risks subside. Furthermore, the risk/reward from current

levels appears better: next-generation valuations have

returned to much more attractive levels, as previously

discussed. Before the recent move higher, growth internet

valuations had reached multi-year lows, on an EV/NTM

EBITDA basis, just as software growth-adjusted EV/sales

multiples sat at 10-year lows. According to Morgan

Stanley, at the beginning of 2023 80% of their software

sector coverage was trading below 8.6x EV/forward sales

- the median private equity takeout multiple since 2013.

The semiconductor sector (SOX) had also meaningfully

derated, by more than -40% from its recent highs at

year end, against an average cycle decline of -26% over

the past seven years. Positioning has improved too,

although investor pessimism towards technology at

the start of the calendar year has been ameliorated by

its relative stability amid travails within US banking,

combined with AI-related excitement.

Investment Manager’s Report continued

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Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

The combination of better than expected first-quarter

results and a ‘flight to safety’ (away from financials

in favour of cash-generative mega-cap technology

companies) has meant five technology stocks have driven

almost two-thirds of the S&P 500’s return year-to-date.

An index made up of Apple, Amazon, Microsoft, Meta

Platforms and Google has returned +31% versus the

other 495 S&P 500 constituents’ +3% return. For the

calendar year, only 30% of S&P 500 companies have

outperformed the market, a level not seen on a full

calendar year basis since 1998 (28%) and 1999 (32%).

Within technology, limited breadth is apparent by the

remarkable year-to-date spread between large and

small-cap technology performance (+26%) as well as the

difference between the market-cap weighted NASDAQ

100 Index and an equally-weighted version of it, which

at +11% is the widest spread seen over any 4.5 month

period during the past 18 years.

While we expect the market to broaden, we cannot

help but share the market’s excitement about the AI

opportunity which – at present – is most easily accessed via

mega-cap stocks primarily within the semiconductor and

cloud computing subsectors. After decades of unrealised

hopes around artificial intelligence, we believe that

generative AI is likely to prove the technology’s so-called

‘iPhone moment’, the new user interface that sparks

mass adoption. Other AI models will come, compete, and

possibly surpass ChatGPT but it represents the first “hands-

on introduction to how powerful modern AI has got”. It

has stunned consumers, investors, and companies alike;

the risk and opportunity it poses to established market

shares, consumer behaviour and existing profit pools has

ignited a powerful wave of AI spending. Inevitably there

will be technology casualties from AI disruption, while

investors will have to navigate periods when narrative and

fundamentals diverge. However, the “era of generative

AI is just beginning” and our sector has front row

seats for what is likely to be one of the most disruptive

performances of our investment lifetimes.

Ben Rogoff & Ali Unwin

Polar Capital Technology Trust

18 July 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Investment Manager’s Core Themes

Cloud Infrastructure / Cybersecurity

Cloud spending has decelerated as customers optimised

their spend following rapid growth during covid, but the

emergence of AI could provide another long-term growth

driver given the enormous amount of compute required to

train large language models.

We’re excited about…

The industry continues to deliver solid growth even

as customers digest some pull forward of digital

transformation spending, with the three dominant vendors

(Amazon, Microsoft, and Google) are still growing >20% at

a >$170bn combined revenue run rate. Excitement around

AI continues to support cloud capital spending growth,

with much of the value of early AI adoption captured by

the dominant semiconductor providers including NVIDIA

and AMD. Overall cloud revenues expected to increase 4x

by 2030 to >$1.35trn, assuming incremental cloud revenue

added can still grow at a 25% Compounded Annual

Growth Rate (CAGR).

This would take the cloud’s share of

overall IT spending from c17% in 2022 to c36% by 2030.

Cloud computing must also be secure, which has supported

cybersecurity growth trends and remains at the top of Chief

Information Officers’ priority lists.

Current holdings

Amazon.com, Microsoft, Alphabet, Arista Networks,

Advanced Micro Devices, Nvidia, Palo Alto Networks,

CrowdStrike

Representing 30.4% of NAV at 30 April 2023

Connectivity & 5G/IOT

The smartphone market is mature but Apple’s position atop

it looks unchallengeable. While the excitement around 5G

has diminished, the infrastructure build out is very much

still in progress, with slower US spending offset by rapid

growth in India and other emerging markets. The internet

of things (IOT) continues to expand, there are hopes AI

could supercharge both adoption and utility.

We’re excited about…

Apple’s historic success in bringing new technological

breakthroughs to the mass affluent market should position

it well for the coming wave of AI-based innovation. As the

services consumers continue to access via their primary

device become more valuable, so should consumers’

willingness to pay Apple for access to the mobile web

ecosystem also move higher.

AI could breathe new life into trends such as digital twins

and drive an inflection in adoption. Digital twins exist in

many industries including healthcare, automotive, industrial,

commerce and manufacturing but are under-utilised,

with the adoption rate between 8-10%. AI could enable

digital twins to become ’smart’ and autonomous, essential

to analyse vast amounts of real-time data produced by

connected sensors. Simulations are used by designers to

observe ‘What if?’ scenarios, but AI-powered digital twins

are virtual environments that can interact with and update

in real time and massively increase their functionality.

Current holdings

Apple, Qualcomm, Taiwan Semiconductor, Lattice

Semiconductor, ASML

Representing 17% of NAV at 30 April 2023

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Digital Advertising / Ecommerce

Digital advertising and ecommerce channels captured an

outsized portion of share from traditional channels during

the pandemic. However, as the world began to reopen,

e-commerce growth rates declined sharply against very

challenging Covid comparators – even dipping below trend

and further compounded by a switch in consumer spending

from goods to services spending.

We’re excited about…

E-commerce has several structural tailwinds which should

continue to support a low double-digit growth CAGR

through 2030. Bernstein estimate an 11.5% CAGR in the

US through 2030 to reach 26% online penetration as a

total percentage of retail sales, and a global CAGR of 13%

to reach 22%. The e-commerce proposition continues to

evolve to offer more value to consumers and producers

alike including new models such as on-demand delivery,

low-cost direct-to-consumer Chinese players, pre-used

marketplaces, and new modalities like social commerce.

The Covid overbuild will pay an ‘infrastructure dividend’

as volumes catch up to capacity and per-unit delivery

economics continue to improve.

Digital advertising appears more mature with penetration

at more than 60% (some estimate as high as 70%) and

close to 50% ex-search. Retail media (likened to paying for

shelf-space in the physical world) and linear TV advertising

still present new market opportunities sized at >$100bn

each. Going forward, the market will become more cyclical

and more closely tied to overall advertising budget growth

but will benefit from a cyclical upturn. Depressed valuation

multiples and highly cash-generative business models offer

the possibility of strong stock performance when cyclical

trends inflect or secular headwinds (IDFA, TikTok) abate.

Current holdings

Alphabet, Amazon.com, Meta Platforms, MercadoLibre,

Shopify, Alibaba, Airbnb

Representing 14% of NAV at 30 April 2023

Software & Digital Transformation

According to Gartner, enterprise software had grown at

an 11% 10-year CAGR to reach c$600bn, made up 16%

of total IT spending in 2020 and is expected to continue

to grow at a similar rate to reach 25% of IT spending by

2030. Net new cloud workloads and on-premise workload

migrations have delivered higher net new cloud revenue

every year for a decade.

We’re excited about…

We agree with Microsoft CEO Satya Nadella’s estimate

that technology spending as a percentage of GDP could

double in the next ten years as the digital transformation

imperative continues to drive change. We can already see

the increasing importance of software as a percentage of

GDP as software private fixed investment increased from

$68bn in 1995 to $578bn in 2022, increasing from 0.83%

of GDP to 2.3%, using the Bureau of Economic Analysis’s

data. The digital transformation market has been sized

at $595bn in 2022 and is projected to grow at a 21%

CAGR through 2027 to exceed c$1.5trn.The proliferation

of product-led growth (PLG) software models has been

driven by the convergence of several major technological

and business trends. This model uses the software product

itself is the primary sales vehicle to attract, monetize and

retain customers, relying on customers self-serving to land

small and then expand virally over time. Given the relatively

low cost of incremental sales, this business model may even

be an improvement to the outstanding economic model

software companies already enjoy at scale.

Current holdings

Microsoft, HubSpot, ServiceNow, Workday, Atlassian,

Salesforce

Representing 17% of NAV at 30 April 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Data Economy & Artificial Intelligence

Recent AI breakthroughs following Google’s invention of

the transformer model (2017) and the development of

large language models have led to an inflection point in AI

capabilities as their performance scales with the number

of parameters. The launch of ChatGPT in November 2022

provided the catalyst for their widespread adoption and the

‘iPhone moment’ as the innovative natural language user

interface drove rapid adoption.

We’re excited about…

AI is set to be the next major secular technology trend

driving the sector’s growth. The early beneficiaries largely

reside in the technology stack which powers the training

and inference operations of large language models,

particularly semiconductors. Given the extraordinary scale

and technical expertise required, the vast majority of large

language model training activity has so far taken place in

the public cloud. The quantity and quality of data on which

models are trained makes a material difference to their

performance, so there may be large growth opportunities

for infrastructure software companies whose products

can help with the collection and management of vast

datasets. We are hugely excited about the potential for

AI to become a general purpose technology (GPT) around

which ‘everything’ is reimagined, as was the case with

earlier GPTs such as the steam engine, electricity and, more

recently, the internet.

Current holdings

Nvidia, Monolithic Power Systems, Advanced Micro

Devices, Pure Storage, Snowflake, MongoDB, Samsung

Electronics

Representing 14.2% of NAV at 30 April 2023

Mobility & EV / Energy Transition

Automotive sales have been impacted by supply-chain

disruption, particularly microcontrollers and power

semiconductors. However, there were also signs of

weakening demand as the year progressed, driven by

macroeconomic headwinds including high inflation and

interest rates. The long-term themes – electrification;

autonomy; mobility – continue to play out.

We’re excited about…

Electric vehicle (EV) adoption has inflected globally: the

International Energy Agency (IEA) expects electric vehicles

to reach 18% of vehicles on the road in 2023, up from

4% in 2020.This has been driven by a combination

of government support/regulation, new product

introductions (automakers have committed over a half a

trillion dollars to the EV transition) and consumer interest.

This also represents a very large market expansion for

semiconductors (especially power semiconductors) as a

typical EV has >2x as much semiconductor content than

a comparable internal combustion engine (ICE) vehicle.

Low-level ADAS (advanced driver assistance systems), such

as automatic emergency braking, reached 42% penetration

and industry observers still expect level 4/5 vehicles to enter

the market in the 2025-30 timeframe. The passing of the

Inflation Reduction Act (IRA) was a watershed moment for

long-term cleantech funding and a key growth driver for

the EV sector, expanding the $7,500 tax credit to EV buyers

and up to $45 per kWh of credit for producers of battery

cells/modules if a sufficient percentage of the materials/

manufacturing are done in the US.

Current holdings

Tesla, BYD, ON Semiconductor, Analog Devices, Infineon

Technologies, Enphase Energy

Representing 4.8% of NAV at 30 April 2023

Investment Manager’s Core Themes continued

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Overview

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

% % Pence per share

NAV per share at 30 April 2022 2305.13

Market Impact

Benchmark performance (Sterling adjusted) 2.85

Active Management

Stock Allocation Effect~ -4.84

Stock Trading and Timing Effect~ -0.22

-5.06

Other factors

Liquidity/gearing Effect 0.18

Ongoing charges -0.81

-0.63

Performance of NAV -2.84 -65.65

NAV per share at 30 April 2023 2239.48

~ Stock allocation effect refers to the portion of the total relative performance which is attributable to being overweight or underweight in a security.

Please refer to the Performance Attribution by Investment below for further details. Stock Trading and Timing effect refers to the portion of the total

relative performance which is attributable to the different returns from a security in the fund and in the benchmark over the same period of time. Refer to

Investment Manager’s Report on pages 14 to 27 for further information.

Performance Attribution

Movement in net asset value (total return) per share

Over the year to 30 April 2023 the Net Asset Value per share fell by 2.84% compared to the increase in total return

provided by the Benchmark of 2.85%. The below table breaks down the Company’s absolute one year return into market

impact, active management and other factors.

Performance Attribution by Investment

The top ten relative contributors and the bottom ten relative detractors from performance over the year to 30 April 2023.

-0.6 -0.4 -0.2 0.0 0.2 0.4 0.6

Elastic

Atlassian

Marvell Technology

GitLab

Amazon.com

Cloudﬂare

Microsoft**

Snap*

Meta Platforms**

CrowdStrike

Lattice Semiconductor

Arista Networks

Intel*

KLA-Tencor

MercadoLibre

Alphabet**

Axon Enterprise

eMemory Technology

Disco Corporation

Monolithic Power Systems

-0.54

-0.53

-0.39

-0.36

-0.33

-0.27

0.18

0.19

0.20

0.23

0.25

0.26

0.35

0.44

0.51

All of the above companies were held during the year to 30 April 2023. All data sourced from Polar Capital LLP

*not held at the year ended 30 April 2023/**underweight position relative to the Benchmark.

Portfolio Review

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Breakdown of investments by region

as at 30 April 2023

Performance attribution by region*

year to 30 April 2023

Market capitalisation of underlying investments

as at 30 April 2023

Performance attribution by market capitalisation*

year to 30 April 2023

0 10 20 30 40 50 60 70 80

US & Canada

Middle East

& Africa

Europe

(inc - UK)

Asia Paciﬁc

(ex-Japan)

Japan

Latin America

Other

Net Assets

2023

2022

72.8

74.2

10.4

10.2

4.4

3.4

2.9

3.9

7.9

6.6

1.2

1.4

0.7

0.0

0 10 20 30 40 50 60 70 80 90 100

Market Capitalisation

<$1bn

Market Capitalisation

$1bn-$10bn

Market Capitalisation

>$10bn

2023

2022

7.5

11.7

92.1

88.0

0.4

0.3

-6.00 -5.00 -4.00 -3.00 -2.00 -1.00 0.00 1.00

0.64

0.20

0.18

-0.02

-0.24

-0.38

-5.28

Asia Paciﬁc (ex-Japan)

Latin America

Liquidity/gearing effect

Japan

Europe (inc-UK)

Middle East & Africa

US & Canada

-3.50 -3.00 -2.50 -2.00 -1.50 -1.00 -0.50 0.00 0.50

0.05

-6.41

Mid Cap (>$1bn - $10bn)

Large Cap (>$10bn)

-1.90

-3.22

0.18

-6.41

Liquidity/gearing effect

Small Cap (<$1bn)

* This represents the gross return of the fund minus the benchmark return. This reflects the attribution effect where the fund’s return is compared to the

benchmark return (excluding ongoing charges of 0.81%).

Portfolio Review continued

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Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Classification of Investments*

as at 30 April 2023

North

America (inc.

Latin America)

Europe

Asia Pacific

(inc. Middle

East)

Total

30 April

2023

Total

30 April

2022

Benchmark

Weightings as

at 30 April

2023

Software 22.7 0.1 1.3 24.1 27.6 29.0

Semiconductors & Semiconductor Equipment 15.9 3.3 4.8 24.0 22.4 22.6

Technology Hardware, Storage & Peripherals 10.4 - 3.0 13.4 14.6 21.5

Interactive Media & Services 9.8 - 1.9 11.7 14.0 15.0

IT Services 3.8 - 0.2 4.0 2.3 5.2

Broadline Retail 2.5 - 0.8 3.3 - 1.5

Financial Services 2.7 0.4 0.2 3.3 - 0.1

Electronic Equipment, Instruments & Components 0.1 - 1.3 1.4 1.6 0.5

Communications Equipment 1.4 - - 1.4 1.5 2.6

Hotels, Restaurants & Leisure 0.7 - 0.5 1.2 - 0.5

Automobiles 0.5 - 0.6 1.1 1.6 -

Entertainment 1.0 - - 1.0 1.2 0.6

Healthcare Equipment & Supplies 0.5 - 0.5 1.0 0.6 -

Ground Transportation 0.9 - - 0.9 - -

Machinery - - 0.9 0.9 0.7 -

Healthcare Technology 0.4 - - 0.4 - 0.2

Aerospace & Defence 0.2 - - 0.2 0.7 -

Electrical Equipment - 0.1 - 0.1 0.4 -

Internet & Direct Marketing Retail - - - - 2.9 -

Total investments (£2,640,177,000) 73.5 3.9 16.0 93.4 92.1

Other net assets (excluding loans) 6.4 0.9 1.1 8.4 9.6

Loans (1.0) - (0.8) (1.8) (1.7)

Grand total (net assets of £2,828,141,000) 78.9 4.8 16.3 100.0 -

At 30 April 2022 (net assets of £3,050,985,000) 79.3 5.2 15.5 - 100.0

* The classifications are derived from the Benchmark as far as possible. The categorisation of each investment is shown in the portfolio available on the

Company’s website. Where a dash is shown for the Benchmark it means that the sector is not represented in the Benchmark. Not all sectors of the

Benchmark are shown, only those in which the Company has an investment at the financial year end.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Top 10 Investments as at 30 April 2023

Ranking

Value of holding

£'000

% of total net

assets

2023 2022 2023 2022 2023 2022

1 (1) 302,791 336,977 10.7 11.0

Held since: 2007

Founded in 1975, the company is the largest software company in the world and has built a dominant franchise in desktop

software through its ubiquitous Windows operating system, Office productivity software and Azure Cloud computing service.

2 (2) 284,199 305,244 10.0 10.1

Held since: 2003

Apple is a leading supplier of personal computers, smartphones, tablets and accessories such as AirPods that feature or

integrate with the company’s proprietary OS X operating system. Other services include AppleTV, Apple Music and its

subscription-based iCloud storage.

3 (3) 174,388 249,058 6.2 8.2

Held since: 2005

As the parent company of Google, the company is the dominant provider of Internet search, online advertising, web

applications and tools and its Android (mobile OS) combined with Chrome (browser) and Google Maps have enabled it to

maintain its market leadership during the mobile internet transition.

4 (4) 130,855 95,065 4.6 3.1

Held since: 2016

NVIDIA is a US fabless semiconductor company with leading market share in graphics processors (GPUs) used in gaming,

professional visualisation, data centre and automotive. Supported by its CUDA programming model, the company’s GPUs are

critical components in Artificial Intelligence (AI) platforms helping to train neural networks.

Held since: 2016

5 (5) 94,299 86,045 3.3 2.8

Advanced Micro Devices is an American semiconductor company that develops computer processors and related technologies for

business and consumer markets.

SAMSUNG

ELECTRONICS

6 (6) 83,894 82,312 3.0 2.7

Held since: 2007

A manufacturer of a wide array of products ranging from components to finished products for both consumer electronics

and industrial end markets. The company is particularly renowned for its high global market share in the fields of memory

semiconductors (NAND/DRAM), LCD displays, and mobile smartphones/tablets.

7 (11) 82,047 54,509 2.9 1.8

Held since: 2001

Meta is the world’s dominant social networking company. It also owns Instagram, a photo and video sharing social networking

service and the instant messaging service WhatsApp among other products and services.

8 (7) 61,421 82,012 2.2 2.7

Held since: 2001

Taiwan Semiconductor engages in the manufacture and sale of integrated circuits and wafer semiconductor devices. Its chips

are used in personal computers and peripheral products; information applications; wired and wireless communications systems

products; automotive and industrial equipment including consumer electronics such as digital video compact disc player, digital

television, game consoles, and digital cameras.

9 (10) 51,884 56,280 1.8 1.8

Held since: 2015

ServiceNow is an American software company that develops a cloud computing platform to help companies manage digital

workflows for enterprise operations.

10 (8) 49,941 59,248 1.8 1.9

Held since: 2001

ASML manufacture complex lithography machines which chipmakers use to produce integrated circuits, or computer chips and

provide chipmakers with hardware, software and services to mass produce patterns on silicon through lithography.

Total

1,315,719 46.5

Portfolio Review continued

www.polarcapitaltechnologytrust.co.uk

Overview

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Environmental, Social

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Full Portfolio

Stock Sector Region

30 April

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30 April

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%2023 2022

1 (1) Microsoft Software North America 302,791 336,977 10.7 11.0

2 (2) Apple Technology Hardware, Storage & Peripherals North America 284,199 305,244 10.0 10.1

3 (3) Alphabet Interactive Media & Services North America 174,388 249,058 6.2 8.2

4 (4) Nvidia Semiconductors & Semiconductor Equipment North America 130,855 95,065 4.6 3.1

5 (5) Advanced Micro Devices Semiconductors & Semiconductor Equipment North America 94,299 86,045 3.3 2.8

6 (6) Samsung Electronics Technology Hardware, Storage & Peripherals Asia Pacific 83,894 82,312 3.0 2.7

7 (11) Meta Platforms Interactive Media & Services North America 82,047 54,509 2.9 1.8

8 (7) Taiwan Semiconductor Semiconductors & Semiconductor Equipment Asia Pacific 61,421 82,012 2.2 2.7

9 (10) ServiceNow Software North America 51,884 56,280 1.8 1.8

10 (8) ASML Semiconductors & Semiconductor Equipment Europe 49,941 59,248 1.8 1.9

Top 10 investments 1,315,719 46.5

11 (9) Amazon.com Broadline Retail North America 46,756 57,558 1.7 1.9

12 (17) HubSpot Software North America 45,203 38,675 1.6 1.3

13 (13) Arista Networks Communications Equipment North America 38,201 44,318 1.4 1.5

14 (16) CrowdStrike Software North America 36,041 39,441 1.3 1.3

15 (14) Tencent Interactive Media & Services Asia Pacific 35,666 43,880 1.3 1.4

16 (15) KLA-Tencor Semiconductors & Semiconductor Equipment North America 35,072 39,816 1.2 1.3

17 (24) Mastercard Financial Services North America 34,908 26,330 1.2 0.9

18 (41) Palo Alto Networks Software North America 34,847 18,479 1.2 0.6

19 (-) Analog Devices Semiconductors & Semiconductor Equipment North America 33,975 - 1.2 -

20 (77) Infineon Technologies Semiconductors & Semiconductor Equipment Europe 33,792 6,891 1.2 0.2

Top 20 investments 1,690,180 59.8

21 (60) Workday Software North America 33,429 11,557 1.2 0.4

22 (38) Visa Financial Services North America 33,156 19,629 1.2 0.6

23 (21) Qualcomm Semiconductors & Semiconductor Equipment North America 32,525 32,622 1.1 1.0

24 (35)

Monolithic Power

Systems

Semiconductors & Semiconductor Equipment North America 32,453 20,305 1.1 0.7

25 (45) Cloudflare IT Services North America 29,973 15,864 1.0 0.5

26 (51) Shopify IT Services North America 29,497 13,251 1.0 0.4

27 (42) Salesforce.com Software North America 27,910 18,315 1.0 0.6

28 (49) Snowflake IT Services North America 27,622 13,973 1.0 0.5

29 (80) Disco Corporation Semiconductors & Semiconductor Equipment Asia Pacific 26,960 6,256 1.0 0.2

30 (-) Uber Technologies Ground Transportation North America 25,788 - 0.9 -

Top 30 investments 1,989,493 70.3

Ranking

Value of holding % of net assets

Ranking

Value of holding % of net assets

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Stock Sector Region

30 April

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30 April

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31 (34) CyberArk Software Software Asia Pacific 24,330 21,721 0.9 0.7

32 (73) Keyence Electronic Equipment, Instruments & Components Asia Pacific 23,561 8,251 0.8 0.3

33 (28) Tokyo Electron Semiconductors & Semiconductor Equipment Asia Pacific 23,016 23,889 0.8 0.8

34 (40) Alibaba Broadline Retail Asia Pacific 22,333 18,888 0.8 0.6

35 (50) MongoDB IT Services North America 22,107 13,343 0.8 0.5

36 (-) MercadoLibre Broadline Retail North America 20,965 - 0.8 -

37 (26) Lattice Semiconductor Semiconductors & Semiconductor Equipment North America 20,572 24,788 0.7 0.8

38 (-) Dynatrace Software North America 19,644 - 0.7 -

39 (47) ON Semiconductor Semiconductors & Semiconductor Equipment North America 19,534 14,451 0.7 0.5

40 (37) Airbnb Hotels, Restaurants & Leisure North America 19,073 19,708 0.7 0.7

Top 40 investments 2,204,628 78.0

41 (-) Confluent Software North America 18,140 - 0.6 -

42 (72) Roblox Entertainment North America 17,444 8,655 0.6 0.3

43 (-) Baidu Interactive Media & Services Asia Pacific 16,616 - 0.6 -

44 (32) BYD Automobiles Asia Pacific 15,976 23,080 0.6 0.7

45 (-) Trip.Com Hotels, Restaurants & Leisure Asia Pacific 15,415 - 0.5 -

46 (-) Pinterest Interactive Media & Services North America 15,134 - 0.5 -

47 (56) eMemory Technology Semiconductors & Semiconductor Equipment Asia Pacific 14,524 12,388 0.5 0.4

48 (71) Hoya Healthcare Equipment & Supplies Asia Pacific 14,264 8,746 0.5 0.3

49 (18) Marvell Technology Semiconductors & Semiconductor Equipment North America 13,879 38,601 0.5 1.2

50 (23) Tesla Motors Automobiles North America 13,358 26,891 0.5 0.9

Top 50 investments 2,359,378 83.4

51 (-) Intuitive Surgical Healthcare Equipment & Supplies North America 13,230 - 0.5 -

52 (44) Smartsheet Software North America 13,018 16,414 0.5 0.5

53 (78) Harmonic Drive Systems Machinery Asia Pacific 12,777 6,430 0.5 0.2

54 (64) Paycom Software Software North America 12,567 10,780 0.4 0.3

55 (-) Adyen Financial Services Europe 12,348 - 0.4 -

56 (66) Atlassian Software Asia Pacific 12,039 9,414 0.4 0.3

57 (39) E Ink Electronic Equipment, Instruments & Components Asia Pacific 12,028 19,235 0.4 0.6

58 (68) Kinaxis Software North America 11,909 9,169 0.4 0.3

59 (36) Pure Storage Technology Hardware, Storage & Peripherals North America 10,694 19,712 0.4 0.7

60 (83) Intuit Software North America 10,538 5,521 0.4 0.2

Top 60 investments 2,480,526 87.7

Ranking

Value of holding % of net assets

Full Portfolio continued

Portfolio Review continued

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30 April

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61 (-) Veeva Systems Healthcare Technology North America 10,390 - 0.4 -

62 (-) Activision Entertainment North America 10,372 - 0.4 -

63 (58) SiTime Semiconductors & Semiconductor Equipment North America 9,912 11,860 0.4 0.4

64 (-) ASM International Semiconductors & Semiconductor Equipment Europe 9,614 - 0.3 -

65 (-) Flywire Financial Services North America 9,503 - 0.3 -

66 (30) Elastic Software North America 9,134 23,453 0.3 0.8

67 (55) SolarEdge Technologies Semiconductors & Semiconductor Equipment Asia Pacific 8,976 12,519 0.3 0.4

68 (-) Enphase Energy Semiconductors & Semiconductor Equipment North America 8,577 - 0.3 -

69 (-) First Solar Semiconductors & Semiconductor Equipment North America 7,708 - 0.3 -

70 (-) Teradyne Semiconductors & Semiconductor Equipment North America 7,012 - 0.2 -

Top 70 investments 2,571,724 90.9

71 (75)

Fuji Machine

Manufacturing

Machinery Asia Pacific 5,680 7,403 0.2 0.2

72 (48) TripAdvisor Interactive Media & Services North America 5,535 14,362 0.2 0.5

73 (-) Nabtesco Machinery Asia Pacific 5,533 - 0.2 -

74 (33) Axon Enterprise Aerospace & defence North America 5,357 21,985 0.2 0.7

75 (-) GMO Payment Gateway Financial Services Asia Pacific 5,224 - 0.2 -

76 (92) Zuken IT Services Asia Pacific 5,187 3,081 0.2 0.1

77 (-) Freshworks Software North America 4,659 - 0.2 -

78 (46) Power Integrations Semiconductors & Semiconductor Equipment North America 4,388 14,930 0.2 0.5

79 (-) GitLab Software North America 4,063 - 0.2 -

80 (-) Darktrace Software Europe 4,039 - 0.1 -

Top 80 investments 2,621,389 92.8

81 (90) Impinj Semiconductors & Semiconductor Equipment North America 4,012 3,417 0.1 0.1

82 (-) Braze Software North America 3,668 - 0.1 -

83 (-) Cognex Electronic Equipment, Instruments & Components North America 3,471 - 0.1 -

84 (93) Seeing Machines Electronic Equipment, Instruments & Components Asia Pacific 3,265 2,894 0.1 0.1

85 (59) Ceres Power Electrical Equipment Europe 2,703 11,569 0.1 0.4

86 (-) HashiCorp Software North America 1,668 - 0.1 -

87 (96)

Cermetek

Microelectronics

Electronic Equipment, Instruments & Components North America 1 1 - -

Total equities 2,640,177 93.4

Other net assets 187,964 6.6

Total net assets 2,828,141 100.0

Note: Asia Pacific includes Middle East and North America includes Latin America.

Ranking

Value of holding % of net assets

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Environmental, Social and Governance

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

ESG – Corporate Perspective

As an investment trust with a wholly non-executive,

independent Board of Directors we delegate the

operational aspects of running the Company to third

parties, primarily the Investment Manager. However, the

ultimate responsibility to stakeholders lies with the Board.

We recognise that this includes elements of ESG and over

recent years ESG has become ever more important to

investors, from a cost, risk and impact perspective across all

aspects of the Company. We recognise however that this is

not a short journey and there is some way to go.

Investment trust companies, like Polar Capital Technology

Trust plc currently have relatively few ESG specific

regulatory reporting requirements but we strive to be

cognisant of best practice as we pursue a long-term

and sustainable future for the Company. The Board has

continued to develop its understanding of sustainability

and ESG more generally, sharing their stance with the

Investment Manager, Polar Capital. The ESG dialogue

with the Managers and third-party providers has increased

greatly; what it is, how it is integrated and how it affects

all elements of the business. On pages 14 to 27 the

Investment Manager reports their assessment of the

portfolio in ESG terms and the associated operations of

the management house, Polar Capital. Below, we separate

ESG into those areas that we as a Board can have a direct

impact on, and those areas where we are reliant on others.

ESG and third-party service providers

The Investment Manager (on behalf of all clients) receives

assurance on an annual basis that, where required, third-

party service providers comply with the requirements of

the Modern Slavery Act and adhere to a zero-tolerance

policy to bribery and corruption. In light of the growing

requirements surrounding ESG, including TCFD, third party

service providers have been engaged in providing copies

of their ESG, diversity and inclusion, stewardship and other

related policies to the Company. The Board will continue

to monitor the practices of service providers and seek to

assure shareholders where appropriate that suitable policies

and procedures are in place to effect positive change.

Corporate responsibility

The Company’s core investment and administrative

activities are undertaken by its Investment Manager which

aims to limit the use of non-renewable resources and

reduce waste where possible. The Investment Manager has

a corporate ESG policy, which is available in the document

library of the Company’s website, and wherever possible

and appropriate the parameters of such are considered

and adopted by the investment team in relation to the

Company’s management and portfolio construction.

As aforementioned, the Portfolio Managers are required

to consider ESG factors when reviewing new, continuing

or exiting investments but they are not required to take an

investment decision solely on the basis of ESG factors.

The Board monitors the Investment Manager’s approach

to ESG including policies for improving their impact on

the environment, and they themselves take into account

ESG factors in the management of the Company. The

Companies Act 2006 (Strategic Report and Directors’

Reports) Regulations 2013 require companies listed on

the Main Market of the London Stock Exchange to report

on the greenhouse gas (GHG) emissions for which they

are responsible. The Company is an investment trust,

with neither employees nor premises, nor has it any

financial or operational control of the assets which it

owns. Consequently, it has no GHG emissions to report

from its operations nor does it have responsibility for any

other emissions. Information on the GHG emissions of the

Investment Manager can be found within the ESG and

Sustainability area of their website.

Taskforce for Climate-Related Financial

Disclosures (TCFD)

The Company notes the TCFD recommendations on

climate-related financial disclosures. As stated above,

the Company is an investment trust with no employees,

internal operations or property. However, it is an asset

owner and therefore we will work to develop appropriate

disclosures about our portfolio. Information sources are

developing and consultations on reporting requirements

are underway. The Board will continue to work alongside

its Investment Manager to provide more information

as it becomes available. Polar Capital supports TCFD’s

recommendations and is in the process of applying the

guidance to ensure compliance going forward.

Diversity Policy and Gender Reporting

The Company has no employees and the Board is

comprised of three female and three male independent

non-executive Directors. The Board recognises the

importance and the benefits of diversity in its membership

and seeks to ensure that its structure, size and composition,

including the skills, knowledge, gender, ethnicity and

experience of Directors, is sufficient for the effective

direction and control of the Company.

The Board is mindful of the importance of having a suitably

mapped board succession and renewal process in line with

corporate governance best practice and the Nomination

This report forms part of the Strategic report section

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Committee keeps succession planning under review. The

Board has put in place a succession plan based on the

recommended nine-year tenure of Directors. The Board will

continue to consider the benefits of diversity throughout

any recruitment process, especially when compiling

a shortlist of candidates and selecting individuals for

interview in order to ensure a wide group of candidates.

The Board has taken care to take account of this when

developing job specifications and in the use of head-

hunters who demonstrate an ability to widen the pool of

candidates. We are acutely aware that not doing so could

mean we do not attract candidates who support the Board

as a whole to function as best it can. The Board’s Diversity

Policy is discussed further in the Corporate Governance

Report on page 78.

The Company has not adopted a policy on human rights as

it has no employees or operational control of its assets.

Modern Slavery Act

As an investment company, the Company does not provide

goods or services in the normal course of business and

does not have any customers. Accordingly, the Company

does not consider that it falls within the scope of the

Modern Slavery Act 2015 and therefore does not meet

the criteria requiring it to produce a statement under the

Act. The Company considers its supply chains to be of

low risk as its suppliers are typically professional advisers.

A statement by the Manager under the Act has been

published on their website.

Anti-bribery, corruption and tax evasion

The Board has adopted a zero-tolerance policy (which is

available on the Company’s website) to bribery, corruption

and the facilitation of tax evasion in its business activities.

The Board uses the principles of the policies formulated

and implemented by the Investment Manager and expects

the same standard of zero-tolerance to be adopted by

third-party service providers. The Company has implemented

a Conflicts of Interest policy to which the Directors must

adhere, in the event of divergence between the Investment

Manager’s policy and the Company’s policy the Company’s

policy shall prevail. The Company is committed to acting

with integrity and in the interests of shareholders at all times.

Risk and Responsibility

The Board has a schedule of principal risks and uncertainties

and addresses how these are mitigated on pages 62 to 65;

additionally how the directors have undertaken their duties

in compliance with s172 of the Companies Act 2006 is

provided on pages 66 to 71.

Catherine Cripps

Chair

18 July 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

The following report describes the approach Polar Capital

LLP, as Investment Manager to the Company, takes to

ESG and how the policies and practices are applied to

the investments made, or considered, in connection with

managing the portfolio of the Company.

The terms ‘our’, ‘we’, ‘us’ relate to Polar Capital and

specifically the Polar Capital Technology team, on behalf of

Polar Capital Technology Trust (the Company).

Polar Capital’s approach to ESG

The Polar Capital Technology team continue to enhance

their approach to ESG, but the primary aim remains

unchanged: to consider the wide range of ESG risks

prevalent in the technology sector while still reflecting the

enormous opportunities for technology companies to help

solve existential environment and social challenges such as

climate change and financial inclusion.

Our ESG approach focuses on the ESG issues and factors

we believe are most material to the portfolio and the

planet and seeks to combine our sector domain expertise

with rigorous external research and oversight. We engage

with companies on ESG matters where it can add value

to our investment process and/or where we can use our

influence to support positive change.

Evaluating and Enhancing our ESG Process

Last year’s annual report offered detailed ESG disclosure

and discussion of our ESG process. We continue to

enhance the process, for example introducing pre-trade

ESG checks for new positions (see further details below)

and greater use of research tools which can augment

ESG-related research including AI-powered research tool

Alphasense and expert network transcript service Tegus.

The services of our in-house ESG consultant remain

invaluable as the Team continues to develop its knowledge

and experience in ESG analysis.

Some parts of the process have worked very well, for

example our focus on governance and remuneration

practices has helped the team identify companies with

the potential for earnings surprises and multiple rerating

as many software and internet companies became more

attuned to investors’ desire for a more even balance of

profitability and growth. This has not necessarily been

a question of identifying companies with the ‘best’

governance, but rather those with the potential for the

biggest change in their remuneration policies and hiring

practices and made up part of our investment thesis

in previously heavily loss-making companies including

Confluent, Freshworks and Monday.com. The ESG process

has also prompted incremental company interactions that

would have been less likely without it, including direct

conversations with investee company board directors,

including at Smartsheet.

Other aspects require further attention. Some investee

companies have been unreceptive to engagement

attempts; others have engaged but offered little detail

beyond their publicly stated commitments. Finally, it is

inevitable that the process feels less relevant for positions

held for a shorter period of time.

In terms of the next stage of ESG process enhancement,

extraordinary recent advances in Artificial Intelligence

(AI) bring new and complex ESG challenges. Existing ESG

tools and frameworks appear insufficient on their own to

address these.

ESG – Investment Perspective

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Overview

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Environmental, Social

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Corporate

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Financial

Statements

Shareholder

Information

Exclusions

The Company adheres to formal exclusions on all companies

that are linked to the production and/or marketing of

controversial weapons (cluster munitions; anti-personnel

mines; depleted uranium). We may also choose to exclude

companies in certain subsectors that, in our or the Board’s

belief, may have a negative impact on the planet and global

population by virtue of their business activities and those

companies in breach of sustainability principles or widely-

accepted behavioural norms including, but not limited to,

the United Nations (UN) Global Compact, the UN Guiding

Principles on Business and Human Rights, the International

Labour Organisation’s conventions and the Organisation

for Economic Co-Operation and Development’s Guidelines

for Multinational Enterprises. Any such exclusions are

discussed with the Board and are reassessed annually. Where

a company does not demonstrate adequate and timely

progress towards re-aligning with these standards, we may

choose to divest from the company, taking into account the

liquidity of the holding.

Alignment

To assess the portfolio’s potential to have a positive

impact on the planet and global population, we want to

reflect the role technology companies can play in bringing

about positive environmental and social outcomes. The

environmental and social characteristics with which the

Company aligns reflect the wide scope of technology

adoption in the world today and portfolio companies’ roles

in supporting (1) access to technology and communications

infrastructure, (2) increasing business productivity and

efficiency, and (3) empowering individuals.

At a high level, the distinction between the characteristics is

as follows:

• Access to technology and communications

infrastructure. This includes companies whose

products and services provide technology,

communications, clean technology, and data security

infrastructure to promote inclusive and sustainable

industrialisation and foster innovation. This may

include cloud computing (cloud providers, networking

equipment providers, semiconductor companies,

semiconductor capital equipment companies,

infrastructure software); clean technology (power

semiconductors, renewable technology); data security

(cybersecurity, encryption, anti-fraud technology).

• Increasing business productivity and efficiency.

This includes companies that contribute to responsible

economic growth through products and services

that enable increases in workforce productivity,

new business formation and more efficient use of

resources. This may include application software, online

advertising, e-commerce, data management, artificial

intelligence, and automation.

• Empowering individuals. This includes companies

whose products and services enhance the wellbeing

and lives of individuals through innovative platforms

and services that support social empowerment,

improved communication, broader access to commerce,

lifelong learning, training, and inclusion. This may

include social networking, smart phones and their

supply chain, online services, health technology,

educational technology, financial technology, and

consumer internet.

Integrating ESG into our investment process

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

ESG analysis

As a team, we use a combination of third-party research

and our own proprietary work to carry out ESG analysis

at the company level. We have also found a third-party

assessment and scoring approach useful as an independent

check on a company’s ESG profile. MSCI ESG ratings

and research aims to measure a company’s resilience

to long-term, financially relevant ESG risks by scoring a

company’s exposure to, and management of, the material

ESG risks and opportunities in its industry (‘Key Issues’),

relative to the company’s peers.

The limitations of MSCI’s approach can include issues around

data accuracy and timeliness, inappropriate peer groups and

a failure to consider fully the context around ESG issues.

More significantly, MSCI does not always reflect the most

material ESG risks and opportunities a company may face

when considered through the lens of our domain knowledge

and industry experience. We therefore believe it is important

to continue to undertake our own proprietary ESG work

when assessing companies, and this work must be led by

the investment team with oversight and support from Polar

Capital’s Risk and Sustainability teams.

Part 1: Investigate and assess third-party research

We use third-party ESG analysis reports as a useful

‘first pass’ for company-level analysis as part of a wider

assessment. We investigate areas where an individual

company scores poorly, check the information used to

make sure the score is accurate and timely, and take a view

on the materiality of the issue or controversy.

We also use this initial assessment as one basis for

engagement if we believe doing so can help us better

understand the issue, or we can influence the company to

mitigate it. Many clients and other stakeholders also view

the Company’s ESG profile through the lens of an external

provider, often MSCI, so it is important we can understand

and explain what drives this.

Part 2: Proprietary research

Where appropriate, we conduct our own proprietary

research to assess material sustainability issues not

captured by third-party assessments, often for reasons of

methodology or scope, making use of company filings,

sustainability reports, sell-side research, news reports and

other sources. This helps us assess any material limitations

in the data or information relied upon for third-party

assessments and allows us to assess companies not covered

by third-party providers (such as companies new to the

public market).

When considering a prospective new position, a review of

a company’s ESG risk factors is undertaken. In particular,

we assess whether there are any material controversies,

legal proceedings, regulatory issues, data breaches, or

other ESG risk factors that may either constitute a norms-

based violation or otherwise create a potential risk to the

investment case. In addition to the controversy reporting

provided by MSCI ESG Manager, wherever possible, we

reference primary sources such as regulatory filings (for

example, 10-K, 20-F, Annual Report, 10-Q), company

ESG or Sustainability Reports, governmental websites, (for

example, US Department of Justice).

In terms of the impact on a company, typically, an ESG

issue might present as a potential one-off liability such as

a fine or settlement, reputational damage which impacts

the valuation multiple, or in the worst case, an on-going

impact on the company’s business model through higher

costs, raised capital expenditure, or necessity to increase

prices. Our initial assessment is vigilant to all these concerns

as well as documenting where engagement on ESG issues

may be required in order to better understand an issue

or attempt to effect change in corporate behaviour in the

interests of other stakeholders.

An assessment of good governance is also made, taking

into account, among other factors, management structure,

employee relations, staff and executive remuneration,

and tax compliance. As an example, some investee

companies, especially in Asian jurisdictions, may not have

independent Board majorities and we evaluate whether

we should vote against the continuation of such a Board

structure. Alternatively, many technology companies that

generate a profit, can report a tax rate that is well below

statutory rates of corporate taxation, and it is important to

investigate the rationale for these differences - is it caused

by the use of accumulated tax losses or tax credits, for

example.

Technology companies and governance

Governance issues are a fundamental consideration when

investing in the technology sector. Many technology

companies operate with different governance structures

and practices, including limited minority shareholder

voting rights, above-average share dilution and option

issuance, non-independent boards and, at times, excessive

management remuneration. We believe it is important

to scrutinise companies on their individual merits and

recognise the trade-offs between shareholder rights and

the importance of backing management’s long-term

vision and allowing the company to compete effectively

in the marketplace. For example, it may be necessary for

ESG – Investment Perspective continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

a company to issue an elevated level of shares to attract

and retain scarce talent in a fast-growing area to support

its growth, but such issuance would be excessive should

the company’s growth not materialise. We consider the

impact of share-based compensation on free cash flow,

and the makeup and integrity of the Board of Directors

as a check on management decisions, especially around

dilutive M&A and strategic investments. The Trust has

invested in many founder-led companies since its inception,

and we will continue to use our domain expertise to judge

the appropriateness and materiality of each company’s

governance arrangements and activities.

Stewardship

Engagement: At a high level we engage where it is useful

and can add value to our investment process and/or where

we can use our influence to support positive change. We

decide where to engage based on our ESG analysis and we

record the results of these engagements. We meet with a

large number of companies regularly given the size of our

team and typically have many opportunities to raise issues

with them. These more informal engagements are recorded

in our research database, Tamale, alongside company

meeting and valuation work. We also undertake a small

number of more ESG-led engagements with companies

where ESG issues have become more material, or we

believe our engagement may effect positive change.

Whilst we do not formally consider Principal Adverse

Impacts (PAIs) as defined by EU legislation as it is not in

scope of the European Sustainable Finance Disclosure

Regulation (SFDR), we are aware when a prospective

holding may flag against certain PAIs, for example for a

high carbon footprint, or a lack of Board gender diversity.

These flags help inform where further engagement or more

intensive monitoring may be necessary.

Voting

The team takes its voting responsibilities very seriously

and will consider all resolutions proposed at an investee

company’s AGM or other special meeting. The team uses

the ISS Benchmark Proxy Voting Guidelines as a starting

point for all research and recommendations regarding

proxy voting. These recommendations are underpinned

by four key principles of accountability, stewardship,

independence, and transparency to promote long-term

shareholder value creation and risk mitigation through

the support of responsible global corporate governance

practices. However, each investment team is the final

decision-maker on proxy voting and will vote in line

with the principles of their investment philosophy and

responsible investment process. The teams will vote by

balancing the best interests of the company concerned

over the long term, in conjunction with maximising the

value of investments managed by each team. Each ballot

resolution is actively reviewed and assessed especially

where ISS recommends voting against management. A

record is kept of when and why the team votes against

either ISS or management. A summary of the voting record

is given within the ESG dashboard on page 51.

Monitoring and oversight

The portfolio’s ESG characteristics are reviewed in detail

every four months in the investment oversight meetings

with Polar Capital’s Chief Investment Officer, Chief Risk

Officer, and Head of Sustainability. Oversight covers the

portfolio’s ESG profile and scoring using third-party data

methodology, climate risk assessment and norms and

controversies screening, the analysis of which is the starting

point for discussion in oversight meetings. In addition, the

PCTT Board reviews a dashboard of key ESG metrics at

each of the 5 annual board meetings.

Climate risk assessment data includes an assessment

of the portfolio relative to the benchmark on metrics

including carbon footprint, carbon intensity of the

portfolio stocks and weighted average carbon intensity.

It also highlights key high-emissions sectors of allocation

within the portfolio. Key high-emitting stocks, stocks

with exposure to potential stranded assets and climate

risk management of the companies are highlighted. The

portfolio is monitored for controversies using third-party

norms and controversies research, which evaluates ESG

controversies’ severity and impact. It is also assessed, in

line with the aforementioned exclusions process, against

alignment with the UN’s Global Compact (UNGC), the

UN’s Guiding Principles on Business and Human Rights, the

International Labour Organisation’s conventions and the

Organisation for Economic Cooperation and Development’s

Guidelines for Multinational Enterprises. The team use

MSCI ESG Norms and Controversies research to provide

deeper insight into companies however, given differing

methodologies, tolerances, and assessments of company

behaviour, we retain discretion over the assessment of

third-party conclusions on a case-by-case basis. The team

also incorporates an additional layer of oversight using an

in-house consultant with expertise in ESG. The purpose of

the additional layer of oversight is to ensure the team have

a detailed understanding of the mechanics of changes in

third-party ESG scores at both the company and portfolio

level, assist with more detailed ESG analysis and to ensure

the ESG integration process is being adhered to.

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Reporting

Reporting forms an important part of our ESG approach

given its role in allowing investors and other stakeholders

to evaluate our activities and progress. The Board receives

an ESG dashboard as part of the regular board packs

which includes metrics regarding the portfolio’s MSCI ESG

fund score, the worst-scoring underlying holdings across

E, S and G metrics, the portfolio’s carbon footprint and

the portfolio’s exposure to clean technology solutions.

The dashboard also has an analysis of the team’s proxy

voting activities over the most recent period. A similar

dashboard is provided on page 51.

The ESG profile of the portfolio is assessed independently

by MSCI using their ESG Manager Fund Ratings system. At

the time of last year’s Annual Report, the fund rating was

AAA, but since then there has been a change by MSCI in

their methodology. Previously, the rating was comprised of

the weighted average ESG score of assessed holdings with

an adjustment factor added to take account of holdings

that have been upgraded or downgraded, and those with

very low scores - deemed ‘laggards’. Now, the fund rating

is based only on the weighted average ESG score of each

assessed holding. There is no longer an adjustment factor

which many users felt had created excessive volatility in

fund scores and ratings. This has resulted in a fall in the

rating for most funds that invest in technology stocks, given

many technology companies had benefitted from positive

momentum in their ESG scores as they improved ESG

practices and disclosures. Indeed, the shift of Apple from

being a positive to negative momentum driver on its own

pushed many funds from AAA to A. The MSCI fund rating

is also now A, although the weighted average ESG score

is broadly comparable to that of last year. Over the year,

the weighted average score of the fund declined slightly

from 6.74 to 6.62, whilst that of the benchmark also fell

slightly from 6.89 to 6.88. The slip in the Fund’s score is

attributed primarily to the purchase of some new names

that score modestly below the Fund’s average score. We do

not manage the portfolio to maintain a particular relative or

absolute MSCI ESG rating.

ESG – Investment Perspective continued

www.polarcapitaltechnologytrust.co.uk

Spotlight On Cloudflare

Building a better internet and defending Ukraine

Cloudflare’s stated mission is “to help build a better internet”

which is more secure and reliable. The internet represents

critical digital infrastructure without which the flow of

information, economic activity and social interaction would be

catastrophically impaired. This makes protecting it and those

that use it vital, and Cloudflare plays a major role in this effort.

Cloudflare’s Free plan allows millions of customers to secure

their websites, applications and data at no cost, providing

critical secure access to technology and communications

infrastructure. This is also a greener alternative as Analysys

Mason found Cloudflare’s Web Application Firewall (WAF)

generated c90% less carbon than on-premise appliances.

More recently, Cloudflare has been a key member of the group

of companies working to maintain Ukrainians’ access to the

internet and help defend it from persistent cyber attacks at no

cost. This includes a number of services to protect Ukrainian

government and key infrastructure, as well as the “.ua” top-

level domain and 130 other Ukrainian government domains.

Cloudflare also protects 79 non-profit organisations in Ukraine

including those helping refugees, documenting war crimes, and

sharing information.

It is a testament to the speed of Cloudflare’s response and the

quality of their technology, along with others, that the barrage

of Russian Distributed Denial of Service (DDOS) and other cyber

attacks have failed to take down critical Ukrainian infrastructure.

This was a major concern when the invasion started.

Cloudflare also runs Project Galileo, which helps keep

vulnerable sites online by offering free cybersecurity services for

companies in the arts, human rights, civil society, journalism,

or democracy. This is in addition to their Athenian Project

which provides free cybersecurity services to US state and local

government websites to improve their security and reliability

and foster trust in the digital aspect of the electoral process.

Cloudflare for Campaigns brings a suite of security products

to smaller campaigns who might otherwise be unable to

afford them. Campaign websites are often attacked which

can undermine voters’ ability to make informed decisions and

interfere with fundraising efforts.

Election season highlights

Here are a few findings from the three months leading up

to the election. These are made possible by our preemptive

campaign discovery and machine learning algorithms.

Cloudflare processed over 20 million emails for campaigns

and stopped around 150K phishing attacks.

We saw more than 10,000 emails sent that were using

the names of candidates without their permission.

The office of one Senate incumbent received an average

of 35 malicious emails every day.

“I want to mention

Cloudflare because

they reached out to us

proactively and offered help.

We took their help and we relied

on them immensely and I really want

to express my gratitude to the

leadership and the team there.”

Dmitry Kohmanyuk,

.ua TLD strategist in Heise

Online interview, 3/24/22

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Spotlight on ServiceNow

Make the world work better for everyone

ServiceNow provides a software platform which

optimises business processes on a single unified

platform to digitize an entire business. This allows

companies to deliver digital experiences that

make work flow more efficiently by connecting

people, processes and systems together to enable

organisations to better serve all stakeholders and

increase business productivity. 7,700 enterprise

customers use ServiceNow’s platform to drive

their digital transformation initiatives, including

85% of the Fortune 500.

ServiceNow’s software platform is increasingly

being used by customers to embed and

strengthen sustainability in the own operations.

This includes digitising physical workflows

and automating manual processes, powering

engagement with employees and customers

and ServiceNow’s platform is increasingly being

used for ESG goal setting, data collection and

reporting. This should help improve the quality

and increase the volume of organisations’ ESG

data – something we continue to advocate for.

There is also significant demand for process and

data governance as companies need to remain

compliant with more onerous regulations and

meet their customer expectations. For example,

ServiceNow has invested in a new solution to

ensure European Union customers’ data is only

handled within EU borders.

ServiceNow has also released new ‘ESG Command

Center’ product to help customers achieve their

ESG goals and recognise ESG’s connection

to long-term value creation. In less than four

months, the number of customer conversations

where ESG is addressed has increased tenfold.

Customers are elevating their own ESG initiatives

with better data collection, process monitoring

and automated reporting.

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

SERVICENOW SOLUTIONSINTRO & ESG STRATEGY

SERVICENOW GLOBAL IMPACT REPORT 2022

ENVIRONMENT SOCIAL GOVERNANCE DATA

Our integrated ESG solution, ESG Command Center,

launched in October 2021. It brings together an all-new

ESG Management product and our Integrated Risk

Management and Strategic Portfolio Management

solutions—along with our partner ecosystem. This

solution, together with our existing and custom-built

workflows and apps, gives organizations the range of

tools they need to turn their ESG strategies into action.

Learn more about our ESG solutions.

Laying the foundation for ESG activation

ServiceNow ESG

Management

Helps companies document material

topics, create goals and metrics,

track performance, collect and

validate audit-ready data, and

create metric disclosures that align

with major ESG reporting frameworks.

ServiceNow Strategic

Portfolio Management

Helps organizations build and

maintain their ESG roadmap through

strategy, planning, and budgeting

tools. Companies can track costs and

resources, gain visibility into their ESG

investments, and improve the scale

and impact of their ESG efforts.

ServiceNow Integrated

Risk Management

Incorporates ESG considerations

and data into enterprise-wide risk

and compliance management by

offering core governance capabilities,

advanced risk assessments, continuous

monitoring, artificial intelligence (AI),

audits, privacy, automation, and

analytics for better decision-making

and business performance.

Our ESG Command Center solution helps organizations at every level of maturity integrate their

ESG initiatives—from setting goals and collecting data to auditing activities and tracking and

disclosing performance. This solution allows customers to plan, manage, govern, and report on

ESG initiatives in every part of the organization.

A closer look at ESG Command Center

SERVICENOW SOLUTIONSINTRO & ESG STRATEGY

SERVICENOW GLOBAL IMPACT REPORT 2022

ENVIRONMENT SOCIAL GOVERNANCE DATA

That’s why we’re developing integrated solutions that cut

across enterprise silos and ecosystems—solutions that

address our customers’ biggest issues (and the issues

their customers, employees, and investors care about).

These solutions help mitigate risk, control costs, and even

grow the top line. We’re not reinventing the wheel. We’re

taking the power of the Now Platform and the solutions

our customers have come to trust and rely on, and we’re

enhancing them to address environmental, social, and

governance needs.

As we progress on our own ESG journey,

we’re building systems to help customers

turn ESG strategy into action. Together,

we create value for business, society,

and the planet.

Building connections that turn ESG strategy

into action

The power of ServiceNow solutions to address ESG

Strategy, management, governance, and reporting

Social

External data sources

Environmental

ServiceNow products for ESG use cases

Creator Workflows for industry and customer-specific needs

ServiceNow Store integrations, content, and partner-built apps

Governance

Now Platform

By keeping data and ideas flowing across value chains and providing engaging and productive

digital experiences, the Now Platform unites the people, processes, and systems that make work

happen in the right way for the benefit of everyone.

ESG – Investment Perspective continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Spotlight on Shopify

The future of commerce has more voices,

not fewer.

Shopify’s mission is to “make commerce better for

everyone” and help people achieve independence by

making it easier to start, run, and grow a business. The

company aims to empower individuals, lower the barriers

to commerce and level the playing field for entrepreneurs

of all ages and backgrounds to compete with larger

businesses.

Shopify has a merchant education and equitable

entrepreneurship programs are designed to improve

accessibility, instil an innovation mindset, and empower

business owners to thrive. This is in addition to the Shopify

Open Learning programme which helps students to create

their own Shopify stores. There are currently more than

2m million merchants on Shopify and more than 5m jobs

have been created by Shopify merchants and partners.

Sustainability is also an increasingly important

driver of consumer choices. A Shopify survey across

>24,000 consumers and >9,000 business executives across

12 countries found 62% of consumers are “unwilling to

compromise on sustainability” and 54% are already making

sustainable purchases by choosing retailers that offer zero-

emission shipping, for example. 82% of merchants believe

there is a strong correlation between sustainability and

improved business performance. 45% of consumers report

they are willing to pay a premium if it leads to a reduction

in their carbon footprint.

Shopify itself is carbon-neutral and

provides merchants with tools to enable this including the

Shopify Planet app, which allows carbon neutral shipping on

all orders and automatically calculates the cost.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Regulation / Polar Initiatives

As a UK listed entity, the Company is currently subject to

limited direct ESG regulation and reporting requirements,

but we are mindful that over the coming year, the UK’s

FCA will introduce a package of measures aimed at

clamping down on greenwashing. This includes sustainable

investment labels, disclosure requirements and restrictions

on the use of sustainability-related terms in product

naming and marketing. These Sustainability Disclosure

Requirements (SDR) are still in development following

significant feedback received during the consultation. The

Policy Statement is likely to be published in September

2023, with the anti-greenwashing rule coming into force

immediately, followed by the disclosure requirements

12 months later.

However, we are cognisant of their broad aims and

recommendations from HM Treasury to the FCA which

among other economic aspirations include Climate Change

objectives; specifically the UK Government’s commitment

to achieve a net-zero economy by 2050 under the Climate

Change Act 2008.

Of most relevance for Polar Capital is the introduction of the

Task force on Climate-related Financial Disclosures (TCFD),

developed by the Financial Stability Board (FSB) to provide

guidance for corporates and investors on key information

that companies should disclose to support investors. The

FCA has now adopted the TCFD guidance to introduce

mandatory climate-related reporting for asset managers

in the UK, implemented in a phased approach depending

on size of the asset manager. Polar Capital falls within the

second phase of reporting (with AUM between £5-50bn) in

scope of the FCA’s TCFD requirements from January 2023,

requiring our first full TCFD report by June 2024.

Polar Capital is working to incorporate the

recommendations of the TCFD into its Governance,

Strategy and Risk Management frameworks, and will

provide on TCFD reporting in the coming year.

Polar Capital has joined the Institutional Investors Group

on Climate Change (IIGCC), the European membership

body for investor collaboration on climate change. The

IIGCC’s mission is to support and enable the investment

community in driving significant and real progress by 2030

towards a net zero and resilient future. The IIGCC is the key

organisation in developing the Net Zero Asset Managers

Initiative and NZ Investment Framework, which is used

by asset managers to develop net zero commitments and

targets.

Polar Capital is considering its position regarding making

a net zero commitment that covers financed emissions

or joining an organisation such as the Net Zero Asset

Managers Initiative. While we have not yet made such a

commitment, we continue to develop our capability to

evaluate our funds’ holdings using the IIGCC Paris Aligned

Investment Initiative Net Zero Framework and hope that

membership of the IIGCC will help us develop our own net

zero strategy and support engagement on climate change

transition within our portfolios.

Alastair Unwin

Deputy Fund Manager

Polar Capital

18 July 2023

ESG – Investment Perspective continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

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Shareholder

Information

Top 5 Rated Holdings

Security Rating Change

Hoya AAA

Kinaxis Inc AAA

ASML AAA

Workday AAA

Microsoft AAA

Source: MSCI

Vote cast statistics

Number of votes FOR

74.6%

Number of votes against

10.2%

Number of votes withhold

6.6%

Number of votes on management

say on pay

8.4%

Number of votes abstain 0.19%

Source: MSCI, ISS

Number of votes on MSOP

Number of votes WITHHOLD

Number of votes ABSTAIN

Number of votes AGAINST

Number of votes FOR

Voting Record

Category Number Percentage

Number of votable meetings 108

Number of meetings voted 107

99.1%

Number of meetings with at least 1 vote

Against, Withhold or Abstain 57 52.8%

Source: MSCI, ISS

Weighted average carbon intensity (tCO2e / $m sales)

The fund’s holdings have low carbon intensity, based on the

weighted average carbon emissions per USD million sales.

25.1

VERY HIGH HIGH MODERATE LOW VERY LOW

MSCI Distribution of Ratings

36% of the fund’s weighted portfolio holdings receive an MSCI

ESG Rating of AAA or AA (ESG Leaders) and 5% receive an MSCI

ESG Rating of B or CCC (ESG Laggards).

AAAAAABBBBBBCCCUnrated

22%

30%

13%

23%

LAGGARD AVERAGE LEADER

Corporate governance

The weighted average percentage of independent board of

directors in the portfolio’s investee companies is 77.9%, and the

weighted average percentage of women on boards is 30.8%.

Board Gender DiversityBoard Independence

77.9%

30.8%

ESG Dashboard

MSCI

ESG RATINGS

Bottom 5 Rated Holdings

Security Rating Change

Zuken CCC

Meta Platforms CCC

SiTime B

Harmonic Drive Systems B

eMemory Technology B

Source: MSCI

Portfolio

Weighted Average ESG Score / Quality Score 6.62

Letter Rating A

CCC B BB BBB A AA AAA

Corporate Governance

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Strategic Report

This report has been provided in accordance with The

Companies Act 2006 (Strategic Report and Directors’

Report) Regulations 2013. The aim of this report is to

provide information to shareholders on the Company’s

strategy and the potential for such to succeed, including

a fair review of the Company’s performance during the

year ended 30 April 2023, the position of the Company

at the year end and a description of the principal risks and

uncertainties, including both economic and business risk

factors underlying any such forward-looking information.

Business Model and Regulatory

Requirements

The Company’s business model follows that of an

externally managed investment trust providing shareholders

with access to an actively managed portfolio of technology

shares selected on a worldwide basis.

The Company is designated as an Alternative Investment

Fund (‘AIF’) under the Alternative Investment Fund

Management Directive (‘AIFMD’) and, as required by the

Directive, has contracted with Polar Capital LLP to act as

the Alternative Investment Fund Manager (‘AIFM’) and

Investment Manager (or ‘Manager’) and HSBC Bank Plc to

act as the Depositary.

Both the AIFM and the Depositary have responsibilities

under AIFMD for ensuring that the assets of the Company

are managed in accordance with the Investment Policy and

are held in safe custody. The Board remains responsible for

setting the investment strategy and operational guidelines

as well as meeting the requirements of the FCA’s Listing

Rules and the Companies Act 2006.

The AIFMD requires certain information to be made

available to investors in AIFs before they invest and requires

that material changes to this information be disclosed

in the Annual Report of each AIF. Investor Disclosure

Documents, which set out information on the Company’s

investment strategy and policies, leverage, risk, liquidity,

administration, management, fees, conflicts of interest

and other shareholder information are available on the

Company’s website.

There have been no material changes to the information

requiring disclosure. Any information requiring immediate

disclosure pursuant to the AIFMD will be disclosed to the

London Stock Exchange. Statements from the Depositary

and the AIFM can be found on the Company’s website.

Investment Objective and Policy

While observing the Dow Jones Global Technology

Index (total return, Sterling adjusted, with the removal

of relevant withholding taxes) as the Benchmark against

which NAV performance is measured, shareholders should

be aware that the portfolio is actively managed and is

not designed to track any particular benchmark index or

market. The performance of the portfolio can vary from the

Benchmark performance, at times considerably.

Over recent decades the technology industry has been one

of the most vibrant, dynamic and rapidly growing segments

of the global economy. Technology companies offer the

potential for substantially faster earnings growth than the

broader market.

Investments are selected for their potential shareholder

returns, not on the basis of technology for its own sake.

The Investment Manager believes in rigorous fundamental

analysis and focuses on:

• management quality;

• the identification of new growth markets;

• the globalisation of major technology trends; and

• exploiting international valuation anomalies and sector

volatility.

Changes to Investment Policy

Any material change to the Investment Policy will require

the approval of the shareholders by way of an ordinary

resolution at a general meeting. The Company will

promptly issue an announcement to inform shareholders

and the public of any change to its Investment Policy.

No changes to the Investment Policy are presently

anticipated.

This report forms part of the Strategic report section

www.polarcapitaltechnologytrust.co.uk

Overview

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Environmental, Social

and Governance (ESG)

Corporate

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Financial

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Shareholder

Information

Investment Strategy Guidelines and Board

Limits

The Board has established guidelines for the Investment

Manager in pursuing the Investment Policy. The Board

uses these guidelines to monitor the portfolio’s exposure

to different geographical markets, sub-sectors within

technology and the spread of investments across different

market capitalisations.

These guidelines are kept under review as cyclical changes

in markets and new technologies will bring certain

sub-sectors or companies of a particular size or market

capitalisation into or out of favour.

Asset Allocation

Technology may be defined as the application of scientific

knowledge for practical purposes and technology

companies are defined accordingly. While this offers a very

broad and dynamic investing universe and covers many

different companies, the portfolio of the Company (the

‘Portfolio’) is focused on companies which use technology

or which develop and supply technological solutions

as a core part of their business models. This includes

areas as diverse as information, media, communications,

environmental, healthcare, finance, e-commerce and

renewable energy, as well as the more obvious applications

such as computing and associated industries.

The Board has agreed a set of parameters which seek to

ensure that investment risk is spread and diversified. The

Board believes that this provides the necessary flexibility

for the Investment Manager to pursue the Investment

Objective, given the dynamic and rapid changes in the field

of technology, while maintaining a spread of investments.

Market Parameters

With current and foreseeable investment conditions, the

Portfolio will be invested in accordance with the Investment

Objective and Policy across worldwide markets, generally

within the following ranges:

• North America up to 85%.

• Europe up to 40%.

• Japan and Asia up to 55%.

• Rest of the world up to 10%.

The Board has set specific upper exposure limits for certain

countries where they believe there may be an elevated risk.

As reported last year, the Company does not hold stocks in

Russia and has no intention of doing so in the near future.

The Company will at all times invest and manage its assets

in a manner that is consistent with spreading investment

risk and invests in a Portfolio comprised primarily of

international quoted equities which is diversified across

both regions and sectors.

Investment Limits

In applying the Policy, the Company will satisfy the

following investment restrictions:

• The Company’s interest in any one company will not

exceed 10% of the gross assets of the Company,

save where the Benchmark weighting of any investee

company in the Company’s portfolio exceeds this

level, in which case the Company will be permitted to

increase its exposure to such investee company up to

the Benchmark ‘neutral’ weighting of that company or,

if lower, 15% of the Company’s gross assets.

• The Company will have a maximum exposure to

companies listed in emerging markets (as defined

by the MSCI Emerging Markets Index) of 25% of its

gross assets.

• The Company may invest in unquoted companies

from time to time, subject to prior Board approval.

Investments in unquoted companies in aggregate will

not exceed 10% of the gross assets of the Company.

Such limits are measured at the time of acquisition of the

relevant investment and whenever the Company increases

the relevant holding.

In addition to the restrictions set out above, the Company

is subject to Chapter 15 of the FCA’s Listing Rules which

apply to closed ended investment companies with a

premium listing on the Official List of the London Stock

Exchange.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Strategic Report continued

In order to comply with the current Listing Rules,

the Company will not invest more than 10% of its total

assets at the time of acquisition in other listed closed

ended investment funds, whether managed by the

Investment Manager or not. This restriction does not apply

to investments in closed ended investment funds which

themselves have published investment policies to invest no

more than 15% of their total assets in other listed closed

ended investment funds. However, the Company will not in

any case invest more than 15% of its total assets in other

closed ended investment funds.

Cash, Borrowings (Gearing) and Derivatives

The Company may borrow money to invest in the Portfolio

over both the long and short-term. Any commitment to

borrow funds is agreed by the Board and the AIFM.

The Investment Manager may also use from time-to-time

derivative instruments, as approved by the Board, such as

financial futures, options, contracts-for-difference and

currency hedges. These are used for the purpose of

efficient portfolio management. Any such use of derivatives

will be made in accordance with the Company’s policies

on spreading investment risk as set out in this investment

policy and any leverage resulting from the use of such

derivatives will be subject to the restrictions on borrowings.

Cash

The Company may hold cash or cash equivalents if the

Investment Manager feels that these will, at a particular

time or over a period, enhance the performance of the

Portfolio. The Board has agreed that management of cash

may be achieved through the purchase of appropriate

government bonds, money market funds or bank deposits

depending on the Investment Manager’s view of the

investment opportunities and the benefits of diversification.

Gearing and Derivatives

The Company’s Articles of Association permit borrowings

up to the amount of its paid-up share capital plus capital

and revenue reserves. The Company may use gearing in

the form of bank loans which are used on a tactical basis

by the Investment Manager, when considered appropriate.

The Board monitors the level of gearing available to the

Portfolio Manager and agrees, in conjunction with the

AIFM, all bank facilities in accordance with the Investment

Policy. The Board approves and controls all bank facilities

and any net borrowings over 20% of the Company’s net

assets at the time of draw down will only be made after

approval by the Board.

During the year, the Company had two loan facilities

with ING Bank NV: one for 36m US Dollars at a fixed rate

of 5.43% pa and one for 3.8bn Japanese Yen at a fixed

rate of 1.13% pa, both of which were drawn down in

September 2022. These loans fall due for repayment in

September 2024. The loan facilities will be reviewed and

may be replaced on expiry.

Details of the loans are set out in Note 17 to the Financial

Statements.

The Investment Manager’s use of derivatives is monitored

by the Board in accordance with the Company’s investment

policy and any leverage from the use of such derivatives

will be subject to the restriction on gearing.

Future Developments

The Board remains positive on the longer-term outlook

for technology and the Company will continue to

pursue its Investment Objective. The outlook for future

performance is dependent to a significant degree on the

world’s financial markets and their reactions to economic

events and other geopolitical forces. In accordance with

the Articles of Association, the Board will propose the

next five-yearly continuation vote of the Company at the

Annual General Meeting to be held in September 2025.

The Chair’s Statement and the Investment Manager’s

Report comment on the outlook.

Dividends

The Company’s revenue varies from year to year and the

Board considers the dividend position each year in order

to maintain the Company’s status as an investment trust.

The revenue reserve remains in deficit and historically

the Company has not paid dividends given its focus on

capital growth.

The Directors do not recommend, for the year under

review, the payment of a dividend (2022: no dividend

recommendation).

www.polarcapitaltechnologytrust.co.uk

Overview

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Service Providers

Polar Capital LLP has been appointed to act as the

Investment Manager and AIFM as well as to provide or

procure company secretarial services, marketing and

website services which it arranges through Huguenot

Limited, and administrative services, including accounting,

portfolio valuation and trade settlement which it has

arranged to deliver through HSBC Securities Services (‘HSS’

or “the Administrator”).

The Company also contracts directly, on terms agreed

periodically, with a number of third parties for the

provision of specialist services. The cost of the services

outlined below are paid for directly by the Company

and are separate from the Investment Management Fee

payable to Polar Capital:

• Stifel Nicolaus Europe Limited as Corporate Broker;

• Equiniti Limited as Share Registrars;

• HSBC Securities Services as Custodian and Depositary;

• RD:IR for Investor Relations and Shareholder Analysis;

• Camarco as PR advisors; and

• Perivan Limited as designers and printers for

shareholder communications.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Investment Management Company and

Management of the Portfolio

As the Company is an investment vehicle for shareholders,

the Directors have sought to ensure that the business of

the Company is managed by a leading specialist investment

management team and that the investment strategy

remains attractive to shareholders. The Directors believe

that a strong working relationship with the investment

management team will help to achieve the optimum return

for shareholders. As such, the Board and the Investment

Manager operate in a supportive, co-operative and open

environment.

The Investment Manager is Polar Capital LLP (‘Polar

Capital’), which is authorised and regulated by the

Financial Conduct Authority, to act as Investment Manager

and AIFM of the Company with sole responsibility for

the discretionary management of the Company’s assets

(including uninvested cash) and sole responsibility to

take decisions as to the purchase and sale of individual

investments. The Investment Manager also has

responsibility for asset allocation within the limits of the

investment policy and guidelines established and regularly

reviewed by the Board, all subject to the overall control and

supervision of the Board.

Polar Capital provides a team of technology specialists led

by Ben Rogoff. Each team member focuses on specific

areas while Ben Rogoff, with Alastair Unwin as Deputy,

has overall responsibility for the portfolio. Polar Capital also

has other specialist and geographically focused investment

teams which may contribute to idea generation. The

technology investment team’s biographies can be found

on pages 10 and 11. The Investment Manager has other

investment resources which support the investment team

and has experience in administering and managing other

investment companies.

Fee Arrangements

Under the terms of the Investment Management

Agreement, the Company pays to the Investment Manager

a base fee, and in certain performance circumstances, a

performance fee.

Management fee

With effect from 1 May 2022, the base management fee

paid by the Company monthly in arrears to the Manager is

calculated on the daily Net Asset Value (‘NAV’) as follows:

• Tier 1: 0.80 per cent. for such of the NAV up to and

including £2bn;

• Tier 2: 0.70 per cent. for such of the NAV between

£2bn and £3.5bn; and

• Tier 3: 0.60 per cent. for such of the NAV above

£3.5bn.

Any investment in funds managed by Polar Capital

are wholly excluded from the base management fee

calculation. Management fees of £21,918,000 (2022:

£28,281,000) have been paid for the year to 30 April 2023

of which £1,827,000 (2022: £6,374,000) was outstanding

at the year end.

Under the terms of the IMA the Board may undertake a

three-yearly review of the fee arrangements, the next of

which will commence in 2025, with the anticipation that

any changes proposed and subsequently agreed will take

effect from the start of the following financial year.

Further details on the performance fee methodology

and calculation are provided on page 134 within the

Shareholder Information section.

Strategic Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Longer-Term Viability

In accordance with the AIC Code of Corporate Governance, the Company is required to make a forward-looking

longer-term viability statement. The Board has considered and addressed the ability of the Company to continue to

operate over a period significantly beyond the twelve-month period required for the going concern statement. The Board

has considered the industry and market in which the Company operates and believes that despite the market volatility

experienced during the financial year under review, there continues to be appetite for technology investment. The Board

continues to use five years as a reasonable term over which the viability of the Company should be viewed; Shareholders

have the opportunity to vote on the continuation of the Company every five years, therefore the outlook for the next

five-year period incorporates the continuation vote which will be put to shareholders at the AGM in 2025. The process

and matters considered in establishing the longer-term viability are detailed within the Audit Committee Report on

page 82. In establishing the positive outlook for the Company over the next five years to 30 April 2028, the Board has

taken into account:

The ability of the

Company to meet its

liabilities as they fall due

The assessment took account of the Company’s current financial position, its cash flows and its liquidity

position, the principal risks as set out on pages 62 to 65 and the Committee’s assessment of any material

uncertainties and events that might cast significant doubt upon the Company’s ability to continue as a

going concern. The assessment was then subject to a sensitivity analysis over a five-year period, which

stress tested a number of the key assumptions underlying the forecasts both individually and in aggregate

for normal, favourable and stressed conditions and considered whether financing facilities will be renewed.

The portfolio comprises a spread of investments by size of company, traded on major international stock

exchanges.

99.8% of the current portfolio could be liquidated within seven trading days and there is no expectation

that the nature of the investments held within the portfolio will be materially different in future.

The expenses of the Company are predictable and modest in comparison with the assets and there are no

capital commitments foreseen which would alter that position. The ongoing charges of the Company for

the year ended 30 April 2023 (excluding performance fees) were 0.81% (2022: 0.84%).

Repayment of the bank facilities, drawn down at the year end, and due in September 2024, would equate

to approximately 21% of the cash or cash equivalents available to the Company at 30 April 2023, without

having to liquidate the portfolio of investments.

The Company has no employees and consequently does not have redundancy or other employment related

liabilities or responsibilities.

The Company will

propose a resolution on

the continuation of the

Company at the AGM in

September 2025

Under the AIC SORP, where Shareholders have the opportunity to vote in favour or against a company

continuing in existence, it will normally be the case that shareholders will have to vote in favour of a

liquidation before it can occur. It is reasonable to believe that if positive long-term performance is achieved

over the period until the next continuation vote shareholders will vote in favour of continuation.

Factors impacting the

forthcoming years

The Investment Manager’s Report and the Strategic Report provide a comprehensive review of factors

which may impact the Company in forthcoming years. In making its assessment, the Board considered

these factors alongside the Principal Risks and Uncertainties, and their corresponding mitigation and

controls, as set out on pages 62 to 65.

Regulatory changes Despite the increased level of regulation and the unpredictability of future requirements it is considered

that regulation will not increase to a level that makes the running of the Company uneconomical or

untenable in comparison to other competitive products.

Closed-ended Investment

Funds

It is believed that the business model of being a closed ended investment fund will continue to be wanted

by investors and the Investment Objective will continue to be desired and achievable.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Further, the Board recognises that there has been

significant progress made in the technology sector and

immense change in what is deemed to be a technology

company which broadens the universe for potential

investment. Technology remains a specialist sector for

which there continues to be a need for independent

specialist sector investment expertise. The Board therefore

have a reasonable expectation that the company will be

able to continue in operation and meet its liabilities as they

fall due over the five years to 30 April 2028.

Going Concern

The Board has also considered the ability of the Company

to adopt the Going Concern basis for the preparation of the

Financial Statements.

Consideration included the Company’s current financial

position, its liquidity position and its assessment. In addition,

the Company’s cash flows were stressed tested for base case

and reasonable worse case scenarios such as higher inflation

and interest rate increases. Further detail on the assessment

for going concern is provided in the Report of the Audit

Committee on pages 81 and 82 and in Note 2(a) of the

Financial Statements.

Key Performance Indicators

The Board appraises the performance of the Company and the Investment Manager as the key supplier of services to

the Company against Key Performance Indicators (‘KPIs’). The objectives of the KPIs comprise both specific financial and

shareholder related measures and these KPIs have not differed from the prior year.

KPI Control Process Outcome

The provision of investment

returns to shareholders

measured by long-term

NAV growth and relative

performance against the

Benchmark.

The Board is aware of the

vulnerability of a sector

specialist investment trust

to a change in investor

sentiment to that sector.

The Board reviews the performance of the

portfolio in detail and hears the views of

the Investment Manager at each meeting.

The Board discusses the market factors

giving rise to any discount or premium,

the long or short-term nature of

those factors and the overall benefit

to Shareholders of any actions. The

market liquidity is also considered when

authorising the issue or buy back of shares

when appropriate market conditions

prevail.

At 30 April 2023 the total net assets of the

Company amounted to £2,828,141,000

(2022: £3,050,985,000). The Company’s

NAV has, over the year to 30 April 2023,

underperformed the Benchmark by 5.7%.

The NAV per share fell by 2.8% from

2305.13p to 2239.48p while the Benchmark

increased 2.9% in Sterling terms over

the same period. As at 30 April 2023

the portfolio comprised 87 (2022: 96)

investments.

Investment performance is explained in

the Chair’s Statement and the Investment

Manager’s Report. The performance of the

Company over the longer-term is shown by

the ten year historic performance chart on

page 3.

Monitoring and reacting to

issues created by the discount

or premium of the ordinary

share price to the NAV per

ordinary share with the aim

of reduced discount volatility

for Shareholders.

The Board receives regular information on the

composition of the share register including

trading patterns and discount/premium levels

of the Company’s ordinary shares.

A daily NAV per share, diluted when

appropriate, calculated in accordance with

the AIC guidelines, is issued to the London

Stock Exchange.

The discount/premium of the ordinary share

price to NAV per ordinary share (diluted

when appropriate) has been as follows:

Financial year to 30 April 2023

• Minimum discount over year: 5.55%

• Maximum discount over year: 17.28%

• Average discount over year: 11.85%

Strategic Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

KPI Control Process Outcome

The Company does not have an absolute

target discount level at which it buys back

shares but has historically bought back

significant amounts of the outstanding

share capital when deemed appropriate

and will continue to do so. This approach

does not preclude a more active approach

as discounts widen and the Investment

Manager may consider that a single

purchase or a series of purchases of shares

in current or greater volumes, which would

enhance the Company’s NAV per share,

would be an attractive investment of the

Company’s cash resources, given the positive

long-term prospects for the Company’s

portfolio. As always, the Board keeps the

level of discount under careful review

and has been buying back shares actively

in recent months at levels set out in the

adjacent column.

In the year ended 30 April 2023, the

Company bought back 6,070,882 ordinary

shares (representing 4.4% of the issued

share capital) at an average discount of

11.95%, Subsequent to the year end and

to 13 July 2023, the Company bought back

a further 1,229,369 shares.

Over the previous five financial years ended

30 April 2023

• Maximum premium over period: 6.06%

• Maximum discount over period: 17.28%

• Average discount over period: 6.52%

Over the previous five financial years ended

30 April 2023 the Company has issued

3,520,000 Ordinary shares as a result of

market demand.

To qualify and continue to

meet the requirements for

Sections 1158 and 1159 of

the Corporation Tax Act 2010

(‘investment trust status’).

The Board receives regular financial

information which discloses the current

and projected financial position of the

Company against each of the tests set out

in Sections 1158 and 1159.

This has been achieved for every year since

launch in 1996.

HMRC has approved the investment trust

status subject to the Company continuing to

meet the relevant eligibility conditions and

ongoing requirements.

The Directors believe that the tests have

been met in the financial year ended

30 April 2023 and will continue to be met.

Efficient operation of the

Company with appropriate

investment management

resources and services from

third party suppliers within

a stable and risk-controlled

environment.

The Board considers annually the services

provided by the Investment Manager,

both investment and administrative, and

reviews on a cycle the provision and costs

of services provided by third parties.

The annual operating expenses are

reviewed and any non-recurring project

related expenditure is approved separately

by the Board.

The Board has received and considered

satisfactory the internal controls report

of the Investment Manager and other

key suppliers including contingency

arrangements to facilitate the ongoing

operations of the Company in the event of

withdrawal or failure of services.

The ongoing charges of the Company for

the year ended 30 April 2023 excluding the

performance fee were 0.81% of net assets

(2022: 0.84%). There was no performance

fee payable for the year ended 30 April 2023

(2022: nil) and therefore the ongoing

charges including the performance fee were

0.81% (2022: 0.84%) of net assets.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Principal Risks and Uncertainties

The Board is responsible for the management of risks faced

by the Company and, through delegation to the Audit

Committee, has established procedures to manage risk,

oversee the internal control framework and determine the

nature and extent of the principal risks the Company is willing

to take in order to achieve its long-term strategic objectives.

The established risk management process the Company

follows, identifies and assesses various risks, their likelihood,

and possible severity of impact, considering both internal and

external controls and factors that could provide mitigation.

A post mitigation risk impact score is then determined for

each principal risk.

At each Audit Committee, identified principal risks are

reviewed and reassessed against the backdrop of the

ever-changing world the Company is operating in.

Furthermore, the Audit Committee carries out, at least

annually, a robust assessment of overall risks and

uncertainties faced by the Company with the assistance

of the Investment Manager. As part of this process, the

Committee also identifies any emerging risks during its

review process and continues to closely monitor these risks

along with any other emerging risks as they develop and

implements mitigating actions as necessary. Emerging risks

during the financial year under review included Climate

change as well as the deterioration of relations between

China and Taiwan and the impact that a war between the

two countries may have on the Company’s portfolio, the

market and global economy. This has also been captured in

our risk map as an emerging risk. The medium and longer

term impacts of this risk will continue to be assessed by

the Audit Committee in light of how they may affect the

Company’s portfolio and the economic and geopolitical

environment in which the Company operates.

The Principal Risks post mitigation are detailed on the

following pages along with a high-level summary of their

management through mitigation and status arrows to

indicate any change in assessment over the past financial

year.

RISK CYCLE

Monitoring

and Review

Identify

Risk

Analyse

Risk

Manage

Risk

Build Risk

Strategy

Strategic Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Principal Risks and Uncertainties continued

Management of risks through Mitigation & Controls

PORTFOLIO RISK

Trend year on

year

Failure to achieve investment objective due to poor performance

The Board seeks to manage the impact of such risks through regular reporting and monitoring of investment

performance. In addition, the Board regularly considers, the level of premium and discount of the share price

to the NAV and ways to enhance shareholder value including share issuance and buy backs.

A detailed annual review of the investment strategy is undertaken by the Investment Manager with the Board

including analysis of investment markets and sector trends.

The Board is committed to a clear communication program to ensure shareholders understand the investment

strategy. A resolution is put forward every five years to provide shareholders with an opportunity to vote

on the continuation of the Company. The last continuation vote was held in September 2020 and had

100% of votes cast in favour, the next continuation resolution will be proposed at the AGM to be held in

September 2025.

Given the market volatility experienced during the year under review and the increased timeframe over which

the Company’s performance has suffered, the Board agreed to hold this risk at the elevated level following the

Company’s year-end.

Portfolio management errors e.g. breach of policy

Investment limits and restrictions are encoded into the dealing and operations systems of the Investment

Manager and various oversight functions are undertaken to ensure there is early warning of any potential

issue of compliance or regulatory matters.

The Investment Manager on behalf of the Company undertakes counterparty monitoring and only trades

with brokers which have satisfied the approval process. Trade settlement, currency exposure and all dealing

operations are monitored by various systems and groups including the Investment Manager’s operations and

risk teams and independent monitoring by the depositary.

OPERATIONAL RISK

Failure in services provided by the Investment Manager

The Board carries out an annual review of internal control reports from suppliers which includes the

Investment Manager’s cyber protocols and disaster recovery procedures.

Accounting, Financial or Custody errors

Due diligence and service reviews are undertaken with third-party service providers including the

Custodian and Depositary.

The Board considers, approves and monitors supplier appointments. The Investment manager reports on

breaches of service level agreements and failure to meet standards as it becomes aware of the issue.

Annual controls reports from service providers are reviewed by Board, and exceptions highlighted to the

Board. Representatives from each service provider attend meetings to apprise the Board of exceptions

found in their control environments. Directors regularly attend due diligence visits to service providers.

Increase

Decrease Unchanged

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Management of risks through Mitigation & Controls

OPERATIONAL RISK continued

Trend year on

year

IT failure, Fraud and Cyber Risk

The number, severity and success rate of cyberattacks have increased considerably in recent years.

However, controls are in place and the Board proactively seeks to keep abreast of developments through

updates with representatives of the Investment Manager who undertakes meetings with relevant service

providers.

The Audit Committee once again sought assurance via the Company Secretary, from each of the

Company’s service providers on the resilience of their business continuity arrangements. These assurances

and the subsequent detailed updates that were given to the Committee provided a satisfactory level of

assurance that there had not been, and there was no anticipation of any disruption in the ability of each

service provider to fulfil their duties as would typically be expected.

In light of the increased potential for fraud and cyber attacks during the year under review, the Board

decided to elevate the pre-mitigation score associated with this risk, the post mitigation remains

unchanged.

Black Swan event – e.g. unforeseen natural disaster

The Company has a disaster recovery plan in place along with a Black Swan Committee comprised of any

two directors, who are able to provide a response to such events as necessary.

Failure of Depositary, Custodian, Sub-Custodian

A full review of the internal control framework is carried out at least annually. Regular reporting is

received by the Investment Manager on behalf of the Board from the Depositary on the safe custody of

the Company’s assets. The Board undertakes independent reviews of the Depositary and Administrator

services (see glossary for further information) and additional resources have been put in place by the

Investment Manager. Management accounts are produced and reviewed monthly, statutory reporting

and daily NAV calculations are produced by the Administrator and verified by the Investment Manager.

REGULATORY RISK

Breach of Statutes and Regulation

The Board monitors regulatory change with the assistance of the Investment Manager, Company Secretary

and external professional suppliers and implements necessary changes should they be required.

The Board receives regulatory reports for discussion and, if required, considers the need for any remedial

action. In addition, as an investment company, the Company is required to comply with a framework of tax

laws, regulation and company law.

The Board keeps abreast of third party service provider internal controls processes to ensure requirements are

met in accordance with regulatory requirements.

Failure to effectively communicate with investors

Polar Capital Sales Team and the Corporate Broker provide periodic reports to the Board on communications

with shareholders and feedback received.

The Audit Committee received the half-year and annual financial statements prior to sign-off and makes

recommendations to the Board.

Contact details and how to contact the Board are provided in regulatory announcements and in half year and

annual reports. The Board are present at the AGM to speak to shareholders.

Increase

Decrease Unchanged

Principal Risks and Uncertainties continued

Strategic Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Management of risks through Mitigation & Controls

ECONOMIC AND MARKET RISK

Trend year on

year

Global geo-political risk

The Board regularly discusses the global geopolitical issues and general economic conditions and

developments. The impact on the portfolio from geopolitical changes is monitored through existing

control systems and discussed regularly by the Board. While it is difficult to quantify the impact of such

changes, it is not anticipated that they will fundamentally affect the business of the Company.

Uncertainty in regulatory environment (including inflation, recession and interest rates)

The Board regularly receives reports which detail corporate matters including legislative and regulatory

developments. Guidance on implementation is sought from and provided via the Company Secretary and

professional advisers where necessary.

Note 27 describes the impact of changes in foreign exchange rates. The Company’s largest exposure is to

US$ holdings. The Company has a varying level of cash which is primarily held in US Dollars and also has

loan facilities in both US Dollars and Japanese Yen. Fluctuations in exchange rates are monitored which

may impact investor returns. An analysis of currency is given in Note 27 to the Financial Statements.

KEY STAFF RISK

Loss of Portfolio Manager or other Key staff

The strength and depth of investment team provides comfort that there is not over-reliance on one

person with alternative senior technology portfolio managers available to act if needed. For each key

business process roles, responsibilities and reporting lines are clear and unambiguous. Key personnel are

incentivised by equity participation in the investment management company.

Ali Unwin was appointed as Deputy Fund Manager and is responsible for managing the portfolio of the

Company alongside Ben Rogoff, Lead Manager since 1 May 2006.

Insufficient resource or experience on the Board

Respected recruiters are used to source suitably experienced candidates for non-executive directorships.

A Board, Committee and Individual evaluation process is carried out annually and justification for

re-election of Directors is provided in Annual Report to Shareholders.

Increase

Decrease Unchanged

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Section 172 Statement

The statutory duties of the Directors are detailed in s171-177 of the Companies Act 2006. The Board recognises that under

s172, Directors have a duty to promote the success of the Company for the benefit of its shareholders as a whole and in

doing so have regard to the consequences of any decision in the long term, as well as having regard to the Company’s

wider stakeholders amongst other considerations. The fulfilment of this duty not only helps the Company achieve its

Investment Objective but ensures decisions are made in a responsible and sustainable way for shareholders.

To ensure that the Directors are aware of, and understand, their duties, they are provided with an induction, including

details of all relevant regulatory and legal duties as a director when they first join the Board, and continue to receive

regular and ongoing updates on relevant good practice, legislative and regulatory developments. They also have continued

access to the advice and services of the Company Secretary and, where deemed necessary, the Directors may seek

independent professional advice. The Schedule of Matters Reserved for the Board, as well as the Terms of Reference of its

committees are reviewed annually and further describe Directors’ responsibilities and obligations and include any statutory

and regulatory duties.

The Board seeks to understand the needs and priorities of the Company’s shareholders and stakeholders and these are

taken into account during all of its discussions and as part of its decision-making process. As an externally managed

investment company, the Company does not have any employees or customers, however the key stakeholders and a

summary of the Board’s consideration and actions where possible in relation to each group of stakeholders are described

in the table below.

Stakeholder Group How we engage with them

Shareholders The Directors have considered shareholder engagement when making the strategic decisions during

the year that affect shareholders, the confirmation of the continued appointment of the Investment

Manager and the recommendation that shareholders vote in favour of the resolutions to be proposed

at the AGM. The Directors have also engaged with and taken account of shareholders’ interests during

the year.

The Portfolio Manager has held numerous face to face meetings and interacted with a number of

shareholders and institutions in addition to presenting at a number of conferences during the year.

Where appropriate, directors are invited to attend these conferences to meet with shareholders and

prospective investors; in addition, the annual Investor Relations dinner was again held in October 2022.

Positive feedback was received from all attendees of the dinner who welcomed the opportunity to

interact with the Board and Manager.

The Chair will write to the Company’s largest shareholders following the publication of the Annual

Report and Financial Statements offering the opportunity to meet to discuss any matters of interest

or concern.

The AGM of the Company was held as a hybrid event in September 2022 and the Board were

delighted to once again welcome shareholders to the meeting in person. However the online level of

presence was minimal. The Company’s next AGM will be held at 2:30pm on Thursday 7 September

2023. Following the trials of holding semi-virtual and hybrid meetings, and considering the feedback

received from shareholders, we have decided to return to an in-person only AGM and will not be

providing a facility for online attendance. The Board recognises that the AGM is an important event

for shareholders and the Company and is keen to ensure that shareholders are able to exercise their

right to attend, vote and participate, we have therefore considered the meeting location and, based on

feedback received, have moved to a central London office which is close to Liverpool Street Station with

easy access from a number of directions. The meeting will therefore be held at the offices of Herbert

Smith Freehills, Exchange House, Primrose Street, London, EC2A 2EG. Once again, we will be inviting

feedback from shareholders and will take this into account when planning the 2024 meeting.

This report forms part of the Strategic report section

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Stakeholder Group How we engage with them

The Board believes that shareholder engagement remains important, especially in the current market

conditions and is keen that the AGM be a participative event for all shareholders who attend.

Shareholders are encouraged to send any questions ahead of the AGM to the Board via the Company

Secretary at cosec@polarcapital.co.uk stating the subject matter as PCTT-AGM. The investment

manager will give an in-person presentation and the Chair of the Board and all members of the Board

will be in attendance and will be available to respond to questions and concerns from shareholders.

Should any significant votes be cast against a resolution, the Board will engage with shareholders.

Should this situation occur, the Board will explain in its announcement of the results of the AGM

the actions it intends to take to consult shareholders in order to understand the reasons behind the

votes against. Following the consultation, an update will be published no later than six months after

the AGM and the next Annual Report will detail the impact the shareholder feedback has had on any

decisions the Board has taken and any actions or resolutions proposed.

Relations with Shareholders

The Board and the Manager consider maintaining good communications and engaging with

shareholders through meetings and presentations a key priority. The Board regularly considers the

share register of the Company and receives regular reports from the Manager and the Corporate

Broker on shareholder meetings attended and any concerns that have been raised in those meetings.

The Board also reviews correspondence from shareholders and may attend investor presentations.

The Chair has met with shareholders representing in the region of 12% of the share register, during

the year and responded to comments raised both at the AGM and via email.

Shareholders are able to raise any concerns directly with the Chair or the Board without intervention

of the Manager or Company Secretary, they may do this either in person at the AGM or at other

events, or in writing either via the registered office of the Company or to the Chair’s specific email

address Chair.pctt@polarcapital.co.uk.

Shareholders are kept informed by the publication of annual and half year reports, monthly fact

sheets, access to commentary from the Investment Manager via the Company’s website and

attendance at events in which the Investment Manager presents.

The Company, through the sales and marketing efforts of the Investment Manager, encourages

retail investment platforms to engage with underlying shareholders in relation to Company

communications and enable those shareholders to cast their votes on shareholder resolutions;

the Company however has no responsibility over such platforms. The Board therefore encourage

shareholders invested via the platforms to regularly visit the Company’s website or to make contact

with the Company directly to obtain copies of shareholder communications.

The Company has also made arrangements with its registrar for shareholders, who own their

shares directly rather than through a nominee or share scheme, to view their account online at

www.shareview.co.uk. Other services are also available via this service.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Stakeholder Group How we engage with them

Outcomes and strategic decisions during the year

AGM

As detailed above the Board have decided to hold an in-person only AGM this year and have changed

the location to accommodate feedback received in 2022. Further details can be found on pages 133

to 134 of the shareholder information section.

Buybacks

Further to shareholder authority being granted, the Company has the facility to conduct share buy

backs when, in normal market conditions, it is in the best interests of shareholders to do so. The

Company bought back a total of 6,070,882 shares during the year under review. Subsequent to the

year end and to 13 July 2023, the Company bought back a further 1,229,369 shares.

Gearing

The Company is aware of the positive effect that leverage can have in increasing the return to

shareholders when utilised. The Company has term loans with ING Bank NV, which expire in

September 2024, consideration will be given to renewal or replacement ahead of the expiry date.

Please see note 17 for further information.

Continuation Vote

The Company has within its corporate structure the requirement to hold a continuation vote

every five years; ahead of each vote the Board, Investment Manager and Corporate Broker seek

the feedback of shareholders including any concerns, and an indication of whether they were

likely to vote in favour of the Company’s continuation. The last continuation vote was held in

September 2020, for which 100% of the votes cast were in favour, and the next continuation

vote will be held at the AGM in September 2025.

Directors’ Remuneration

The remuneration of Directors is reviewed regularly and was increased with effect from 1 May 2022

and again from 1 May 2023, to bring the fees of the Directors more in line with the wider market.

Further details are provided in the Report of the Remuneration Committee on page 86.

Section 172 Statement continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Stakeholder Group How we engage with them

Investment

Manager

Engagement

Through the Board meeting cycle, regular updates and the work of the Management Engagement

Committee reviewing the services of the Investment Manager twice yearly, the Board is able to

safeguard shareholder interests by:

• Ensuring adherence to the Investment Management Policy and reviewing the agreed

management and performance fees;

• Ensuring excessive risk is not undertaken in the pursuit of investment performance;

• Reviewing the Investment Manager’s decision making and consistency in investment process;

• Ensuring compliance with statutory legal requirements, regulations and other advisory guidance

such as consumer duty and aspects of operational resilience; and

• Considering the succession plans for the Technology Team in ensuring the continued provision of

portfolio management services.

Maintaining a close and constructive working relationship with the Manager is crucial as the Board

and the Investment Manager both aim to continue to achieve consistent, long-term returns in

line with the Investment Objective. The culture which the Board maintains to ensure this involves

encouraging open discussion with the Investment Manager; recognising that the interests of

shareholders and the Investment Manager are aligned, providing constructive challenge and making

Directors’ experience available to support the Investment Manager. This culture is aligned with the

collegiate and meritocratic culture which Polar Capital has developed and maintains.

Outcome and Strategic Decisions during the year

ESG

The Board continued to engage with the Investment manager to understand how ESG has been

integrated into the overall house style, the technology team investment approach and decision

making as well as the methodology behind this. The Board also receives information on how ESG

affects Polar Capital as a business and the technology team in particular.

Consumer Duty

The Board has worked with the Investment Manager to ensure the obligations of the new

Consumer Duty regulations are appropriately applied to the Company. In light of the obligations, all

communications including the website, fact sheets and other published documentation, have been

reviewed to ensure they are appropriate for all end users. A ‘value for money’ assessment has also

been undertaken and is made available to distributors on request for their due diligence processes.

Management

The Management Engagement Committee has recommended the continued appointment of the

Investment Manager on the terms agreed within the Investment Management Agreement.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Stakeholder Group How we engage with them

Investee

Companies

Stewardship

The Board has instructed the Investment Manager to take into account the published corporate

governance policies of the companies in which it invests.

The Board has also considered the Investment Manager’s Stewardship Code and Proxy Voting

Policy. The voting policy is for the Investment Manager to vote at all general meetings of companies

in favour of resolutions proposed by the management where it believes that the proposals are in

the interests of shareholders. However, in exceptional cases, where it believes that a resolution

could be detrimental to the interests of shareholders or the financial performance of the Company,

appropriate notification will be given and abstentions or a vote against will be lodged.

The Investment Manager reports to the Board, when requested, on the application of the

Stewardship Code and Voting Policy. The Investment Manager’s Stewardship Code and Voting

Policy can be found on the Investment Manager’s website in the Corporate Governance section

(www.polarcapital.co.uk).

The Technology Investment Team also use the services of ISS to assist with their own evaluation of

companies’ proposals or reporting ahead of casting votes on behalf of the Company at their general

meetings. In the event that an investee company has share blocking in place, the default position is

to refrain from voting to ensure the ability to trade these stocks if required.

During the year ended 30 April 2023, votes were cast at 99% of investee company general meetings

held. At 52% of those meetings a vote was either cast against management recommendation,

withheld or abstained from. Further information on how the Investment Manager considers ESG in its

engagement with investee companies can be found in the ESG Report on pages 40 to 51.

Outcomes and strategic decisions during the year

During the year the Board discussed the impact of ESG and other market factors and how the

Investment Manager factors these into its strategy, investment and decision-making process. The

Board receives information on the ratings of investee companies and is able to use this as tool to

inform discussions with the Manager during Board meetings.

Service

Providers

Engagement

The Directors have frequent engagement with the Company’s other key service providers through the

annual cycle of reporting, site visits and due diligence meetings. The schedule of deep-dive in-person

meetings re-commenced in 2023. This engagement is completed with the aim of having effective

oversight of delegated services, seeking to improve the processes for the benefit of the Company

and to understand the needs and views of the Company’s service providers, as stakeholders in the

Company. Further information on the Board’s engagement with service providers is included in the

Corporate Governance Statement and the Report of the Audit Committee. During the year under

review, due diligence meetings have been undertaken by the Investment Manager and where possible,

service providers have joined meetings to present their reports directly to the Board or the Audit

Committee as appropriate.

Outcomes and strategic decisions during the year

The reviews of the Company’s service providers have been positive and the Directors believe their

continued appointment is in the best interests of the shareholders and the Company as a whole. The

accounting and administration services of HSBC Securities Services (HSS) are contracted through Polar

Capital and provided to the Company under the terms of the IMA. The Board, through due diligence

undertaken by the Company Secretary and the Polar Capital Compliance team, is satisfied that the

service received continues to be of a high standard.

Section 172 Statement continued

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Overview

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Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Stakeholder Group How we engage with them

Proxy Advisors Engagement

The support of proxy adviser agencies is important to the Directors, as the Company seeks to retain a

reputation for high standards of corporate governance, which the Directors believe contributes to the

long-term sustainable success of the Company. The Directors consider the recommendations of these

various proxy voting agencies when contemplating decisions that will affect shareholders and also

when reporting to shareholders through the Half Year and Annual Reports.

Recognising the principles of stewardship, as promoted by the UK Stewardship Code, the Board

welcomes engagement with all of its investors. The Board recognises that the views, questions

from, and recommendations of many institutional investors and proxy adviser agencies provide a

valuable feedback mechanism and play a part in highlighting evolving shareholders’ expectations and

concerns.

Outcomes and strategic decisions during the year

Where possible the Chair and other representatives of the Company have engaged with the

stewardship teams of some larger investors to understand and address their expectations in terms of

board governance, recruitment and diversity. Prior to the Company’s AGMs, the Company engages

with agencies including PIRC and ISS to fact check their advisory reports and clarify any areas or

topics contained within the report. This ensures that whilst the proxy advisory reports provided to

shareholders are objective and independent, the Company’s actions and intentions are represented

as clearly as possible to assist with shareholders’ decision making when considering the resolutions

proposed at the AGM.

The AIC Engagement

The Company is a member of the AIC and has supported lobbying activities such as the consultation on

the 2019 AIC Code, the 2021 BEIS Restoring Trust in Audit and Corporate Governance and the FCA’s

2021 consultation on Diversity and Inclusion on Company Boards. The Directors also cast votes in the AIC

Board Elections each year and regularly attend AIC events.

Approved by the Board on 18 July 2023

By order of the Board

Jumoke Kupoluyi, ACG

Polar Capital Secretarial Services Limited

Company Secretary

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Report of the Directors

The Directors, who are listed on pages 8 and 9, present

their annual report, together with their Report on

Corporate Governance and the Audited Financial

Statements for the year ended 30 April 2023. In

addition, the attention of Shareholders is drawn to

the Strategic Report Section (Chair’s Statement, the

Investment Manager’s Report, Strategic Report, and

the ESG and Section 172 Statements) which provides

further commentary on the activities and outlook for the

Company.

Introduction and Status

The Company is incorporated in England and Wales as

a public limited company and domiciled in the United

Kingdom. It is an investment company as defined in

Section 833 of the Companies Act 2006, operating as an

investment trust in accordance with sections 1158 and

1159 of the Corporation Tax Act 2010 (as amended by

section 42(2) of the Finance Act 2011). Its ordinary shares

are listed and traded on the London Stock Exchange.

As an investment trust the Company’s ordinary shares

are excluded from the FCA’s restrictions which apply to

non‑mainstream investment products. The Company

conducts its affairs and intends to do so for the foreseeable

future so that the exclusion continues to apply.

Life of the Company

The Articles of Association of the Company provide

that a vote on whether the Company should continue

in operation be proposed as an ordinary resolution at

every fifth AGM of the Company. Such a resolution was

proposed at the AGM held on 2 September 2020 and was

passed with 100% of the votes cast in favour of continuing

for a further five years. The next continuation vote will be

proposed at the AGM to be held in September 2025.

Directors

The current Directors of the Company are listed on pages 8

and 9. All the Directors held office throughout the year

under review with the exception of Sarah Bates who retired

on 8 September 2022. All Directors will seek re‑election

at the AGM in September 2023 in accordance with the

AIC Code, which recommends annual re‑election for all

directors. The fees paid to the Directors are set out in the

Directors’ Remuneration Report. The Board have considered

the support for the Directors’ re‑election and the rationale

for such is set out on pages 8 and 9. The Corporate

Governance report on page 78 provides more information

on the composition of the Board.

Financial Instruments

The Company’s financial risk management objectives

and policies arising from its financial instruments and its

exposure to risk are disclosed in note 27 to the Financial

statements.

Listing Rule 9.8.4

Listing Rule 9.8.4 requires the Company to include certain

information in a single identifiable section of the Annual

Report or a cross reference table indicating where the

information is set out. The Directors confirm there are no

disclosures to be made pursuant to this rule.

Corporate Governance Statement

The Report on Corporate Governance on pages 74 to 79

forms part of this Directors’ Report.

Capital Structure

Issued

The Company’s share capital is divided into ordinary shares

of 25p nominal value each. At 30 April 2023, there were

137,315,000 ordinary shares in issue of which 11,029,456

were held in treasury (2022: 4,958,574 ordinary shares

held in treasury). As at 13 July 2023, the latest practicable

date prior to signing of this report, there were 137,315,000

ordinary shares in issue of which 12,258,825 were held in

treasury.

Changes During the Year

In the year under review, the Company bought back

6,070,882 ordinary shares (representing 4.4% of issued

share capital) which were placed into treasury. Since

the year ended 30 April 2023 to 13 July 2023, a further

1,229,369 shares have been bought back and placed in

treasury. Further details can be found in Note 18 on page

115 to the Financial Statements.

Further information on transferability and the voting rights

attached to these shares can be found in the shareholder

information page 134.

Powers to issue and make market purchases

of ordinary shares

The Board was granted authority by shareholders at the

AGM in 2022 to allot equity securities up to a nominal

value of £3,432,875, representing approximately

10 per cent. of the then issued share capital, and to

issue those shares for cash without offering those

shares to shareholders in accordance with their statutory

pre‑emption rights. New ordinary shares will not be allotted

and issued at below the Net Asset Value.

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

The Board also obtained shareholder authority at the AGM

in 2022 to make market purchases up to a nominal value

of £5,145,880 representing approximately 14.99 per cent.

of the then issued share capital, or 20,583,518 ordinary

shares, for cancellation or holding as treasury shares in

accordance with the terms and conditions set out in the

resolution.

The level of the ordinary share price discount or premium

to the Net Asset Value together with internal guidelines for

the repurchase or issuance of new ordinary shares are kept

under regular review by the Board. The Board considers

that discount volatility is unattractive to shareholders but

as a specialist investment fund, market sentiment can

create sustained discount pressure. With this in mind the

Board has a pragmatic approach to share buy backs. While

there is no formal discount policy the Board discusses the

market factors giving rise to any discount or premium, the

long or short‑term nature of those factors and the overall

benefit to shareholders of any actions. The Board regularly

considers, in comparison to the sector and peers, the level

of premium and discount of the share price to the NAV

and ways to enhance shareholder value including share

issuance and buy backs.

These powers to issue and make market purchases of

ordinary shares will expire at the AGM to be held in

September 2023 and renewal of the authorities will be

sought at that AGM.

Environmental, Social and Governance

(“ESG”)

The Board is responsible for the corporate elements of

ESG and for ensuring ESG is factored into the investment

process. Details of how ESG is considered and where

corporate requirements are met is provided on pages 40

to 51.

Disclosure of information to the Auditors

The Directors who held office at the date of approval of

this Directors’ Report confirm that, so far as they are each

aware, there is no relevant audit information of which

the Company’s Auditors are unaware; and each Director

has taken all the steps that they ought to have taken as a

Director to make themselves aware of any relevant audit

information and to establish that the Company’s Auditors

are aware of that information.

Annual General Meeting

The AGM of the Company will be held on Thursday,

7 September 2023. Please see pages 133 and 134 for

further information on the resolutions to be proposed at

the meeting.

By order of the Board

Jumoke Kupoluyi, ACG

Polar Capital Secretarial Services Limited

Company Secretary

18 July 2023

Major interests in ordinary shares

As at the year end of 30 April 2023, the Company had received notifications from the following shareholders in respect of

their own and their clients’ interests in the voting rights of the Company:

Shareholder Type of Holding Number of Shares % of voting rights*

Rathbone Brothers plc Indirect 12,662,785 10.13%

Brewin Dolphin Ltd Indirect 9,946,829 7.95%

Investec Wealth & Investment Ltd Direct 6,813,636 5.45%

Quilter plc Indirect 6,704,725 5.36%

Lazard Asset Management LLC Both 6,383,454 5.10%

* The above percentages are calculated by applying the ordinary shareholdings as notified to the Total Voting Rights of the issued

ordinary share capital at 13 July 2023 of 125,056,175 and do not necessarily match the submitted TR1s.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

The Directors recognise the importance of strong corporate governance and acknowledge that they are ultimately

accountable to the Company and its shareholders and are therefore responsible for the good governance of the

Company. The Company has no employees and the Directors rely on third parties to administer the Company and to

provide investment management services. The following diagram demonstrates the governance framework within

which the Company is managed.

Report on Corporate Governance

As an externally managed investment trust, some

provisions of the FRC UK Code of Corporate Governance

(the UK Code) are not relevant, including those relating

to the roles of chief executive, executive directors’

remuneration, statement of gas emissions and the

requirement to have an internal audit function, therefore

the Board has considered the Principles and Provisions

of the Association of Investment Companies Code of

Corporate Governance (the AIC Code) and considers that

reporting against the Principles and Provisions of the AIC

Code provides more relevant information to Shareholders.

The AIC Code addresses the relevant principles set out

in the Financial Report Council (‘FRC’) UK Code as well

as additional principles and recommendations on issues

that are specific to investment trust companies. The FRC

has confirmed that by following the AIC Code, boards

of investment companies (including those structured as

investment trusts) will meet their obligations under FCA

Listing Rule 9.8.6.

Statement of Compliance and Application

of The AIC Code’s Principles

The AIC Code is available on the AIC website

(www.theaic.co.uk). It includes an explanation of how

the AIC Code adapts the Principles and Provisions set out

in the UK Code to make them relevant for investment

companies. The Board believes that the Company’s current

practices are consistent in all material respects in applying

the principles and complying with the provisions of the AIC

Code. The Board will continue to observe the principles

and recommendations set out in the AIC Code.

The AIC Code’s principles and provisions are structured

into five sections: Board leadership and purpose; division

of responsibilities; composition, succession and evaluation;

audit, risk and internal control; and remuneration. The

Company’s application of the principles and compliance

with the provisions of each section is detailed on the

following pages.

Audit Committee

Management Engagement

Committee

Nomination

Committee

Remuneration

Committee

Shareholders

Board of Directors

Investment Manager

and AIFM

Third Party Service

Providers

Chair:

Catherine Cripps

Members:

all independent NEDs

Chair:

Charlotta Ginman

Members:

all independent NEDs

with the exception of

the Chair of the Board

Chair:

Catherine Cripps

Members:

all independent NEDs

Chair:

Tim Cruttenden

Members:

all independent NEDs

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Board Leadership and Purpose (Principles

A‑E, Provisions 1‑7)

Purpose

The purpose of the Company is to provide a vehicle in

which investment is spread across a diversified portfolio

of technology companies which aim to deliver long

term capital growth to shareholders. The Investment

objective and policy seeks to achieve this purpose by

providing investors with global exposure to technology

companies and sets parameters to ensure the portfolio

is diversified and excessive risk is not undertaken. As

an externally managed investment trust, the culture of

the Company is consequential of the Board’s diversity,

decisions and behaviours which are aligned with the values

and behaviours of the Investment Manager, interaction

between the two and engagement with the Company’s

stakeholders. The Board monitors this culture, including

the policies and practices it implements to maintain it.

Board Leadership

The Directors, collectively as the Board, are responsible

for leading the Company and the strategic direction of

such and the Board engages various third‑party providers

to implement the strategy. In promoting the long‑term

sustainable success of the Company, the performance of

the Company’s portfolio is constantly reviewed in view

of value generation for shareholders by achievement of

the investment objective. The engagement of third‑party

providers is considered regularly along with the fee rates

payable to each. The largest financial commitment of the

Company is with the Investment Manager with whom

the Board reviews fees regularly; the last change was in

2022 and the next formal 3‑yearly review will commence

in 2024.

The Company’s performance over the previous ten years

can be found on page 3 and how the Board views its

duties is considered in the s172 statement on pages 66

to 71. The Board’s engagement with shareholders and

stakeholders and how it contributes to strategic decision

making is also discussed within the s172 statement.

Participation from both groups is encouraged and the

Board can be easily contacted through the Company

Secretary. The Company’s service providers are subject

to periodic visits and attend service review and other

meetings throughout the year, ensuring effective

engagement. Fulfilling the Investment Objective and

the Company’s performance is the focus of the Board’s

primary discussions in meetings, these are also reported

on at least monthly.

The Board’s effectiveness, including how it promotes

the long‑term sustainable success of the Company,

is reviewed annually and is facilitated by an external

evaluator every three years. The evaluation process

is managed by the Nomination Committee and the

outcomes from the external evaluation completed in 2023

are detailed in the Report of the Nomination Committee

on page 90.

Role, responsibilities and committees of the board

The Board has delegated to each of the Audit,

Management Engagement, Remuneration and Nomination

committees specific remits detailed within the terms of

reference which are available on the Company’s website,

but the final responsibility in these areas remains with the

Board. In addition to formal meetings, the Board also holds

ad hoc meetings or creates ad hoc committees (such as

the Black Swan Committee) to enact or approve policies

or actions agreed in principle by the whole Board. The

Chair of each committee attends the AGM to deal with

questions relating to the Financial Statements and their

specific mandates.

Attendance at each of these meetings is disclosed

on page 76. Given the size of the Board and that all

the Directors of the Company are non‑executive, all

members of the Board serve on each Committee, with

the exception of the Board Chair Catherine Cripps who

is an invited guest at meetings of the Audit Committee.

This encourages unity, clear communication and prevents

duplication of discussion between the Board and

the Committees.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Investment Manager

The Board has contractually delegated the day‑to‑day

management of the portfolio to Polar Capital LLP (the

‘Manager’ or ‘Investment Manager’), directly represented

by Ben Rogoff as Portfolio Manager and Alastair Unwin as

Deputy Fund Manager. It is the sole responsibility of the

Portfolio Managers to take decisions as to the purchase

and sale of individual investments other than unquoted

investments where the Board is consulted. The Portfolio

Manager has responsibility for tactical gearing, asset allocation

and sector selection within the guidelines established and

regularly reviewed by the Board.

The Manager is responsible for providing or procuring

accountancy services, company secretarial and administrative

services. The Company Secretary also ensures that all

Directors receive in a timely manner all relevant management,

regulatory and financial information. Representatives of the

Manager attend all Board meetings in a variety of capacities

including investment management, compliance, risk and

marketing, enabling the Directors to probe further on matters

of concern or seek clarification on certain issues.

The whole Board reviews the performance of the Manager

in all service disciplines and, at each Board meeting, the

Company’s performance against the market and a peer

group of funds with similar investment objectives is reviewed.

The investment team provided by the Manager, led by Ben

Rogoff, has long experience of investment in technology. In

addition, the Manager has other investment resources which

support the investment team and has experience in managing

and administering other investment trust companies.

The Board and Investment Manager work in a collaborative

manner and the Chair encourages open discussion and debate.

Report of The Nomination Committee

Catherine Cripps chairs the Nomination Committee and

all independent non‑executive Directors are members. The

Report of the Nomination Committee can be found on

page 90.

Report of The Audit Committee

Charlotta Ginman chairs the Audit Committee, and all

independent non‑executive Directors are members with the

exception of the Chair of the Board, who may be invited to

attend meetings as a guest. The Audit Committee Report is

set out on pages 80 to 84.

Report of The Remuneration Committee

Tim Cruttenden as Senior Independent Director, chairs

the Remuneration Committee and all independent

non‑executive Directors are members. The Report of the

Remuneration Committee can be found on pages 85 to 89.

Division Of Responsibilities

(Principles F‑I, Provisions 8‑21)

The Chair

The Chair is responsible for the leadership of the Board and

works with the Company Secretary for setting the Board

meeting agendas and for balancing the issues presented

to each meeting. Open and honest debate is encouraged

at each Board meeting and the Chair keeps in touch with

both the Company Secretary and other Directors between

Board meetings. Catherine Cripps was appointed to the

Board in September2021 and appointed as Chair of the

Board in September 2022. The Chair was independent

on appointment and continues to meet the criteria for

independence.

Report on Corporate Governance continued

The number of formal meetings of the Board and its committees held during the year ended 30 April 2023 and the

attendance of individual Directors are shown below.

Board &

Strategy Audit

Management

Engagement Remuneration Nomination 2022 AGM

Number of Meetings

Catherine Cripps* 5 3 2 1 1 1

Tim Cruttenden 5 3 2 1 1 1

Charlotta Ginman 5 3 2 1 1 1

Charles Park 5 3 2 1 1 1

Jane Pearce 5 3 2 1 1 1

Stephen White 5 3 2 1 1 1

Sarah Bates** 3 2 1 1 1 1

* Invited guest following appointment as Chair of the Board on 8 September 2022

**Invited guest / retired 8 September 2022

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

The Senior Independent Director (‘SID’)

The Board does not have any executive directors; therefore

Tim Cruttenden as the SID leads on matters relating to

Chair succession, evaluation and remuneration of the Chair

and non‑executive Directors. The SID can be contacted via

the Registered Office of the Company.

Board Responsibilities

The Board currently comprises six non‑executive Directors

who are all considered to be independent. The Board

considers that its overall composition is adequate for the

effective governance of the Company. A formal schedule

of matters specifically reserved for decision by the full Board

has been defined and a procedure has been adopted for

individual Directors, in the furtherance of their duties, to

take independent professional advice at the expense of the

Company. No such advice has been sought during the year.

The Directors have access to the advice and services of

the Company Secretary which is provided in compliance

with the IMA through Polar Capital Secretarial Services

Limited. An appointed representative, Jumoke Kupoluyi,

ACG, is responsible to the Board for ensuring that Board

procedures are followed, and that applicable rules and

regulations are complied with. The Board and Investment

Manager operate in a supportive, co‑operative and

open environment. The Board acknowledges that PIRC

(Pensions and Investment Research Consultants Limited,

an independent corporate governance and shareholder

advisory consultancy) has confirmed its voting guidelines

and recommends voting against the laying of the Annual

Report at an AGM where the Investment Manager provides

company secretarial services to the Company. The Board

believe the benefits gained by utilising the services of a

Company Secretary provided by the Investment Manager

far outweigh any perceived risk or conflicts in the view

of PIRC. The Company Secretary is provided to the

Company as an independent service and the appointed

representative acts as an officer of the Company and not

an employee of the Investment Manager when working

with the Board and the Company.

The Board has a schedule of regular meetings through the

year and meets at additional times as required. During the

year, Board and Committee meetings were held to deal with

the ongoing stewardship of the Company and other matters

including the setting and monitoring of investment strategy

and performance, review of the Financial Statements, ESG

and considering any shareholder feedback. The level of

share price discount or premium to the net asset value

are kept under review along with matters affecting the

industry and the evaluation of third‑party service providers.

The Board was responsible for considering, reviewing and

implementing appropriate policies in respect of regulatory

changes that impacted the Company.

The Board continues to consider the Company’s strategy

and its relevance to the market and shareholders

as a whole at each Board meeting and at least one

Board meeting per year includes an in‑depth focus on

strategy. Through this process the Board supervises the

management of the investment portfolio, the work of the

Investment Manager, the risks to which the Company is

exposed and their mitigation, and the quality of services

received by the Company.

The Nomination Committee seeks to balance the time

required, skills, knowledge and experience of individual

Directors to form an effective and efficient Board. Directors

may adopt external appointments in compliance with the

Board’s conflicts of interests policy which also considers the

time commitment of external appointments.

Directors’ Professional Development

When new Directors are appointed, they are offered an

induction course provided by the Manager. Directors are

welcome to visit the Manager at any time to receive an

update on any aspect of interest or a refresher on the

Manager’s operations both generally and those which are

specific to the Company. Directors are also provided on a

regular basis with key information on the Company’s policies,

regulatory and statutory obligations and internal controls.

Changes affecting Directors’ responsibilities are advised to the

Board as they arise. Directors may also regularly participate

in professional and industry seminars and may use the

Manager’s online training resources to ensure they maintain

their knowledge. The programme of ‘deep‑dive’ internal

controls reviews with suppliers serve to both maintain the

level of internal review undertaken with suppliers but also to

enhance the Directors’ understanding of the services and any

enhancements or changes made to such.

Conflicts Of Interest

Directors have a duty to avoid a situation in which they

have a conflict of interest or a possible or perceived conflict

with the interests of the Company. The Company’s Articles

of Association contain provisions to permit the Board to

authorise conflicts or potential conflicts.

The Board has in place a policy to govern situations where

a potential conflict of interest may arise, for example where

a director is also a director of a company in which the

Company invests or may invest. Where a conflict situation

arises, the conflicted Director is excluded from any discussions

or decisions relating to the matter of conflict. The Conflicts

are reminded of their obligations for disclosure. No Director

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

has declared the receipt of any material benefits other than

their emoluments and associated expenses in their capacity as

a Director of the Company.

There were no contracts subsisting during or at the end of

the year in which a Director is or was interested and which

is or was significant in relation to the Company’s business

or to the Director since its introduction. All the Directors

were considered independent of the Investment Manager

and had no relationship or conflicts which were likely to

affect their judgement.

The Directors’ interests in the ordinary shares of the

Company are set out on page 88 of the Directors’

Remuneration Report.

Composition, succession and evaluation

(principles j‑l, provisions 22‑28)

Board Composition and Diversity

During the full year under review there were seven

non‑executive Directors, reducing to six with the retirement

of Sarah Bates on 8 September 2022.

In accordance with the Disclosure and Transparency Rules,

the Company is required to have a Diversity Policy. The

Board is committed to considering diversity at all stages of

recruitment to the Board and has worked hard to ensure

the broadest range of candidates are found when recruiting

new directors. When recruiting directors, the Nomination

Committee seeks to follow the diversity recommendations

of the various Governance Reviews, amongst other factors;

consideration is given to all forms of diversity in order to

balance both the expertise on, and the structure of, the

Board as a whole.

The Board notes the reporting requirements of the FCA

Diversity and Inclusion Policy and has chosen to align its

diversity reporting reference date with the Company’s

financial year end, 30 April 2023. The Company has met

two of the three targets on board diversity at its chosen

reference date: (i) at least 40% of the individuals on its

board of directors are women, three of the six directors are

female; and (ii) at least one senior female appointment, two

of the three females on the board hold senior positions,

the Chair and the Chair of the Audit Committee*. Whilst

the current composition of the Board does not satisfy

the ethnicity requirements (at least one non‑white ethnic

minority Board member), the Board continues to keep this

under consideration as part of the Board’s future succession

plans and hopes to meet all aspects of the FCA’s Diversity

policy in future.

* due to the Company being an investment trust with no employees or

executive directors the Board considers senior roles on the Board to

comprise the Chair, the Chair of the Audit Committee and the Senior

Independent Director.

Report on Corporate Governance continued

As required under LR 9.8.6R(10), further detail in respect of the diversity targets as at 30 April 2023 are provided in the

tables below.

Number of

board members

Percentage

of the board

Number of senior

positions on the

board (Chair, Audit

Chair and SID)

Men 3 50% 1

Women 3 50% 2

Number of

board members

Percentage

of the board

Number of senior

positions on the

board (Chair, Audit

Chair and SID)

White British or other (including minority‑white groups) 6 100% 3

Minority Ethnic ‑ ‑ ‑

As an externally managed investment trust, the Company has no executive directors or employees therefore columns relating to executive roles/management

have been omitted from the tables. As per the AIC’s Guidance, the Company considers the role of Board Chair and Chair of the Audit Committee as senior

board positions and the above disclosures are made on this basis.

Performance and re-election

The Board formally reviews the performance of the

Directors each year and considers any recommendations

of the Nomination Committee, the deliberations of which

take place in the absence of any Board nominee. Directors

are required to stand for election by shareholders at the

first AGM following their appointment to the Board and

each Director will stand for re‑election annually.

The rationales for re‑election of each Director are included

in the Board of Directors biographies on pages 8 to 9 and

the Chair’s letter which accompanies the Notice of Annual

General Meeting at which the re‑election resolution is

being put to shareholders.

When considering Board structure and composition, the

Committee seeks to ensure the candidates considered will

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enhance the Board and replace or refresh desired skill sets.

The Board has a policy to consider diversity and has worked

hard to ensure the broadest range of candidates are found

when recruiting new directors.

Further information on the Company’s succession,

evaluation and recruitment process can be found in the

report of the Nomination Committee on page 90.

Audit, Risk And Internal Control

(Principles M‑O, Provisions 29‑36)

Internal Controls

The Board has overall responsibility for the Company’s

system of internal control, for reviewing its effectiveness

and ensuring that risk management and control process are

embedded in the day to day operations which are operated

or overseen by the Investment Manager. The Board,

through the Audit Committee, has established a process

for identifying, evaluating, monitoring and reviewing,

and managing the principal risks faced by the Company.

This is documented through the use of a Risk Map which

is subject to regular review by the Audit Committee and

accords with the Guidance on Risk Management, Internal

Control and Related Financial and Business Reporting

issued in September 2014 by the Financial Reporting

Council. As the Company has no employees and its

operational functions are carried out by third parties, the

Audit Committee does not consider it necessary for the

Company to establish its own internal audit function.

Contracts with suppliers are entered into after full and proper

consideration by the Board of the quality and cost of the

services offered, including the control systems in operation in

so far as they relate to the affairs of the Company.

The Investment Manager has an internal control framework

to provide reasonable but not absolute assurance on the

effectiveness of the internal controls operated on behalf of

its clients. The Manager is authorised and regulated by the

Financial Conduct Authority and its compliance department

monitors the Company’s compliance with the various rules

and regulations applicable to it including the FCA’s rules,

AIFMD and GDPR, for example.

The Audit Committee reviews and reports to the Board

on the operation of the controls which are embedded

within the business of the Manager and other third‑party

suppliers. Controls and risk management covering the risks

identified, including financial, operational, compliance,

safeguarding of assets, maintenance of proper accounting

records and the publication of reliable financial information

are monitored by a series of regular reports from the

Investment Manager including risks not directly the

responsibility of the Investment Manager.

Operation of Internal Controls

The process was active throughout the year and up to the

date of approval of this Annual Report. However, such a

system is designed to manage rather than eliminate risks of

failure to achieve the Company’s business objectives and

can only provide reasonable and not absolute assurance

against material misstatement or loss.

The Board, in assessing the effectiveness of the Company’s

internal controls has, through the Audit Committee,

received formal reports on the policies and procedures

in operation, where control failures have occurred an

exceptions report is provided along with mitigation in

place to ensure the control is met in future. For the year

under review, no material errors or control failures were

identified. The Manager and the key service providers

have subsequently provided confirmation that their control

environments continued to operate effectively up to the

date of signing these Financial Statements.

The Board also considers other reports provided by

third‑party suppliers and ad hoc reports from the

Investment Manager are supplied to the Board as required.

The Manager has delegated the provision of accounting,

portfolio valuation and trade processing to HSBC Securities

Services but remains responsible to the Company for these

functions and provides the Board with information on

these services.

Remuneration (Principles P‑R, Provisions 37‑42)

The Remuneration Committee is chaired by Tim Cruttenden

and all independent non‑executive Directors are members

of the Committee. The current remuneration policy was

approved by shareholders at the AGM in September 2020

and came into effect on 1 May 2021, the policy shall expire

on 30 April 2024, being three years since inception of the

policy. The new policy for the three year period from 1

May 2024, (which is proposed unchanged from the current

policy) is subject to shareholder approval at the AGM

in September 2023 and will apply to the three financial

years commencing 1 May 2024 and ending on 30 April

2027. Further detail is contained within the Report of the

Remuneration Committee on page 85 and explains how

the policy is designed to support strategy and promote

long‑term sustainable success.

Jumoke Kupoluyi ACG

Polar Capital Secretarial Services Limited

Company Secretary

18 July 2023

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Audit Committee Report

Introduction from The Chair

I am pleased to present, as Chair of the Audit Committee,

my eighth report to Shareholders. As referenced in my

report to you last year, Jane Pearce joined the Board on 6

September 2021 as Audit Chair Elect and will succeed me

as Audit Chair for the year ending 30 April 2024. As part of

the phased transition and to ensure a smooth and orderly

handover process ahead of my retirement in September

2024, I will be stepping down as Audit Chair on 31 October

2023 but will remain on the Board as a non‑executive

Director whilst Jane will step up and assume the role of

Audit Chair. This is therefore my final report to you as Audit

Chair and I express my thanks to shareholders and my

fellow board members for the support I have received in my

role since joining the Board in February 2015.

Committee Composition

The Committee comprises all of the independent

non‑executive Directors; with the exception of the Chair of

the Board who attends Committee meetings by invitation.

The Audit Committee, as a whole, has competence

relevant to the sector in which the Company operates.

Committee members have a range of financial, investment

and other relevant sector experience, including fund

management in both listed and private equity funds. The

requirement for at least one member of the Committee to

have recent and relevant financial experience is satisfied

by various members of the Committee who are Chartered

Accountants and some of whom also chair Audit

Committees for other public companies. More information

about the Committee members can be found in the

Directors’ biographies on pages 8 and 9.

During the year the Audit Committee met three times, with

all members of the Committee attending each meeting.

Charlotta Ginman

Chair of the Audit Committee

Committee Role and Responsibilities

The Committee has written terms of reference which

clearly define its responsibilities and duties. The terms of

reference which are reviewed annually by the Committee

and are approved by the Board, are available to view on the

Company’s website, www.polarcapitaltechnologytrust.co.uk.

Matters considered by the Audit Committee

during The Year

Geopolitical events

This time last year we were reporting on the impact

of the Russian war on Ukraine as well as the effects of

inflation and rising interest rates which closely followed the

transition out of the pandemic and the commencement of

the Russia‑Ukraine war. The effect of this is still being felt

through escalating energy prices, supply chain shortages

and more recently we have seen increased market volatility

following the collapse of large banks such as Silicon Valley

Bank (“SVB”) and Credit Suisse. In addition to this, we

have seen relations between Taiwan and China deteriorate

and tensions have grown in recent months increasing the

likelihood of a military escalation between the countries.

The consequences of these events and the associated

market volatility has had an impact on the Company’s

portfolio performance. Further details can be found in

the Investment Manger’s Report on pages 14 to 27. The

Committee will continue to monitor the impact of these

events which appear in our assessment of risk and the

ability to achieve the Company’s investment objective.

The Committee regularly reviews the operational resilience of

its various service providers in connection with the mitigation

of the business risks posed by geopolitical events. Many

of the external service providers have continued to utilise

the hybrid working model after such a successful business

transition to fully remote working during the pandemic. The

Committee is pleased to confirm that all service providers

have continued to demonstrate their ability to provide

services to the expected level, with no breaks in the services

provided or significant operational failures.

This report forms part of the Strategic report section

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New Regulation and Guidance

Since my last report to you, the Committee has

continued to follow developments in the relevant

regulatory environment to consider any new and ongoing

requirements.

As reported last year, the Committee is aware of the

extensive proposals outlined by the Department of Business

and Trade (“DBT”) which seek to strengthen the UK’s audit

and corporate governance framework. The outcomes of

the consultation process were published on 31 May 2022

and are now progressing through primary and secondary

legislation.

The Committee will continue to monitor the detail of any

primary and secondary legislation arising from the reforms

and consider any suggested guidance from DBT for

good practice. The FRC have also launched an associated

consultation process for changes to the UK Code of

Corporate Governance; the consultation will close in

September 2023; the results will be reviewed thereafter in

conjunction with the AIC’s Code of Corporate Governance

which the Company follows. The Committee will report

on any changes made in the Annual Report following

the introduction of any revised legislation as well as any

changes arising out of the FRC’s recently released “Audit

Committees and the External Audit: Minimum Standard”

guidance.

Significant Reporting Matters

Annual Report and Financial Statements

(the ‘Annual Report’)

The Board has asked the Committee to once again confirm

that in its opinion the Annual Report as a whole can be

taken as fair, balanced and understandable and provides

the information necessary for shareholders to assess the

Company’s financial position, performance, business

model and strategy. In doing so the Committee has given

consideration to:

• the ongoing comprehensive control framework around

the production of the Annual Report, including the

verification processes in place to deal with the factual

content;

• the extensive levels of review that are undertaken in

the production process, by the Investment Manager

and the Committee;

• the internal control environment as operated by the

Investment Manager and other suppliers including any

checks and balances within those systems; and

• the unqualified audit report from the auditors.

As a result of the work performed, the Committee has

concluded that the Annual Report for the year ended

30 April 2023, taken as a whole, is fair, balanced and

understandable and provides the information necessary

for Shareholders to assess the Company’s performance,

business model and strategy, and this has been

recommended to the Board.

Valuation of Investments

During the year the Committee once again reviewed the

robustness of the Investment Manager’s processes in place

for recording investment transactions as well as ensuring

the valuation of assets is carried out in accordance with the

adopted accounting policies and as laid out in Note 2 (f). No

unquoted valuations were held at the Company’s year end.

Existence and Ownership of Investments

During the year the Committee received reassuring quarterly

reports from the Depositary on its work and safe keeping of

the Company’s investments, in accordance with the AIFM

Regulations. No errors have been reported during the year.

Other Reporting Matters

Accounting Policies

During the year the Committee ensured that the accounting

policies as set out on pages 104 to 108 were applied

consistently throughout the year. In light of there being

no unusual transactions during the year or other possible

reasons, there were no changes to currently adopted

policies. There were no new UK‑adopted international

accounting standards (“UK‑adopted IAS”) or amendments

to UK‑adopted IAS applicable to the current year which

had any significant impact on the Company’s Financial

Statements.

Going Concern

The Audit Committee considered the ability of the

Company to adopt the Going Concern basis for the

preparation of the Financial Statements. Having reviewed

the Company’s financial position, the Committee is

satisfied that it is appropriate for the Board to prepare the

Financial Statements for the year ended 30 April 2023 on a

going concern basis.

The Committee’s review of the Company’s financial

position included consideration of the current cash

and debt ratios of the Company; the ability to repay

outstanding bank facilities with 21% cash equivalents

readily available to the Company as at 30 April 2023; the

diversification of the portfolio; and the analysis of portfolio

liquidity, which estimated liquidation of 99.8% of the

portfolio within seven trading days.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

The Committee is mindful of the ongoing inflation,

recession fears and rising interest rates along with the

increased tensions between China and Taiwan and the

longer term impact this may have on the global economy

and the sector in which the Company operates. As noted

above, these have been included on the Company’s risk

map and will continue to be monitored. The Committee

also considered the Company’s financial performance

during the year under review and concluded that: given

the lack of impact on dividend income received and there

being no exposure to unquoted assets at the year‑end,

this had not affected the Company’s ability to continue as

a going concern and is not expected to have a significant

financial impact on the Company during the next

12 months.

Viability Statement

The Committee considered the Company’s longer‑term

viability, with reference to the FRC’s Guidance on Risk

Management, Internal Control and Related Financial and

Business Reporting, and concluded that the Board may

state its reasonable expectation that the Company will be

able to continue in operation and meet its liabilities as they

fall due over the period of their assessment.

The assessment took account of the Company’s current

financial position, its cash flows and its liquidity position,

the principal risks as set out on pages 62 to 65 and the

Committee’s assessment of any material uncertainties

and events that might cast significant doubt upon the

Company’s ability to continue as a going concern.

The assessment was then subject to a sensitivity analysis

projected over a five‑year period, which tested a

number of the key assumptions including income and

expenditure underlying the forecasts both individually

and in aggregate for normal, favourable and stressed

conditions. In conducting the stress tests, the Company’s

principal risks such as failure to achieve the investment

objective, global geopolitical risk, black swan events

and IT Failure, fraud and cyber risk were grouped into

three buckets according to their post mitigation scores

and, where possible, material values were attached

to the key risks materialising and evaluated to assess

the effect of this on the Company’s ability to continue

as a going concern and its viability over a five‑year

period. The Committee recommended to the Board that

the Company’s longer term prospects to continue its

operations and meet its expenses and liabilities as they

fall due over the next five years to 30 April 2028 were

reasonable. See pages 59 and 60 for further details.

Taxation and Expenses

The Committee sought to ensure that the Company

was compliant with section 1158 of the Corporation

Tax Act 2010 throughout the year, by seeking and

receiving confirmation that the Company continues to

meet the eligibility conditions. In the year under review,

Grant Thornton LLP provided services to the Company

as tax agents in Taiwan and Arkk Solutions provided the

iXBRL and ESEF tagging of the Company’s accounts for

submission to HM Revenue and Customs.

At the Audit Committee meeting in May 2023, the

Committee also considered the allocation of expenses

between capital and income and agreed to continue with

the Company’s stated accounting policy of allocating

the indirect costs to revenue and any performance fees

to capital, in line with market practice and permitted by

the AIC SORP (Statement of Recommended Practice).

Interim Report and Financial Statements

The Committee considered and reviewed the Interim

Report and Financial Statements, which are not audited

or reviewed by the external Auditors, to ensure that they

remained consistent with the accounting policies used in

the annual Financial Statements.

Internal Controls and Risk Management

The Board has ultimate responsibility for the management

of risk throughout the Company and has asked the Audit

Committee to assist in maintaining an effective internal

control environment. The Company maintains a Risk Map

which seeks to identify, monitor and control principal

risks as well as identifying emerging risks. At each Audit

Committee meeting, the Committee reviews the Risk Map

to identify the principal and emerging risks facing the

business including those that might threaten its business

model, future performance, liquidity and reputation.

Alongside this, the Committee considers the likelihood,

impact, mitigating factors and controls to reduce the

impact of such risks as described on pages 62 to 65.

Any material changes to the Risk Map are proposed to

the Board for consideration and if appropriate, adoption.

Furthermore, the Audit Committee discusses and assesses

emerging risks and where appropriate recommends

changes to the Risk Map, as well as thinking of different

ways of illustrating the level of risk faced by the business.

The Committee will actively continue to monitor the

system of internal controls through the regular review of

the Risk Map and the internal control environment in order

to provide assurance that they operate as intended and

that the Risk Map reflects developing and new risks.

Audit Committee Report continued

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As part of the year end process the Audit Committee

undertook a review of the effectiveness of the system of

internal controls taking into account any issues that had arisen

during the course of the year. The Committee acknowledges

that the Company is reliant on the systems utilised by external

suppliers. Representatives of the Investment Manager

reported to the Committee on the system of internal controls

in place for the performance of the Investment Manager’s

duties under the Investment Management Agreement.

Presentations and internal control reports were also received

from other key suppliers on the quality and effectiveness of

the services provided to the Company. In addition, employees

of the Manager conducted an onsite due diligence visit with

HSBC where they received thorough presentations from

representatives covering the work of the Operations, Risk

Administration and Accounting Teams, in addition to the

Custodian and Depositary. No matters of concern with any

areas of service were raised at any of the meetings or on

reviewing the internal controls reports. Deep dive review

meetings of service providers have been reintroduced

following the COVID‑19 pandemic and the schedule of

meetings commenced in May 2023, immediately following

the financial year under review. These meetings will be

reported on in the 2024 Annual Report.

The Audit Committee has reviewed the Investment

Manager’s policies on whistleblowing, anti‑bribery and the

Modern Slavery Act and is satisfied that the Investment

Manager has controls and monitoring processes in place

to implement their policies across the main contractors

which supply goods and services to the Investment

Manager and the Company. The Company has adopted

an Anti‑Corruption policy which incorporates Anti‑Bribery,

Anti‑Slavery and the Corporate Criminal Offence of Tax

Evasion. In addition to this the Company has issued a data

privacy notice in relation to the General Data Protection

Regulation. All such policies can be found on the Company’s

website www.polarcapitaltechnologytrust.co.uk.

The Audit Committee has also considered the Investment

Manager’s policy and controls surrounding the use of

brokerage commissions generated from transactions

in the Company’s portfolio. There were no issues of

concern arising from the reviews of the internal controls

environment the Company relied upon during the course

of the year ended 30 April 2023.

External Auditor

The Committee, on behalf of the Board, is responsible

for overseeing the relationship with the external auditor,

including ensuring the quality and robustness of the audit.

Appointment and Tenure

Following a formal and competitive tender process, KPMG

LLP (‘KPMG’) was appointed as the Company’s external

auditor with their first year as the Company’s auditor being

the year ended 30 April 2018. Mr John Waterson was

the Audit Partner allocated to the Company by KPMG on

engagement until completion of the financial year ending

in April 2022. Mr Waterson was succeeded by Mr Philip

Merchant who will complete his first audit cycle with the

Company for the financial year ended 30 April 2023.

In accordance with current legislation, the Company is

required to tender the external audit no later than for the

year ending 30 April 2028, after ten full audit years by the

incumbent auditor. However, the Committee keeps the

external audit function under review and may choose to

undertake an audit tender process earlier than prescribed

should it be deemed in the best interests of shareholders

so to do. The re‑appointment of KPMG as Auditor to the

Company will be submitted for shareholder approval at

the AGM to be held in September 2023, together with a

separate resolution to authorise the Directors to set the

remuneration of the Auditor.

The Company has complied throughout the year ended

30 April 2023 with the provisions of the Statutory Audit

Services Order 2014, issued by the Competition and

Markets Authority (‘CMA Order’). There are no contractual

obligations restricting the choice of external auditor. The

external auditor is invited to all Committee meetings and

receives copies of all relevant papers and meeting minutes.

The Audit

The scope of the annual external audit was agreed in

advance with the Committee with a focus on areas of

audit risk and the appropriate level of audit materiality.

The Auditors reported to the Audit Committee on the

results of the audit work and highlighted any issues which

were significant or material in the context of the Financial

Statements. There were no adverse matters brought to the

Audit Committee’s attention in respect of the financial year

2023 which were material or significant or which should

be brought to shareholders’ attention.

Effectiveness

The Audit Committee monitored and evaluated the

effectiveness of the Auditors under the terms of

their appointment based on an assessment of their

performance, qualification, knowledge, expertise and

resources. The Auditors’ effectiveness was also considered

along with other factors such as audit planning and

interpretations of accounting standards. This evaluation

has been carried out throughout the year by meetings

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

held with the Auditors, by review of the audit process and

by comments from the Investment Manager and others

involved in the audit process.

The Auditors were provided with an opportunity to

address the Committee and independently, the Audit

Chair, without the Investment Manager present to raise

any concerns, or discuss any matters relating to the audit

work, the cooperation of the Investment Manager and

others in providing any information and the quality of that

information including the timeliness in responding to audit

requests. No concerns were raised by the Auditors or the

Audit Committee in relation to the service provided by

the Investment Manager or any other third‑party service

provider.

Independence

To fulfil the Committee’s responsibility regarding the

independence of the Auditor, the Committee reviewed the

senior staffing for the audit, the Auditors arrangements

concerning any conflicts of interest, the extent of any

non‑audit services, the Auditors independence statement

and any other issues that may affect the Auditors

independence.

Subsequent to the review, the Audit Committee concluded

that the Auditor remained independent and continued to

act in an independent manner.

Fees

As part of the year end audit, the Committee considered

and re‑confirmed the level of fees pre‑agreed and payable

to the Auditor bearing in mind the nature of the audit and

the quality of services received. The annual audit fee for

the year was £62,500 (2022: £45,000). The fee represents

a further increase on the prior year to reflect the additional

work required by the auditors as a result of new auditing

standards, specifically IAS 315, inflation and the level of

audit work required to perform a robust quality audit.

The year‑on‑year increase is in line with increases

experienced across the investment trust sector in the

current and recent years. Audit firms generally have

increased the fees that they charge to investment trusts in

order to reflect the increased level of work that they have

been required to perform, and the increased risk that they

perceive, in the context of more rigorous levels of audit

scrutiny and regulation.

The Audit Committee is conscious of the increased external

audit fees which continue to be proposed across the

industry in connection with increasing requirements of

auditing standards and expectations. The Audit Committee

therefore continues to keep fee levels under close review

and considers that any fee increases must be justified.

Non-Audit Services

The Audit Committee’s policy on the provision of

non‑audit services by the Auditors is available on the

Company’s website. The policy was produced in line with

the FRC Ethical Standards (March 2020) and any non‑audit

services are required to be pre‑approved by the Audit

Committee. KPMG LLP were appointed to undertake their

first annual audit for the year ended 30 April 2018 and

have not provided any non‑audit services to the Company

in the year under review, or in the previous year.

Effectiveness of The Committee

The services provided to the Board by the Committee are

reviewed within the Annual Board Evaluation, including

consideration of actions undertaken by the Committee

with the Investment Manager and Auditor to ensure an

appropriate audit process is undertaken. This year, an

internal evaluation was completed and I am pleased to

confirm that the findings of the evaluation processes

were positive with no matters of concern to report. The

Committee continually seeks to improve its effectiveness

where possible and follow best practice guidance from the

FRC and other relevant legislative and industry bodies.

Charlotta Ginman, FCA

Chair of the Audit Committee

18 July 2023

Audit Committee Report continued

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Directors’ Remuneration Report

Introduction

This report is submitted in accordance with the Large and

Medium‑Sized Companies and Groups (Accounts and

Reports) (Amendment) Regulation 2013 (the ‘Regulations’),

The Companies (Directors’ Remuneration Policy and Directors’

Remuneration Report) Regulations 2019 and the Listing Rules

of the Financial Conduct Authority in respect of the year

ended 30 April 2023. It has been audited where indicated.

Chair’s Report

The Remuneration Committee is Chaired by Tim Cruttenden

who is also the Senior Independent Director (SID).

The Remuneration Committee (“the Committee”) comprises

all the independent non‑executive Directors and has written

terms of reference, which are available to view on the

Company’s website, www.polarcapitaltechnologytrust.co.uk.

The terms of reference clearly define the Committee’s

responsibilities and duties.

The Committee meets at least annually and is responsible

for recommending the framework for the remuneration

of Directors, including the ongoing appropriateness of

the Remuneration Policy and the individual remuneration

of Directors based on their contributions. The Committee

aims to pay fees relative to other companies in the

sector commensurate with the responsibilities and time

commitments of the Board. On at least an annual basis

and within the current year, we considered the time and

commitment required of the Directors and of the Chair of

the Board. The remuneration review carried out in May

2023 is detailed on page 86.

Remuneration Policy

Shareholders approved the current Directors’ Remuneration

Policy by way of an ordinary resolution passed at the AGM

in September 2020. Such Policy came into effect on 1 May

2021 and shall remain in force until 30 April 2024.

Tim Cruttenden

Senior Independent

Director and Chair of the

Remuneration Committee

Company’s Policy on Directors’ Remuneration effective until 30 April 2024

How policy supports strategy and

promotes long term sustainable success

Operation Opportunity

The Board consists entirely of

independent non‑executive

Directors, who meet regularly to deal

with the Company’s affairs.

The intention is that fees payable

reflect the time spent by them

individually and collectively, be

of a level appropriate to their

responsibilities and be in line with

market practice, sufficient to enable

candidates of high calibre to be

recruited and retained.

Non‑executive Directors have formal

letters of appointment and their

remuneration is determined by the

Board within the limits set by the

Articles of Association.

Fees are reviewed annually but the

review will not necessarily result in any

change to rates. No Director is involved

in deciding their own remuneration

level.

Non‑executive Directors are appointed

initially for a three‑year term, subject to

annual re‑election by Shareholders in

accordance with the AIC Code.

All fees are paid by credit transfer

monthly in arrears, to the Director

concerned.

The Company’s policy in relation to fees is to offer only

a fixed basic fee in line with equivalent roles within the

sector with additional fees for the roles of Chair of the

Company, Chair of the Audit Committee and SID.

In accordance with the Company’s Articles of

Association, any Director who performs, or undertakes

to perform, services which the Directors consider go far

beyond the ordinary duties of a Director, may be paid

such additional remuneration (whether by way of fixed

sum, bonus, commission, participation in profits or

otherwise) as the Directors may determine.

In such instances, when the Remuneration Committee

believes that there have been exceptional circumstances

and a Director’s services have been substantially

beyond what is typically expected, the Remuneration

Committee will authorise a payment to a Director and

provide details of the events, duties and responsibilities

that gave rise to such within the Remuneration

Implementation Report.

As the Company is an investment

trust and all Directors are

non‑executive, it is considered

inappropriate to have any long‑term

incentive schemes or benefits.

Non‑executive Directors do not

receive any bonus, nor do they

participate in any long‑term incentive

schemes or pension schemes.

There are no performance conditions relating to

non‑executive Directors fees.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

As the current Remuneration Policy will expire on 30 April 2024, the Company is required to seek shareholder approval for

a Remuneration Policy that can remain in operation for the next three‑year period (unless proposed for change within such

period). The Policy being proposed is unchanged from the policy outlined on page 83 which was approved in 2020 and if

approved by shareholders, the Remuneration Policy will come into force on 1 May 2024 until its expiry on 30 April 2027.

As per previous AGM resolutions shareholders will be asked to consider a non‑binding vote for the approval of the

Directors’ Remuneration Implementation Report which reports on how the current policy has operated during the year to

30 April 2023. The results of the Shareholder vote on the Directors’ Implementation Report and on Directors’ Policy Report

submitted to the 2022 Annual General Meeting were as follows:

Implementation Report

for the Year ended

30 April 2022

Remuneration

Policy for the three

years ending on

30 April 2024

Votes for 99.87% of votes cast 99.94% of votes cast

Votes against 0.13% of votes cast 0.06% of votes cast

Votes withheld 21,716 1,379,929

2022/23 Fees Paid

In the year under review the Directors’ fees were paid

at the following annual rates, the Chair £55,000; other

Directors £33,000 with the Chair of the Audit Committee

receiving an extra £7,000 and the Senior Independent

Director receiving an extra £4,200 for performing such

additional roles.

Fee Review

The Committee carries out an annual review of fees paid to

the Directors. While such a review will not necessarily result

in any change to the rates, the Committee believes that it

is important that these reviews happen annually.

As referenced in last years’ report, during the 2022

remuneration review and as reflected in the wider

Board Evaluation report from the external evaluator,

we recognised that the Remuneration of the Chair was

significantly below that of peers and below the market

rate for a large investment trust. The Board usually

favours modest increases year on year therefore, we

elected to increase the remuneration of the Chair in two

stages, across 2022 and 2023. To that end we raised the

Chair’s remuneration by 10% in 2022 and have raised

the amount by 15.6% this year, reflecting both the need

to get closer to the comparable pay of other similar

sized investment trusts and the current level of inflation.

The basic NED salary was raised in 2022 by 4.7% and in

2023, by 6.1%, with the supplements for both audit chair

and senior independent director remaining unchanged for

the financial year under review and the financial year to

30 April 2024.

During the review of Directors’ remuneration, a selection

of peer comparisons and external reports including the

Nurole Compensation Report and the Trust Associates

2022 Fee Review are considered. Consideration is also

given to the rise in inflation and the retail price index since

the last change in Directors’ fees and the increased level of

input and responsibility the members of the Board have in

relation to enhanced regulations and requirements. As a

result, the Committee decided to implement the following

increases with effect from 1 May 2023:

Chair

The annual fee for the Chair has been increased from to

£55,000 to £63,600 pa. This is an increase of 15.6% year‑

on‑year.

Directors

The annual fee for a non‑executive Director has been

increased from £33,000 to £35,000 pa, representing

a 6.1% increase. Directors’ fees for the year ending

30 April 2023, in respect of the current board members,

after taking account of the retirement of the previous

Chair, are expected to total £249,800. The maximum

aggregate amount provided for in the Company’s Articles

of Association (the Articles), Article 99 is £300,000.

The Board remains committed to ongoing shareholder

dialogue and any views expressed by shareholders on

the fees being paid to Directors would be taken into

consideration by the Remuneration Committee in the

annual review of Directors’ fees. No such views have been

received from shareholders.

The Directors did not participate in discussions on the fees

applicable to their own roles.

Directors’ Remuneration Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Senior Independent Director and Chair of

Audit Committee

The supplements for the Senior Independent Director and

Chair of the Audit Committee remained unchanged at

£4,200 and £7,000 respectively.

Other Fees and Incentives

As the Company is an investment trust it has no executive

Directors or employees and as all the Directors are

non‑executive, it is considered inappropriate to have any long

term incentive schemes. The fees are not specifically related to

the Directors’ performance, either individually or collectively.

The Directors are entitled to be reimbursed for reasonable

expenses incurred by them in connection with the

performance of their duties and attendance at Board and

General Meetings. In certain circumstances, under HMRC

rules, travel and other out of pocket expenses reimbursed

to the Directors may be considered as taxable benefits.

The taxable expenses, for example, comprise of expenses

incurred by the Directors attending Board and other

meetings held in London. Such expenses are paid to the

Directors grossed up for taxation and shown in the taxable

column of the Directors remuneration table.

Letters of Appointment

In accordance with recommended practice, the Directors

do not have service agreements but instead each Director

has received a letter setting out the terms of their

appointment under which they provide their services to the

Company. A Director may resign by giving one month’s

notice in writing to the Board at any time. The Directors

are not entitled to payment for loss of office.

A sample equivalent to the Directors’ Letter of

Appointment is available on the Company’s website.

In accordance with the Articles, any new Director is

required to stand for election at the first AGM following

their appointment, and in accordance with good corporate

governance practice all Directors stand for re‑election by

shareholders every year thereafter.

Directors’ And Officers’ Liability Insurance /

Indemnity

Directors’ and officers’ liability insurance is held by the

Company in respect of the Directors. The Company has, to

the extent permitted by law and the Company’s Articles,

provided each Director with a Deed of Indemnity which,

subject to the provisions of the Articles and s234 of the

Companies Act 2006 ‘qualifying third party indemnity

provisions’, indemnifies the Directors in respect of costs

which they may incur relating to the defence of any

proceedings brought against them arising out of their

position as Directors (excluding criminal and regulatory

penalties). Directors’ legal costs may be funded up‑front

provided they reimburse the Company if the individual

is convicted or, in an action brought by the Company,

judgement is given against them. These provisions were in

force during the year and remain in force.

Remuneration Implementation Report

Remuneration Paid In The Year Ended 30 April 2023 (Audited)

The fees payable in respect of each of the Directors were as follows:

Year ended 30 April 2023 Year ended 30 April 2022

Director Fixed fee

Taxable

expenses

Total

Remuneration Fixed fee

Taxable

expenses

Total

Remuneration

Catherine Cripps (appointed as Chair with

effect from 8 Sep 2022 and to the Board on

6 Sep 2021)

£47,737 ‑ £47,737 £20,677 ‑ £20,677

Sarah Bates (retired as Chair and from the

Board on 8 Sep 2022)

£19,603 ‑ £19,603 £50,000 ‑ £50,000

Charlotta Ginman (Chair of the Audit

Committee)

£40,000 ‑ £40,000 £38,500 ‑ £38,500

Tim Cruttenden (Senior Independent Director) £37,200 ‑ £37,200 £35,700 ‑ £35,700

Charles Park £33,000 ‑ £33,000 £31,500 ‑ £31,500

Stephen White £33,000 ‑ £33,000 £31,500 ‑ £31,500

Jane Pearce £33,000 £3,004 £36,004 £20,677 £777 £21,454

Total £243,540 £3,004 £246,544 £228,554 £777 £229,331

Note 1: Taxable travel and subsistence expenses incurred in attending Board and Committee meetings. With effect from 1 May 2022, the amounts disclosed

are the grossed figures and includes grossed elements from prior year end.

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

No pension contributions or other remuneration or compensation was paid or payable by the Company during the year

to any of the Directors. Consequently, the figures shown above comprise the single total remuneration figure for each

Director.

The table below contains the annual percentage change in remuneration in the five financial years prior to the current

year in respect of each Director:

Fee Rates

Year to 30 April

2019

Year to 30 April

2020

Year to 30 April

2021

Year to 30 April

2022

Year to 30 April

2023

Year ahead from

1 May 2023

Chair

£43,000 £44,300 £46,500 £50,000 £55,000 £63,600

+3.6% +3.0% +5.0% +7.5% +10.0% +15.6%

Directors’ fees

£27,600 £28,400 £30,000 £31,500 £33,000 £35,000

+3.0% +2.9% +5.6% +5.0% +4.7% +6.1%

Additional fees:

Chair of Audit Committee

£3,600 £5,000 £6,000 £7,000 £7,000 £7,000

+2.9% +38.9% +20.0% +16.6% 0.0% 0.0%

Senior Independent Director

£3,600 £3,700 £4,000 £4,200 £4,200 £4,200

+2.9% +2.8% +8.1% +5.0% 0.0% 0.0%

Directors’ Share Interests (Audited)

Neither the Company’s Articles nor the Directors’ letters of appointment require Directors to hold shares in the Company.

The interests in the ordinary shares of the Company of the Directors in office at 30 April 2022 and 30 April 2023 are as

follows:

Ordinary Shares 30 April 2023 30 April 2022

Catherine Cripps 481 ‑

Tim Cruttenden 1,000 1,000

Charlotta Ginman 4,941 4,941

Charles Park 1,840 1,840

Stephen White 10,000 10,000

Jane Pearce 930 ‑

Sarah Bates (Chair)* N/A 10,500

*retired 8 September 2022

There have been no changes in these interests between the end of the financial year and 13 July 2023.

Performance

The Large and Medium‑Sized Companies and Groups (Accounts and Reports) (amendment) Regulations 2013,

(Schedule 8, Part 3 (18, 4(c))) require a line graph to be included in the Directors’ Remuneration Report showing the

total shareholder return for each of the financial years in the relevant period, being the five financial years with the last

being the period under review. Each subsequent annual graph is required to increase by one year until the maximum

relevant period of ten years is reached; thereafter the relevant period will continue to be ten years. The Dow Jones Global

Technology Index is shown because, as a market capitalisation weighted index based on the entire global technology

sector, it is the most relevant benchmark.

Directors’ Remuneration Report continued

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Relative Importance Of Spend On Pay

Under the Regulations (Schedule 8, Part 3 (20)), the Directors’ Remuneration Report must show a comparison of all

remuneration paid to employees to all distributions (including dividends and share buy backs) paid to shareholders for the

current year, preceding year and the difference between those years. This is to assist the Directors in understanding the

relative importance of spend on pay.

The Company has no employees and while the Directors do not consider that the comparison of Directors’ remuneration

with distributions to shareholders is a meaningful measure of the Company’s overall performance, for comparison

purposes the table below compares Directors’ fees with the level of dividends paid, profit after tax and the cost of share

buy backs undertaken by the Company.

Change

2023

£’000

2022

£’000 £’000 %

Directors’ total remuneration* 247 229 18 8%

Dividends paid or declared in respect of the financial

year

– – – –

Net loss for the year and total comprehensive expense (105,182) (258,646) 153,464 59%

Ordinary shares repurchased into treasury 117,662 99,132 18,530 19%

* Increase relates to Directors’ fee increase from 1 May 2022, and Catherine Cripps assuming the role of Chair following the retirement of Sarah Bates in

September 2022.

Tim Cruttenden

Senior Independent Director and Chair of the Remuneration Committee

18 July 2023

April

2013

April

2014

April

2015

April

2016

April

2017

April

2018

April

2019

April

2020

April

2021

April

2022

April

2023

100

200

300

400

500

600

700

800

Company Ordinary Share Price Dow Jones Global Technology Index

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Report of the Nomination Committee

The Nomination Committee (“the Committee”) is chaired

by Catherine Cripps and comprises all the independent

non‑executive Directors. The Committee has written terms

of reference, which are available to view on the Company’s

website, www.polarcapitaltechnologytrust.co.uk. The terms

of reference clearly define the Committee’s responsibilities

and duties.

The Committee meets at least annually and is responsible to

the Board for the size, structure and composition of the Board

as well as for succession planning and the tenure policies for

the Chair and Directors.

Meetings and Work Undertaken

During the financial year ended 30 April 2023 the Nomination

Committee met once and considered the following:

Board Evaluation

The Committee is also responsible for coordinating the

evaluation of the Board and considering the conclusions

from that review. Evaluation of the Board, individual

Directors and the committees is undertaken annually. The

evaluation undertaken in 2022‑2023 was self‑administered

and incorporated completion of questionnaires,

culminating in written reports being provided to the

Committee and the Board.

The evaluation process was also used by the Committee to

carefully review and rigorously assess the contribution of

each Director and their independence. The performance

review of the Chair was also carried out by the Committee,

led by the SID. Each year, the evaluation outcomes are

reviewed by the Board as a whole and, should it be

deemed necessary, additional reporting measures or

operations are put in place.

The evaluation process considers the balance of skills,

experience, knowledge and independence on the Board.

Consideration is also given to its diversity and other

factors which contribute to the effectiveness of the

Board, including how the Directors interact as a unit. The

Committee has determined that each of the Directors

standing for re‑election continued to offer relevant

experience, effectively contributed to the operation of

the Board and had demonstrated independent views on

a range of subjects. The Committee is satisfied that the

structure, mix of skills and operation of the Board continue

to be effective and relevant for the Company.

The last externally facilitated evaluation was carried out

in 2022 by Stephenson Executive Search, an independent

external Board Evaluator, with no other connection to the

Company or individual Directors. External evaluations have

been completed every three years whilst the Company has

been a constituent of the FTSE 350, the next externally

administered Board Evaluation will be carried out in 2025

unless it is deemed to be required earlier.

Succession

The Board believes that retaining Directors with sufficient

experience of the Company, investment industry and

financial markets is of benefit to shareholders while

recognising that regular refreshment of approach is equally

of benefit and importance. The Board does not consider

that the length of a Director’s tenure, in isolation, reduces

his or her ability to act independently. The Board believes

that continuity and experience add significantly to the

strength of the Board. Directors will ordinarily retire from

the Board at the AGM following nine‑years of service.

As reported in last year’s Annual Report, the Nomination

Committee carried out a phased recruitment process

commencing with the recruitment of a new non‑executive

Director to succeed Charlotta Ginman as Audit Chair in

2024. Jane Pearce and I, were appointed as non‑executive

Directors on 6 September 2021. During the recruitment

process, a long list of suitably qualified candidates was

considered followed by interviews of shortlisted candidates

with the Board. Charlotta Ginman will step down as Chair

of the Audit Committee on 31 October 2023 and will be

succeeded by Jane Pearce; it is anticipated that Charlotta

will remain on the Board until stepping down at the AGM

to be held in 2024.

Catherine Cripps

Chair of the Nomination

Committee

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Board Recruitment

Ahead of any recruitment process, the Nominations

Committee on behalf of the Board, will engage with

selected recruitment firms interested in working with

the Board to appoint the next non‑executive director. A

detailed role specification is compiled and presented to the

selected recruitment agent who will then source candidates

for consideration. Following a review of a prepared long‑

list of candidates, the Nominations Committee will select

a short list of candidates for interview; selection is based

on candidates’ fulfilment of required skill sets, taking

into account board dynamics and board fit and the wider

diversity criteria. Following a series of interviews, the

selected candidate will be offered the opportunity to join

the board on equal terms to the existing non‑executive

directors. As detailed on page 78, the Board notes the

expectations of the FCA diversity and inclusion policy and

ensures this is factored into any recruitment process.

Chair Tenure Policy

As referenced in the succession section above, it is the

Board’s view that in the circumstances of an investment

company, where corporate knowledge and continuity

can add value, there may be merit in appointing one

of its members to the Chair. In addition, there may be

circumstances where succession plans are disrupted

such that an internal candidate with some years’ existing

experience is the most appropriate candidate for the

Chair. In other circumstances an external candidate

may be more appropriate. The Board supports the best

practice of Directors remaining on the Board for no‑longer

than 9‑years but acknowledges that in exceptional

circumstances the Chair may remain on the Board for

up to 12‑years.

Committee Evaluation

The activities of the Nomination Committee were

considered as part of the annual Board evaluation process.

This year, an internal evaluation was completed and the

findings of the evaluation processes were positive with no

matters of concern to report.

Catherine Cripps

Chair of the Nomination Committee

18 July 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Management Engagement Committee Report

The Management Engagement Committee (“the

Committee”) is chaired by Catherine Cripps and comprises all

the independent non‑executive Directors. The Committee has

written terms of reference, which are available to view on the

Company’s website, www.polarcapitaltechnologytrust.co.uk.

The terms of reference clearly define the Committee’s

responsibilities and duties.

The Committee meets at least twice a year and is responsible

for reviewing the performance of the Investment Manager

along with the Company’s other service providers. The

Committee is also responsible for keeping under review the

terms of the Investment Management Agreement (‘IMA’) and

the Manager’s appointment as AIFM.

Performance Evaluation Process

Investment Manager

During the financial year ended 30 April 2023, the

Committee met twice to consider the relationship with and,

the services provided by the Investment Manager. In addition,

the Committee reviewed the terms of the IMA including the

level and structure of management and performance fee

paid or payable to the Investment Manager, making relevant

recommendations to the Board when appropriate.

As referenced in the Strategic Report and detailed in the

Notes to the Financial Statements, the Board keeps the

fee arrangements with Polar Capital LLP under review

and considers any recommendations of the Committee.

The Committee reflected on the changes made to the

fee arrangements which took effect on 1 May 2022 and

confirmed that the next full review would take place in 2024

and any negotiated changes would come into effect from

1 May 2025; the Board is however at liberty to review the

fees at any time should they deem it appropriate and in the

best interests of shareholders to do so. Further details on the

Management fee structure can be found on page 58 of the

Strategic Report. There were no changes to the performance

fee arrangements which were last reviewed for the financial

year beginning 1 May 2019.

The Committee has reviewed the performance of the

Investment Manager in managing the portfolio over the

longer‑term. The review also considered the quality of

the other services provided, including the strength of the

investment team, the depth of the other services provided

and the resources available to provide such services. The

Board reflected on the positive impact from the continued

recruitment into various teams at the Investment Manager

to support the Company, which includes the investment

team, marketing, administration, and the organisation on the

Company’s behalf of third party suppliers, and the quality of

the shareholder communications.

Following review, the Committee concluded that it is in

the best interests of shareholders as a whole that the

appointment of Polar Capital LLP as Investment Manager is

continued on the terms agreed on 12 April 2019.

Other Suppliers

The Board also monitors directly or through the Investment

Manager the performance of its other key service providers.

• The Board has directly appointed HSBC Bank Plc as

Depositary and Stifel Nicolaus as Corporate Broker.

The Depositary reports quarterly and makes an annual

presentation to the Board. The Corporate Broker provides

reports to the Board periodically and joins the Board on

request to discuss markets and other issues.

• The Registrar, Equiniti Limited, is directly appointed by the

Board and the performance of its duties is monitored by

the Company Secretary.

• Other suppliers such as printers, website designers and

PR agents are monitored by the Company Secretary and

each supplier reports to the Board as and when deemed

necessary.

Committee Evaluation

The activities of the Management Engagement Committee

were considered as part of the annual Board evaluation

process. This year, an internal evaluation was completed and

the findings of the evaluation processes were positive with

no matters of concern or requirements for change were

highlighted.

Catherine Cripps

Chair of the Management Engagement Committee

18 July 2023

Catherine Cripps

Chair of the Management

Engagement Committee

www.polarcapitaltechnologytrust.co.uk

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Statement of Directors’ Responsibilities in respect of

the Annual Report and Financial Statements

The Directors are responsible for preparing the Annual

Report and the financial statements in accordance with

applicable law and regulations.

Company law requires the Directors to prepare financial

statements for each financial year. Under that law they

have elected to prepare the financial statements in

accordance with UK‑adopted international accounting

standards and applicable law. Under company law the

directors must not approve the financial statements unless

they are satisfied that they give a true and fair view of the

state of affairs of the Company and of its profit or loss for

that period. In preparing these financial statements, the

Directors are required to:

• select suitable accounting policies and then apply them

consistently;

• make judgements and estimates that are reasonable,

relevant and reliable;

• state whether they have been prepared in accordance

with UK‑adopted international accounting standards;

• assess the Company’s ability to continue as a going

concern, disclosing, as applicable, matters related to

going concern; and

• use the going concern basis of accounting unless they

either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain

the Company’s transactions and disclose with reasonable

accuracy at any time the financial position of the Company

and enable them to ensure that its financial statements

comply with the Companies Act 2006. They are responsible

for such internal control as they determine is necessary

to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or

error, and have general responsibility for taking such steps

as are reasonably open to them to safeguard the assets of

the Company and to prevent and detect fraud and other

irregularities.

Under applicable law and regulations, the Directors

are also responsible for preparing a Strategic Report,

Directors’ Report, Directors’ Remuneration Report and

Corporate Governance Statement that complies with that

law and those regulations.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information

included on the company’s website. Legislation in

the UK governing the preparation and dissemination

of financial statements may differ from legislation in

other jurisdictions.

Responsibility Statement of the Directors in

respect of the Annual Report and Financial

Statements

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with

the applicable set of accounting standards, give a true

and fair view of the assets, liabilities, financial position

and profit or loss of the company; and

• the Strategic Report includes a fair review of the

development and performance of the business and the

position of the issuer, together with a description of the

principal risks and uncertainties that they face.

We consider the annual report and accounts, taken as

a whole, is fair, balanced and understandable and provides

the information necessary for shareholders to assess the

Company’s position and performance, business model and

strategy

Catherine Cripps

Chair

18 July 2023

www.polarcapitaltechnologytrust.co.uk

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Independent Auditor’s Report

to the members of Polar Capital Technology Trust plc

1. Our opinion is unmodified

We have audited the financial statements of Polar Capital

Technology Trust plc (“the Company”) for the year

ended 30 April 2023 which comprise the Statement of

Comprehensive Income, Balance Sheet, Statement of

Changes in Equity, Cash Flow Statement, and the related

notes, including the accounting policies in note 2.

In our opinion the financial statements:

– give a true and fair view of the state of the Company’s

affairs as at 30 April 2023 and of its loss for the year

then ended;

– have been properly prepared in accordance with UK

adopted international accounting standards; and

– have been prepared in accordance with the

requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International

Standards on Auditing (UK) (“ISAs (UK)”) and applicable

law. Our responsibilities are described below. We believe

that the audit evidence we have obtained is a sufficient

and appropriate basis for our opinion. Our audit opinion is

consistent with our report to the Audit Committee.

We were first appointed as auditor by the shareholders

on 7 September 2017. The period of total uninterrupted

engagement is for the six financial years ended 30 April

2023. We have fulfilled our ethical responsibilities under, and

we remain independent of the Company in accordance with,

UK ethical requirements including the FRC Ethical Standard

as applied to listed public interest entities. No non‑audit

services prohibited by that standard were provided.

Overview

Materiality: Financial

statements as a whole

£29.0m (2022:£31.6m)

1% (2022: 1%) of Total Assets

Key audit matter vs 2022

Recurring risk

Carrying amount of



level 1 investments

2. Key audit matters: our assessment of risks of

material misstatement

Key audit matters are those matters that, in our

professional judgement, were of most significance in the

audit of the financial statements and include the most

significant assessed risks of material misstatement (whether

or not due to fraud) identified by us, including those which

had the greatest effect on: the overall audit strategy; the

allocation of resources in the audit; and directing the

efforts of the engagement team. We summarise below

the key audit matter (unchanged from 2022), in arriving

at our audit opinion above, together with our key audit

procedures to address this matter and our findings from

those procedures in order that the Company’s members,

as a body, may better understand the process by which we

arrived at our audit opinion. This matter was addressed,

and our findings are based on procedures undertaken, in

the context of, and solely for the purpose of, our audit of

the financial statements as a whole, and in forming our

opinion thereon, and consequently are incidental to that

opinion, and we do not provide a separate opinion on

this matter.

The risk Our response

Carrying amount of level 1

investments

(£2,641m; 2022: £2,817m)

Refer to page 81 (Audit

Committee Report), pages 105

and 106 (accounting policy) and

pages 112 and 113 (financial

disclosures).

Low risk, high value:

The Company’s portfolio of level 1 investments

makes up 91% (2022: 89%) of the Company’s

total assets (by value) and is one of the key

drivers of results. We do not consider these

investments to be at a high risk of significant

misstatement, or to be subject to a significant

level of judgement because they comprise

liquid, level 1 investments.

However, due to their materiality in the context

of the financial statements as a whole, they are

considered to be one of the areas which had

the greatest effect on our overall audit strategy

and allocation of resources in planning and

completing our audit.

We performed the detailed tests below rather

than seeking to rely on any of the Company’s

controls, because the nature of the balance

is such that we would expect to obtain audit

evidence primarily through the detailed

procedures described below.

Our procedures included:

– Test of detail: Agreed the valuation of

100% of level 1 investments in the portfolio

to externally quoted prices; and

– Enquiry of custodians: Agreed 100% of

level 1 investment holdings in the portfolio

to independently received third party

confirmations from investment custodians.

Our findings

– We found no differences (2022: no

differences) from the holdings confirmations

nor from the externally quoted prices of a size

to require reporting to the Audit Committee.

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3. Our application of materiality and an

overview of the scope of our audit

Materiality for the financial statements as a whole was set

at £29.0m (2022: £31.6m), determined with reference to

a benchmark of total assets, of which it represents 1%

(2022: 1%).

In line with our audit methodology, our procedures

on individual account balances and disclosures were

performed to a lower threshold, performance materiality,

so as to reduce to an acceptable level the risk that

individually immaterial misstatements in individual account

balances add up to a material amount across the financial

statements as a whole. Performance materiality was

set at 75% (2022: 75%) of materiality for the financial

statements as a whole, which equates to £21.7m

(2022: £23.7m). We applied this percentage in our

determination of performance materiality because we did

not identify any factors indicating an elevated level of risk.

We agreed to report to the Audit Committee any corrected

or uncorrected identified misstatements exceeding £1.4m

(2022: £1.6m), in addition to other identified misstatements

that warranted reporting on qualitative grounds.

Our audit of the Company was undertaken to the

materiality and performance materiality levels specified

above and was performed by a single audit team.

The scope of the audit work was fully substantive as we did

not rely upon the Company’s internal control over financial

reporting.

Total Assets

£2,903m (2022: £3,160m)

Materiality

£29.0m (2022: £31.6m)

£29.0m

Whole financial

statements materiality

(2022: £31.6m)

£21.7m

Whole financial

statements performance

materiality (2022: £23.7m)

£1.4m

Misstatementsreportedto the

Audit CommiƩee (2022: £1.6m)

Total assets Materiality

4. Going concern

The Directors have prepared the financial statements on

the going concern basis as they do not intend to liquidate

the Company or to cease its operations, and as they have

concluded that the Company’s financial position means

that this is realistic. They have also concluded that there are

no material uncertainties that could have cast significant

doubt over its ability to continue as a going concern for

at least a year from the date of approval of the financial

statements (“the going concern period”).

We used our knowledge of the Company, its industry, and

the general economic environment to identify the inherent

risks to its business model and analysed how those risks

might affect the Company’s financial resources or ability

to continue operations over the going concern period.

The risks that we considered most likely to adversely affect

the Company’s available financial resources and metrics

relevant to debt covenants over this period were:

– the impact of a significant reduction in the valuation

of investments and the implications for the Company’s

debt covenants;

– the liquidity of the investment portfolio and its ability to

meet the liabilities of the Company as and when they

fall due; and

– the operational resilience of key service organisations.

We considered whether these risks could plausibly affect

the liquidity or covenant compliance in the going concern

period by assessing the degree of downside assumption

that, individually and collectively, could result in a liquidity

issue, taking into account the Company’s current and

projected cash and liquid investment position (a reverse

stress test).

We considered whether the going concern disclosure

in note 2(A) to the financial statements gives a full and

accurate description of the Directors’ assessment of

going concern, including the identified risks and related

sensitivities.

Our conclusions based on this work:

– we consider that the Directors’ use of the going

concern basis of accounting in the preparation of the

financial statements is appropriate;

– we have not identified, and concur with the Directors’

assessment that there is not, a material uncertainty

related to events or conditions that, individually

or collectively, may cast significant doubt on the

Company’s ability to continue as a going concern for

the going concern period;

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

– we have nothing material to add or draw attention to in

relation to the Directors’ statement in note 2(A) to the

financial statements on the use of the going concern

basis of accounting with no material uncertainties that

may cast significant doubt over the Company’s use

of that basis for the going concern period, and we

found the going concern disclosure in note 2(A) to be

acceptable; and

– the related statement under the Listing Rules set out

on page 60 is materially consistent with the financial

statements and our audit knowledge.

However, as we cannot predict all future events or

conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that

were reasonable at the time they were made, the above

conclusions are not a guarantee that the Company will

continue in operation.

5. Fraud and breaches of laws and regulations –

ability to detect

To identify risks of material misstatement due to fraud

(“fraud risks”) we assessed events or conditions that

could indicate an incentive or pressure to commit fraud

or provide an opportunity to commit fraud. Our risk

assessment procedures included:

– enquiring of Directors as to the Company’s high‑level

policies and procedures to prevent and detect fraud,

as well as whether they have knowledge of any actual,

suspected or alleged fraud;

– reading Board and Audit Committee minutes;

– assessing the segregation of duties in place between

the Directors, the Administrator and the Company’s

investment manager, and

We communicated identified fraud risks throughout the

audit team and remained alert to any indications of fraud

throughout the audit.

As required by auditing standards, we perform procedures

to address the risk of management override of controls, in

particular the risk that management may be in a position

to make inappropriate accounting entries. We evaluated

the design and implementation of the controls over journal

entries and other adjustments and made inquiries of the

Administrator about inappropriate or unusual activity

relating to the processing of journal entries and other

adjustments. We substantively tested all material post‑

closing entries and a sample of journal entries made at the

end of the reporting period. Based on the results of our risk

assessment procedures and understanding of the process,

including the segregation of duties between the Directors

and the Administrator, no further high‑risk journal entries

or other adjustments were identified.

On this audit we do not believe there is a fraud risk related

to revenue recognition because the revenue is non‑

judgemental and straightforward, with limited opportunity for

manipulation. We did not identify any additional fraud risks.

Identifying and responding to risks of material

misstatement due to non-compliance with laws and

regulations

We identified areas of laws and regulations that could

reasonably be expected to have a material effect on

the financial statements from our general commercial

and sector experience and through discussion with the

Directors, the Investment Manager and the Administrator

(as required by auditing standards), and discussed with the

Directors the policies and procedures regarding compliance

with laws and regulations. As the Company is regulated,

our assessment of risks involved gaining an understanding

of the control environment including the entity’s

procedures for complying with regulatory requirements.

We communicated identified laws and regulations

throughout our team and remained alert to any indications

of non‑compliance throughout the audit.

The potential effect of these laws and regulations on the

financial statements varies considerably.

Firstly, the Company is subject to laws and regulations

that directly affect the financial statements including

financial reporting legislation (including related companies

legislation), distributable profits legislation, and its

qualification as an Investment Trust under UK taxation

legislation, any breach of which could lead to the Company

losing various deductions and exemptions from UK

corporation tax, and we assessed the extent of compliance

with these laws and regulations as part of our procedures

on the related financial statement items.

Secondly, the Company is subject to many other laws and

regulations where the consequences of non‑compliance

could have a material effect on amounts or disclosures

in the financial statements, for instance through the

imposition of fines or litigation. We identified the

following areas as those most likely to have such an

effect: money laundering, data protection, bribery and

corruption legislation and certain aspects of company

legislation recognising the financial and regulated nature

of the Company’s activities and its legal form. Auditing

standards limit the required audit procedures to identify

non‑compliance with these laws and regulations to enquiry

Independent Auditor’s Report continued

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Information

of the Directors and the Administrator and inspection of

regulatory and legal correspondence, if any. Therefore if

a breach of operational regulations is not disclosed to us

or evident from relevant correspondence, an audit will not

detect that breach.

Context of the ability of the audit to detect fraud or

breaches of law or regulation

Owing to the inherent limitations of an audit, there is an

unavoidable risk that we may not have detected some

material misstatements in the financial statements, even

though we have properly planned and performed our audit

in accordance with auditing standards. For example, the

further removed non‑compliance with laws and regulations

is from the events and transactions reflected in the financial

statements, the less likely the inherently limited procedures

required by auditing standards would identify it.

In addition, as with any audit, there remained a higher risk

of non‑detection of fraud, as these may involve collusion,

forgery, intentional omissions, misrepresentations, or the

override of internal controls. Our audit procedures are

designed to detect material misstatement. We are not

responsible for preventing non‑compliance or fraud and

cannot be expected to detect non‑compliance with all laws

and regulations.

6. We have nothing to report on the other

information in the Annual Report

The Directors are responsible for the other information

presented in the Annual Report together with the financial

statements. Our opinion on the financial statements does

not cover the other information and, accordingly, we do

not express an audit opinion or, except as explicitly stated

below, any form of assurance conclusion thereon.

Our responsibility is to read the other information and,

in doing so, consider whether, based on our financial

statements audit work, the information therein is materially

misstated or inconsistent with the financial statements

or our audit knowledge. Based solely on that work we

have not identified material misstatements in the other

information.

Strategic report and Directors’ report

Based solely on our work on the other information:

– we have not identified material misstatements in the

strategic report and the Directors’ report;

– in our opinion the information given in those reports

for the financial year is consistent with the financial

statements; and

– in our opinion those reports have been prepared in

accordance with the Companies Act 2006.

Directors’ remuneration report

In our opinion the part of the Directors’ Remuneration

Report to be audited has been properly prepared in

accordance with the Companies Act 2006.

Disclosures of emerging and principal risks and

longer-term viability

We are required to perform procedures to identify whether

there is a material inconsistency between the Directors’

disclosures in respect of emerging and principal risks and

the viability statement, and the financial statements and

our audit knowledge.

Based on those procedures, we have nothing material to

add or draw attention to in relation to:

– the Directors’ confirmation within the Principal Risks

and Uncertainties disclosure on page 62 that they have

carried out a robust assessment of the emerging and

principal risks facing the Company, including those that

would threaten its business model, future performance,

solvency and liquidity;

– The Principal and Emerging Risks disclosures describing

these risks and how emerging risks are identified,

and explaining how they are being managed and

mitigated; and

– the Directors’ explanation in the Viability Statement

of how they have assessed the prospects of the

Company, over what period they have done so and

why they considered that period to be appropriate, and

their statement as to whether they have a reasonable

expectation that the Company will be able to continue

in operation and meet its liabilities as they fall due

over the period of their assessment, including any

related disclosures drawing attention to any necessary

qualifications or assumptions.

We are also required to review the Viability Statement, set

out on page 59 under the Listing Rules. Based on the above

procedures, we have concluded that the above disclosures

are materially consistent with the financial statements and

our audit knowledge.

Our work is limited to assessing these matters in the

context of only the knowledge acquired during our

financial statements audit. As we cannot predict all future

events or conditions and as subsequent events may result in

outcomes that are inconsistent with judgements that were

reasonable at the time they were made, the absence of

anything to report on these statements is not a guarantee

as to the Company’s longer‑term viability.

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Corporate governance disclosures

We are required to perform procedures to identify whether

there is a material inconsistency between the Directors’

corporate governance disclosures and the financial

statements and our audit knowledge.

Based on those procedures, we have concluded that each

of the following is materially consistent with the financial

statements and our audit knowledge:

– the Directors’ statement that they consider that the

annual report and financial statements taken as a

whole is fair, balanced and understandable, and

provides the information necessary for shareholders

to assess the Company’s position and performance,

business model and strategy;

– the section of the annual report describing the work of

the Audit Committee, including the significant issues

that the Audit Committee considered in relation to

the financial statements, and how these issues were

addressed; and

– the section of the annual report that describes the

review of the effectiveness of the Company’s risk

management and internal control systems.

We are required to review the part of the Corporate

Governance Statement relating to the Company’s

compliance with the provisions of the UK Corporate

Governance Code specified by the Listing Rules for our

review. We have nothing to report in this respect.

7. We have nothing to report on the other

matters on which we are required to report

by exception

Under the Companies Act 2006, we are required to report

to you if, in our opinion:

– adequate accounting records have not been kept, or

returns adequate for our audit have not been received

from branches not visited by us; or

– the financial statements and the part of the Directors’

Remuneration Report to be audited are not in

agreement with the accounting records and returns; or

– certain disclosures of Directors’ remuneration specified

by law are not made; or

– we have not received all the information and

explanations we require for our audit.

We have nothing to report in these respects.

8. Respective responsibilities

Directors’ responsibilities

As explained more fully in their statement set out on

page 93, the Directors are responsible for: the preparation

of the financial statements including being satisfied that

they give a true and fair view; such internal control as

they determine is necessary to enable the preparation

of financial statements that are free from material

misstatement, whether due to fraud or error; assessing

the Company’s ability to continue as a going concern,

disclosing, as applicable, matters related to going concern;

and using the going concern basis of accounting unless

they either intend to liquidate the Company or to cease

operations, or have no realistic alternative but to do so.

Auditor’s responsibilities

Our objectives are to obtain reasonable assurance about

whether the financial statements as a whole are free from

material misstatement, whether due to fraud or error, and to

issue our opinion in an auditor’s report. Reasonable assurance

is a high level of assurance, but does not guarantee that an

audit conducted in accordance with ISAs (UK) will always

detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material

if, individually or in aggregate, they could reasonably be

expected to influence the economic decisions of users taken

on the basis of the financial statements.

A fuller description of our responsibilities is provided on the

FRC’s website at www.frc.org.uk/auditorsresponsibilities. .

9. The purpose of our audit work and to whom

we owe our responsibilities

This report is made solely to the Company’s members, as

a body, in accordance with Chapter 3 of Part 16 of the

Companies Act 2006 and the terms of our engagement by

the company. Our audit work has been undertaken so that

we might state to the Company’s members those matters

we are required to state to them in an auditor’s report,

and the further matters we are required to state to them in

accordance with the terms agreed with the Company, and

for no other purpose. To the fullest extent permitted by

law, we do not accept or assume responsibility to anyone

other than the Company and the Company’s members,

as a body, for our audit work, for this report, or for the

opinions we have formed.

Philip Merchant (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants

Saltire Court

20 Castle Terrace

Edinburgh

EH1 2EG

18 July 2023

Independent Auditor’s Report continued

Financial Statements

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Statement of Comprehensive Income

For the year ended 30 April 2023

Year ended 30 April 2023 Year ended 30 April 2022

Notes

Revenue

return

£’000

Capital

return

£’000

Total

return

£’000

Revenue

return

£’000

Capital

return

£’000

Total

return

£’000

Investment income 3 16,160 42 16,202 15,870 - 15,870

Other operating income 4 3,820 - 3,820 31 - 31

Losses on investments held at fair value 5 - (106,807) (106,807) - (253,694) (253,694)

Gains/(losses) on derivatives 6 - 34 34 - (5,799) (5,799)

Other currency gains 7 - 8,409 8,409 - 17,535 17,535

Total income 19,980 (98,322) (78,342) 15,901 (241,958) (226,057)

Expenses

Investment management fee 8 (21,918) - (21,918) (28,281) - (28,281)

Other administrative expenses 9 (1,176) - (1,176) (1,335) - (1,335)

Total expenses (23,094) - (23,094) (29,616) - (29,616)

Loss before finance costs and tax (3,114) (98,322) (101,436) (13,715) (241,958) (255,673)

Finance costs 10 (1,598) - (1,598) (973) - (973)

Loss before tax (4,712) (98,322) (103,034) (14,688) (241,958) (256,646)

Tax 11 (2,148) - (2,148) (2,000) - (2,000)

Net loss for the year and total

comprehensive expense

(6,860) (98,322) (105,182) (16,688) (241,958) (258,646)

Loss per share (basic and diluted) (pence) 12 (5.30) (75.98) (81.28) (12.36) (179.25) (191.61)

The total column of this statement represents the Company’s Statement of Comprehensive Income, prepared in accordance with

UK-adopted International Accounting Standards.

The revenue return and capital return columns are supplementary to this and are prepared under guidance published by the AIC.

All items in the above statement derive from continuing operations.

The Company does not have any other comprehensive income.

The notes on pages 104 to 125 form part of these Financial Statements.

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Notes

capital

£’000

Capital

redemption

reserve

£’000

premium

£’000

Special

non-

distrib-

utable

reserve

£’000

Capital

reserves

£’000

Revenue

reserve

£’000

Total

£’000

Total equity at 30 April 2021 34,329 12,802 223,374 7,536 3,240,833 (110,111) 3,408,763

Total comprehensive expense:

Loss for the year to 30 April 2022 - - - - (241,958) (16,688) (258,646)

Transactions with owners, recorded

directly to equity:

Ordinary shares repurchased into treasury 18, 22 - - - - (99,132) - (99,132)

Total equity at 30 April 2022 34,329 12,802 223,374 7,536 2,899,743 (126,799) 3,050,985

Total comprehensive expense:

Loss for the year to 30 April 2023 - - - - (98,322) (6,860) (105,182)

Transactions with owners, recorded

directly to equity:

Ordinary shares repurchased into treasury 18, 22 - - - - (117,662) - (117,662)

Total equity at 30 April 2023 34,329 12,802 223,374 7,536 2,683,759 (133,659) 2,828,141

The notes on pages 104 to 125 form part of these Financial Statements.

Statement of Changes in Equity

For the year ended 30 April 2023

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102

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Balance Sheet

As at 30 April 2023

Notes

30 April 2023

£’000

30 April 2022

£’000

Non current assets

Investments held at fair value through profit or loss 13 2,640,177 2,811,080

Current assets

Receivables 14 20,605 31,096

Overseas tax recoverable 379 286

Cash and cash equivalents 15 239,096 311,363

Derivative financial instruments 13 2,571 6,479

262,651 349,224

Total assets 2,902,828 3,160,304

Current liabilities

Payables 16 (23,842) (57,284)

Bank loans 17 - (52,035)

(23,842) (109,319)

Non current liabilities

Bank loans 17 (50,845) -

Net assets 2,828,141 3,050,985

Equity attributable to equity shareholders

Share capital 18 34,329 34,329

Capital redemption reserve 19 12,802 12,802

Share premium 20 223,374 223,374

Special non-distributable reserve 21 7,536 7,536

Capital reserves 22 2,683,759 2,899,743

Revenue reserve 23 (133,659) (126,799)

Total equity 2,828,141 3,050,985

Net asset value per ordinary share (pence) 25 2239.48 2305.13

The Financial Statements, on pages 100 to 125 , were approved and authorised for issue by the Board of Directors on 18 July 2023 and

signed on its behalf by:

Catherine Cripps

Chair

The notes on pages 104 to 125 form part of these Financial Statements

Registered number 3224867

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Notes

2023

£’000

2022

£’000

Cash flows from operating activities

Loss before tax (103,034) (256,646)

Adjustments

Losses on investments held at fair value through profit or loss 5 106,807 253,694

(Gains)/losses on derivative financial instruments 6 (34) 5,799

Proceeds of disposal on investments 2,311,861 2,822,328

Purchases of investments (2,266,936) (2,618,737)

Proceeds on disposal of derivative financial instruments 13 46,536 39,006

Purchases of derivative financial instruments 13 (42,594) (47,194)

Increase in receivables (472) (64)

Decrease in payables* (4,580) (401)

Finance costs* 1,598 973

Overseas tax (2,241) (2,124)

Foreign exchange gains 7 (8,409) (17,535)

Net cash generated from operating activities 38,502 179,099

Cash flows from financing activities

Finance costs paid* (1,539) (927)

Ordinary shares repurchased into treasury (116,449) (98,001)

Net cash used in financing activities (117,988) (98,928)

Net (decrease)/increase in cash and cash equivalents (79,486) 80,171

Cash and cash equivalents at the beginning of the year 311,363 212,732

Effect of movement in foreign exchange rates on cash held 7 7,219 18,460

Cash and cash equivalents at the end of the year 15 239,096 311,363

Reconciliation of cash and cash equivalents to the Balance Sheet is as follows:

Notes

2023

£’000

2022

£’000

Cash held at bank and derivative clearing houses 15 148,682 219,403

BlackRock’s Institutional Cash Series plc

(US Treasury Fund), money market fund

15 90,414 91,960

Cash and cash equivalents at the end of the year 15 239,096 311,363

* The finance costs paid which were previously included in the cash flows from operating activities in the year 2022 have been re-

presented as a cash flow from financing activities to align with the current year presentation.

The notes on pages 104 to 125 form part of these Financial Statements

Cash Flow Statement

For the year ended 30 April 2023

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

1 General Information

Polar Capital Technology Trust plc is a public limited company registered in England and Wales whose shares are traded

on the London Stock Exchange.

The principal activity of the Company is that of an investment trust company within the meaning of Section 1158/1159 of

the Corporation Tax Act 2010 and its investment approach is detailed in the Strategic Report.

The Company’s Financial Statements have been prepared and approved by the Directors in accordance with UK-adopted

International Accounting Standards (“UK-adopted IAS”).

The Company’s presentational currency is Pounds Sterling. All figures are rounded to the nearest thousand pounds (£’000)

except as otherwise stated.

2 Accounting Policies

The principal accounting policies, which have been applied consistently for all years presented are set out below:

(A) Basis of Preparation

The Financial Statements have been prepared on a going concern basis under the historical cost convention, as modified

by the inclusion of investments and derivative financial instruments at fair value through profit or loss.

Where presentational guidance set out in the Statement of Recommended Practice (SORP) for investment trusts issued by

the Association of Investment Companies (AIC) in July 2022 is consistent with the requirements of UK-adopted IAS, the

Directors have sought to prepare the Financial Statements on a basis compliant with the recommendations of the SORP.

The financial position of the Company as at 30 April 2023 is shown in the balance sheet on page 102. As at 30 April 2023

the Company’s total assets exceeded its total liabilities by a multiple of over 37. The assets of the Company consist mainly

of securities that are held in accordance with the Company’s Investment Policy, as set out on page 54 and these securities

are readily realisable. The Company has two, two-year fixed rate term loans with ING Bank N.V. both of which fall due

for repayment on 30 September 2024. The Directors have considered a detailed assessment of the Company’s ability to

meet its liabilities as they fall due. The assessment took account of the Company’s current financial position, its cash flows

and its liquidity position. In addition, the Company’s cash flows were stressed tested for base case and reasonable worse

case scenarios such as higher inflation and interest rate increases. In light of the results of these tests, the Company’s cash

balances, and the liquidity position, the Directors consider that the Company has adequate financial resources to enable it to

continue in operational existence for at least 12 months. Accordingly, the Directors believe that it is appropriate to continue

to adopt the going concern basis in preparing the Company’s Financial Statements.

(B) Presentation of Statement of Comprehensive Income

In order to reflect better the activities of an investment trust company and in accordance with the guidance set out by

the AIC, supplementary information which analyses the Statement of Comprehensive Income between items of a revenue

and capital nature has been presented alongside the Statement of Comprehensive Income. The results presented in the

revenue return column is the measure the Directors believe appropriate in assessing the Company’s compliance with

certain requirements set out in section 1158 of the Corporation Taxes Act 2010.

Dividends receivable from equity shares are taken to the revenue return column of the Statement of Comprehensive

Income on an ex-dividend basis.

Special dividends are recognised on an ex-dividend basis and may be considered to be either revenue or capital items.

The facts and circumstances are considered on a case by case basis before a conclusion on appropriate allocation is reached.

Where the Company has received dividends in the form of additional shares rather than in cash, the amount of the cash

dividend foregone is recognised in the revenue return column of the Statement of Comprehensive Income. Any excess in

value of shares received over the amount of the cash dividend foregone is recognised in the capital return column of the

Statement of Comprehensive Income.

Notes to the Financial Statements

For the year ended 30 April 2023

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Unfranked income includes the taxes deducted at source.

Bank interest, money market fund interest and other income receivable are accounted for on an accruals basis and is

recognised in the period in which it was earned.

Interest outstanding at the year end is calculated on a time apportioned basis using the market rates of interest.

(D) Expenses and Finance Costs

All expenses, including finance costs, are accounted for on an accruals basis.

All indirect expenses have been presented as revenue items per the non-allocation method except as follows:

– any performance fees payable are allocated wholly to capital, reflecting the fact that, although they are calculated on

a total return basis, they are expected to be attributable largely, if not wholly, to capital performance.

– transaction costs incurred on the acquisition or disposal of investments are expensed either as part of the unrealised

gain/loss on investments (for acquisition costs) or as a deduction from the proceeds of sale (for disposal costs).

Finance costs are calculated using the effective interest rate method and are accounted for on an accruals basis.

(E) Taxation

The tax expense represents the sum of the overseas withholding tax deducted from investment income, tax currently

payable and deferred tax.

The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in

the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible

in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is

calculated using tax rates that have been enacted or substantively enacted at the balance sheet date.

In line with the recommendations of the SORP, the allocation method used to calculate tax relief on expenses presented

against capital returns in the supplementary information in the Statement of Comprehensive Income is the ‘marginal

basis’. Under this basis, if taxable income is capable of being offset entirely by expenses presented in the revenue return

column of the Statement of Comprehensive Income, then no tax relief is transferred to the capital return column.

Deferred tax is the tax expected to be payable or recoverable on temporary differences between the carrying amounts

of assets and liabilities in the Financial Statements and the corresponding tax bases used in the computation of taxable

profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable

temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be

available against which deductible temporary differences can be utilised.

Investment trusts which have approval as such under section 1158 of the Corporation Tax Act 2010 are not liable for

taxation on capital gains.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no

longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is

realised based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or

credited directly to equity, in which case the deferred tax is also dealt with in equity.

(F) Investments Held at Fair Value Through Profit or loss

When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant

market, the investments concerned are recognised or derecognised on the trade date and are initially measured at fair value.

On initial recognition the Company has designated all of its investments as held at fair value through profit or loss as defined

by UK-adopted IAS.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

All investments are measured at subsequent reporting dates at fair value, which is either the bid price or the last traded price,

depending on the convention of the exchange on which the investment is quoted. Investments in unit trusts or OEICs are

valued at the closing price, the bid price or the single price as appropriate, as released by the relevant investment manager.

Fair values for unquoted investments, or for investments for which there is only an inactive market, are established by using

various valuation techniques. These may include recent arms length market transactions, the current fair value of another

instrument that is substantially the same, discounted cash flow analysis and option pricing models. Where there is a valuation

technique commonly used by market participants to price the instrument and that technique has been demonstrated to

provide reliable estimates of prices obtained in actual market transactions, that technique is utilised. Where no reliable fair

value can be estimated for such instruments, they are carried at cost, subject to any provision for impairment.

Changes in fair value of all investments held at fair value and realised gains and losses on disposal are recognised in the

capital return column of the Statement of Comprehensive Income.

(G) Receivables

Receivables are initially recognised at fair value and subsequently measured at amortised cost. Receivables do not carry

any interest and are short-term in nature and are accordingly stated at their nominal value (amortised cost) as reduced by

appropriate allowances for estimated irrecoverable amounts.

(H) Cash and Cash Equivalents

Cash comprises cash on hand and demand deposits. Cash equivalents are short-term maturity of three months or less,

highly liquid investments that are readily convertible to known amounts of cash.

The Company’s investment in BlackRock’s Institutional Cash Series plc – US Treasury Fund of £90,414,000

(2022: £91,960,000) is managed as part of the Company’s cash and cash equivalents as defined under IAS 7.

In the Balance Sheet bank overdrafts are shown within current liabilities.

(I) Payables

Payables are initially recognised at fair value and subsequently measured at amortised cost. Payables are not interest-bearing

and are stated at their nominal value (amortised cost).

(J) Bank Loans

Interest bearing bank loans are initially recognised at cost, being the proceeds received net of direct issue costs, and

subsequently at amortised cost. The amounts falling due for repayment within one year are included under current

liabilities in the Balance Sheet.

(K) Derivative Financial Instruments

The Company’s activities expose it primarily to the financial risks of changes in market prices, foreign currency exchange

rates and interest rates. Derivative transactions which the Company may enter into comprise forward exchange contracts,

the purpose of which is to manage the currency risks arising from the Company’s investing activities, quoted options on

shares held within the portfolio, or on indices appropriate to sections of the portfolio, the purpose of which is to provide

additional capital return.

The use of financial derivatives is governed by the Company’s policies as approved by the Board, which has set written

principles for the use of financial derivatives.

A derivative instrument is considered to be used for hedging purposes when it alters the market risk profile of an existing

underlying exposure of the Company. The use of financial derivatives by the Company does not qualify for hedge

accounting under UK-adopted IAS. As a result, changes in the fair value of derivative instruments are recognised in the

Statement of Comprehensive Income as they arise. If capital in nature, associated change in value is presented in the

capital return column of the Statement of Comprehensive Income.

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(L) Rates of Exchange

Transactions in foreign currencies are translated into Sterling at the rate of exchange ruling on the date of each

transaction. Monetary assets, monetary liabilities and equity investments in foreign currencies at the balance sheet date

are translated into Sterling at the rates of exchange ruling on that date. Realised profits or losses on exchange, together

with differences arising on the translation of foreign currency assets or liabilities, are taken to the capital return column of

the Statement of Comprehensive Income.

Foreign exchange gains and losses arising on investments held at fair value are included within changes in fair value.

(M) Share Capital

Represents the nominal value of authorised and allocated, called-up and fully paid shares issued.

(N) Capital Reserves

Capital reserves - gains/losses on disposal includes:

– gains/losses on disposal of investments

– exchange differences on currency balances and on settlement of loan balances

– cost of own shares bought back

– other capital charges and credits charged to this account in accordance with the accounting policies above

Capital reserve - revaluation on investments held includes:

– increases and decreases in the valuation of investments and loans held at the year end.

All of the above are accounted for in the Statement of Comprehensive Income except the cost of own shares bought back

or issued which are accounted for in the Statement of Changes in Equity.

(O) Repurchase of Ordinary Shares (including those held in treasury)

Where applicable, the costs of repurchasing ordinary shares including related stamp duty and transaction costs are taken

directly to equity and reported through the Statement of Changes in Equity as a charge on the capital reserve. Share

repurchase transactions are accounted for on a trade date basis.

The nominal value of ordinary share capital repurchased and cancelled is transferred out of called up share capital and into

the capital redemption reserve.

Where shares are repurchased and held in treasury, the transfer to capital redemption reserve is made if and when such

shares are subsequently cancelled.

(P) Share issue costs

Costs incurred directly in relation to the issue of new shares together with additional share listing costs have been

deducted from the share premium reserve.

(Q) Segmental Reporting

Under IFRS 8, ‘Operating Segments’, operating segments are considered to be the components of an entity about which

separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding

how to allocate resources and in assessing performance. The chief operating decision maker has been identified as the

Manager (with oversight from the Board).

The Board is of the opinion that the Company is engaged in a single segment of business, namely by investing in a

diversified portfolio of technology companies from around the world in accordance with the Company’s Investment

Objective, and consequently no segmental analysis is provided.

In line with IFRS 8, additional disclosure by geographical segment has been provided in Note 26.

Further analyses of expenses, investment gains or losses, profit and other assets and liabilities by country have not been given

as either it is not possible to prepare such information in a meaningful way or the results are not considered to be significant.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

(R) Key Estimates and Assumptions

Estimates and assumptions used in preparing the Financial Statements are reviewed on an ongoing basis and are based on

historical experience and various other factors that are believed to be reasonable under the circumstances. The results of

these estimates and assumptions form the basis of making judgements about carrying values of assets and liabilities that

are not readily apparent from other sources.

The majority of the Company’s investments are in US Dollars, the level of which varies from time to time. The Board

considers the functional and reporting currency to be Sterling. In arriving at this conclusion the Board considered that

Sterling is most relevant to the majority of the Company’s Shareholders and creditors and the currency in which the

majority of the Company’s operating expenses are paid and the Company’s shares are denominated in Sterling.

The only estimates and assumptions that may cause material adjustment to the carrying value of assets and liabilities

relate to the valuation of unquoted investments and investments for which there is an inactive market. These are valued in

accordance with the techniques set out in Note 2(f). At the year end, there was no unquoted investments (2022: same).

(S) New and revised accounting Standards

There were no new UK-adopted IAS or amendments to UK-adopted IAS applicable to the current year which had any

significant impact on the Company’s Financial Statements.

i) There were no relevant standards became effective for the current annual reporting period that potentially impact the

Company are in issue.

ii) At the date of authorisation of the Company’s Financial Statements, the following relevant standards that potentially

impact the Company are in issue but are not yet effective and have not been applied in the Financial Statements:

Standards & Interpretations

Effective for periods commencing on

or after

Disclosure of Accounting

Policies (Amendments to

IAS 1 and IFRS Practice

Statement 2)

Requirement amended to disclose material accounting

policies instead of significant accounting policies and

provided guidance in making materiality judgements to

accounting policy disclosure.

1 January 2023

Definition of Accounting

Estimates (amendments to

IAS 8)

Introduced the definition of accounting estimates and

included other amendments to IAS 8 to help entities

distinguish changes in accounting estimates from changes

in accounting policy.

1 January 2023

The Directors expect that the adoption of the standards listed above will have either no impact or that any impact will not be

material on the Financial Statements of the Company in future periods.

3 Investment income

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Revenue:

Overseas dividend income 16,160 15,870

16,160 15,870

Capital:

Special dividends allocated to capital 42 -

All investment income is derived from listed investments.

Included within income from investments is £350,000 (2022: £172,000) of special dividends classified as revenue in nature

in accordance with note 2 (c). £42,000 of special dividend has been recognised in capital as the dividend paid out of the

proceeds from a disposal of an overseas investments (2022: nil).

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4 Other operating income

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Bank interest 1,478 4

Money market fund interest 2,342 27

3,820 31

5 Losses on investments held at fair value

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Net (losses)/gains on disposal of investments at historic cost (130,861) 232,360

Transfer on disposal of investments (59,647) (353,508)

Losses on disposal of investments based on carrying value at previous balance sheet date (190,508) (121,148)

Valuation gains/(losses) on investments held during the year 83,701 (132,546)

(106,807) (253,694)

6 Gains/(losses) on derivatives

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Gains/(losses) on disposal of derivatives held 5,019 (10,212)

(Losses)/gains on revaluation of derivatives held (4,985) 4,413

34 (5,799)

The derivative financial instruments represent the call and put options, which are used for the purpose of efficient

portfolio management. Refer to page 112 for further details.

7 Other currency gains

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Exchange gains on currency balances 7,219 18,460

Exchange losses on settlement of loan balances (507) -

Exchange gains/(losses) on translation of loan balances 1,697 (925)

8,409 17,535

8 Investment management and performance fee

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Investment management fee paid to Polar Capital (charged wholly to revenue) 21,918 28,281

Performance fee paid to Polar Capital (charged wholly to capital) - -

There was no performance payable in respect of the year nor outstanding at the year end (2022:same).

The basis for calculating the investment management and performance fees are set out in the Strategic Report on page 58

and details of all amounts payable to the Manager are given in Note 24 on page 117.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

As a result of the current fee arrangements which came into force on 1 May 2022, the management fee in 2023 is

calculated on the reduced rates and daily net asset value, as such has subsequently decreased compared to the previous

year. Details of the Investment Management Agreement are disclosed in the Strategic Report on page 58.

9 Other administrative expenses

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Directors' fees and expenses

247 229

National insurance contributions 26 24

Depositary fee

192 233

Registrar fee 54 51

Custody and other bank charges

267 358

UKLA and LSE listing fees

204 190

Legal & professional fees and other financial services 16 4

AIC fees 21 21

Auditors' remuneration - for audit of the financial Statements 63 45

Directors' and officers' liability insurance 38 23

AGM expenses

6 31

Corporate brokers' fee

- -

Shareholder communications

38 82

Other expenses 4 44

1,176 1,335

1 Full disclosure is given in the Directors’ Remuneration Report on page 85.

2 Depositary fee is based on the value of the net assets. The daily average net asset value decreased by 19.3% compared to the previous year.

3 Custody fees are based on the value of the assets and geographical activity and determined on the pre-approved rate card with HSBC.

4 Fees are based on the market capitalisation of the Company which has risen over the last invoice period.

5 Reduced 2023 AGM expenses mainly due to the removal of Lumi online hybrid AGM option.

6 2022/2023 annual fee was offset by the commission credit on shares repurchases.

7 Includes reversal of prior year over accruals in this period.

10 Finance costs

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Interest on loans and overdrafts 1,514 973

Loan arrangement and facility fees 84 -

1,598 973

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11 Taxation

a) Analysis of tax charge for the year:

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Overseas tax 2,148 2,000

Total tax for the year (see Note 11b) 2,148 2,000

b) Factors affecting tax charge for the year:

The charge for the year can be reconciled to the loss per the Statement of Comprehensive Income as follows:

Loss before tax (103,034) (256,646)

Tax at the UK corporation effective tax rate of 19.5% (2022: 19%) (20,092) (48,763)

Tax effect of non-taxable dividends (3,159) (3,015)

Tax effect of losses on investments that are not taxable 19,181 45,972

Unrelieved current year expenses and deficits 4,070 5,806

Overseas tax suffered 2,148 2,000

Total tax for the year (see Note 11a) 2,148 2,000

c) Factors that may affect future tax charges:

There is an unrecognised deferred tax asset comprising:

Unrelieved management expenses 66,998 61,780

Non-trading loan relationship deficits 1,807 1,807

68,805 63,587

The deferred tax asset is based on a corporation tax rate of 25% (2022: 25%).

The Company has an unrecognised deferred tax asset of £66,998,000 (2022: £61,780,000) arising from surplus

management expenses of £267,992,000 (2022: £247,120,000) and unrecognised deferred tax asset of £1,807,000 (2022:

£1,807,000) arising from non-trade loan relationship deficits of £7,227,000 (2022: £7,227,000) based on a corporation

tax rate of 25% (2022: 25%). In its 2021 budget, the government announced that the main rate of corporation tax would

increase to 25% for the fiscal year beginning on 1 April 2023. This deferred tax asset has arisen due to the cumulative

excess of deductible expenses over taxable income. Given the composition of the Company’s portfolio, it is not likely that

this asset will be utilised in the foreseeable future and therefore no asset has been recognised in the accounts.

Due to the Company’s tax status as an investment trust and the intention to continue meeting the conditions required to

maintain approval of such status in the foreseeable future, the Company has not provided tax on any capital gains arising

on the revaluation or disposal of investments held by the Company.

12 Loss per ordinary share

Year ended 30 April 2023 Year ended 30 April 2022

Revenue

return

Capital

return

Total

return

Revenue

return

Capital

return

Total

return

The calculation of basic loss per share is based

on the following data:

Net loss for the year (£'000) (6,860) (98,322) (105,182) (16,688) (241,958) (258,646)

Weighted average ordinary shares in issue

during the year

129,409,889 129,409,889 129,409,889 134,984,460 134,984,460 134,984,460

From continuing operations

Basic - loss per ordinary share (pence) (5.30) (75.98) (81.28) (12.36) (179.25) (191.61)

As at 30 April 2023 there are no potentially dilutive shares in issue and the earnings per share therefore equate to those

shown above (2022: there was no dilution).

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

13 Investments held at fair value through profit or loss

i) Investments held at fair value through profit or loss

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Opening book cost 2,253,434 2,199,334

Opening investment holding gains 557,646 1,043,700

Opening fair value 2,811,080 3,243,034

Analysis of transactions made during the year

Purchases at cost 2,236,802 2,639,004

Sales proceeds received (2,300,898) (2,817,264)

Losses on investments held at fair value (106,807) (253,694)

Closing fair value 2,640,177 2,811,080

Closing book cost 2,058,477 2,253,434

Closing investment holding gains 581,700 557,646

Closing fair value 2,640,177 2,811,080

Of which:

Listed on a recognised Stock Exchange 2,640,177 2,811,080

The Company received £2,300,898,000 (2022: £2,817,264,000) from disposal of investments in the year. The book cost of

these investments when they were purchased was £2,431,759,000 (2022: £2,584,904,000). These investments have been

revalued over time and until they were sold any unrealised gains/losses were included in the fair value of the investments.

Included in additions at cost are purchase costs of £1,055,000 (2022: £1,005,000). Included in proceeds of disposals are

sales costs of £1,231,000 (2022: £1,182,000). These costs primarily comprise commission.

ii) Changes in derivative financial instruments

Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Valuation at 1 May 6,479 4,090

Additions at cost 42,594 47,194

Proceeds of disposal (46,536) (39,006)

Gains/(losses) on disposal 5,019 (10,212)

Valuation (losses)/gains (4,985) 4,413

Valuation at 30 April 2,571 6,479

The derivative financial instruments represent the call and put options, which are used for the purpose of efficient

portfolio management. As at 30 April 2023, the Company held NASDAQ 100 Stock Index put option and the market

value of these open put option position was £1,559,000 (2022: NASDAQ 100 Stock Index put options with a market

value of £6,431,000). The Company also held Microsoft Corp call options and the market value of these open call option

position was £1,012,000 (2022: Apple Inc. call options with a market value of £48,000).

iii) Classification under Fair Value Hierarchy:

The table below sets out the fair value measurements using the IFRS 7 fair value hierarchy. Categorisation within the

hierarchy has been determined on the basis of the lowest level of input that is significant to the fair value measurement of

the relevant asset as follows:

Level 1 - valued using quoted prices in active markets for identical assets.

Level 2 - valued by reference to valuation techniques using observable inputs other than quoted prices included within Level 1.

Level 3 - valued by reference to valuation techniques using inputs that are not based on observable market data.

The valuation techniques used by the Company are explained in the accounting policies note on pages 105 and 106.

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Year ended

30 April 2023

£’000

Year ended

30 April 2022

£’000

Equity Investments and derivative financial instruments

Level 1 2,641,189 2,817,559

Level 2 1,559 -

Level 3 - -

2,642,748 2,817,559

The NASDAQ 100 Stock Index put options held at the year ended 30 April 2023 have been classified as level 2 due to the

absence of regular trading activity levels closer to the measurement date. All other options held at the current and prior

year end have been classified as level 1.

There has been no further transfer between Levels 1, 2 and 3 during the year ended 30 April 2023.

iv) Unquoted investments

As at 30 April 2023, the portfolio comprised no unquoted investment (30 April 2022: same):

14 Receivables

30 April 2023

£’000

30 April 2022

£’000

Sales for future settlement 18,352 29,315

Prepayments and accrued income 2,215 1,741

VAT recoverable 38 40

20,605 31,096

The carrying values of other receivables approximate their fair value.

15 Cash and cash equivalents

30 April 2023

£’000

30 April 2022

£’000

Cash at bank 148,682 211,940

Cash held at derivative clearing houses - 7,463

Money market funds 90,414 91,960

Cash and cash equivalents 239,096 311,363

As at 30 April 2023, the Company held BlackRock’s Institutional Cash Series plc – US Treasury Fund with a market value

of £90,414,000 (30 April 2022: £91,960,000), which is managed as part of the Company’s cash and cash equivalents as

defined under IAS 7.

16 Payables

30 April 2023

£’000

30 April 2022

£’000

Purchases for future settlement 19,285 49,419

Repurchase of ordinary shares awaiting settlement 2,344 1,131

Accruals 2,213 6,734

23,842 57,284

The carrying values of other payables approximate their fair value.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

17 Bank loans

i) Bank loans

30 April 2023

£’000

30 April 2022

£’000

The Company has the following unsecured Japanese Yen and US Dollar loans:

JPN¥3,800m at a rate of 0.9% repayable 30 September 2022 - 23,361

US$36m at a rate of 1.335% repayable 30 September 2022 - 28,674

JPN¥3,800m at a rate of 1.13% repayable 30 September 2024 22,203 -

US$36m at a rate of 5.43% repayable 30 September 2024 28,642 -

50,845 52,035

The bank loans held at the year end are a Japanese Yen 3.8 billion and a US Dollar 36 million two-year fixed rate term

loan with ING Bank N.V. The loans are unsecured but are subject to certain undertakings and restrictions, all of which

have been complied with during the year. The carrying value of the loans approximates at their fair value. These loans are

repayable on 30 September 2024.

The main covenants relating to the above loans are:

(i) Total borrowings shall not exceed 30% of the Company’s net asset value

(ii) The Company’s minimum net asset value shall be £400 million

(iii) The Company shall not change the Investment Manager without prior written consent of the lenders.

ii) Reconciliation of bank loans

30 April 2023

£’000

30 April 2022

£’000

Bank loans held as at 30 April 2022 52,035 51,110

Term loan of JPN¥3,800m and US$36m under September 2020 facility expired in

September 2022

(56,441) -

Term loan of JPN¥3,800m and US$36m under September 2022 facility due to expire in

September 2024

56,441 -

Exchange losses on settlement of loan balances 507 -

Effect of changes in foreign exchange rates on bank loans held (1,697) 925

Bank loans held as at 30 April 2023 50,845 52,035

Both of the Japanese Yen 3.8 billion and US Dollar 36 million two-year fixed rate term loans expired on 30 September

2022, and were replaced with a Japanese Yen 3.8 billion and a US Dollar 36 million two-year fixed rate term loan with

ING Bank N.V.

The movement in the liability arising from the bank loans due to changes in foreign exchange rates is a non-cash

movement and is included in the Statement of Comprehensive Income within ‘Other currency gains’.

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18 Share capital

30 April 2023

£’000

30 April 2022

£’000

Allotted, Called up and Fully paid:

Ordinary shares of 25p each

Opening balance of 132,356,426 (30 April 2022: 136,544,764) 33,089 34,136

Repurchase of 6,070,882 (30 April 2022: 4,188,338) ordinary shares into treasury (1,518) (1,047)

Allotted, called up and fully paid: 126,285,544 (30 April 2022: 132,356,426) ordinary shares

of 25p

31,571 33,089

11,029,456 (2022: 4,958,574) ordinary shares held in treasury 2,758 1,240

At 30 April 2023 34,329 34,329

During the year, there were no ordinary shares issued to the market (2022: same). A total of 6,070,882 (2022: 4,188,338)

ordinary shares were repurchased into treasury at a cost of £117,078,000 (2022: £98,639,000).

Subsequent to the year end, and to 13 July 2023 (latest practicable date), 1,229,369 ordinary shares were repurchased

into treasury at an average price of 2151.43p per share.

19 Capital redemption reserve

30 April 2023

£’000

30 April 2022

£’000

As at 1 May 2022 12,802 12,802

As at 30 April 2023 12,802 12,802

The Capital Redemption Reserve represents the nominal value of shares repurchased and cancelled.

This reserve is not distributable.

20 Share premium

30 April 2023

£’000

30 April 2022

£’000

As at 1 May 2022 223,374 223,374

As at 30 April 2023 223,374 223,374

The share premium arises from excess of consideration received on the issue of the shares over the nominal value.

This reserve is not distributable.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

21 Special non-distributable reserve

30 April 2023

£’000

30 April 2022

£’000

As at 1 May 2022 7,536 7,536

As at 30 April 2023 7,536 7,536

The special non-distributable reserve arose from the exercise of warrants which were issued by the Company at launch in

1996. The final warrant conversion was exercised in 2005.

This reserve is not distributable.

22 Capital reserves

Capital*

reserve -

gains/losses

on disposal

30 April 2023

£’000

Capital**

reserve -

revaluation

30 April 2023

£’000

Total

capital

reserves

30 April 2023

£’000

Capital

reserve -

gains/losses

on disposal

30 April 2022

£’000

Capital

reserve -

revaluation

30 April 2022

£’000

Total

capital

reserves

30 April 2022

£’000

As at 1 May 2022 2,339,715 560,028 2,899,743 2,198,239 1,042,594 3,240,833

Net losses on disposal of investments (190,508) - (190,508) (121,148) - (121,148)

Transfer on disposal of investments 59,647 (59,647) - 353,508 (353,508) -

Valuation gains/(losses) on investments held

during the year

- 83,701 83,701 - (132,546) (132,546)

Net gains/(losses) on derivative contracts 5,019 (4,985) 34 (10,212) 4,413 (5,799)

Special dividends allocated to capital 42 - 42 - - -

Exchange gains on currency balances 7,219 - 7,219 18,460 - 18,460

Exchange losses on settlement of loan balances (507) - (507) - - -

Exchange gains/(losses) on translation of loan

balances

- 1,697 1,697 - (925) (925)

Ordinary shares repurchased into treasury (117,078) - (117,078) (98,639) - (98,639)

Stamp duty on ordinary shares repurchased

into treasury

(584) - (584) (493) - (493)

As at 30 April 2023 2,102,965 580,794 2,683,759 2,339,715 560,028 2,899,743

* These are realised distributable capital reserves which may be used to repurchase the Company’s shares or be distributed as dividends.

** This reserve comprises holdings gains on investments (which may become realised) and other amounts, which are unrealised. An analysis has not been

made between the amounts that are realised (and maybe distributed or used to repurchase the Company’s shares) and those that are unrealised.

23 Revenue reserve

30 April 2023

£’000

30 April 2022

£’000

As at 1 May 2022 (126,799) (110,111)

Loss for the year to 30 April (6,860) (16,688)

As at 30 April 2023 (133,659) (126,799)

The revenue reserve may be distributed or used to repurchase the Company’s shares (subject to being a positive balance).

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Information

24 Transactions with the Manager and related party transactions

(a) Transactions with the Manager

Under the terms of an agreement dated 9 February 2001 the Company has appointed Polar Capital LLP (“Polar Capital”)

to provide investment management, accounting, secretarial and administrative services. Details of the fee arrangement

for these services are given in the Strategic Report. The total management fees, paid under this agreement to Polar

Capital in respect of the year ended 30 April 2023 were £21,918,000 (2022: £28,281,000) of which £1,827,000 (2022:

£6,374,000) was outstanding and accrued at the year end.

There was no performance fee payable in respect of the year nor outstanding at the year end (2022: same).

In addition, the research costs and the first £200,000 of marketing costs per annum are borne by the Manager.

The new investment management agreement which came into force on 1 May 2022 agreed lower rates of the

management base fee, simplified the structure of the base fee to three tiers and calculated on the daily net asset value.

The Manager also agreed an increased contribution to the marketing costs payable by the Company to the first £200,000

per annum. Details of the Investment Management Agreement are provided in the Strategic Report on page 58.

(b) Related party transactions

The compensation payable to key management personnel in respect of short term employee benefits is £247,000 (2022:

£229,000) which comprises £247,000 (2022: £229,000) paid by the Company to the Directors.

Refer to pages 85 to 89 for the Directors’ Remuneration Report including Directors’ shareholdings and movements within

the year.

25 Net asset value per ordinary share

Net asset value per share

30 April 2023 30 April 2022

Undiluted:

Net assets attributable to ordinary Shareholders (£'000) 2,828,141 3,050,985

Ordinary shares in issue at end of year 126,285,544 132,356,426

Net asset value per ordinary share (pence) 2239.48 2305.13

As at 30 April 2023, there were no potentially dilutive shares in issue (2022: there was no dilution)

26 Segmental reporting

Geographical segments

Since the Company does not have external customers an analysis of the Company’s investments held at 30 April 2023 by

geographical segment and the related investment income earned during the year to 30 April 2023 is noted below:

30 April 2023

Value of

investments

£’000

Year ended

30 April 2023

Gross

income

£’000

30 April 2022

Value of

investments

£’000

Year ended

30 April 2022

Gross

income

£’000

North America (inc. Latin America) 2,079,055 7,658 2,260,033 6,945

Europe 112,437 1,516 91,450 2,171

Asia Pacific (inc. Middle East) 448,685 6,986 459,597 6,754

Total 2,640,177 16,160 2,811,080 15,870

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

27 Derivatives and other financial instruments

Risk management policies and procedures

The Company invests in equities and other financial instruments for the long term to further the Investment Objective set

out on page 54. This exposes the Company to a range of financial risks that could impact on the assets or performance of

the Company.

The main risks arising from the Company’s pursuit of its Investment Objective are market risk, liquidity risk, credit risk

and gearing risk and the Directors’ approach to the management of them is set out below. The risks have remained

unchanged since the beginning of the year to which the Financial Statements relate.

The Company’s exposure to financial instruments comprise:

- Equity and non-equity shares which are held in the investment portfolio in accordance with the Company’s Investment

Objective.

- Term loans and bank overdrafts, the main purpose of which is to raise finance for the Company’s operations.

- Cash, money market funds, liquid resources and short-term receivables and payables that arise directly from the

Company’s operations.

- Derivative transactions which the Company enters into may include equity or index options, index future contracts,

forward foreign exchange contracts and interest rate swaps.

The purpose of these is to manage the market price risks, foreign exchange risks and interest rate risks arising from the

Company’s investment activities.

The overall management of the risks is determined by the Board and its approach to each risk identified is set out below.

The Board and the Investment Manager co-ordinate the risk management and the Investment Manager assesses the

exposure to market risk when making each investment decision.

(a) Market Risk

Market risk comprises three types of risk: market price risk (see Note 27(a)(i)), currency risk (see Note 27(a)(ii)), and interest

rate risk (see Note 27(a)(iii)).

(i) Market Price Risk

The Company is an investment company and as such its performance is dependent on the valuation of its investments.

Consequently, market price risk is the most significant risk that the Company faces.

Market price risk arises mainly from uncertainty about future prices of financial instruments used in the Company’s

operations. It represents the potential loss the Company might suffer through holding market positions in the face of price

movements.

A detailed breakdown of the investment portfolio is given on pages 31 to 37. Investments are valued in accordance with

the Company’s accounting policies as stated in Note 2(f).

At the year end, the Company’s portfolio included derivative instruments of £2,571,000 (2022: £6,479,000).

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Management of the risk

In order to manage this risk, it is the Board’s policy to hold an appropriate spread of investments in the portfolio in order

to reduce both the statistical risk and the risk arising from factors specific to a particular technology sector. The allocation

of assets to international markets, together with stock selection covering small, medium and large companies, and the use

of index options, are other factors which act to reduce price risk. The Investment Manager actively monitors market prices

throughout the year and reports to the Board which meets regularly in order to consider investment strategy.

Market price risk exposure

The Company’s exposure to changes in market prices at 30 April on its quoted investments was as follows:

30 April 2023

£’000

30 April 2022

£’000

Non-current asset investments at fair value through profit or loss 2,640,177 2,811,080

Derivative financial instruments at fair value through profit or loss 2,571 6,479

2,642,748 2,817,559

An analysis of the Company’s portfolio is shown on pages 31 to 37.

Market price risk sensitivity

The following table illustrates the sensitivity of the return after taxation for the year and the value of Shareholders’ funds

to an increase or decrease of 20% (2022: 20%) in the fair values of the Company’s investments. This level of change is

considered to be reasonably possible based on observation of current market conditions and historic trends. The sensitivity

analysis is based on the Company’s investments at each balance sheet date, with all other variables held constant.

30 April 2023 30 April 2022

Increase in

fair value

£’000

Decrease in

fair value

£’000

Increase in

fair value

£’000

Decrease in

fair value

£’000

Revenue return (3,700) 3,700 (3,945) 3,945

Capital return 528,550 (528,550) 563,512 (563,512)

Change to the profit after tax for the year 524,850 (524,850) 559,567 (559,567)

Change to Shareholders' funds 524,850 (524,850) 559,567 (559,567)

Change to NAV per share (pence) 415.61 (415.61) 422.77 (422.77)

(ii) Currency Risk

The Company’s total return and net assets can be significantly affected by currency translation movements as the majority

of the Company’s assets and revenue are denominated in currencies other than Sterling.

Management of the risk

The Investment Manager mitigates the individual currency risks through the international spread of investments and may

make use of forward foreign exchange contracts. Borrowings in foreign currencies are entered into to manage the asset

exposure to those currencies, which vary according to the asset allocation.

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

Foreign currency exposure

The table below shows, by currency, the split of the Company’s non-Sterling monetary assets, liabilities and investments

that are priced in currencies other than Sterling.

30 April 2023

£’000

30 April 2022

£’000

Monetary Assets:

Cash and short term receivables

US Dollars 199,560 218,119

Japanese Yen 25,424 32,928

Euros 20,710 57,761

Hong Kong Dollars 4,565 8,035

Swedish Krona 1,727 1,703

Canadian Dollars 627 -

Korean Won 394 375

Taiwan Dollars 317 923

Swiss Franc 24 12,879

Polish Zloty 5 5

Norwegian Krone - 222

Monetary Liabilities:

Payables

US Dollars (19,419) (43,678)

Swedish Krona (1,645) -

Canadian Dollars (626) -

Japanese Yen (22) (16)

Euros - (3,105)

Taiwan Dollars - (2,709)

Swiss Franc - (7)

Bank Loans:

US Dollars (28,642) (28,674)

Japanese Yen (22,203) (23,361)

Foreign currency exposure on net monetary items 180,796 231,400

Non-Monetary Items:

Investments at fair value through profit or loss that are equities

US Dollars 2,166,854 2,322,762

Japanese Yen 122,202 104,636

Euros 105,695 73,137

Taiwan Dollars 87,974 124,760

Korean Won 83,895 88,449

Hong Kong Dollars 51,641 66,960

Canadian Dollars 11,909 9,169

Swiss Franc - 3,309

Swedish Kroner - 2,181

Investments at fair value through profit or loss that are derivatives

US Dollars 2,571 6,479

Total net foreign currency exposure 2,813,537 3,033,242

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Foreign currency exchange rate movement

During the financial year Sterling appreciated by 0.1% (2022: depreciated by 9.3%) against the US Dollar, appreciated by

5.2% (2022: appreciated by 7.5%) against the Japanese Yen, depreciated by 4.3% (2022: appreciated by 3.5%) against

the Euro, appreciated by 0.2% (2022: depreciated by 8.4%) against the Hong Kong Dollar, appreciated by 6.7% (2022:

appreciated by 2.4%) against the Korean Won and appreciated by 4.4% (2022: depreciated by 4.3%) against the Taiwan

Dollar.

Foreign currency sensitivity

The following table illustrates the sensitivity of the loss after tax for the year and the value of Shareholders’ funds in regard

to the financial assets and financial liabilities and the exchange rates for the £/US Dollar, £/Euro, £/Japanese Yen, £/Hong

Kong Dollar, £/Korean Won and £/Taiwan Dollar.

Based on the year end position, if Sterling had depreciated, by a further 10% (2022: 10%), against the currencies shown,

this would have the following effect:

30 April 2023

£’000

US Dollar Euro

Japanese

Yen

Hong Kong

Dollar

Korean

Won

Taiwan

Dollar

Statement of Comprehensive Income - profit/

loss after tax

Revenue return 560 142 282 28 220 166

Capital return 257,839 13,992 13,820 6,245 9,322 9,810

Change to the profit/loss after tax for the year 258,399 14,134 14,102 6,273 9,542 9,976

Change to Shareholders' funds 258,399 14,134 14,102 6,273 9,542 9,976

30 April 2022

£’000

US Dollar Euro

Japanese

Yen

Hong Kong

Dollar

Korean

Won

Taiwan

Dollar

Statement of Comprehensive Income - profit/

loss after tax

Revenue return 746 87 355 21 209 285

Capital return 274,996 14,179 12,552 8,333 9,828 13,664

Change to the profit/loss after tax for the year 275,742 14,266 12,907 8,354 10,037 13,949

Change to Shareholders' funds 275,742 14,266 12,907 8,354 10,037 13,949

Based on the year end position, if Sterling had appreciated, by a further 10% (2022: 10%), against the currencies shown,

this would have the following effect:

30 April 2023

£’000

US Dollar Euro

Japanese

Yen

Hong Kong

Dollar

Korean

Won

Taiwan

Dollar

Statement of Comprehensive Income - profit/

loss after tax

Revenue return (411) (116) (231) (23) (180) (136)

Capital return (210,959) (11,448) (11,308) (5,110) (7,627) (8,026)

Change to the profit/loss after tax for the year (211,370) (11,564) (11,539) (5,133) (7,807) (8,162)

Change to Shareholders' funds (211,370) (11,564) (11,539) (5,133) (7,807) (8,162)

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

30 April 2022

£’000

US Dollar Euro

Japanese

Yen

Hong Kong

Dollar

Korean

Won

Taiwan

Dollar

Statement of Comprehensive Income - profit/

loss after tax

Revenue return (610) (71) (290) (17) (171) (233)

Capital return (224,997) (11,601) (10,270) (6,818) (8,041) (11,179)

Change to the profit/loss after tax for the year (225,607) (11,672) (10,560) (6,835) (8,212) (11,412)

Change to Shareholders' funds (225,607) (11,672) (10,560) (6,835) (8,212) (11,412)

In the opinion of the Directors, neither of the above sensitivity analysis are representative of the year as a whole since

the level of exposure changes frequently as part of the currency risk management process used to meet the Company’s

objectives.

(iii) Interest Rate Risk

Interest rate changes may affect the income received from cash at bank and interest payable on borrowings.

All cash balances earn interest at a variable rate.

The Company has additional exposure to interest rate risk in relation to its holdings in the money market funds and

receive interests income at a variable rate.

The Company finances its operations through its term loans as well as bank overdrafts and any retained gains arising from

operations.

The Company uses borrowings in the desired currencies at both fixed and floating rates of interest to both generate the

desired interest rate profile and manage the exposure to interest rate fluctuations.

The Company’s Japanese Yen and US Dollar two-year term loans carry a fixed rate of interest and therefore do not give

rise to any interest rate risk.

Management of the risk

The Board imposes borrowing limits to ensure gearing levels are appropriate to market conditions and reviews these on a

regular basis. The Company may also enter into interest rate swap agreements.

Interest rate exposure

The exposure, at 30 April, of financial assets and liabilities to interest rate risk is shown by reference to:

– floating interest rates (i.e. giving cash flow interest rate risk) - when the rate is due to be re-set;

– fixed interest rates (i.e. giving fair value interest rate risk) - when the financial instrument is due for repayment.

30 April 2023 (£’000) 30 April 2022 (£’000)

Within

one year

More than

one year Total

Within

one year

More than

one year Total

Exposure to floating interest rates:

Cash and cash equivalents 148,682 - 148,682 219,403 - 219,403

Money market funds 90,414 - 90,414 91,960 - 91,960

Exposure to fixed interest rates:

Bank loan - (50,845) (50,845) (52,035) - (52,035)

Total exposure to interest rates 239,096 (50,845) 188,251 259,328 - 259,328

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Upon expiry of the Japanese Yen and US Dollar two-year fixed rate term loan on 30 September 2022, the Company

entered into replacement contracts with ING Bank N.V. for two, two-year fixed rate term loans of Japanese Yen 3.8 billion

(2022: 3.8 billion) at an interest rate of 1.13% (2022: 0.90%) and US Dollar 36 million (2022: 36 million) at an interest

rate of 5.43% (2022: 1.335%) per annum, both of which fall due for repayment on 30 September 2024.

Interest rate sensitivity

The sensitivity analysis is based on the Company’s monetary financial instruments held at each balance sheet date, with all

other variables held constant.

The table below illustrates the Company’s sensitivity to interest rate movements, with a change of 1.5% (2022: 1%)

per annum in the rates of interest available to the Company’s a change of 1.5% (2022: 1%) per annum in the rates of

interest available to the Company’s financial liabilities. The effect on the revenue and capital return after tax and the value

of Shareholders’ funds are as follows if rates increased:

30 April 2023

£’000

30 April 2022

£’000

Statement of Comprehensive Income - profit/loss after tax

Revenue return 2,824 2,593

Capital return - -

Change to the profit/loss after tax for the year 2,824 2,593

Change to Shareholders' funds 2,824 2,593

A corresponding decrease in the rate would have equal and opposite effect to that shown in the table above.

This level of change is considered to be reasonably possible based on observation of current market conditions. This is

not representative of the year as a whole, since the exposure changes as level of cash/(loans) held during the year will be

affected by the strategy being followed in response to the Investment Manager’s perception of market prospects and the

investment opportunities available at any particular time.

(b) Liquidity Risk

Liquidity risk is the possibility of failure of the Company to realise sufficient assets to meet its financial liabilities.

Management of the risk

The Company’s assets mainly comprise readily realisable securities which may be sold to meet funding requirements as

necessary.

Liquidity risk exposure

The maturity of the Company’s existing borrowings are set out in Note 17 to the Financial Statements. Short-term

flexibility is achieved through the use of overdraft facilities.

At 30 April the financial liabilities comprised of:

30 April 2023

£’000

30 April 2022

£’000

Due within 1 month:

Balances due to brokers 19,285 49,419

Repurchase of ordinary shares awaiting settlement 2,344 1,131

Accruals 2,058 6,688

Due after 3 months and within 1 year:

Bank loan interest (2022: Bank loan and interest) 1,992 52,336

Due after 1 year and within 2 years:

Bank loan and interest 51,613 -

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Notes to the Financial Statements continued

Credit risk is the exposure to loss from failure of a counterparty to deliver securities or cash for acquisitions or disposals of

investments or to repay deposits.

Management of the risk

The Company manages credit risk by using brokers from a database of approved brokers and by dealing through Polar Capital.

All cash balances are held with approved counterparties. HSBC Bank plc is the Custodian of the Company’s assets. The

Company’s assets are segregated from HSBC’s own trading assets and are therefore protected in the event that HSBC

were to cease trading.

These arrangements were in place throughout the current year and the prior year.

Credit risk exposure

The maximum exposure to credit risk at 30 April 2023 was £259,526,000 (30 Apr 2022: £342,331,000) comprising:

30 April 2023

£’000

30 April 2022

£’000

Balances due from brokers 18,352 29,315

Accrued income 2,078 1,653

Cash at bank 148,682 211,940

Cash held at derivative clearing houses - 7,463

Money market funds 90,414 91,960

259,526 342,331

All of the above financial assets are current, their fair values are considered to be the same as the values shown and the

likelihood of a material credit default is considered low.

None of the Company’s financial assets are past due or impaired. All deposits were placed with banks that had a rating of

A or higher.

The money market fund, BlackRock’s Institutional Cash Series plc – US Treasury Fund, held by the Company as at year

ended 30 April 2023 has a rating of AAA or higher, the fund invests primarily in US Treasury bills, US Treasury Repurchase

Agreements and other similar instruments.

Investment transactions are carried out with a large number of brokers, the credit standing of each is reviewed periodically

by the Investment Manager are set on the amount that may be due from any one broker.

(d) Gearing risk

The Company’s policy is to increase its exposure to equity markets through the judicious use of borrowings. When

borrowings are invested in such markets, the effect is to magnify the impact on Shareholder’s funds of changes, both

positive and negative, in the value of the portfolio.

Management of the risk

The Company uses short-term loans to manage gearing risk, details of which can be found in Note 17.

Gearing risk exposure

The loans are valued at amortised cost, using the effective interest rate method in the Financial Statements. The Board

regulates the overall level of gearing by raising or lowering cash balances.

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(e) Capital Management Policies and Procedures

The Company’s capital, or equity, is represented by its net assets which are managed to achieve the Company’s

Investment Objective set out on page 54.

The Board monitors and reviews the broad structure of the Company’s capital on an ongoing basis. This review includes:

(i) the planned level of gearing through the Company’s fixed rate loan facility, credit facility and

(ii) the need to issue or buy back equity shares for cancellation, which takes account of the difference between the net

asset value per share and the share price (i.e. the level of share price discount or premium).

The Company’s objectives, policies and processes for managing capital are unchanged from the preceding accounting

period.

The Company is subject to externally imposed capital requirements through the Companies Act with respect to its status

as a public company.

In addition in order to pay dividends out of profits available for distribution by way of dividend, the Company has to be

able to meet one of the two capital restriction tests imposed on investment companies by Company Law. The Company is

also subject to externally imposed capital requirements through the loan covenants set out in the loan facility.

These requirements are unchanged since the previous year end and the Company has complied with them.

28 Post Balance Sheet Event

Subsequent to the year end, and to 13 July 2023, 1,229,369 ordinary shares were repurchased and placed in the Treasury

at an average price of 2,151.43p per share.

There are no other significant events that have occurred after the end of the reporting period to the date of this report

which require disclosure.

Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Shareholder Information

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

128

In assessing the performance of the Company, the Investment Manager and the Directors use the following APMs which

are not defined in accounting standards or law but are considered to be known industry metrics:

NAV Total Return

The NAV total return shows how the net asset value per share has performed over a period of time taking into account

both capital returns and dividends paid to shareholders.

NAV total return reflects the change in value of NAV plus the dividend paid to the shareholder. Since the Company has

not paid a dividend the NAV total return is the same as the NAV per share return as at the year ended 30 April 2023 and

30 April 2022.

Year ended

30 April 2023

Year ended

30 April 2022

Opening NAV per share a 2305.13p 2496.44p

Closing NAV per share b 2239.48p 2305.13p

NAV total return for the year (b / a)-1 (2.8%) (7.7%)

Share Price Total Return

Share price total return shows how the share price has performed over a period of time. It assumes that dividends paid to

shareholders are reinvested in the shares at the time the shares are quoted ex dividend

Share price total return reflects the change in share price value plus the dividend paid to the Shareholder. Since the

Company has not paid dividends the share price total return is the same as the price per ordinary share return as at year end

30 April 2023 and 30 April 2022.

Year ended

30 April 2023

Year ended

30 April 2022

Opening share price a 2040.00p 2364.00p

Closing share price b 1940.00p 2040.00p

Share price total return for the year (b / a)-1 (4.9%) (13.7%)

(Discount)/Premium

A description of the difference between the share price and the net asset value per share usually expressed as a percentage (%)

of the net asset value per share. If the share price is higher than the NAV per share the result is a premium. If the share price

is lower than the NAV per share, the shares are trading at a discount. A premium or discount is generally the consequence of

supply and demand for the shares on the stock market.

30 April 2023 30 April 2022

Closing share price a 1940.00p 2040.00p

Closing NAV per share b 2239.48p 2305.13p

Discount of ordinary share price to the NAV per ordinary share (a / b)-1 (13.4%) (11.5%)

Alternative Performance Measures (APMs)

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129

Ongoing Charges

Ongoing charges are calculated in accordance with AIC guidance by taking the total expenses of the Company, excluding

performance fees and exceptional items, if any, and expressing them as a percentage of the average daily net asset value

of the Company over the year.

Ongoing charges include all regular operating expenses of the Company. Transaction costs, interest payments, tax and

non-recurring expenses are excluded from the calculation as are the costs incurred in relation to share issues and share

buybacks.

Where a performance fee is paid or is payable, a second ongoing charge is provided, calculated on the same basis as the

above but incorporating the amount of performance fee due or paid.

Year ended

30 April 2023

Year ended

30 April 2022

Investment Management Fee (Note 8 on page 109) £21,918,000 £28,281,000

Other Administrative Expenses (Note 9 on page 110) £1,176,000 £1,335,000

a £23,094,000 £29,616,000

Average daily net assets value b £2,843,190,000 £3,525,121,000

Ongoing Charges excluding performance fee a / b 0.81% 0.84%

Performance fee (Note 8 on page 109) c – –

d = a+c £23,094,000 £29,616,000

Ongoing charges including performance fee d / b 0.81% 0.84%

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

Glossary of Terms

Administrator The Company’s Administrator is HSBC Securities Services (HSS) who are contracted through

Polar Capital LLP to provide accounting and administrative services under the terms of the

Investment Management Agreement (“IMA”).

AGM Annual General Meeting – a meeting required to be held in accordance with the Companies

Act 2006, within six months of the Company’s financial year end. The AGM of the

Company will be held on Thursday, 7 September 2023. Details of the arrangements will be

provided in the separate Notice of AGM and on the Company’s website.

AIC Association of Investment Companies, the industry body for closed ended investment

companies.

AIF Alternative Investment Fund – the Company is an investment trust which is a collective

investment undertaking which raises capital from a number of investors (in the case of the

Company, by selling shares in the open market on the London Stock Exchange) with a view

to investing the capital in accordance with the investment policy (see page 54).

AIFM Alternative Investment Fund Manager, a body appointed in accordance with the AIFMD

(see below). Polar Capital LLP is the appointed AIFM to the Company.

AIFMD Alternative Investment Fund Managers Directive. Issued by the European Parliament in 2012

and 2013. The Directive requires that, while the Board of Directors of an Investment Trust

remains fully responsible for all aspects of the Company’s strategy, operations and compliance

with regulations, all alternative investment funds (‘AIFs’) in the UK and European Union, must

appoint a Depositary and an Alternative Investment Fund Manager (‘AIFM’).

Benchmark The Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal

of relevant withholding taxes). The naming convention of the benchmark has been updated

to align with the S&P 500. The benchmark of the Company remains unchanged. The

performance of the Company is measured against the performance of the benchmark.

Closed-ended

Investment Company

An Investment Company whose shares are traded in the open market, e.g., on the

London Stock Exchange.

Custodian HSBC Bank plc is the Custodian of the Company’s assets. The Custodian is a financial

institution responsible for safeguarding, worldwide, the listed securities and certain cash

assets of the Company, as well as the income arising therefrom, through provision of

custodial, settlement and associated services.

Depositary The Company’s Depositary is also HSBC Bank plc. Under AIFMD (see above) rules the

Company must appoint a Depositary whose duties in respect of investments, cash and

similar assets include: safekeeping; verification of ownership and valuation; and cash

monitoring. Under the AIFMD rules, the Depositary has strict liability for the loss of the

Company’s financial assets in respect of which it has safe-keeping duties. The Depositary’s

oversight duties will include but are not limited to share buybacks, dividend payments and

adherence to investment limits.

Derivative Derivative is a contract between two or more parties, the value of which fluctuates in

accordance with the value of an underlying security. Examples of derivatives are Put and Call

Options, Swap contracts, Futures and Contracts for Difference. The use of derivatives is to

protect the capital value of the portfolio or for efficient portfolio management. A derivative

can be an asset or a liability and is a form of gearing because it can increase the economic

exposure to shareholders.

Discount/premium See Alternative Performance Measure (APM) on page 128.

Earnings per Share

(“EPS”)

A company’s profitability expressed on a per share basis and calculated by dividing the

company’s annual earnings after tax by the weighted average number of shares in issue.

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Fund/Portfolio

Manager

Ben Rogoff (Lead Manager) and Ali Unwin (Deputy Fund Manager) of Polar Capital LLP

have been delegated responsibility for the creation and management of the portfolio of

investments subject to the investment policy and various parameters set by the Board

of Directors.

FCA The Financial Conduct Authority (FCA) regulates the financial services industry in the UK.

Its role includes protecting consumers, keeping the industry stable, and promoting healthy

competition between financial service providers.

IFRS International Financial Reporting Standards (IFRS) are accounting standards which are

developed by the International Accounting Standards Board (IASB) and the International

Sustainability Standards Board (ISSB). The IASB sets IFRS Accounting Standards and the

ISSB sets IFRS Sustainability Disclosure Standards.

Inflation A measure of the change in the average price level of a basket of goods and services in a

particular economy.

Investment Company In Section 833 of the Companies Act 2006, an Investment Company is defined as a company

which invests its funds in shares, land or other assets with the aim of spreading investment risk.

Investment Trust

taxation status

UK Corporation Tax law (Section 1158 of the Corporation Tax Act 2010) allows an

Investment Company (referred to in Tax law as an Investment Trust) to be exempt from tax

on its profits realised on investment transactions, provided it complies with certain rules.

These are similar to Section 833 above but further require that the Company must be listed

on a regulated stock exchange and that it cannot retain more than 15% of income received.

The Directors’ Report contains confirmation of the Company’s compliance with this law and

its consequent exemption from taxation on capital gains.

KPMG The Company’s auditor is KPMG LLP, represented by Philip Merchant, Partner.

Leverage As defined under AIFMD rules, leverage is any method by which the exposure of an AIF

is increased through borrowing of cash or securities or leverage embedded in derivative

positions. Leverage is broadly equivalent to gearing but is expressed as a ratio between the

assets (excluding borrowings) and the net assets (after taking account of borrowings).

Liquidity The ease with which a security can be traded on the market, usually defined by turnover of

the shares divided by the number of shares in issue.

Manager/Investment

Manager

Polar Capital LLP (Polar Capital), also appointed as AIFM (see above). The responsibilities and

fees payable to Polar Capital are set out in the Strategic Report.

Market capitalisation Also sometimes referred to as ‘market cap’, this is a measure which describes the size of a

Company or an Investment Trust. It is calculated by multiplying the number of shares by the

price of the shares.

Net Asset Value (NAV) The NAV is the value attributed to the shareholders of the Company less the liabilities,

presented either on a per share or total basis. The value of the Company’s assets, principally

investments made in other companies and cash being held, minus any liabilities. The NAV is

also described as ‘Shareholders’ funds’ per share. The NAV is often expressed in pence per

share after being divided by the number of shares which have been issued. The NAV per

share is unlikely to be the same as the share price which is the price at which the Company’s

shares can be bought or sold by an investor. The NAV per ordinary share is published daily.

Non-executive Director The Company is managed by a Board of Directors who are appointed by letter rather than a

contract of employment. The Company does not have any executive Directors. Remuneration

of the Non-executive Directors is set out in the Directors’ Remuneration Report while the

duties of the Board and the various Committees are set out in the Corporate Governance

Statement.

PCT or the Company Polar Capital Technology Trust Plc.

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Price/earnings ratio

(P/E ratio)

A way to estimate the future earnings potential of a particular company or investment trust.

It is calculated by taking the current price and dividing it by earnings per share.

The P/E ratio also gives an indication of how quickly the company is expected to grow – a

high PE indicates that a company is expected to see EPS grow quickly in the future.

SORP The Statement of Recommended Practice (SORP) for investment trust is issued by the AIC

and it provides recommendations on financial reporting that supplement official accounting

standards. The financial statements of the Company are prepared in accordance with the

Investment Trust SORP.

Treasury shares Treasury shares are the Company’s own shares that have been brought back from

shareholders and not cancelled but held in Treasury. Such shares may be reissued into the

market at a premium to NAV. Treasury shares do not attract the right to receive dividends or

have any other voting rights.

UK-adopted IAS The international accounting standards adopted by the UK Endorsement Board after

delegation of adoption powers. This includes International Accounting Standards (IAS),

IFRS and related interpretations, subsequent amendments to those standards and related

interpretations, future standards and related interpretations issued or adopted by the IASB.

Volatility Volatility describes the price movement of an investment. High volatility indicates frequent

and significant price movement, whereas low volatility investments have less frequent or

severe fluctuations in price.

Yield The yield is the return on an investment, usually expressed as a percentage of the purchase

price.

Glossary of Terms continued

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Environmental, Social

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Corporate

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Financial

Statements

Shareholder

Information

Corporate Information - AGM

2023 Annual General Meeting (“AGM”)

The Company’s AGM will be held at 2:30pm on Thursday

7 September 2023 at offices of Herbert Smith Freehills,

Exchange House, Primrose Street, London, EC2A 2EG.

Further information including the full text of the resolutions

to be proposed at the AGM and an explanation of each

resolution is contained in the Notice of AGM which has

been posted to Shareholders and is available on the

Company’s website.

Shareholders will have the option to ask questions at the

meeting but are also encouraged to send any questions

ahead of the AGM to the Board via the Company Secretary

at cosec@polarcapital.co.uk stating the subject matter

as PCTT-AGM. We will endeavour to answer relevant

questions at the meeting.

For ease of reference and understanding a brief

explanation of the resolutions and the structure of the

AGM is given below.

Resolution 1 relates to the statutory requirement of every

company to lay before shareholders the Annual Report and

Financial Statements, i.e. this document in full. The Annual

Report has been prepared and approved by the Board of

Directors and audited by the externally appointed auditors.

The document will be filed at Companies House once

published to shareholders. The Annual Report sets out the

Company’s business strategy, governance structure and

procedures as well as the financial accounts for the financial

year under review and any forward-looking statements.

Resolutions 2 and 3, in compliance with the Large and

Medium-Sized Companies and Groups (Accounts and

Reports) (Amendment) Regulation 2013 (the ‘Regulations’),

The Companies (Directors’ Remuneration Policy and Directors’

Remuneration Report) Regulations 2019 and the Listing

Rules of the Financial Conduct Authority, the Company

is required on a three-yearly basis to provide shareholders

with the opportunity to vote on the Company’s Directors’

Remuneration Policy. Resolution 2 seeks shareholder approval

to renew the forward looking Remuneration Policy which

lasts for up to three years. The current Policy was approved

by shareholders at the 2020 AGM and will expire on 30 April

2024 unless renewed. The Policy being presented for renewal

is unchanged from the current Policy and will apply to the

three financial years commencing 1 May 2024 and ending

on 30 April 2027.

In addition to this, on an annual basis, shareholders are

presented, with the Directors’ Remuneration Implementation

Report which looks back at the year under review and

advises how the Remuneration Policy was applied.

Resolution 3 therefore, is the annual advisory vote

of shareholders on the Remuneration Implementation

Report. The Directors’ Remuneration Report is presented

on pages 85 to 89.

Resolutions 4 to 9 relate to the annual re-election of

directors. In line with good corporate governance the

tenure policy of directors is 9-years, with the exception of

the Board’s Chair tenure policy which allows the Chair to

remain in role for up to 12-years in certain circumstances.

It is recommended that directors stand for re-election on an

annual basis in order to give shareholders the opportunity to

vote on each Director. Having undergone a Board Evaluation

process, as described on page 90, the Directors have provided

a rationale for their support for the reappointment of each

director on pages 8 and 9 and within the Notice of AGM.

Resolutions 10 and 11 relate to the statutory appointment

or reappointment of the Company’s external auditors and

the Directors’ authority to determine their remuneration.

Further information is provided in the Audit Committee

Report on pages 80 to 84.

Resolutions 12 to 14 relate to potential changes in the

share capital. Resolution 12 authorises the Directors to

allot (i.e. sell) ordinary shares, whether these be newly

created shares or shares held in the Company’s treasury

account which have been previously bought back in

the market. Once allotted the shares are listed on the

London Stock Exchange and have the same rights as any

other ordinary shares of the Company. Resolution 13

is proposed in connection with 12 and allows the

Directors to allot the shares without pre-emption rights.

Under the Companies Act, all shareholders have the

right of pre-emption which means that the Company

must offer the same to all; being a listed company with

many shareholders, the Directors ask to disapply the

pre-emption rights which means they are able to offer

and allot the shares to specific shareholders or in specific

ways to the market, noting that such allotments would

be at a premium to the net asset value (NAV) per share

and therefore accretive (i.e positive) to overall shareholder

value. While all shareholders can trade the ordinary shares

of the Company on the open market there are times when

a shareholder would like to acquire greater amounts of

shares than are available in the market and might approach

the Company through the corporate broker to obtain

shares. In a similar but opposite scenario, resolution 14

provides the Directors’ the ability to buy back (i.e. purchase)

shares of the Company in the market. Depending on

the market environment, and various other factors, the

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Polar Capital Technology Trust plc Annual Report and Financial Statements 30 April 2023

shares of the Company may trade at a discount to NAV,

when this is the case the Company may step in and buy

back shares in an effort to reduce the discount. Each of

these authorities require shareholder approval and are

regular resolutions proposed to each AGM; each authority

remains in place for 12 months or until the limits have

been reached.

Share Capital, Voting Rights and Transferability

The Company’s share capital is divided into ordinary shares

of 25p nominal value each. At 30 April 2023, there were

137,315,000 ordinary shares in issue of which 11,029,456

were held in treasury (2022: 4,958,574 ordinary shares

held in treasury).

Ordinary shares carry voting rights which are exercised on

a show of hands at a meeting, or on a poll, where each

share has one vote. Arrangements for the casting of proxy

votes are provided when a notice of meeting is issued.

Any shares in the Company may be held in uncertificated

form and, subject to the Articles, title to uncertificated

shares may be transferred by means of a relevant

system. Further information can be found in the Articles

of Association available on the Company’s website

www.polarcapitaltechnologytrust.co.uk.

The Company is not aware of arrangements to restrict the

votes or transferability of its shares.

History, Structure and Fees

The Company was launched in 1996 with a five-yearly

continuation vote. Shareholders approved the resolution

for the Company to continue in operation in its current

form at the AGM in 2020. The next continuation vote

of the Company, in accordance with the Articles of

Association, will be proposed at the AGM to be held in

2025. The Company continues to operate as an investment

trust with an independent Board and third-party

investment manager.

Performance fee

The performance fee participation rate is 10 per cent. of

outperformance above the Benchmark, subject to a cap

on the amount which may be paid out in any one year of

1 per cent. of NAV. Any amount over the 1 per cent. payment

is written off. There was no performance fee payable for the

year to 30 April 2023 (2022: nil), and therefore no amount

(2022: nil) was outstanding at the year end.

Performance periods coincide with the Company’s

accounting periods. In the event of a termination of

the investment management agreement, the date the

agreement is terminated will be deemed to be the end of

the relevant performance period and any performance fee

payable shall be calculated as at that date.

Calculation

A notional performance fee entitlement (‘NPFE’) is

calculated and if positive, accrued daily, having made up all

past underperformance; however, it is only at the financial

year end that payment of the performance fee is tested.

The calculation period starts at the end of the financial

year in which the last performance fee was paid and is

open until the end of the financial year that the next

performance fee is paid.

The 1 per cent. cap is applied as part of the NAV

calculation so the performance fee accrual will never

exceed 1 per cent. of the NAV.

Any under performance since the last performance fee was

paid must be made good before a fee may be paid.

Payment Conditions

On the final day of each financial year the NPFE will be tested.

If the NPFE is positive, then a performance fee may be paid to

the Manager if the following conditions have been achieved:

• There has been outperformance of the Benchmark in

the financial year;

• The NAV per share at the financial year end is equal

to or higher than the NAV per share when the last

performance fee was paid;

• The NAV per share at the financial year end is equal to

or higher than the NAV per share at the beginning of

the financial year; and

• If the NPFE is negative, then no performance fee is paid,

and the calculation period remains open.

Termination Arrangements

The Investment Management Agreement (“IMA”) may be

terminated by either party giving 12 months’ notice, but

under certain circumstances the Company may be required

to pay up to one year’s management charges if immediate

Corporate Information - AGM continued

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

notice is given. Compensation will be on a sliding scale

if less than 12 months’ notice is given. The IMA may be

terminated earlier by the Company with immediate effect

on the occurrence of certain events, including: (i) if an

order has been made or an effective resolution passed

for the liquidation of the Investment Manager; (ii) if the

Investment Manager ceases or threatens to cease to carry

on its business; (iii) where the Company is required to do

so by a relevant regulatory authority; (iv) on the liquidation

of the Company; or (v) subject to certain conditions, where

the Investment Manager commits a material breach of the

IMA.

Other

In addition to the above, the Investment Manager is

responsible for the first £200,000 of marketing costs and

all research costs.

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Company Website

www.polarcapitaltechnologytrust.co.uk

The Investment Manager maintains a website on behalf of

the Company which provides a wide range of information

on the Company, monthly factsheets issued by the

Investment Manager and copies of announcements,

including the annual and half year reports when issued.

Information on the Company can also be obtained from

various other sources including:

• www.theaic.co.uk

• www.ft.com/markets

• www.londonstockexchange.co.uk

Benchmark

The Company uses the Dow Jones Global Technology

Index (total return, Sterling adjusted, with the removal

of relevant withholding taxes) as the Benchmark against

which Net Asset Value (NAV) performance is measured for

the purpose of assessing performance fees.

Dividends

The Company has not historically paid a dividend as the

objective is capital growth.

Capital Gains Tax

Information on Capital Gains Tax (‘CGT’) is

available on the HM Revenue & Customs website

www.hmrc.gov.uk/cgt/ index.

When shares are disposed of a capital gain may result if the

disposal proceeds exceed the sum of the base cost of the

shares sold and any other allowable deductions such as share

dealing costs. The exercise of subscription shares into ordinary

shares should not have given rise to a capital gain, however a

capital gain may arise on the eventual disposal of those shares.

The calculations required to compute capital gains may

be complex and depend on personal circumstances.

shareholders are advised to consult their personal financial

advisor for further information regarding a possible tax

liability in respect of their shareholdings.

Within the Document Library of the Company’s website,

launch and calculation details for CGT purposes are

provided, Shareholders may find these useful when

considering their tax position.

Statement by the Depositary

The statement of the Depositary’s responsibilities in

respect of the Company and its report to Shareholders

for the year ended 30 April 2023 is available on the

Company’s website. The Depositary, having carried out

such procedures as it considered necessary, was satisfied

that in all material respects the Company was managed in

accordance with the applicable FCA rules and AIFMD.

Polar Capital Technology Trust plc is a public listed company

on the London Stock Exchange Premium Market section and

complies with the Financial Conduct Authority (‘FCA’) Listing

Rules. It is not directly authorised and regulated by the FCA.

Statement By The AIFM

The statement by the AIFM in respect of matters to be

disclosed to investors for the year ended 30 April 2023 is

available on the Company’s website.

Share Price and Net Asset Value

The Company’s Net Asset Value (NAV) is normally released

daily, on the next working day, following the calculation

date, to the London Stock Exchange. The mid-market price

of the ordinary shares is published daily in the Financial

Times in the Companies and Markets section under the

heading ‘Investment Companies’. Share price information

is also available from The London Stock Exchange website:

www.londonstockexchange.co.uk

Securities Financing Transactions

The Securities Financing Transactions Regulation, as

published by the European Securities and Markets

Authority, aims to improve the transparency of the

securities financing markets. Disclosures regarding exposure

to Securities Financing Transactions (‘SFTs’) or total return

swaps will be required on all reports & accounts published

after 13 January 2018. During the period to 30 April 2023

and at the balance sheet date, the Company did not use

SFTs or total return swaps, as such no disclosure is required.

Electronic Communications

If you hold your shares in your own name you can choose

to receive communications from the Company in electronic

format. This method reduces cost, is environmentally

friendly and, for many, is convenient.

If you would like to take advantage of Electronic

Communications, please visit our registrar’s website at

www.shareview.co.uk. You will need your Shareholder

Reference Number. If you agree to the terms and

conditions, in future, on the day that documents are sent to

shareholders by post you will receive an e-mail providing the

website address where the documents can be viewed and

downloaded. Paper copies will still be available on request.

Disability Act

Copies of this Annual Report and Financial Statements or

other documents issued by the Company are available from

the Company Secretary. If needed, copies can be made

available in a variety of formats, either Braille or on audio

tape or larger type as appropriate.

Corporate Information - Other

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Environmental, Social

and Governance (ESG)

Corporate

Governance

Financial

Statements

Shareholder

Information

Investing

The ordinary shares of the Company are listed and traded

on the London Stock Exchange. Investors should be aware

that the value of the Company’s ordinary shares may reflect

the greater relative volatility of technology shares.

Polar Capital Technology Trust plc is an investment trust

and as such its ordinary shares are excluded from the FCA’s

restrictions which apply to non-mainstream investment

products. The Company conducts its affairs and intends

to do so for the foreseeable future so that the exclusion

continues to apply.

There are a variety of ways to invest in the Company.

However, this will largely depend upon whether you

would like financial advice or are happy to make your

own investment decisions.

Investing Risks

Investors should be aware of the following risks when

considering investing in the shares of Polar Capital

Technology Trust plc:

Past performance is not a guide to future performance.

Please remember that any investment in the shares of

Polar Capital Technology Trust either directly or through

a savings scheme or ISA carries the risk that the value of

the investment and any income from such may go down

as well as up due to the fluctuations of the share price, the

market and interest rates. This risk may result in an investor

not getting back the original amount invested.

Investors should be aware that the value of the NAV of the

Company’s shares may reflect the greater relative volatility

of technology shares. Technology shares are subject to the

risks of developing technologies, competitive pressures and

other factors including the acceptance by business and

consumers of new technologies. Many companies in the

technology sector are smaller companies and are therefore

also subject to the risks attendant on investing in smaller

capitalisation businesses. As the Company invests in

overseas companies changes in exchange rates may cause

fluctuations in the value of the investments and of your

investment in the Company.

The Company takes on bank debt for investment purposes

(‘gearing’) which exposes the company to exchange risk

when the borrowings are in different currencies and the

value of the investments made with the borrowings may

fall and may not be sufficient to cover the borrowings and

interest costs. However, the Company may increase or

decrease its borrowing levels to suit market conditions.

If you are investing through a savings plan, ISA or other

investment arrangement it is important that you read the

key features documents and understand the risks associated

with investing in the shares of the Company. If you are in

any doubt as to the suitability of a plan or any investment

available within a plan, please take professional advice.

Tax rates and reliefs change from time to time and may

affect the value of your investment.

For those investors who would like advice:

Private Client Stockbrokers – generally for investors with

a large lump sum to invest, a private client stockbroker will

manage a portfolio of shares on behalf of a private investor

and will offer a personalised service to meet an individual’s

particular needs. A list of private client stockbrokers is

available from The Personal Investment Management &

Financial Advice Association (PIMFA) at www.pimfa.co.uk

Financial Advisers – carry out the share transactions

for their clients, they can do this directly but also via a

growing number of platforms that offer investment trusts

including AJ Bell, Interactive Investor, Ascentric, Embark,

Nucleus, Raymond James, Seven IM and Transact. For

investors looking to find a financial adviser, please visit

www.unbiased.co.uk

For those investors who are happy to make their

own investment decisions:

Online Stockbroking Services – There are a number of real

time execution only stockbroker services which allow private

investors to trade online for themselves, manage a portfolio

and buy UK listed shares. Online stockbroking services include

AJ Bell, Interactive Investor, Barclays Stockbrokers, Halifax

Share Dealing and Hargreaves Lansdown.

As an investor holding shares through one of these platforms,

you are entitled to attend and vote at company general

meetings. For example, interactive investor allow you to vote

your shares at no extra cost through your account and new

customers are automatically signed up to the voting and

information service, which enables you to receive shareholder

materials and vote on decisions directly affecting your UK

registered shareholdings.

Please visit the AIC’s pages below for further information:

https://www.theaic.co.uk/how-to-attend-an-AGM

https://www.theaic.co.uk/availability-on-platforms/how-

tovote-your-shares

Share Dealing Services

The Company has also made arrangements with its share

registrars, Equiniti Limited, for investors to buy and sell

shares through the Shareview.co.uk service.

For telephone sales call 0345 603 7037 (or +44 121 415 7560)

between 8.30am and 4.30pm for dealing and up to 6.00pm

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How to avoid investment and pension scams

If you’re suspicious, report it

You can report the �rm or scam to us by

contacting our Consumer Helpline on

0800 111 6768 or using our reporting form

using the link below.

If you’ve lost money in a scam, contact

Action Fraud on 0300 123 2040 or

www.actionfraud.police.uk

Reject unexpected o�ers

Scammers usually cold call, but contact

can also come by email, post, word of mouth

or at a seminar. If you’ve been o�ered an

investment out of the blue, chances are it’s

a high risk investment or a scam.

Check the FCA Warning List

Use the FCA Warning List to check the risks

of a potential investment – you can also search

to see if the �rm is known to be operating without

our authorisation.

Get impartial advice

Get impartial advice before investing – don’t use

an adviser from the �rm that contacted you.

Be ScamSmart and visit

www.fca.org.uk/scamsmart

for enquiries, Monday to Friday. For Internet sales log on to

www.shareview.co.uk/dealing

Forward-Looking Statements

Certain statements included in this Annual Report and

Financial Statements contain forward-looking information

concerning the Company’s strategy, operations, financial

performance or condition, outlook, growth opportunities

or circumstances in the countries, sectors or markets in

which the Company operates.

By their nature, forward-looking statements involve

uncertainty because they depend on future circumstances,

and relate to events, not all of which are within the

Company’s control or can be predicted by the Company.

Although the Company believes that the expectations

reflected in such forward-looking statements are reasonable,

no assurance can be given that such expectations will prove

to have been correct.

Actual results could differ materially from those set out

in the forward-looking statements. For a detailed analysis

of the factors that may affect our business, financial

performance or results of operations, we urge you to look

at the principal risks and uncertainties included in the

Strategic Report within this Annual Report.

No part of this Annual Report constitutes, or shall be taken

to constitute, an invitation or inducement to invest in Polar

Capital Technology Trust plc or any other entity and must

not be relied upon in any way in connection with any

investment decision.

The Company undertakes no obligation to update any

forward-looking statements.

Boiler Room Scams

Shareholders of the Polar Capital Technology Trust plc

may receive unsolicited phone calls or correspondence

concerning investment matters. These are typically from

overseas based ‘brokers’ who target UK shareholders,

offering to sell them what often turn out to be worthless or

high risk shares in U.S. or UK investments or offering to act

on the shareholder’s behalf on the payment of a retainer or

similar in a spurious corporate event. These operations are

commonly known as ‘boiler rooms’. These ‘brokers’ can be

very persistent and extremely persuasive.

It is not just the novice investor that has been duped in this

way; many of the victims had been successfully investing

for several years. Shareholders are advised to be very wary

of any unsolicited advice, offers to buy shares at a discount

or offers of free company reports.

If you have been contacted by an unauthorised firm

regarding your shares the FCA would like to hear from

you. You can report an unauthorised firm using the FCA

helpline on 0845 606 1234 or 0800 111 6768 or by visiting

their website, which also has other useful information,

at www.fca.org.uk

If you receive any unsolicited investment advice:

• Make sure you get the correct name of the person and

organisation

• If the calls persist, hang up

If you deal with an unauthorised firm, you will not be

eligible to receive payment under the Financial Services

Compensation Scheme. More detailed information on this

or similar activity can be found on the FCA website.

Corporate Information - Other continued

This document is printed on Respecta

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CBP013582

Registered office and address for contacting the

directors

16 Palace Street,

London,

SW1E 5JD

020 7227 2700

Company Registered Number

Polar Capital Technology Trust Plc

(The ‘Company’)

is incorporated in England and Wales with company

number 3224867 and registered as an investment company

under section 833 of the Companies Act 2006.

Investment Manager and AIFM

Polar Capital LLP

Authorised and regulated by the Financial Conduct

Authority

Represented by Portfolio Manager Ben Rogoff and Deputy

Manager Alastair Unwin

Company Secretary

Polar Capital Secretarial Services Limited

Represented by Jumoke Kupoluyi, ACG

Email: cosec@polarcapital.co.uk

Independent Auditor

KPMG LLP

Chartered Accountants and Statutory Auditors

15 Canada Square,

London,

E14 5GL

Corporate Broker

Stifel Nicolaus Europe Limited

150 Cheapside,

London,

EC2V 6ET

Depositary, Custodian and Administrator*

HSBC Bank PLC

8 Canada Square,

London,

E14 5HQ

* Administrator appointed under the Investment Management

Agreement.

Registrar

Equiniti Limited

Aspect House, Spencer Road, Lancing, West Sussex,

BN99 6DA

Shareholder helpline: 0371 384 2476

(or +44 (0) 371 384 2476 from overseas)

www.shareview.co.uk

Shareholders who have their shares registered in their own

name, not through a share savings scheme or ISA, can

contact the registrars with any queries on their holding.

In correspondence you should refer to Polar Capital

Technology Trust plc, stating your registered name and

address and, if available, your full account number.

Financial Calendar

The key dates in the Company’s financial year are as

follows:

30 April Financial year-end

July Announcement of year-end results

September Annual General Meeting

31 October Half-year end

December Announcement of half-year results

Identification Code

SEDOL 422002

ISIN GB0004220025

TICKER PCT

BLOOMBERG PCT.LN

DATASTREAM PCT

REUTERS PCT.L

LIPPER 71000395

GIIN J29SBF.99999.SL.826

LEI 549300TN1O5392UC4K19

AIC

The Company is a member of the Association of Investment

Companies (‘AIC’). The AIC website www.theaic.co.uk

contains detailed information about investment trusts,

including guides and statistics.

Contact Information

Overview

Manager’s

Report

Environmental, Social

and Governance (ESG) Governance

Financial

Statements

Shareholder

Information

The Association of

Investment Companies

See more at: polarcapitaltechnologytrust.co.uk