LONDON (ShareCast) - Herald Investment Trust, which focuses on small quoted growth companies, marginally underperformed its benchmark index in the first quarter.

Net asset value (NAV) total return, which factors in dividends paid out to shareholders, was 14.3% in the first three months of 2012, slightly below the 14.5% achieved by its benchmark index, which is a blend of the Hoare Govett Smaller Companies Index plus AIM (capital gains ex. Investment companies) and the Russell 2000 (small cap) Technology Index (in sterling terms).

Over one-year, three-year and five-year periods, however, the trust is giving its benchmark index a sound trouncing, as demonstrated below:

NAV total return (period/Herald's return/benchmark index's return)
One year - +4.5% (vs -2.1%)
Three years - +151.5% (vs +111.1%)
Five years - +45.8% (vs 19.6%)

During the quarter the company made net acquisitions of £1.3m. At the end of March 2012, all of the trust's £50m multi-currency loan facility had been drawn down. The trust's gearing ratio - total assets (including all debt used for investment purposes) less all cash and fixed interest securities (excluding convertibles and corporate bonds) divided by shareholders' funds - had eased to 103 at the end of March from 105 three months earlier. The potential gearing ratio - total assets (including all debt used for investment purposes) divided by shareholders' funds - dipped to 113 from 116 at the end of 2011.

The fair value of the related interest rate swap contract at March 31st, 2012 was an estimated liability of £16.8m based on the swap provider's valuation.

NAV per share at the end of March stood at 644.3p, including current year income, compared to 563.7p at the end of 2011. At the end of March the shares were trading at a 19.1% discount to NAV, representing a slight contraction from the end of year discount of 19.3%.

The shares edged up 2.5p to 517.5p on the results in the morning session.

JH

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