Why we like the opportunities in the Information Technology Sector

Axis believes that information is the foundation of today's economy, and that information technology will be one of the key factors driving economic growth in the decades ahead. Information technologies are an integral part of people's lives, businesses and society. New generations of processors, overcapacity of optical fiber, broadband, increasing use of the internet for commerce, and important new core technologies in hardware and software are all factors that are converging to make information technology an important investment area.

Advances in microprocessors, memories, storage, software and communication technologies make it possible to build computers that are smaller and more affordable, as well as enable the development of powerful systems at commercially reasonable costs. Product prices will drop and new industries are expected to develop in areas as diverse as medicine and consumer electronic products.

At the same time, competition between companies will likely be a tremendous driver of information technology. Information technology will provide competitive advantages by increasing efficiency. Improvements in information technology will assist companies that are seeking to attract new customers and retain current customers by increasing productivity, reducing costs, improving quality, maintaining flexibility, and reducing design cycle time.

Axis believes that there is an on-going convergence of factors in information technology hardware and software that make investing in information technology attractive. Historically, when similar convergences have occurred - in 1958, 1970, 1976, and 1996 - each factor (the integrated circuit, the microprocessor, the PC, and the internet) spawned tremendous investment opportunities.

The increasing acceptance of internet standards and languages such as UDDI, SOAP and XML are creating an information infrastructure of interconnected computers, wireless devices, companies and people. Electronic communication is already dramatically changing how commercial transactions between companies take place, how digitally based goods and services are distributed, and how retail sales are made. Companies are using information technology to get closer to their customers and suppliers, reduce paperwork, and streamline operations. Axis believes that the current economic climate, especially compared to the climate of the past 24 months, is an opportune time to build a portfolio of early-stage investments in the technology sector. We expect that this economic climate will continue for the near future.