Our NAV performance over the six month period was better by 3.2% against the most relevant index, the Morgan Stanley Internet Index, compared to the Nasdaq Composite Index however, it was worse by 19.6%. Our under-performance against the Nasdaq is typical of bear market conditions where stock prices in smaller companies react more sharply than larger more liquid stocks which are the bulk of the Nasdaq. Additionally, the Nasdaq is not made up solely of technology stocks that fared the worst during the recent market downturn.
The Amerindo Internet Fund plc portfolio allocation, investment strategy and market outlook are clearly outlined in the accompanying review by Amerindo Investment Advisors Inc. The quoted portion of the portfolio was significantly rebalanced over this six month period to reflect shifts in company prospects. A number of new unquoted investments were also added with the resulting split of quoted and unquoted being 66.9% and 33.1% respectively of total investments.
Amerindo Internet Fund plc is well positioned in the US technology sector. The mix of quoted and unquoted investments in the Company’s portfolio is appropriate and represents a broad range of technological innovation and application. In addition the Company benefits from the Investment Manager’s professional management and strong research staff with particular access to unquoted investments where innovation is often at its most dynamic.
Because of the difficult market conditions the Board feels that it is important to re-iterate the valuation policy for the unquoted portfolio. The carrying cost of each unquoted investment is continually monitored by the Investment Manager based upon operating fundamentals, relative performance against business plan targets, factors influencing the Company’s sector, competitive position and access to future financing. This ongoing analysis is fully reflected in the Company’s weekly NAV announcements. Since 30 June, market conditions and the prospects facing certain unquoted companies in our portfolio have deteriorated. Therefore, provisions totalling $5,813,000 for five holdings have been made since the end of the half year when appropriate and included in the weekly published net asset values for the Company’s shares. Information on the Company’s 41 unquoted holdings can be found on our website www.amerindo.co.uk.
The recent tragedy in New York clearly has and will affect the general economic and financial environment on which our companies depend. Both the Investment Manager and your Board are monitoring these developments closely but it is simply too early to gauge the impact on our portfolio companies.
In summary, the Board believes that the investment rationale for the Amerindo Internet Fund plc remains sound notwithstanding the difficulties experienced in the technology market over the last eighteen months. Through the Investment Manager we have access to a select group of public and private technology companies. However, investment performance and our share price will depend upon the recovery of information technology and related Internet and e-commerce spending and the availability of funding from the venture capital, private placement and public markets, particularly for the unquoted portfolio.
SOURCE: COMPANY PRESS RELEASE
