[AMERINDO LOGO OMITTED]
Annual Report
October 31, 1999
<PAGE>
TABLE OF CONTENTS
-----------------
SHAREHOLDER LETTER ...................................................... 1
1999 REVIEW AND ECONOMIC OUTLOOK ........................................ 4
STATEMENT OF NET ASSETS ................................................. 7
STATEMENTS OF OPERATIONS ................................................ 9
STATEMENTS OF CHANGES IN NET ASSETS ..................................... 10
NOTES TO FINANCIAL STATEMENTS ........................................... 11
FINANCIAL HIGHLIGHTS .................................................... 18
INDEPENDENT AUDITOR'S REPORT ............................................ 20
NOTICE TO SHAREHOLDERS (Unaudited) ...................................... 21
<PAGE>
December 1999
Dear Shareholder:
The Amerindo Technology Fund ended the year with unprecedented triple digit
returns. The Class A shareholders achieved an outstanding gain of 273% while the
Class D shareholders earned an impressive 270% for the 12 months ended October
31, 1999. The month of October also marked the Funds three-year anniversary. We
are very proud to report that the Amerindo Technology Fund Class D received
Morningstar Inc.'s coveted Five-Star rating* for superior risk adjusted
performance.
In our last letter we reviewed our decision to lower the Fund's investment
minimums and establish an automatic investment program to make the Fund
available to all potential investors interested in accessing Amerindo's highly
successful investment style. We substantially increased the availability of the
Fund by joining major fund networks such as Charles Schwab & Co., Fidelity and
Waterhouse. We also secured new distribution agreements with numerous
traditional broker/dealers and have recently introduced a "C" class share to
support this effort. The response from our shareholders has been extremely
positive. As we go to press we are happy to report that the Fund's assets have
passed the $500mm mark, up dramatically from just $65mm at the end of last year.
Our family of shareholders has grown even more rapidly, from 550 late last year
to over 18,000 as this is written.
In October, the Fund distributed an annual capital gain of $10.15 per
share. This was the first distribution in the Fund's three-year life. As you may
know, the Amerindo Technology Fund was the subject of numerous press articles
throughout much of 1999 speculating about the possible size of a capital gains
distribution in the Fund. We believe the focus of these articles was
misdirected. Most of the predictions were way off the mark in that the actual
distribution was far less than estimates appearing in the articles. In this
instance, the press would have better served their audience by focusing on the
seasoned research and management team behind the Fund along with its stellar
performance. Any mutual fund that triples in value over a 12-month period is
likely to pay a capital gains distribution. We believe by "hyping" the size of
the Fund's potential distribution, the press may have turned potential investors
away from Amerindo Technology Fund. In light of the Fund's performance in 1999,
this was an expensive misdirection. Even the unluckiest shareholder, the
investor who purchased the Fund the day before the distribution was declared,
earned enough capital appreciation within 8 trading days following the payout to
sat-isfy all taxes due. We have repeatedly stated to our shareholders that the
Fund is designed for the aggressive investor who can tolerate volatility in the
pursuit of strong performance. In managing the Fund, capital appreciation takes
precedence over tax efficiency. Our recent performance fully justifies that
philosophy.
As you will read in our Economic Outlook, we believe that Internet growth
will increasingly rely on the dynamics of a business to business (B2B) shift as
the business to consumer (B2C) wave matures. While Amerindo B2C perennial
favorites like eBay, Yahoo! and Amazon.com should continue to do extremely well,
we look to increasingly emphasize the B2B area as we move into 2000. A B2B play
introduced to our shareholders is Ariba Inc. Its phenomenal
1
<PAGE>
performance since being added to our portfolio in the second quarter of 1999 has
attributed to the Fund's impressive gains. We believe companies in the B2B
sector will continue to propel the growth of the Internet over the next few
years. The exceptionally strong earnings gains of emerging technology growth
stocks is due to the rapid unfolding of the next generation of computing that is
centered around the Internet. Further, the demand for Internet related services
continues to experience exponential growth which has contributed to the strong
returns the Fund has achieved this past year.
As we venture into 2000, we continue to believe that we are just in the
initial stages of this revolutionary change in the Global economy. We remain
convinced that companies in the Internet and related sectors offer the most
compelling investment opportunities that we have ever seen in our experience on
Wall Street. Our investment management style for the past twenty years has
remained unchanged. Our emphasis has focused on discovering emerging growth
technology companies as they enter their most dynamic growth phase. In 1996 we
emphasized that this management style was designed for the long-term investor
that could sustain above average levels of volatility, with the hope that
financial rewards would be considerable. It is essential to understand that
volatility is inherent in high performance growth stock investing. Emerging
technology stocks can be subject to rapidly shifting sentiment accompanied by
price dislocations during short-term market upheavals. We will continue to view
volatility opportunistically and use dramatic prices swings to our advantage
whenever possible.
We thank our shareholders for their continued confidence in our investment
management style. We are pleased that those investors with patience have been
handsomely rewarded with extraordinary returns. We look forward to further
success in the months and years ahead and wish our shareholders and their
families a happy and healthy Holiday Season.
AMERINDO TECHNOLOGY FUND
/s/ Signature omitted /s/ Signature omitted
- -------------------- ------------------
Alberto W. Vilar Gary A. Tanaka
* Morningstar proprietary ratings reflect historical risk-adjusted performance
as of 11/30/99. The ratings are subject to change every month. Other classes may
vary. Past performance is no guarantee of future results. Morningstar ratings
are calculated from the Fund's three-year average annual return in excess of the
90-day Treasury Bill returns with appropriate fee adjustments, and a risk factor
that reflects fund performance below 90-day T-Bill returns. Amerindo Technology
Fund received 5 stars for the three-year period. The top 10% of funds in a broad
asset class receive 5 stars. The fund was rated among 3,272 Domestic Equity
funds for the three-year period.
2
<PAGE>
[GRAPHIC OMITTED]
In the printed version of the document, a line graph appears
which depicts the following plot points:
Amerindo Class A Hambrecht
8/31/98 9425 10000
Oct 98 13271 12692
Oct 99 4951 30225
Amerindo Class D Hambrecht
10/31/96 10000 10000
Oct 97 7344 10673
Oct 98 8822 10694
Oct 99 32664 25469
3
<PAGE>
1999 Review and Economic Outlook
This year, technology, namely the Internet sector, appears to be the one
exception to the lackluster performance of the overall market. At the end of
September, more than half of the stocks in the Standard & Poor's 500 Stock Index
("S&P") had declined for the year; more than 35% had declined 10%, more than 20%
had declined 20%, and more than 8% had declined 30%. The Russell 3000 did even
worse: over 40% of the stocks were down 10% for the year, more than 25% were
down 20%, and more than 15% were down 30%.
Our second quarter report stated that we thought the broad market was
overvalued and thus vulnerable to a significant decline this year where the Dow
Jones could dip down to the 9000 level, and that the Internet stocks would
undergo a typical bull market sector correction near term. This meant that most
emerging technology stocks would sustain corrections of 40-50% from their
earlier year highs over the ensuing six-month period. By the third quarter
internet stocks did pretty much what we expected, and have since recovered from
their sharp summer declines, but not to new highs. The Internet sector is still
expected to start a major new up-leg near term, although its timing could be
pushed out to December-January. The broad market still appears to have
significant difficulty reclaiming and surpassing the August highs, with the odds
still leaning towards further downside pressure from the unwinding of the huge
concentration of funds that were invested in the so called large cap nifty-fifty
stocks over the past several years, and from sequential quarterly earnings
disappointments from many established large companies being adversely impacted
by new Internet competition, as shown by the example of Compaq versus Dell.
Should the expected broad market correction end with a climactic market sell-off
due to some unforeseen event, our sector would likely decline somewhat in
sympathy, but not retest the summer lows. Time-wise our sector led this year's
broad market correction.
The question that arises is "why is the market not responding better to
rising profits?" Over half of the companies in the S&P are enjoying strong
profits and growth. Clearly, central bankers are becoming nervous about the
stance of monetary policy because of signs of stronger economic activity.
Although the US economy remains vibrant, relatively sluggish growth, plus
considerable unused capacity in the world as a whole, help explain subdued
inflation. As long as inflation does not pick up significantly, growth in itself
is not a reason to tighten policy. Markets appear overly pessimistic about a
rise in rates.
The unprecedented economic performance of the 1990's was due in no small
way to a revolution on the production side of the US economy. Strong capital
spending, a rising capital stock, and a technological revolution have increased
the economy's underlying productivity trend. Thanks to stronger productivity
growth, the non-inflationary growth potential of the US economy is also rising.
During the past year, Gross Domestic Product ("GDP") grew about 4%, while core
inflation dropped and unemployment was stable. The world economy is now in the
very early stages of a structural increase in productivity due in large measure
to the Internet, which we regard as a global mega-trend along the lines of the
great technological developments of the last 100 years that will cause the
creation and/or redistribution of several trillion dollars in stock
4
<PAGE>
market capitalization across various sectors. Unlike conventional technology
trends, which render the status quo obsolete and create an opportunity for
vendors of new technologies to quickly build new businesses, the Internet is
revolutionizing the way people and companies communicate, research, buy, sell
and distribute goods and services, and spend leisure time. It is fomenting
change and competition into a wide range of mature industries, such as media,
retailing, telecommunications, financial services, healthcare and energy. The
Internet has quickly emerged as a global medium or unified technology platform
for communications, content delivery and electronic commerce. E-commerce is
evolving into a mission-critical component of many companies' operations, and is
dramatically changing how businesses interact with their customers, suppliers
and partners.
An example of a huge business-to-consumer industry that lends itself to the
Internet is healthcare, one of the largest segments of the US economy
representing roughly $1 trillion in GDP. Subscribers now on the Internet who
search for health and medical information is believed to be roughly 17 million,
which could double over the next few years. The reasons for this increase
include: the ability to shop 24 hours a day, 7 days a week; direct delivery of
purchases to the shopper's home; a personal shopping list for every customer,
allowing for fingertip reordering on future visits; and instant confidential
access to individual medical records. The market for all pharmacy products has
grown despite the limitations in terms of convenience, selection, information
and privacy associated with a trip to a traditional drugstore. This implies that
there is a significant market opportunity for an on-line, enhanced shopping
experience through convenient and private access to detailed information about a
broad range of products, and an easy transaction vehicle. The Web has become an
increasingly important tool for researching an array of healthcare topics.
Providing useful information is a critical aspect of enabling consumers to make
informed purchasing decisions.
We continue to believe, however, that the bulk of Internet traffic will be
business-to-business (B2B). The early visible consumer companies like Yahoo!,
Inc., Amazon.com, Inc. and eBay Inc. should continue to do well and remain
attractive long-term holdings. Over the past two decades, companies have
invested heavily in software applications that have reduced costs by automating
basic business processes. From 1995-9, companies spent something on the order of
$100 billion on industrial enterprise applications software to automate such
transaction-oriented functions as sales, support, manufacturing, distribution
and finance. Companies are now investing in Internet infrastructure software and
systems that enable commercial transactions over the Web, as well as systems
that monitor and track customers' behavior on Web sites. These earlier
applications focused on automating business processes rather than analyzing data
to help companies better understand their customers. As electronic commerce
expands, traditional and Internet merchants are turning to the Web to locate new
customers, advertise, market their products and facilitate transactions.
Major opportunities exist for companies providing infrastructure software
and systems for B2B, new telecommunications to build-out the new broadband
network, and electronic commerce. Businesses are changing their operations to
leverage the power of the Internet to stimulate
5
<PAGE>
revenue, reduce costs, and initiate competitive advantages. This will involve
creating B2B digital marketplaces and integrating "virtual" value chains. This
will drive a huge wave of corporate spending on electronic process solutions
early next year, specifically to better reach and retain customers, strengthen
interaction with business partners, and improve internal efficiencies. Companies
are changing how they source and purchase raw materials, how they procure
operating resources and services, and how they sell excess inventory through
digital marketplaces and on-line auctions. Many large companies such as FedEx,
General Motors, Merrill Lynch and Pfizer now use their Web sites as a
fundamental cost-effective way of communicating product and shipment information
as well as conducting business transactions. The goal is to make the entire
business process seamless, instantaneous and customer-specific. Internet enabled
value chain coordination aims to break down the barriers of communication and
foster real-time collaboration among trading partners and customers. Companies
are adopting virtual manufacturing models that link their multiple component
manufacturers, parts distributors and employees by using Internet collaboration
software.
One of the upcoming big Internet investment plays will involve the next
generation build-out of a new public data network. The volume of high-speed data
traffic across the public telecommunications network has grown exponentially to
where it is now doubling every 7-8 weeks. However, the existing public
infrastructure network is unable to accommodate high-speed data applications
that are instrumental to network growth. Integral to an overall solution is
intelligent optical networking products designed to allow service providers to
optimize fiber optic networks. Today's problem is that the public network
infrastructure was built for voice traffic. Optical fiber itself is only a
physical transmission medium with no imbedded intelligence. The solution is to
build software-based intelligent optical networking products that enable service
providers to quickly and cost effectively provide bandwidth on demand and create
new high speed data services. This will facilitate a gradual migration from the
existing electronic optical (SONET) network.
Internet companies are rapidly establishing that they are not the "concept
stocks" many on Wall Street still imagine. Rather they are stocks that are
supported by very strong underpinnings of higher growth that is threatening the
status quo in numerous sectors of the economy. Good Internet players are in
great demand and short supply now. The risk to investors is not that they buy a
temporarily over-valued stock and see a quick loss on paper, but that they will
miss the biggest stock market wave of the next half dozen years rising 5-10 fold
in value. When Yahoo! went public, most investors balked at a company that
capitalized one million dollars in revenues at a billion dollars. But the
company's growth was so phenomenal that the stock was soon actually trading at a
mere 10 times 4th quarter 1998 annualized revenues.
6
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF NET ASSETS
October 31, 1999
COMMON STOCKS* -- 84.82%
Shares Value
- ------- ------------
50,000 Amazon.com, Inc. ................................... $ 3,531,250
175,000 Ariba, Inc. ........................................ 27,125,000
385,000 Artisan Components, Inc. ........................... 3,657,500
89,000 Ask Jeeves, Inc. ................................... 6,875,250
312,500 At Home Corporation ................................ 11,679,688
52,000 Broadcom Corporation ............................... 6,646,250
217,500 Critical Path, Inc. ................................ 9,950,625
80,000 drugstore.com, inc. ................................ 2,910,000
351,000 eBay Inc. .......................................... 47,428,875
185,000 eToys Inc. ......................................... 11,053,750
88,500 Gilead Sciences, Inc. .............................. 5,592,094
260,000 Healtheon Corporation .............................. 8,580,000
325,000 Homestore.com, Inc. ................................ 15,254,688
139,100 Inktomi Corporation ................................ 14,109,956
103,000 InterNAP Network Services Corporation .............. 9,514,625
77,500 LookSmart, Ltd. .................................... 2,082,813
245,000 MP3.com, Inc. ...................................... 11,882,500
280,000 Net.B@nk, Inc. ..................................... 6,195,000
347,500 PlanetRX.com, Inc. ................................. 8,166,250
210,000 Priceline.com, Incorporated ........................ 12,652,500
47,500 Siebel Systems, Inc. ............................... 5,216,094
45,888 Yahoo! Inc. ........................................ 8,216,820
------------
TOTAL COMMON STOCKS
(Cost $196,200,659) 238,321,528
------------
- ----------
* All Common Stocks held as of October 31, 1999 are non-income producing.
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF NET ASSETS (continued)
October 31, 1999
<TABLE>
<CAPTION>
REPURCHASE AGREEMENTS -- 14.14%
Principal
Amount Value
----------- ------------
<S> <C> <C>
J.P. Morgan
5.17%, dated 10/29/99, matures 11/1/99, repurchase
price $10,005,759 (collateralized by U.S. Treasury Bond:
total market value $10,201,859) .......................................... $10,001,450 $ 10,001,450
SBC Warburg
5.17%, dated 10/29/99, matures 11/1/99, repurchase
price $29,735,576 (collateralized by U.S. Treasury Bond:
total market value $30,320,450) .......................................... 29,722,770 29,722,770
------------
TOTAL REPURCHASE AGREEMENTS (Cost $39,724,220) ............................................ 39,724,220
------------
TOTAL INVESTMENTS -- 98.96%
(Cost $235,924,879) ...................................................................... 278,045,748
------------
OTHER ASSETS AND LIABILITIES, NET -- 1.04%
Receivable for shares of beneficial interest sold ...................................... 4,653,467
Payable for investment securities purchased ............................................ (660,625)
Payable for shares of beneficial interest redeemed ..................................... (617,255)
Other assets and liabilities, net ...................................................... (444,201)
------------
2,931,386
------------
NET ASSETS-- 100% ......................................................................... $280,977,134
============
NET ASSETS:
Fund shares of the Class A Shares
(one billion authorized-$.001 par value) based on 371,609 shares of
beneficial interest .................................................................... $ 8,328,513
Fund shares of the Class D Shares
(one billion authorized-$.001 par value) based on 11,602,712
shares of beneficial interest .......................................................... 230,527,752
Net unrealized appreciation on investments ................................................ 42,120,869
------------
NET ASSETS ................................................................................ $280,977,134
============
Net Asset Value and Redemption Price
Per Share-- Class A .................................................................... $ 23.61
============
Maximum Offering Price Per Share-- Class A ($23.61/94.25%) ................................ $ 25.05
============
Net Asset Value, Offering and Redemption Price
Per Share-- Class D shares ............................................................. $ 23.46
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the period ended For the year ended
October 31, 1999* December 31, 1998
-------------------- ------------------
<S> <C> <C>
INCOME
Interest .............................. $ 2,111,317 $ 14,308
------------- ------------
EXPENSES
Investment advisory fees
(Note 4) ........................ 1,959,874 674,525
Distribution fees--
Class A (Note 5) ................ 20,273 701
Distribution fees--
Class D (Note 5) ................ 316,509 112,067
Professional fees .................. 173,950 64,750
Administration and
accounting fees ................. 173,516 73,466
Transfer agents fees ............... 79,294 19,069
Registration fees .................. 52,698 59,999
Directors' fees and
expenses ........................ 52,556 54,998
Amortization of organization
expenses (Note 2) ............... 48,679 55,998
Printing ........................... 46,850 36,778
Custodian fees ..................... 4,841 10,979
Miscellaneous ...................... 50,640 19,060
------------- ------------
Total expenses before
interest ........................ 2,979,680 1,182,390
Interest expense ................... 20,087 55,110
------------- ------------
Total expenses ..................... 2,999,767 1,237,500
Less: reimbursed expenses
(Note 4) ........................ (53,171) (225,991)
------------- ------------
Net expenses ....................... 2,946,596 1,011,509
------------- ------------
Net investment loss ................ (835,279) (997,201)
------------- ------------
REALIZED AND
UNREALIZED GAIN
ON INVESTMENTS
Net realized gain from
investment transactions ......... 89,294,885 11,408,771
Net change in
unrealized appreciation
of investments .................. 17,013,105 21,783,873
------------- ------------
Total net realized and unrealized
gain on investments ............. 106,307,990 33,192,644
------------- ------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS .................... $ 105,472,711 $ 32,195,443
============= ============
</TABLE>
- ----------
* Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the For the For the
period ended year ended year ended
October 31, 1999* December 31, 1998 December 31, 1997
----------------- ----------------- -----------------
<S> <C> <C> <C>
OPERATIONS
Net investment loss ............ $ (835,279) $ (997,201) $ (913,952)
Net realized gain (loss)
from investment
transactions ................ 89,294,885 11,408,771 (12,022,195)
Net change in unrealized
appreciation of
investments ................. 17,013,105 21,783,873 6,906,137
------------- ------------ ------------
Net increase (decrease)
in net assets from
operations .................. 105,472,711 32,195,443 (6,030,010)
------------- ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS FROM:
Net realized gains
Class A Shares .............. (2,644,686) 0 0
Class D Shares .............. (83,960,097) 0 0
------------- ------------ ------------
Total distributions ............ (86,604,783) 0 0
------------- ------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease)
(Note 6) ....................... 197,111,761 (7,389,154) 12,011,486
------------- ------------ ------------
Total increase in net
assets ...................... 215,979,689 24,806,289 5,981,476
NET ASSETS:
Beginning of period ............... 64,997,445 40,191,156 34,209,680
------------- ------------ ------------
End of period ..................... $ 280,977,134 $ 64,997,445 $ 40,191,156
============= ============ ============
</TABLE>
- ----------
* Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements
October 31, 1999
Note 1. Organization
The Amerindo Technology Fund (the "Fund") is a series of the Amerindo Funds
Inc., a Maryland corporation, which commenced operations on October 28, 1996.
The Fund is a non-diversified, open-end management investment company registered
under the Investment Company Act of 1940, authorized to issue one billion shares
of capital stock in separate series, with each series representing interests in
a separate portfolio of securities and other assets, each with its own
investment objectives and policies. The Fund's investment objective is to seek
long-term capital appreciation by investing in the common stocks of technology
companies.
The Fund offers two classes of shares to investors, Class A and Class D
shares. Class A shares are sold subject to an initial sales load of up to 5.75%
with a minimum investment of $2,500. Class D shares are sold without an initial
sales load with a minimum investment of $2,500. Both Class A and D Shares are
subject to a fee of 3% on redemptions made within the first year of purchase.
The Fund is the only current series of the Amerindo Funds Inc.
Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
Note 2. Summary of Significant Accounting Policies
The following is a summary of the significant accounting policies followed
by the Fund in the preparation of its financial statements. These policies are
in conformity with generally accepted accounting principles for investment
companies. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities at the
date of the financial statements and the reported amounts of revenue and
expenses during the period. Actual results could differ from these estimates.
Securities Valuation -- Securities which are traded on any exchange or on
the NASDAQ over-the-counter market are valued at the last quoted sale price.
Lacking a last
11
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 2. Summary of Significant Accounting Policies (continued)
sale price, a security is valued at its closing bid price on such exchanges, or
at the quoted bid price in the over-the-counter market. Securities for which
market quotations are not readily available are valued in accordance with
procedures established by the Fund's Board of Directors (the "Board"), including
use of an independent pricing service or services which use prices based upon
yields or prices of comparable securities, indications as to values from
dealers, and general market conditions.
Short term investments in fixed income securities with maturities of less
than 60 days when acquired, or which subsequently are within 60 days of
maturity, are valued by using the amortized cost method of valuation, which the
Board has determined should represent fair value.
Federal Income Taxes -- For the year ended December 31, 1998, the Fund did
not qualify as a regulated investment company. Subsequent to December 31, 1998,
the Fund's management elected to change the fiscal year end to October 31, 1999.
It is the Fund's policy to meet the requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provision for federal income or excise taxes is
required.
Organization Expenses -- In April 1998, Statement of Position 98-5,
"Reporting on Costs of Start-Up Activities" ("SOP 98-5"), was issued requiring
start-up costs and organization costs to be expensed as incurred. SOP 98-5
exempted investment companies that met certain criteria from retroactively
applying the provisions of this pronouncement and allowed them to continue to
amortize start-up costs and organization costs over the remaining amortization
period.
During its organization and initial registration with the Securities and
Exchange Commission ( the "SEC"), the Fund incurred organization expenses of
$279,807. In accordance with the provisions of SOP 98-5, the Fund has elected to
defer these expenses and amortize them on a straight-line basis over a 60 month
period beginning with the Fund's commencement of operations. During the period
ended October 31, 1999 and the year ended December 31, 1998, $48,679 and
$55,998, respectively, was amortized.
12
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 2. Summary of Significant Accounting Policies (continued)
Security Transactions and Investment Income -- Security transactions are
accounted for on the date the security is purchased or sold (trade date).
Dividend income is recognized on the ex-dividend date and interest income is
recognized on an accrual basis. Costs used in determining net realized gains and
losses on the sales of investment securities are those of the specific
securities sold adjusted for the accretion and amortization of purchase
discounts and premiums during the respective holding period. Purchase discounts
and premiums on securities held by the Funds are accreted and amortized to
maturity using the scientific interest method, which approximates the effective
interest method.
Income and Expenses -- All income earned and expenses incurred by the Fund
are borne on a pro-rata basis by each outstanding class of shares, based on the
proportionate interest in the Fund represented by the shares of such class,
except that the Fund's Class A shares bear higher distribution fees than Class D
shares.
Dividends and Distributions -- Dividends and distributions to shareholders
are recorded on the ex-dividend date. The timing and characterization of certain
income and capital gains distributions are determined annually in accordance
with federal tax regulations which may differ from generally accepted accounting
principles. As a result, net investment income (loss) and net realized gain
(loss) on investment transactions for a reporting period may differ
significantly from distributions during such period. These book/tax differences
may be temporary or permanent in nature. To the extent these differences are
permanent, they are charged or credited to paid-in-capital or accumulated net
realized gain, as appropriate, in the period that the differences arise.
Accordingly, the following permanent differences, primarily attributable to net
operating losses and the classification of short-term capital gains and ordinary
income for tax purposes, have been reclassified to (from) the following
accounts:
Accumulated Accumulated
Paid-in-Capital Net Investment Income Net Realized Gain
--------------- --------------------- -----------------
$1,241,399 $835,279 $(2,076,678)
This reclassification had no effect on net assets or net asset value per
share.
13
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 3. Purchases and Sales of Securities
Purchases and sales of investment securities (other than short-term
investments), for the period ended October 31, 1999, were $319,278,836 and
$250,793,826, respectively.
At October 31,1999 the cost of investments for federal income tax purposes
was $235,924,879. Accordingly, gross unrealized appreciation of investments was
$54,503,810 and gross unrealized depreciation of investments was $12,382,941,
resulting in net unrealized appreciation of $42,120,869.
Note 4. Investment Advisory and Administration Agreements
The Fund has an agreement with Amerindo Investment Advisors Inc. (the
"Advisor"), with whom certain officers and directors of the Fund are affiliated,
to serve as investment advisor and manager. Under the terms of the agreement, a
monthly fee is paid to the investment advisor based on 1/12th of 1.50% (1.50% on
an annual basis) of the average daily net asset value. This advisory agreement
is subject to an annual review by the Board.
The Advisor has agreed to a reduction in the amounts payable to it and to
reimburse the Fund for any expenses (including the advisory fee, but excluding
taxes, interest and brokerage fees and extraordinary expenses incurred in
connection with any matter not in the ordinary course of business of the Fund)
over 2.50% and 2.25% of the average daily net asset values of the Class A Shares
and Class D Shares, respectively.
For the period ended October 31, 1999 and for the year ended December 31,
1998, the Advisor earned advisory fees of $1,959,874 and $674,525, respectively,
and reimbursed the Fund $53,171 and $225,991, respectively, in expenses.
Amerindo Funds Inc. and SEI Investments Mutual Funds Services (the
"Administrator") are parties to an agreement under which the Administrator
provides management and administrative services for an annual fee of 0.125% of
the average daily
14
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 4. Investment Advisory and Administration Agreements (continued)
net assets of the Fund up to $250 million, 0.09% on the next $250 million, 0.07%
on the next $500 million and 0.05% of such assets in excess of $1 billion. Prior
to September 20, 1999, administrative services were provided to Amerindo Funds,
Inc. by American Data Securities, Inc. for a fee of $1,500 per month if the
Fund's average net assets were less than $10 million, $1,750 per month if the
assets were between $10 to $20 million, and $2,000 per month if the assets were
in excess of $20 million. The Fund also pays the Administrator for any
out-of-pocket expenses.
On September 20, 1999 Forum Shareholder Services, LLC (the "Transfer
Agent") became the transfer agent and dividends disbursing agent for the Fund
under a transfer agency agreement with Amerindo Fund Inc. Prior to this date,
American Data Services, Inc. provided these services to the Fund.
Note 5. Distribution Fees
Amerindo Funds Inc. and SEI Investments Distribution Co. (the
"Distributor") are parties to a Distribution Agreement dated September 15, 1999.
The Fund has adopted a Distribution Plan for Class A and Class D Shares. Under
the terms of the Plan, the Fund pays the Distributor a monthly distribution fee
at an annual rate of 0.50% of the average daily net assets of the Fund's Class A
Shares and 0.25% of the Class D Shares, which may be used by the Distributor to
provide compensation for sales support and distribution activities.
For the period ended October 31, 1999 and the year ended December 31, 1998,
the Fund incurred distribution expenditures of $20,273 and $701 on Class A
Shares, respectively, and $316,509 and $112,067 on Class D Shares, respectively.
15
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 6. Fund Share Transactions
At October 31, 1999 there were one billion shares of $0.001 par value
capital stock authorized. Transactions in capital stock for the period ended
October 31, 1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
Class A Shares
For the For the period
period ended August 31, 1998* through
October 31, 1999** December 31, 1998
-------------------------- ------------------------
Shares Amount Shares Amount
-------- ----------- ------- ---------
<S> <C> <C> <C> <C>
Shares sold ........................ 242,687 $ 6,197,102 60,778 $ 589,063
Shares issued in reinvestment of
distributions from realized gains 108,793 2,575,121 0 0
Shares redeemed (net of redemption
fees retained of $25,948 and
$563, respectively) ............. (39,002) (1,074,275) (1,647) (18,270)
-------- ----------- ------- ---------
Net increase ....................... 312,478 $ 7,697,948 59,131 $ 570,793
======== =========== ======= =========
</TABLE>
<TABLE>
<CAPTION>
Class D Shares
For the For the For the
period ended year ended year ended
October 31, 1999** December 31, 1998 December 31, 1997
----------------------------- ---------------------------- ----------------------------
Shares Amount Shares Amount Shares Amount
---------- ------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ............. 5,699,786 $ 166,007,792 779,033 $ 6,936,614 3,158,607 $ 22,631,789
Shares issued in
reinvestment
of distributions
from realized gains... 3,197,880 75,214,130 0 0 0 0
Shares redeemed
(net of redemption
fees retained of
$723,877, $11,529,
and $145,946,
respectively) ........ (2,010,955) (51,808,109) (1,518,536) (14,896,561) (1,501,986) (10,620,303)
---------- ------------- ---------- ------------ ---------- ------------
Net increase (decrease).. 6,886,711 $ 189,413,813 (739,503) $ (7,959,947) 1,656,621 $ 12,011,486
========== ============= ========== ============ ========== ============
</TABLE>
- ----------
* Commencement of operations of Class A Shares.
** Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
16
<PAGE>
AMERINDO TECHNOLOGY FUND
Notes to Financial Statements (continued)
October 31, 1999
Note 7. Concentration of Credit Risk
The Fund invests a substantial portion of its assets in securities in the
technology industry. Therefore, it may be more affected by economic and
political developments in that industry than would be a comparable general
equity fund.
17
<PAGE>
AMERINDO TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
CLASS A SHARES
(For a fund share outstanding throughout each period)
<TABLE>
<CAPTION>
For the period
August 3, 1998
For the (commencement of
period ended operations) through
October 31, 1999*** December 31, 1998
------------------- -------------------
<S> <C> <C>
Net asset value, beginning of period ................... $13.59 $ 8.44
------ ------
Income (loss) from investment operations:
Net investment loss .................................... (0.08) (0.10)
Net realized and unrealized gain on investments ........ 20.25 5.25
------ ------
Net increase in net assets from investment operations... 20.17 5.15
------ ------
Less distributions:
Net realized gains on investments ...................... (10.15) 0.00
------ ------
Total distributions .................................... (10.15) 0.00
------ ------
Net asset value, end of period ......................... $23.61 $13.59
====== ======
Total investment return** .............................. 148.20% 61.02%
Ratios/supplemental data
Net assets end of period (in 000's) .................... $8,772 $ 803
Ratio of expenses to average net assets ................ 2.54%* 2.86%*
Ratio of expenses to average net assets,
net of reimbursement ................................ 2.50%* 2.50%*
Ratio of net investment loss to
average net assets .................................. (0.79)%* (2.76)%*
Ratio of net investment loss to average
net assets, net of reimbursement .................... (0.75)%* (2.40)%*
Portfolio turnover rate ................................ 170.00% 78.46%
</TABLE>
- ----------
* Annualized.
** Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges are not
reflected in the calculation of total investment return.
*** Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
18
<PAGE>
AMERINDO TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
CLASS D SHARES
(For a fund share outstanding throughout each period)
<TABLE>
<CAPTION>
For the period
For the For the For the October 28, 1996
period ended year ended year ended (commencement of
October 31, December 31, December 31, operations) through
1999*** 1998 1997 December 31, 1996
------------ ------------ ------------ -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period .... $ 13.61 $ 7.37 $ 9.00 $ 10.00
-------- -------- ------- -------
Income (loss) from investment operations:
Net investment loss ..................... (0.07) (0.20) (0.16) (0.04)
Net realized and unrealized gain (loss)
on investments ....................... 20.07 6.44 (1.47) (0.96)
-------- -------- ------- -------
Net increase (decrease) in net assets
from investment operations ........... 20.00 6.24 (1.63) (1.00)
-------- -------- ------- -------
Less distributions:
Net realized gains on investments ....... (10.15) 0.00 0.00 0.00
-------- -------- ------- -------
Total distributions ..................... (10.15) 0.00 0.00 0.00
-------- -------- ------- -------
Net asset value, end of period .......... $ 23.46 $ 13.61 $ 7.37 $ 9.00
======== ======= ======= =======
Total investment return** ............... 146.74% 84.67% (18.11)% (10.00)%
Ratios/supplemental data
Net assets end of period (in 000's) ..... $272,205 $64,194 $40,191 $34,210
Ratio of expenses to average net assets . 2.29%* 2.75% 2.83% 3.82%*
Ratio of expenses to average net assets
net of reimbursement ................. 2.25%* 2.25% 2.25% 2.25%*
Ratio of net investment loss to
average net assets ................... (0.68)% * (2.72)% (2.83)% (3.82)%*
Ratio of net investment loss to average
net assets, net of reimbursement ..... (0.64)% * (2.21)% (2.25)% (2.25)%*
Portfolio turnover rate ................. 170.00% 78.46% 355.21% 0.00%
</TABLE>
- ----------
* Annualized.
** Total investment return is calculated assuming an initial investment made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period.
*** Subsequent to December 31, 1998, the Fund's management elected to change
the Fund's fiscal year end to October 31, 1999.
19
<PAGE>
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Amerindo Funds Inc.
We have audited the accompanying statement of net assets of the Amerindo
Technology Fund (the sole fund constituting Amerindo Funds Inc.; collectively
known as the "Fund"), as of October 31, 1999, and the related statements of
operations for the ten months ended October 31, 1999 and the year ended December
31, 1998, the statements of changes in net assets for the ten months ended
October 31, 1999, and for each of the two years ended December 31, 1998 and
1997, and the financial highlights for each of the periods indicated therein.
These financial statements and financial highlights are the responsibility of
the Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and financial highlights. Our procedures included confirmation of
securities owned as of October 31, 1999, by correspondence with the custodian.
An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of the
Amerindo Technology Fund as of October 31, 1999, the results of its operations
for the ten months ended October 31, 1999 and the year ended December 31, 1998,
the changes in its net assets for the ten months ended October 31, 1999, and for
each of the two years ended December 31, 1998 and 1997, and the financial
highlights for each of the periods indicated therein in conformity with
generally accepted accounting principles.
Morrison, Brown, Argiz & Company
Miami, Florida
November 17, 1999
20
<PAGE>
NOTICE TO SHAREHOLDERS
- --------------------------------------------------------------------------------
(Unaudited)
For shareholders that do not have an October 31, 1999 tax year end, this
notice is for informational purposes only. For shareholders with an October 31,
1999 tax year end, please consult your tax advisor as to the pertinence of this
notice. For the fiscal year ended October 31, 1999, each portfolio is
designating the following items with regard to distributions paid during the
year.
<TABLE>
<CAPTION>
Long Term
(20% Rate) Ordinary
Capital Gain Income Tax-Exempt Total Qualifying
Fund Distribution Distributions Interest Distributions Dividends(1)
---- ------------ ------------- ---------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Amerindo Technology Fund 36.58% 63.42% 0.00% 100.00% 0.00%
</TABLE>
- ----------
(1) Qualifying dividends represent dividends which qualify for the corporate
dividends received deduction and is reflected as a percentage of "Ordinary
Income Distributions".
21
<PAGE>
Investment Advisor
- --------------------------------------------
Amerindo Investment Advisors Inc.
San Francisco, California/New York, New York
Administrator
- --------------------------------------------
SEI Investments Mutual Funds Services
Oaks, Pennsylvania
Distributor
- --------------------------------------------
SEI Investments Distribution Co.
Oaks, Pennsylvania
Transfer and Dividend Agent
- --------------------------------------------
Forum Shareholder Services, LLC
Portland, Maine
Custodian
- --------------------------------------------
The Northern Trust Company
Chicago, Illinois
Legal Counsel
- --------------------------------------------
Battle Fowler LLP
New York, New York
Independent Auditors
- --------------------------------------------
Morrison, Brown, Argiz & Company
Miami, Florida
1-888-TECH FUND
www.amerindo.com
AME-F-001-02
