SEMI-ANNUAL REPORT
JUNE 30, 1999
<PAGE>
TABLE OF CONTENTS
SHAREHOLDER LETTER. . . . . . . . . . . . . . . .1
ECONOMIC OUTLOOK. . . . . . . . . . . . . . . . .3
SCHEDULE OF INVESTMENTS . . . . . . . . . . . . .5
STATEMENT OF ASSETS AND LIABILITIES . . . . . . .7
STATEMENT OF OPERATIONS . . . . . . . . . . . . .8
STATEMENT OF CHANGES IN NET ASSETS. . . . . . . .9
NOTES TO FINANCIAL STATEMENTS . . . . . . . . 10
FINANCIAL HIGHLIGHTS. . . . . . . . . . . . . . 13
YEAR 2000 INVESTOR UPDATE . . . . . . . . . . . 15
<PAGE>
June 30, 1999
Dear Shareholder:
We are pleased to report to our shareholders that the Amerindo Technology
Fund Class A shares achieved a stunning gain of 119.57% (without sales charge)
for the six months ended June 30, 1999. The Class D shares for the same period
returned 117.78%.
We attribute a large part of these impressive gains over the past six months to
the broadening of the stock market away from large cap growth stocks. The
market's major theme has become the expansion of earnings stories. Our earlier
call for a correction in our emerging technology sector, heavily weighted
towards the Internet, is on track. In April, we had expected a six-month decline
with individual stocks correcting 40% plus from their highs. By making a
well-timed shift and moving a portion of our portfolio to cash, we were able to
sustain our performance. We believe that the bulk of the correction is now
behind us and the fourth quarter should see a major resumption of strength in
technology.
Early in 1999 we made the decision to lower the investment minimums to make our
Fund available to all potential investors interested in being a part of what we
believe will offer the most significant investment opportunities for the Fund
over the next three to five years, namely, the Internet. The response was
extremely positive and the assets of the Fund nearly tripled to $178 million as
of June 30, 1999. We also recently established an automatic investment program
so our shareholders could invest strategically by adding to their holdings
during periodic market corrections in our sector. This philosophy has served us
well as a fundamental underpinning of our management style for over two decades.
Our outlook for emerging technology remains extremely positive. We would like to
highlight two stocks that recently became public and that we find particularly
attractive for our Fund to own.
ARIBA was added to the Fund during the second quarter. They are the leading
provider of Internet and Internet-based business-to-business electronic commerce
solutions for operating resources. The company enables organizations to automate
the procurement cycle within their own "intranets", namely, the internal
computer networks that are based on the Internet protocol. Their recently
launched Ariba.com network is a global business-to-business electronic commerce
network for operating resources that enables buyers and suppliers to automate
transactions on the Internet. Over the past 30 years, information technologies
have brought automation to departmental operations such as manufacturing
resource planning, financial management, sales force automation and human
resource management. However, the information technology platforms that made
departmental automation possible did not provide enterprise-wide connectivity
within organizations or connectivity between organizations. Thus, the processes
linking end-users to approvers and organizations to suppliers for operating
resources still remain largely paper-based.
1
<PAGE>
With the widespread implementation of intranets and the adoption of the Internet
as a business communication platform, organizations can now automate
enterprise-wide and inter-organizational commerce activities. The availability
of this technology creates a significant market opportunity for Internet-based
business-to-business electronic commerce solutions for operating resources.
MP3.COM is at the forefront of a new Internet-based technology for
inexpensively compressing audio-visual data that will dramatically alter the way
recorded music is distributed. In recent years consumers have increasingly used
their computers to play music. Consumers can now play CDs on their computers
with the ease and fidelity formerly associated only with stereo systems.
However, music files can be very large; storing and transferring audio files is
expensive and slow. To address this problem, compression formats have been
developed such as the MP3 standard that MP3.com uses. MP3.com, however, is not
about the MP3 compression format; it is about pioneering a revolutionary
approach to the promotion and distribution of music, benefiting both artists and
consumers. The company offers its artists a distribution model that allows them
to upload and promote their music through their own MP3.com webpage for no
charge; control pricing of their music, and achieve superior economics through
revenue sharing on the sales of their digital audio music (DAM) CDs.
Internationally recognized artists can promote their music to a global audience
in new ways that didn't exist before. Artist discovery is facilitated by
allowing users to browse the site alphabetically through geographical
classifications from countries to local towns or by music genre and style.
As we near our three-year anniversary of the Amerindo Technology Fund we
would like to thank the shareholders who have remained loyal supporters of our
unique investment approach. We continue to expend a large proportion of our
analytical and valuation talent on the evolution of the Internet as we continue
to believe that companies in the Internet and related sectors offer the most
compelling long-term investment opportunities for our shareholders. We have
consistently stated, and it bears repeating, that the Fund is designed for long
term investors who can accept above average levels of price fluctuations, and
who understand that this volatility is inherent in high performance growth stock
investing.
AMERINDO TECHNOLOGY FUND
/s/ Alberto W. Vilar /s/ Gary A. Tanaka
- -------------------- ------------------
Alberto W. Vilar Gary A. Tanaka
<PAGE>
ECONOMIC OUTLOOK
We address three key issues in this letter: recent trends in interest rates
and inflation affecting the market; the broadening of the market which is the
principal development this year; and, our assessment of the ongoing correction
in the Internet sector.
The current expansion is now 100 months old. It is already the most durable
peacetime expansion on record and in six months, it will be the longest
expansion ever. An important new factor responsible for a good deal of the
economy's impressive performance has been a swing in corporate attitudes away
from the perception that revenues could be boosted by inflationary price hikes
to an emphasis on reducing costs and boosting productivity gains. A record share
of real GDP is being ploughed back into capital spending, notably on information
technology equipment, which also serves to boost aggregate demand in the
economy. This has led to a substantial increase in productivity growth from the
1980s. With capital investments continuing to grow as a share of GDP,
productivity growth could exceed 3% in 1999 and 2000, identical to the
experience of the 1960s. The revolutionary Internet-based productivity could
eventually surpass the growth rates of three decades ago. We do not believe that
31/2% productivity growth is an aberration, but rather is a result of emerging
digital technologies, which permit the economy to utilize underemployed labor,
substitute capital for labor, and avail itself of the global labor pool. The
increasingly knowledge -based foundation of the economy, aided by low cost
telecommunications, is facilitating the worldwide export of workloads.
Inflation has remained subdued because of competitive pressures and excess
capacity, which could intensify during the second half, when domestic demand
should moderate. This should leave core inflation at its current negligible rate
intact for this year. In fact, in each of the past seven years, core inflation
was lower during the second half than during the first half.
Debate has raged over the Fed's perceived need to raise interest rates to
keep inflation in check. We believe that the Fed's recent token tightening is
not motivated by its traditional focus on inflation fighting; rather, it is an
aftermath of last summer's efforts to mitigate the worst banking situation in
half a century. The Fed may well decide to systematically claw back most of the
75-basis point crisis-inducing-easing over the next few quarters. To do
otherwise and maintain shorter rates at a crisis determined level could put a
fully-employed economy at unnecessary risk. The worsening of the debt emergency
and last year's hedge fund debacle helped to drive yields below 5%. With these
problems largely behind us, yields have returned to more appropriate levels.
We continue to believe that the major story for the stock market this year
is its ongoing broadening from the huge concentration of money that was invested
in large cap growth stocks, which are now vastly overvalued. Investors will be
forced to gradually contemplate substituting the world economic and financial
system risk that they've stressed in their analyses for individualized risks
unique to specific investment portfolios instead. Last year, investors weathered
a very testing world economic climate by sheltering their ownership of equities
in concentrations of the high profile large cap companies. With the world
financial crisis gradually dissipating this year, it is no longer crucial to own
the pure blue chip multinationals. This broadening of the market will take many
quarters, if not years. Given the degree of over-ownership in the present crop
of the so-called "nifty-fifty" stocks, the unraveling process will not be
3
<PAGE>
straightforward for the market. The process of shifting to more volatile,
less-predictable earnings growth will also cause very significant portfolio
disruptions. Trading down in quality means buying companies that fall outside of
the confines of very highly valued growth companies that were yesterday's
success stories. Investors will then have to cope with an increasing number of
companies that will see their businesses impacted negatively by Internet-based
competition. In the once-in-a-generation transformation of the economy that we
believe the Internet will usher in, there will be numerous companies like Compaq
and Merrill Lynch that were hurt by new Internet companies like Dell and Schwab.
We indicated in our first quarter report that we believed that the Internet
sector, which is the basic building block of our Third Generation of Computing
in 40 years, was likely to correct. This has pretty much happened as we
expected. While we remain convinced that a new bull market cycle in emerging
technology started last October, technology stocks historically undergo 40% plus
periodic corrections from their highs. Many of the top Internet stocks have
already receded a like amount from their April peaks. We predict investors will
probably become confused and discouraged near term when the broad market has its
overdue correction of its own, simultaneous with the Internet stocks completing
a basing process that will set the stage for another major up-leg likely to get
underway in the fourth quarter.
The Internet continues to roll out at a near-exponential rate. The Internet
has emerged as the fastest growing communications medium in history and is
dramatically changing how businesses and individuals communicate and share
information. The Internet has also created many new opportunities for conducting
electronic commerce. Recently, the widespread adoption of intranets and the
acceptance of the Internet as a business communications platform has created a
foundation for business-to-business e-commerce. Poised for very rapid growth, it
offers the potential for organizations to streamline complex processes, lower
costs and improve productivity. Another important new area undergoing dynamic
growth is online auctions, which could potentially be one of the most valuable
innovations fostered by the Internet. Dynamic auction pricing is creating far
more competitively priced and vastly deeper markets.
Our conclusion is that while the broad market is vulnerable to a major
correction, our own emerging technology sector has already sustained a major
correction since April and will soon be poised to outperform once again as more
and more investors acknowledge the fact that Internet technology is rapidly
promoting the largest transformation of the US economy in a generation.
4
<PAGE>
AMERINDO TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCKS - 68.33%
MARKET
SHARES VALUE
- ------ -----
<C> <S> <C>
72,500 +Amazon.com, Inc. .............................. $9,071,562
60,000 +America Online ................................ 6,630,000
144,500 +Ariba, Inc. ................................... 14,052,625
305,000 +Artisan Components, Inc. ...................... 3,545,625
40,000 +broadcast.com ................................. 5,342,500
52,000 +Broadcom Corporation .......................... 7,517,250
37,500 +Centocor, Inc. ................................ 1,748,437
200,000 +Critical Path, Inc. ........................... 11,062,500
55,000 +ebay, Inc. .................................... 8,305,000
185,000 +eToys, Inc. ................................... 7,538,750
70,000 +Exodus Communications ......................... 8,395,625
25,000 +Geltex Pharmaceuticals, Inc. .................. 450,000
25,000 +Gilead Sciences, Inc. ......................... 1,306,250
55,000 +Inktomi Corporation ........................... 7,180,938
1,900 +Momentum Business Applications, Inc. .......... 13,419
112,500 +Siebel Systems, Inc. .......................... 7,467,188
.60,000 +The Vantive Corporation ....................... 686,250
125,000 +Yahoo! Inc. ................................... 21,531,250
------------
TOTAL COMMON STOCKS
(Cost $101,590,485) ...................... 121,845,169
------------
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
AMERINDO TECHNOLOGY FUND
SCHEDULE OF INVESTMENTS - CONTINUED
JUNE 30, 1999
(UNAUDITED)
SHORT TERM INVESTMENTS - 62.03%
PRINCIPAL
AMOUNT
- ------
U.S. GOVERNMENT SECURITIES - 30.91%
55,150,000 U.S. Treasury Bill, 3.74%, 07/08/99 ............ 55,109,893
------------
COMMERCIAL PAPER - 31.12%
8,100,000 American Express, 5.50%, 07/01/99 .............. 8,100,000
8,100,000 Associates Corporation, 5.50%, 07/01/99 ........ 8,100,000
8,100,000 Associates First Capital, 5.50%, 07/01/99 ..... 8,100,000
6,900,000 Chrysler Corp., 5.00%, 07/01/99 ................ 6,900,000
8,100,000 Ford Motor Co., 5.01%, 07/01/99 ................ 8,100,000
8,100,000 Northern Trust Co., 5.50%, 07/01/99 ............ 8,100,000
8,100,000 Prudential, 5.35%, 07/01/99 .................... 8,100,000
------------
Total Commercial Paper ......................... 55,500,000
------------
TOTAL SHORT TERM INVESTMENTS
(Cost $110,609,894) ...................... 110,609,893
TOTAL INVESTMENTS
(Cost $212,200,379) ....... 130.36% 232,455,062
LIABILITIES LESS
CASH AND OTHER ASSETS ..... (30.36)% (54,137,273)
------- ------------
TOTAL NET ASSETS ................ 100.00% $178,317,789
======= ============
<FN>
(1) Federal Tax Information: At June 30, 1999 the net unrealized appreciation
based on cost for Federal Income tax purposes of $212,200,379 was as
follows:
Aggregate gross unrealized appreciation for all investments
in which there was an excess of value over cost .......... $23,015,199
Aggregate gross unrealized depreciation for all investments
in which there was an excess of cost over value .............. (2,760,515)
Net unrealized appreciation ................................. $20,254,684
+Non-income producing security
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
ASSETS:
<S> <C>
Investments in securities, at value (cost $212,200,379) (Note 2) $ 232,455,062
Cash at custodian bank ......................................... 197,941
Receivable for fund shares sold ................................ 3,068,217
Interest receivable ............................................ 8,241
Deferred organization expenses (Note 2) ........................ 131,279
Prepaid expenses ............................................... 98,373
Other assets ................................................... 4,350
-------------
Total Assets ................................................... 235,963,463
-------------
LIABILITIES:
Payables:
Fund shares redeemed ..........................$ 1,557,730
Securities purchased .......................... 55,907,105
Advisory fees, net (Note 4) ................... 129,649
Accrued expenses .............................. 51,190
-----------
Total Liabilities .............................................. 57,645,674
-------------
NET ASSETS ..................................................... $ 178,317,789
=============
NET ASSETS:
Class A Shares:
Net assets applicable to 207,015 shares;
one billion shares authorized; $.001 par value ............ $ 6,176,488
=============
Net asset value and redemption price per
Class A Share ($6,176,488/207,015 shares) ................. $ 29.84
=============
Offering price per share ($29.84 / .96) ........................ $ 31.08
=============
Class D Shares:
Net assets applicable to 5,807,358 shares;
one billion shares authorized; $.001 par value ............ $ 172,141,301
=============
Net asset value, offering and redemption price per
Class D Share ($172,141,301 / 5,807,358 shares) ........... $ 29.64
=============
NET ASSETS CONSIST OF:
Capital stock .................................................. $ 6,014
Additional paid in capital ..................................... 75,543,939
Net investment loss ............................................ (295,801)
Net realized gain on security transactions ..................... 82,808,953
Net unrealized appreciation on investments ..................... 20,254,684
-------------
Net Assets ..................................................... $ 178,317,789
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF OPERATIONS
<PAGE>
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED
JUNE 30, 1999
(UNAUDITED)
-----------
INVESTMENT INCOME:
<S> <C>
Interest ..................................................... $ 947,748
Other ........................................................ 31,825
-----------
Total Investment Income ...................................... 979,573
-----------
Expenses:
Investment advisory fees (Note 4) ...................... $ 847,938
Distribution fees- Class D (Note 5) ............... 137,042
Distribution fees- Class A (Note 5) ............... 8,546
Professional fees ................................. 108,884
Administration and accounting fees ................ 69,852
Transfer agent fees ............................... 44,185
Miscellaneous ..................................... 33,652
Directors' fees and expenses ..................... 32,502
Registration fees ................................. 30,000
Printing expense .................................. 28,316
Amortization of organization expenses (Note 2 ) ... 27,769
Interest expense .................................. 19,125
----------
Total expenses .................................... 1,387,811
Less:
Reimbursed expenses (Note 4) ...................... (112,437)
----------
Net expenses ............................................ 1,275,374
-----------
Net investment loss ..................................... (295,801)
-----------
REALIZED AND UNREALIZED GAINS ON INVESTMENTS: (Note 2)
Net realized gain from investment
transactions ............................................ 83,422,376
Net change in unrealized appreciation of
investments ................................................ (4,853,080)
-----------
Net realized and unrealized gain .............................
on investments ............................................. 78,569,296
-----------
Net increase in net assets resulting
from operations ......................................... $78,273,495
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
8
<PAGE>
AMERINDO TECHNOLOGY FUND
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED FOR THE
JUNE 30, 1999 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1998
----------- -----------------
<S> <C> <C>
Net investment loss ................................ $ (295,801) $ (997,201)
Net realized gain from investment transactions ..... 83,422,376 11,408,771
Net change in unrealized appreciation of investments (4,853,080) 21,783,873
------------- -------------
Net increase net assets resulting from operations .. 78,273,495 32,195,443
Net capital share transactions (Note 6 ) ........... 35,046,849 (7,389,154)
------------- -------------
Net increase in net assets ......................... 113,320,344 24,806,289
NET ASSETS:
Beginning of period ................................ 64,997,445 40,191,156
------------- -------------
End of period ...................................... $ 178,317,789 $ 64,997,445
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
AMERINDO TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTSJUNE 30, 1999
(UNAUDITED)
NOTE 1. ORGANIZATION
The Amerindo Technology Fund (the "Fund") is a series of the Amerindo Funds
Inc., a Maryland Corporation incorporated on February 6, 1996, which commenced
operations on October 29, 1996. The Fund is an open-end, non-diversified
management investment company 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.
The Fund is the only current series of the Amerindo Funds Inc.
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.
SECURITY 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 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. However, in all subsequent years,
the Fund intends to comply with requirements of the Internal Revenue Code
applicable to regulated investment companies and to distribute all of its
taxable income to its shareholders. Subsequent to December 31, 1998, the Fund's
management elected to change the fiscal year-end for tax reporting purposes to
October 31, 1999 and for all subsequent years. As a result, the Fund was not
required to record a provision for deferred taxes in accordance with Statement
of Financial Accounting Standards No. 109 "Accounting for Income Taxes."
DIVIDENDS AND DISTRIBUTIONS -- The Fund intends to distribute substantially
all of its net investment income as dividends to its shareholders on an annual
basis. The Fund intends to distribute its net long term capital gains and its
net short term capital gains at least once a year.
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.
10
<PAGE>
AMERINDO TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTSJUNE 30, 1999
(UNAUDITED)
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 six
months ended June 30, 1999, $27,769 was amortized.
OTHER -- The Fund follows industry practice and records security
transactions on the trade date. The specific identification method is used for
determining gains or losses for financial statements and income tax purposes.
Dividend income is recorded on the ex-dividend date and interest income is
recorded on an accrual basis.
YEAR 2000 SYSTEMS COSTS -- The Fund utilizes software and related
technologies throughout its business that will be affected by the date change in
the year 2000. The Fund is in the process of evaluating the full scope and
related costs to insure that its systems continue to meet its internal needs and
those of its customers. Anticipated costs for system modifications will be
expensed as incurred and are not expected to have a material impact on the
Fund's results of operations. However, the Fund cannot measure the impact that
the Year 2000 issue will have on its investments, vendors, suppliers, customers
and other parties with whom it conducts business.
NOTE 3. PURCHASES AND SALES OF SECURITIES
The cost of purchases and sales of investment securities (other than
short-term investments), for the six months ended June 30, 1999, aggregated
approximately $158,503,000 and $168,717,000.
NOTE 4. INVESTMENT ADVISORY AGREEMENT
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 six months ended June 30, 1999, the Advisor earned advisory fees of
$847,938 and reimbursed the Fund $112,437 in expenses.
The Fund has agreements with American Data Services, Inc. (the
"Administrator") to provide shareholder servicing, fund accounting, and
administrative services to the Fund. The services to be provided under the
agreements include day-to-day administration of matters related to the corporate
existence of the Fund (other than rendering investment advice), maintenance of
its records, preparation of reports, supervision of the Fund's arrangement with
its custodian and assistance in the preparation of the Fund's registration
statement under federal and state laws. Costs incurred totaled $114,037 for the
six months ended June 30, 1999.
NOTE 5. DISTRIBUTION FEES
The Board of Directors has adopted a distribution plan ("the Plan")
applicable to the Fund under Section 12(b) of the Investment Company Act of 1940
and Rule 12b-1 thereunder. Pursuant to the Plan, registered broker-dealers and
qualified recipients will be reimbursed by the Fund for distribution
expenditures up to a limit of 0.50% of 1% and 0.25% of 1% on Class A Shares and
Class D Shares, respectively.
11
<PAGE>
AMERINDO TECHNOLOGY FUND
NOTES TO FINANCIAL STATEMENTSJUNE 30, 1999
(UNAUDITED)
For the six months ended June 30, 1999, the Fund incurred distribution
expenditures of $8,546 and $137,042 on Class A shares and Class D shares,
respectively.
NOTE 6. FUND SHARE TRANSACTIONS
At June 30, 1999 there were one billion shares of $0.001 par value capital
stock authorized. Transactions in capital stock during the six months ended June
30, 1999 and the year ended December 31, 1998 were as follows:
<TABLE>
<CAPTION>
CLASS A SHARES:
FOR THE FOR THE PERIOD
SIX MONTHS ENDED AUGUST 3, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
----------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shares sold ........................................ 177,460 $ 4,069,957 60,778 $ 589,063
Shares issued for reinvestment dividends and
distribution from realized gains .............. 0 0 0 0
Shares redeemed (net of redemption fees
retained of $16,378 and $563, respectively) ... (29,576) (725,950) (1,647) (18,270)
------- ------------ ------ ------------
Net increase ....................................... 147,884 $ 3,344,007 59,131 $ 570,793
------- ------------ ------ ------------
<FN>
* Commencement of operations of Class A shares
CLASS D SHARES:
FOR THE FOR THE PERIOD
SIX MONTHS ENDED AUGUST 3, 1998*
JUNE 30, 1999 THROUGH
(UNAUDITED) DECEMBER 31, 1998
----------- -----------------
Shares Amount Shares Amount
------ ------ ------ ------
Shares sold ........................................ 2,154,407 $ 55,337,807 779,033 6,936,614
Shares issued for reinvestment dividends and
distribution from realized gains .............. 0 0 0 0
Shares redeemed (net of redemption fees
retained of $155,030 and $11,529, respectively) (1,063,050) (23,634,965) (1,518,536) (14,896,561)
---------- ------------ --------- ------------
Net increase (decrease) ............................ 1,091,357 $ 31,702,842 (739,503) $ (7,959,947)
---------- ------------ --------- ------------
</FN>
</TABLE>
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.
12
<PAGE>
AMERINDO TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS CLASS A SHARES
(For a fund share outstanding throughout each period)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX AUGUST 3, 1998
MONTHS ENDED (COMMENCEMENT OF
JUNE 30, 1999 OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, 1998
----------- -----------------
<S> <C> <C>
Net asset value, beginning of period ................. $ 13.59 $ 8.44
------------ ----------
INCOME (LOSS) FROM INVESTMENT OPERATIONS:
Net investment loss .................................. (0.06) (0.10)
Net realized and unrealized gain (loss) on investments 16.31 5.25
------------ ----------
Total from investment operations ..................... 16.25 5.15
------------ ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ................. 0.00 0.00
Distributions from realized gains from security
transactions ................................... 0.00 0.00
------------ ----------
Total distributions .................................. 0.00 0.00
------------ ----------
Net asset value, end of period ....................... $ 29.84 $ 13.59
============ ==========
Total return** ....................................... 119.57% 61.02%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) ................. $ 6,176 $ 803
Ratio of expenses to average net assets .............. 2.64%* 2.86%*
Ratio of expenses to average net assets,
net of reimbursement ........................... 2.50%* 2.50%*
Ratio of net investment income (loss) to average
net assets ...................................... (.66%)* (2.76%)
*Ratio of net investment income (loss) to average net
assets, net of reimbursement .................... (.48%)* (2.40%)*
Portfolio turnover rate .............................. 234.38% 78.46%
<FN>
* Annualized
** Based on net asset value per share
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
13
<PAGE>
AMERINDO TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS CLASS D SHARES
(FOR A FUND SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX OCTOBER 29, 1996
MONTHS ENDED FOR THE FOR THE (COMMENCEMENT OF
JUNE 30, 1999 YEAR ENDED YEAR ENDED OPERATIONS) THROUGH
(UNAUDITED) DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 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 ...................... (0.06) (0.20) (0.16) (0.04)
Net realized and unrealized gain (loss) on
investments ........................ 16.09 6.44 (1.47) (0.96)
--------- --------- --------- ---------
Total from investment operations ......... 16.03 6.24 (1.63) (1.00)
--------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ..... 0.00 0.00 0.00 0.00
Distributions from realized gains from
security transactions ............... 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
Total distributions ...................... 0.00 0.00 0.00 0.00
--------- --------- --------- ---------
Net asset value, end of period ........... $ 29.64 $ 13.61 $ 7.37 $ 9.00
========= ========= ========= =========
Total return** ........................... 117.78% 84.67% (18.11%) (10.00%)
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (in 000's) .. $ 172,141 $ 64,194 $ 40,191 $ 34,210
Ratio of expenses to average net assets .. 2.44%* 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 .................. (.72%)* (2.72%) (2.83%) (3.82%)
*Ratio of net investment loss to average
net assets, net of reimbursement .... (.52%)* (2.21%) (2.25%) (2.25%)*
Portfolio turnover rate .................. 234.38% 78.46% 355.21% 0.00%
<FN>
* Annualized
** Based on net asset value per share
</FN>
</TABLE>
The accompanying notes are an integral part of these financial statements.
14
<PAGE>
YEAR 2000 INVESTOR UPDATE
You have probably already heard about the Year 2000 problem, which is also
referred to as Y2K or the Millennium Bug. The problem is simple to understand:
Until recently, many computer systems recognized only two digits for the year,
such as "99" for 1999. This practice began when computers were in their infancy
and computer memory was limited and expensive. If left "unfixed", the two digit
year could compromise computer systems by failing to recognize "00" for 2000
rather than 1900.
Amerindo understands that, as an investor, you have concerns about the
transition to the Year 2000. Like other mutual funds, businesses, and
individuals around the world, the Fund could be adversely affected if the
computer systems used by its service providers do not properly process dates on
and after January 1, 2000. For example, interest rates, fees, and return
calculations could be wrong, initiating the start date from 1900 instead of
2000.
WHAT IS THE AMERINDO TECHNOLOGY FUND DOING ABOUT THE YEAR 2000 PROBLEM?
We are taking this issue very seriously and have taken steps to assure seamless
processing for all systems and applications utilized by the Fund's service
providers. Our goal is to ensure a smooth and uneventful transition into the new
millennium and to that end the Fund has been working, for some time, to prepare
for the Year 2000 transition.
To deal with the Year 2000, we have committed resources to review, evaluate, and
determine if all the Fund's service providers' computer systems meet Year 2000
compliance standards. For mission critical service providers, we have requested
and received information regarding their efforts in adjusting for the Year 2000
transition. We have also sought and received assurances from each service
provider that computer systems used in providing services to the Fund have been
modified to achieve Year 2000 compliance. Be assured that we are continuing to
monitor the progress of these service providers with respect to the testing of
modified systems and that we have sought and received assurances that such
testing confirms Year 2000 compliance.
An additional Year 2000 consideration is the readiness of the companies in which
the Fund has invested. The Year 2000, like any other market influence, could
quite possibly impact fund performance: The impact could as easily be positive
(a company that benefits due to its preparedness) as negative (a company that
suffers from lack of preparedness). The investment advisor to the Fund does
consider Year 2000, like any other factor, in making investment decisions.
While we have received such assurances, the Fund and its shareholders may
experience losses if these assurances prove to be incorrect. Losses could also
arise as a result of Year 2000 computer difficulties experienced by issuers of
portfolio securities or third parties, such as the custodian, banks,
broker-dealers or others with which the Fund does business. It is important to
understand that the Fund cannot warrant or guarantee the compliance of any third
party.
The information contained in this document constitutes
"Year 2000 Readiness Disclosures" within the meaning of the
Year 2000 Information and Readiness Disclosure Act, PL 105-271 1998 S 2392.
15
<PAGE>
WHAT CAN YOU DO TO PREPARE FOR THE YEAR 2000?
At the Amerindo Technology Fund, safeguarding your fund assets is our business
and that is why we have taken a proactive approach to the Year 2000. In the
event that there are any disruptions due to the Year 2000 we are providing you
with the following checklist to help you manage your investments.
MAINTAIN YOUR RECORDS -- Most likely you already keep records of
confirmation and statements for tax purposes and to guard against errors
that can sometimes occur in the normal course of a transaction. If you do
not already have a systematized or orderly way to keep your records, this
is the time to begi., Your detailed records can help you spot potential
errors.
MAINTAIN YOUR LONG-TERM INVESTMENT PLAN -- The market experiences gains or
losses for numerous reasons: The Year 2000 may or may not be one of them.
Historically, attempts to anticipate the market, known as "market timing",
are rarely successful over time. Developing and maintaining a long-term
investment plan has usually proven to be the most prudent strategy to
follow.
CHECK YOUR OWN PC -- Many investors manage their investments on their
personal computers or on-line. If this is the case, you should take steps
to ensure that your personal computer and any software you use are Year
2000 compliant. Most major computer equipment and softwar e manufacturers
have information on their web sites regarding compliance. It is also
possible to purchase software to analyze your hardware and software for
Year 2000 compliance.
SIGN UP FOR ELECTRONIC ACCESS -- At the end of 1999 and the beginning of
2000, there may be a spike in telephone volume. You may find it more
convenient to access accounts or submit any questions electronically. To
ensure success, it would be wise to establish automated telephone or
on-line services before the end of this year.
OBTAIN MORE INFORMATION -- Most mutual fund companies and other financial
institutions such as banks are actively communicating with their clients.
If you have not received appropriate communication on Year 2000 you should
request it. You can also obtain additional information on the Year 2000 at
the U.S. Securities and Exchange Commission's web site (www.sec.gov) or
from The Investment Company Institute, the national mutual fund trade
association's web site (www.ici.org).
IN CASE OF ERROR -- Shareholders who believe that an error has occurred
should immediately contact the Amerindo Technology Fund at:
1-888-TECH FUND (832-4386).
www.amerindo.com
AMERINDO INVESTMENT ADVISORS INC. SERVES AS INVESTMENT ADVISOR FOR THE AMERINDO
TECHNOLOGY FUND. THE AMERINDO TECHNOLOGY FUND IS DISTRIBUTED BY SEI INVESTMENTS
DISTRIBUTION CO., OAKS, PA 19456. SEI INVESTMENTS DISTRIBUTION CO. IS NOT
AFFILIATED WITH THE INVESTMENT ADVISOR.
The information contained in this document constitutes
"Year 2000 Readiness Disclosures" within the meaning of the
Year 2000 Information and Readiness Disclosure Act, PL 105-271 1998 S 2392.
16
<PAGE>
INVESTMENT ADVISOR
Amerindo Investment Advisors Inc.
San Francisco, California/New York, New York
ADMINISTRATOR AND
TRANSFER AND DIVIDEND AGENT
American Data Services, Inc.
Hauppauge, New York
DISTRIBUTOR
ADS Distributors, Inc.
Hauppauge, New York
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
