Dot.com fund fights for survival

The price of technology stocks has slumped

A dot.com investment trust which has been forced to sell all but £7.8m of its portfolio to pay off debts has opened talks with shareholders in an effort to continue trading.

The Framlington NetNet.Inc plc investment trust, launched last March just as the dot.com bubble began to pop, is to consult backers including some of the UK's premier investment managers after selling £41m of share to meet bank demands.

The enterprise used £40m backing from the Bank of Scotland, on top of £60m of shareholder funds, to create a £100m investment pot at launch.

But "as a consequence of the falls in world markets", the fund, which was prompted by its declining value to restructure its debt in January, has been forced to sell sufficient bonds and shares pay it off altogether.

City meetings

"We will be going round with managers speaking to major shareholders about what happens next," a spokesman for the fund told BBC News Online.

"We have received one or two voices of support so far."

The move leaves the fund, backed by finance giants including CGNU, Britannia Investment Managers and Aberdeen Asset Managers, with a portfolio worth less than 8% of its launch value.

But the 85% decline in the price of shares in the fund since last March denies Framlington NetNet a place in the '90% club' of worst performing net-related enterprises.

Leading manager

The fund, while operated as a listed company, is managed by Framlington, which describes its investment strategy as "growth at a reasonable price... combined with an ability to spot positive global trends".

Framlington manages billions of pounds of assets on behalf of pension funds, charities, corporations and private investors.

Robert Jones, chairman of the NetNet, said in October that the trust was "well positioned to benefit from developments in the internet".

"Within the pure internet sector, valuations for the market leaders are now at more attractive levels," he said.

The trust was looking to boost holdings in dot.com firms, with many broader based technology firms "facing some concerns regarding their future earnings", he added.