Interim Report January - September 2000

INTERIM REPORT JANUARY - SEPTEMBER 2000 Investor's net asset value on September 30, 2000, amounted to SEK 161,062 m. (119,353 on September 30, 1999). This corresponds to SEK 201 (149) per share. At year-end 1999, Investor's net asset value amounted to SEK 153,259 m., corresponding to SEK 191 per share. In the first nine months of the year, net asset value increased by SEK 7,803 m. (25,851) or 5 percent (28). On September 30, 2000, the value of all Investor's holdings was SEK 172,199 m. (132,706), which is on a par with the value at year-end 1999 (172,172). Since year-end, net debt in relation to total assets has decreased from 11 to 6 percent. The total return on Investor shares amounted to 17 percent (9) in the first nine months of 2000. During the period, Investor increased its holdings in AstraZeneca (SEK 257 m.), SEB (SEK 287 m.) and Electrolux (SEK 760 m.). In the same period, Scania shares were divested for SEK 13,838 m. A Swedish UMTS application (license for third generation mobile telephony) was submitted to the National Post and Telecom Agency through the newly formed company HI3G. Investor owns 40 percent of the company and Hutchison Whampoa owns 60 percent. During the period, SEK 7,059 m. was invested within the new investments business area. Divestments amount to SEK 2,603 m., of which capital gains account for SEK 1,494 m. Lycos Europe has agreed to acquire Spray Network with its own shares. Following this transaction and a directed new issue, Investor's ownership will correspond to 4.8 percent of Lycos Europe. The transaction is expected to be closed in October. The interim report can also be accessed on the Internet www.investorab.com PRESIDENT'S COMMENTS Differentiated portfolio balances market fluctuations Recently we have seen substantial fluctuations in the financial markets. The euro and a number of other currencies have weakened against the dollar. There has been concern about the impact high oil prices will have on economic growth. In Asia, last year's strong upturns have lost momentum and in some quarters the pace of growth has slowed. In some financial markets in Europe, Asia and Latin America, performance has been negative since the beginning of the year. Prices have fallen for many technology and telecom stocks, partly due to profit warnings from a number of major computer companies and component manufacturers. The technology-heavy Nasdaq Stock Market in the U.S. has fallen nearly 10 percent since the beginning of the year following a decline of almost 13 percent in September. This decline has subsequently continued. One of the sectors which has continued its positive performance is healthcare. This sector accounts for one-third of Investor's core holdings. The individual company that contributed most to the growth in Investor's net asset value in the first nine months of this year is AstraZeneca with SEK 13.5 billion. AstraZeneca has a promising research portfolio and is one of the most R&D-intensive companies in its sector. New technologies also provide new opportunities for innovation and product development within medical technology, biotechnology and pharmaceuticals. Here, Investor has made significant investments through Investor Growth Capital and now has some 30 holdings within these areas in the U.S. and Europe. Another sector experiencing strong growth is financial services, which makes up one-tenth of our core holdings. Here we have OM Gruppen which made a bid for the London Stock Exchange in the third quarter. We were involved when OM Gruppen was formed in the mid-1980s and their continued international expansion has our full support. In the first nine months of the year, OM Gruppen contributed SEK 3 billion to Investor's growth in value. SEB, which is in the same sector, contributed more than SEK 2 billion. The technology sector, with Ericsson and WM-data, accounts for one-third of Investor's portfolio of core holdings. In the first nine months of the year, the value of our holding in Ericsson increased by SEK 2.5 billion while the holding in WM-data declined in value by SEK 3.2 billion. In addition to the holdings in Ericsson and WM-data, Investor has approximately SEK 8 billion in IT-related companies through our New Investments business area. The areas which we find particularly attractive are the Internet and IT services, telecommunications, software and education. Some other sectors in our portfolio have experienced a negative stock market development so far this year. However, these companies are also making intensive efforts to adapt and take advantage of new technologies and a changed environment through product development, a greater knowledge and service content, and cost savings. The importance of having a stable and differentiated portfolio can be clearly seen when there are substantial market fluctuations. The long-term holdings balance each other over time. At the same time, the portfolio must be continually adapted to the changes that occur as regards the growth rate in different sectors. In this nine-month period, we increased our holdings in AstraZeneca and SEB. We also increased in Electrolux when we found the valuation attractive. We continue to make our largest investments in the New Investments business area. A total of SEK 7 billion was invested during the period January to September. We were able to exploit our opportunities to participate in the creation of new businesses in harmony with the old, primarily within areas where new technology is being used. One such area is Internet-based commerce between companies. In partnership with ABB, SEB and a number of other companies, we formed b-business partners earlier this year, which made two additional investments in the third quarter. We believe strongly in the future prospects of this area. Another area in which we continue to believe is the mobile Internet. In addition to making our own direct investments, we have together with Ericsson and others, formed Ericsson Venture Partners, a venture capital fund with a focus on the mobile Internet. Last spring, Ericsson, Hutchison Whampoa and Investor formed imGO, a company focused on investments in mobile data communication in Asia. Hong Kong-based Hutchison Whampoa is a world leader in mobile communications systems. We formed a joint venture with them which applied for a license for the third generation of mobile telephony systems in Sweden. The most resource-intensive activities within Investor today are our new investment operations. These are conducted from offices in New York, Palo Alto, Hong Kong, Stockholm and Amsterdam. Here there is greater mobility and shorter investment horizons than those applying to our traditional more long-term holdings. Today, 70 percent of our portfolio comprises holdings in growth sectors such as IT/telecom, healthcare and financial services. Some of these investments are within what is known as the venture capital market. Naturally, we must expect that some investments will not be as successful as we had hoped, despite careful analyses and active follow-up through board work. But at the same time it is within these areas that we see great opportunities for future value growth. Investor was originally formed as a venture capital company in order to be able to support the entrepreneurial spirit in both large and small companies. This is just as important today as it was at the start of our history. Marcus Wallenberg P.S. Log on to Investor's new website www.investorab.com for more information about our holdings. ------------------------------------------------------------ This information was brought to you by BIT http://www.bit.se The following files are available for download: http://www.bit.se/bitonline/2000/10/12/20001012BIT00200/bit0001.doc http://www.bit.se/bitonline/2000/10/12/20001012BIT00200/bit0002.pdf