Authorities urged to rein in powers of the fund's managers A $750 million fund investing in technology research and business ventures has lost $247 million, the auditor's report revealed. Many of the projects it backed lost nearly all the money invested. The report said the Applied Research Fund, formed in March 1998, had invested $461 million in 50 projects but that 32 suffered a loss, of which 18 lost at least 90 per cent of their capital. The government's goal for the fund was to achieve the 'best return rate achievable'. Private-sector fund managers have been engaged since November 1998 to improve performance, but the audit report said they had not made much difference. Six of the 23 investments made by the fund managers lost $75.4 million between them. Four of the six companies went into liquidation, while the other two were sold at a loss. The report urged the Applied Research Council and the government to 'take vigorous action to strengthen control over the disposal of the investments by fund managers', who now have absolute discretion to invest. The Audit Commission also indicated that there had been difficulty identifying worthwhile projects for the fund to invest in; it noted only five investments had been made over the past three years and none since May. John Tsang Chun-wah, the Secretary for Commerce, Industry and Technology, yesterday said the report would be studied and acted on. But he said the performance of the fund could not be assessed solely from a financial point of view, as technology was a long-term investment. He said the projects backed by the fund had created new industries and job opportunities. The minister said it would be premature to say the fund had made a loss since about 40 per cent of the investment projects it supported had not been completed. 'We have not wasted the money, as it is a long-term investment,' he said. ICEA Securities telecoms analyst Bertrand Chui Kwok-hay said the poor performance of the fund's investments was partly down to the bursting of the technology sector bubble between late 2000 and 2002.