EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2000
(unaudited)
Shares Value
------- -----------
COMMON STOCKS (99.4%)
FINLAND (6.2%)
MULTI-INDUSTRY
311,600 Nokia ....................... $ 17,890,417
------------
TOTAL FINLAND ............... 17,890,417
------------
FRANCE (17.8%)
BANKING
92,820 Banque National de Paris CI . 7,508,220
------------
CAPITAL EQUIPMENT
23,300 Alcatel Alsthom SA .......... 5,406,171
------------
ENERGY
84,131 Total Fina SA ............... 12,776,328
------------
MEDIA
17,400 Canal Plus .................. 3,356,439
------------
PHARMACEUTICALS
130,000 Aventis SA .................. 7,156,363
------------
SERVICES
184,700 Accor SA .................... 6,865,191
52,600 Suez Lyonnaise Des Eaux ..... 8,255,978
------------
15,121,169
------------
TOTAL FRANCE ................ 51,324,690
------------
GERMANY (8.5%)
BANKING
68,690 Deutsche Pfandbrief-und
Hypothekenbank AG ......... 7,062,616
------------
CAPITAL EQUIPMENT
146,500 SAP AG ADR .................. 7,196,813
------------
INSURANCE
26,744 Allianz AG Registered ....... 10,305,604
------------
TOTAL GERMANY ............... 24,565,033
------------
IRELAND (3.6%)
BANKING
216,000 Allied Irish Banks, Plc. .... 2,157,992
500,000 Allied Irish Banks .......... 4,993,076
------------
7,151,068
------------
PHARMACEUTICALS
73,600 Elan Corp., Plc. ADR* ....... 3,155,600
------------
TOTAL IRELAND ............... 10,306,668
------------
ITALY (9.3%)
FINANCE
100,000 Banca Fideuram SpA .......... 1,492,236
100,000 Mediolanum SpA .............. 1,660,568
------------
3,152,804
------------
INSURANCE
224,800 Assicurazioni Generali ...... 6,402,275
------------
TELECOMMUNICATIONS
829,200 Telecom Italia Mobile SpA ... 7,922,135
675,000 Telecom Italia SpA .......... 9,446,127
------------
17,368,262
------------
TOTAL ITALY ................. 26,923,341
------------
NETHERLANDS (3.7%)
CONSUMER GOODS
115,402 Heineken NV ................. 6,405,261
------------
FINANCE
173,100 Fortis Amev NV .............. 4,356,552
------------
TOTAL NETHERLANDS ........... 10,761,813
------------
SPAIN (8.7%)
BANKING
734,758 Banco Santander SA .......... 7,668,341
------------
FINANCE
555,200 Banco Bilbao Vizcaya SA ..... 7,577,647
------------
TELECOMMUNICATIONS
413,232 Telefonica CA. .............. 9,204,475
11,000 Terra Networks* ............. 681,106
------------
9,885,581
------------
TOTAL SPAIN ................. 25,131,569
------------
SWEDEN (6.7%)
CAPITAL EQUIPMENT
143,200 Atlas Copco ................. 3,351,251
125,000 Ericsson (LM) Telephone Co.
Class 'B' ................. 11,128,798
------------
14,480,049
------------
CONSUMER DURABLES
290,600 Electrolux AB ............... 4,917,996
------------
TOTAL SWEDEN ................ 19,398,045
------------
<PAGE>
EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
April 30, 2000 (continued)
(unaudited)
Shares Value
------- -----------
SWITZERLAND (3.8%)
PHARMACEUTICALS
7,940 Novartis AG Registered ..... $ 11,100,609
------------
TOTAL SWITZERLAND .......... 11,100,609
------------
UNITED KINGDOM (31.1%)
BASIC MATERIALS
331,000 Rio Tinto, Plc. ............ 5,130,207
------------
ENERGY
1,117,400 BP Amoco, Plc. ............. 9,651,483
470,000 British Energy, Plc. ....... 1,251,923
1,055,000 Shell Transport &
Trading Co., Plc. ........ 8,586,627
------------
19,490,033
------------
FOOD & BEVERAGES
831,806 Diageo, Plc. ............... 6,731,183
------------
INSURANCE
339,600 Prudential Corp. ........... 5,215,890
------------
MEDIA
285,000 Pearson, Plc. .............. 9,815,613
------------
PHARMACEUTICALS
400,600 Glaxo Wellcome, Plc. ....... 12,361,730
------------
REAL ESTATE
619,800 British Land Co., Plc. (The) 4,129,766
------------
SERVICES
409,000 BAA, Plc. .................. 2,642,369
1,439,000 British Airways ............ 7,458,692
538,220 Granada Group, Plc. ........ 5,248,292
------------
15,349,353
------------
TELECOMMUNICATIONS
650,400 British Telecom, Plc. ...... 11,661,104
------------
TOTAL UNITED KINGDOM ....... 89,884,879
------------
<TABLE>
<CAPTION>
<S> <C> <C>
TOTAL INVESTMENTS (Identified cost $236,207,868) (a) .......... 99.4% $287,287,064
CASH AND OTHER ASSETS LESS LIABILITIES ........................ 0.6 1,614,063
----- ------------
NET ASSETS .................................................... 100.0% $288,901,127
===== ============
</TABLE>
----------
* non-income producing security
(a) The aggregate cost for federal income tax purposes is $236,207,868, the
aggregate gross unrealized appreciation is $59,272,095, and the aggregate
gross unrealized depreciation is $8,192,899, resulting in net unrealized
appreciation of $51,079,196.
See Notes to Financial Statements
<PAGE>
EUROPEAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
April 30, 2000
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
ASSETS:
Investments in securities, at value (identified cost $236,207,868) (Note 1) .. $287,287,064
Cash (including $41,607 in foreign currency) ................................. 1,468,837
Receivables for:
Investments sold ........................................................ 613,779
Contributions ........................................................... 2,422,960
Dividends and other receivables ......................................... 898,853
------------
Total Assets ....................................................... 292,691,493
============
LIABILITIES:
Payables for:
Investments purchased ................................................... 3,393,262
Withdrawals ............................................................. 143,914
Advisory fee (Note 2) ................................................... 152,756
Custody fee (Note 2) .................................................... 81,853
Administration fee (Note 2) ............................................. 8,225
Accrued expenses and other liabilities .................................. 10,356
------------
Total Liabilities .................................................. 3,790,366
------------
NET ASSETS ....................................................................... $288,901,127
============
Net Assets Consist of:
Paid-in capital ......................................................... $237,858,597
Net unrealized appreciation ............................................. 51,042,530
------------
Net Assets ................................................................. $288,901,127
============
</TABLE>
See Notes to Financial Statements
<PAGE>
EUROPEAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the six months ended April 30, 2000
(unaudited)
<TABLE>
<CAPTION>
<S> <C>
INVESTMENT INCOME:
Income
Dividends (net of foreign withholding tax of $299,270) ............................... $ 1,461,276
-----------
Expenses:
Advisory fee (Note 2) ................................................................ 820,785
Custody fee (Note 2) ................................................................. 161,643
Administrative fee (Note 2) .......................................................... 44,196
Directors' fees and expenses (Note 2) ................................................ 7,042
Miscellaneous expenses ............................................................... 9,390
-----------
Total Expenses .................................................................... 1,043,056
Fees paid indirectly (Note 2) ..................................................... (12,773)
-----------
Net Expenses ...................................................................... 1,030,283
-----------
Net Investment Income ............................................................. 430,993
-----------
NET REALIZED AND UNREALIZED GAIN (NOTES 1 AND 3):
Net realized gain on investments and foreign exchange transactions ............ 9,307,245
Net change in unrealized appreciation on investments and foreign currency
translations ........................................................................ 51,042,530
-----------
Net Realized and Unrealized Gain ................................................... 60,349,775
-----------
Net Increase in Net Assets Resulting from Operations .................................. $60,780,768
===========
</TABLE>
See Notes to Financial Statements
<PAGE>
EUROPEAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
(unaudited)
<TABLE>
<CAPTION>
For the
six months ended
April 30, 2000
---------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income ............................................................. $ 430,993
Net realized gain on investments and foreign exchange transactions .............. 9,307,245
Net change in unrealized appreciation on investments and foreign currency
translations ....................................................................... 51,042,530
------------
Net increase in net assets resulting from operations ............................... 60,780,768
------------
Capital Transactions:
Proceeds from contributions ......................................................... 313,810,271
Value of withdrawals ................................................................ (85,689,912)
------------
Net increase in net assets resulting from capital transactions ..................... 228,120,359
------------
Total increase in net assets ..................................................... 288,901,127
NET ASSETS:
Beginning of period ................................................................... 0
------------
End of period ......................................................................... $288,901,127
============
</TABLE>
See Notes to Financial Statements
<PAGE>
EUROPEAN EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share outstanding throughout the period
(unaudited)
For the six months
ended April 30, 2000
--------------------
Ratios/Supplement Data:
Net asset, end of period (000's omitted) ................... $288,901
Expenses as a percentage of average net assets
Expenses paid by Portfolio ............................. 0.83%(1)
Expense offset arrangement ............................. (0.01)%(1)
-----
Total Expenses ...................................... 0.82%
Ratio of net investment income to average net assets ....... 0.34%(1)
Portfolio turnover rate .................................... 22%
----------
1 Annualized
See Notes to Financial Statements.
<PAGE>
EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Organization and Significant Accounting Policies. European Equity
Portfolio (the "Portfolio") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company which was
organized as a trust under the laws of the State of New York on June 15, 1993.
The Portfolio commenced operations on November 1, 1999. The Declaration of Trust
permits the Trustees to create an unlimited number of beneficial interests in
the Portfolio.
The Portfolio's financial statements are prepared in accordance with
generally accepted accounting principles, which require management to make
certain estimates and assumptions at the date of the financial statements and
are based, in part, on the following accounting policies. Actual results could
differ from those estimates.
A. Valuation of Investments. (1) The value of investments listed on
either a domestic or foreign securities exchange is based on the last sale
price on that exchange prior to the time when assets are valued, or in the
absence of recorded sales, at the average of readily available closing bid
and asked prices on such exchange; (2) unlisted securities are valued at
the average of the quoted bid and asked prices in the over-the-counter
market; (3) securities or other assets for which market quotations are not
readily available are valued at fair value in accordance with procedures
established by and under the general supervision and responsibility of the
Portfolio's Trustees. Such procedures include the use of independent
pricing services, which use prices based upon yields or prices of
securities of comparable quality, coupon, maturity and type; indications
as to the value from dealers; and general market conditions; (4) all
assets and liabilities initially expressed in foreign currencies will be
converted into U.S. dollars at the prevailing rates of exchange available
at the time of valuation; and (5) trading in securities on most foreign
exchanges and over-the-counter markets is normally completed before the
close of the New York Stock Exchange and may also take place on days on
which the New York Stock Exchange is closed. If events materially
affecting the value of foreign securities occur between the time when the
exchange on which they are traded closes and the time when the Portfolio's
net assets are calculated, such securities will be valued at fair value in
accordance with procedures established by and under the general
supervision of the Portfolio's Trustees.
B. Foreign Currency Translations. The accounting records of the
Portfolio are maintained in U.S. dollars. Foreign currency amounts are
translated into U.S. dollars at the current rate of exchange of such
currency against the U.S. dollar to determine the value of investments,
assets and liabilities. Purchases and sales of securities, and income and
expenses are translated at the prevailing rate of exchange on the
respective dates of such transactions. Upon the purchase or sale of a
security denominated in foreign currency, the Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale, for
a fixed amount of U.S. dollars of the amount of foreign currency involved
in the underlying security transaction. The Portfolio isolates that
portion of realized gain or loss on investments resulting from changes in
foreign exchange rates on investments from the fluctuations arising from
changes in market prices of such investments. Reported net realized and
unrealized gains and losses arise from the sales of portfolio securities,
sales of foreign currencies, currency gains or losses realized between the
trade and settlement dates on securities transactions, and the difference
between the amounts of dividends, interest and foreign withholding taxes
recorded on the Portfolio's books and the U.S. dollar equivalent of the
amounts actually received or paid. Net unrealized appreciation or
depreciation on foreign currency translations arise from changes in the
value of the assets and liabilities, excluding investments in securities,
at six months ended, arising from changes in the exchange rate.
<PAGE>
EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
(unaudited)
C. Forward Foreign Currency Exchange Contracts. The Portfolio may
enter into forward foreign currency exchange contracts ("contracts") in
connection with planned purchases or sales of securities, to hedge the
U.S. dollar value of portfolio securities denominated in a particular
currency, or to increase or shift its exposure to a currency other than
U.S. dollars. The Portfolio has no specific limitation on the percentage
of assets which may be committed to these types of contracts. The
Portfolio could be exposed to risks if the counterparties to the contracts
are unable to meet the terms of their contracts or if the value of the
foreign currency changes unfavorably. The U.S. dollar values of foreign
currency underlying all contractual commitments held by the Portfolio are
determined using forward currency exchange rates supplied by a quotation
service.
D. Accounting for Investments. Security transactions are accounted
for on the trade date. Realized gains and losses on security transactions
are determined on the identified cost method. Dividend income and other
distributions from portfolio securities are recorded on the ex-dividend
date. Dividend income is recorded net of foreign taxes withheld where
recovery of such taxes is not assured. Interest income is accrued daily.
E. Federal Income Taxes. The Portfolio will be treated as a
partnership for federal income tax purposes. As such, each investor in the
Portfolio will be subject to taxation on its share of the Portfolio's
ordinary income and capital gains. It is intended that the Portfolio's
assets will be managed in such a way that an investor in the Portfolio
will be able to comply with the provisions of the Internal Revenue Code
applicable to regulated investment companies. Accordingly, no provision
for federal income taxes is necessary.
2. Transactions with Affiliates.
Investment Advisory Fee. The Portfolio has an investment advisory
agreement with Brown Brothers Harriman & Co. (the "Adviser") for which it
pays the Adviser a fee calculated daily and paid monthly at an annual rate
equivalent to 0.65% of the Portfolio's average daily net assets. For the
six months ended April 30, 2000, the Portfolio incurred $820,785 for
advisory services.
Administrative Fee. The Portfolio has an administrative agreement
with Brown Brothers Harriman Trust Company, LLC (the "Administrator") for
which it pays the Administrator a fee calculated daily and paid monthly at
an annual rate equivalent to 0.035% of the Portfolio's average daily net
assets. The Administrator has a subadministration agreement with 59 Wall
Street Administrators for which 59 Wall Street Administrators receives
such compensation as is from time to time agreed upon. For the six months
ended April 30, 2000, the Portfolio incurred $44,196 for administrative
services.
Custody Agreement. The Portfolio has a custody agreement with Brown
Brothers Harriman & Co. for which Brown Brothers Harriman & Co. receives a
fee calculated and paid monthly. For the six months ended April 30, 2000,
the Portfolio incurred $161,643 for custody services. These fees were
reduced by $12,773, as a result of an expense offset arrangement with the
Portfolio's custodian.
Board of Directors' Fee. Each Director receives an annual fee as
well as reimbursement for reasonable out-of-pocket expenses. For the six
months ended April 30, 2000, the Portfolio incurred $7,042 for these fees.
3. Investment Transactions. For the six months ended April 30, 2000,
the cost of purchases and the proceeds of sales of investment securities
other than short-term investments were $168,769,262 and $51,935,073,
respectively. There were no purchases or sales of U.S. government
obligations during the six months.
