BBH EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000
Shares Value
------- -----------
COMMON STOCKS (96.2%)
FINLAND (3.5%)
MULTI-INDUSTRY
225,600 Nokia AB ............................................ $ 9,284,221
------------
TOTAL FINLAND ....................................... 9,284,221
------------
FRANCE (20.8%)
BANKING
88,928 BNP Paribas ......................................... 7,668,076
------------
CAPITAL EQUIPMENT
116,500 Alcatel SA .......................................... 7,109,008
------------
ELECTRONIC SEMI-CONDUCTOR
103,180 STmicroelectronics .................................. 5,358,911
------------
ENERGY
82,063 Total Fina SA ....................................... 11,742,462
------------
PHARMACEUTICALS
130,000 Aventis SA .......................................... 9,378,135
------------
SERVICES
153,700 Accor SA ............................................ 6,222,236
50,973 Suez Lyonnaise Des Eaux ............................. 7,778,289
------------
14,000,525
------------
TOTAL FRANCE ........................................ 55,257,117
------------
GERMANY (7.2%)
BANKING
109,000 Bayerische Hypo-und
Vereinsbank AG .................................... 5,985,287
45,039 Deutsche Pfandbrief-und
Hypothekenbank AG ................................. 3,317,895
17,220 Direkt Anlage Bank AG* .............................. 771,652
------------
10,074,834
------------
INSURANCE
26,744 Allianz AG Registered ............................... 9,090,402
------------
TOTAL GERMANY ....................................... 19,165,236
------------
IRELAND (4.5%)
BANKING
811,000 Allied Irish Banks, Plc. ............................ 8,259,548
------------
PHARMACEUTICALS
73,600 Elan Corp., Plc. ADR* ............................... 3,822,600
------------
TOTAL IRELAND ....................................... 12,082,148
------------
ITALY (11.3%)
FINANCE
474,000 Banca Fideuram SpA .................................. 7,289,382
490,000 Mediolanum SpA ...................................... 7,181,954
------------
14,471,336
------------
INSURANCE
141,656 Assicurazioni Generali .............................. 4,658,659
------------
TELECOMMUNICATIONS
599,200 Telecom Italia Mobile SpA ........................... 5,095,581
492,083 Telecom Italia SpA .................................. 5,700,661
------------
10,796,242
------------
TOTAL ITALY ......................................... 29,926,237
------------
NETHERLANDS (5.0%)
CONSUMER GOODS
131,402 Heineken NV ......................................... 7,137,336
------------
ELECTRIC COMPONENTS
158,500 Philips Electronics* ................................ 6,229,573
------------
TOTAL NETHERLANDS ................................... 13,366,909
------------
SPAIN (8.8%)
BANKING
834,758 Banco Santander SA .................................. 8,090,603
------------
FINANCE
630,200 Banco Bilbao Vizcaya SA ............................. 8,397,157
------------
TELECOMMUNICATIONS
363,232 Telefonica de Espana SA ............................. 6,926,939
------------
TOTAL SPAIN ......................................... 23,414,699
------------
SWEDEN (3.0%)
CAPITAL EQUIPMENT
500,000 Ericsson (LM) Telephone Co.
Class B ........................................... 6,654,459
------------
CONSUMER DURABLES
115,587 Electrolux AB ....................................... 1,457,373
------------
TOTAL SWEDEN ........................................ 8,111,832
------------
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
PORTFOLIO OF INVESTMENTS
October 31, 2000 (continued)
Shares Value
------- -----------
SWITZERLAND (4.4%)
PHARMACEUTICALS
7,778 Novartis AG Registered .............................. $ 11,800,716
------------
TOTAL SWITZERLAND ................................... 11,800,716
------------
UNITED KINGDOM (28.0%)
BANKING
790,000 Lloyds TSB Group, Plc. .............................. 8,046,401
------------
ENERGY
1,117,400 BP Amoco, Plc. ...................................... 9,476,122
1,055,000 Shell Transport & Trading Co., Plc. ................. 8,487,729
------------
17,963,851
------------
FOOD & BEVERAGES
798,155 Diageo, Plc. ........................................ 7,533,070
------------
LEISURE
406,194 Granada Compass ..................................... 3,500,720
------------
MEDIA
316,956 Pearson, Plc. ....................................... 8,503,023
------------
PHARMACEUTICALS
359,520 Glaxo Wellcome, Plc. ................................ 10,349,091
------------
SERVICES
409,000 BAA, Plc. ........................................... 3,400,286
------------
TELECOMMUNICATIONS
452,538 British Telecom, Plc. ............................... 5,305,226
2,342,500 Vodafone Airtouch, Plc. ............................. 9,745,868
------------
15,051,094
------------
TOTAL UNITED KINGDOM ................................ 74,347,536
------------
TOTAL INVESTMENTS (identified cost $222,010,121) (a) .. 96.5% $256,756,651
CASH AND OTHER ASSETS IN EXCESS OF LIABILITIES ........ 3.5 9,391,386
----- -----------
NET ASSETS ............................................ 100.0% $266,148,037
===== ===========
----------------
* Non-income producing security
(a) The aggregate cost for federal income tax purposes is $223,325,688, the
aggregate gross unrealized appreciation is $63,939,534, and the aggregate
gross unrealized depreciation is $30,508,571, resulting in net unrealized
appreciation of $33,430,963.
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 2000
ASSETS:
Investments in securities, at value (identified
cost $223,325,688) ................................... $256,756,651
Cash ................................................... 550,476
Receivables for:
Investments sold .................................... 16,873,706
Contributions ....................................... 1,955,253
Foreign tax reclaim ................................. 187,574
Dividends ........................................... 176,833
------------
Total Assets ..................................... 276,500,493
------------
LIABILITIES:
Payables for:
Investments purchased ............................... 8,402,483
Withdrawals ......................................... 1,503,396
Investment advisory fee ............................. 289,872
Custody fee ......................................... 105,303
Administration fee .................................. 15,629
Trustee fee ......................................... 4,000
Accrued expenses and other liabilities .............. 31,773
------------
Total Liabilities ................................ 10,352,456
------------
NET ASSETS ................................................... $266,148,037
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
For the year ended October 31, 2000
NET INVESTMENT INCOME:
Income:
Dividends (net of foreign withholding taxes
of $737,771) ....................................... $ 3,571,653
------------
Expenses:
Investment advisory fee .............................. 1,738,539
Custody fee .......................................... 329,425
Administrative fee ................................... 93,629
Trustees' fees and expenses .......................... 13,988
Miscellaneous expenses ............................... 63,178
------------
Total Expenses ..................................... 2,238,759
Fees paid indirectly ............................... (48,266)
------------
Net Expenses ....................................... 2,190,493
------------
Net Investment Income ................................... 1,381,160
------------
NET REALIZED AND UNREALIZED GAIN:
Net realized gain on investments and foreign
exchange transactions ................................ 2,318,033
Net change in unrealized appreciation on investments
and foreign currency translations .................... 34,710,029
------------
Net Realized and Unrealized Gain ................... 37,028,062
------------
Net Increase in Net Assets Resulting from Operations .... $ 38,409,222
============
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
For the
year ended
October 31, 2000
-----------------
<S> <C>
INCREASE IN NET ASSETS:
Operations:
Net investment income ................................................... $ 1,381,160
Net realized gain on investments and foreign exchange transactions ...... 2,318,033
Net change in unrealized appreciation on investments and foreign currency
translations .......................................................... 34,710,029
-------------
Net increase in net assets resulting from operations ................... 38,409,222
-------------
Capital Transactions:
Proceeds from contributions ............................................. 373,829,857
Fair value of withdrawals ............................................... (146,091,042)
-------------
Net increase in net assets resulting from capital transactions ......... 227,738,815
-------------
Total increase in net assets .......................................... 266,148,037
NET ASSETS:
Beginning of year .......................................................... --
-------------
End of year ................................................................ $ 266,148,037
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY Portfolio
FINANCIAL highlights
For the
year ended
October 31, 2000
----------------
Total Return .......................................... 8.64%
Ratios/Supplemental Data:
Net assets, end of period (000's omitted) .......... $266,148
Expenses as a percentage of average net assets
Expenses paid by Portfolio ..................... 0.82%
Expense offset arrangement ..................... 0.02%
--------
Total Expenses ............................. 0.84%
Ratio of net investment income to average net assets 0.52%
Portfolio turnover rate ............................ 42%
The accompanying notes are an integral part of these financial statements.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
1. Organization and Significant Accounting Policies. BBH 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
accounting principles generally accepted in the United States of America, 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 year ended, arising from changes in the exchange rate.
<PAGE>
BBH EUROPEAN EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (continued)
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 (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 year ended October
31, 2000, the Portfolio incurred $1,738,539 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 year ended October 31,
2000, the Portfolio incurred $93,629 for administrative services.
Custody Agreement Fee. The Portfolio has a custody agreement with Brown
Brothers Harriman (the "Custodian") for which the Custodian receives a fee
calculated and paid monthly. For the year ended October 31, 2000, the Portfolio
incurred $329,425 for custody services. Custody fees for the Portfolio were
reduced by $48,266 as a result of an expense offset arrangement with the
Portfolio's custodian.
Board of Trustees' Fee. Each Trustee receives an annual fee as well as
reimbursement for reasonable out-of-pocket expenses. For the year ended October
31, 2000, the Portfolio incurred $13,988 for these fees.
3. Investment Transactions. For the year ended October 31, 2000, the cost
of purchases and the proceeds of sales of investment securities other than
short-term investments were $216,141,243 and $100,334,091, respectively. There
were no purchases or sales of U.S. government obligations during the year.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Trustees and Investors
BBH European Equity Portfolio:
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of BBH European Equity Portfolio as of
October 31, 2000, and the related statement of operations, the statement of
changes in net assets, and the financial highlights for the year then ended.
These financial statements and financial highlights are the responsibility of
the Portfolio's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities owned at October 31, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of BBH European Equity
Portfolio at October 31, 2000, the results of its operations, the changes in its
net assets, and its financial highlights for the year then ended in conformity
with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 22, 2000
