RNS Number:7933L
European Exchange Traded Fnd Co PLC
30 May 2003
European Exchange-Traded Fund
Company plc
(an open-ended investment company with variable capital
with registered office in Dublin, Ireland)
HALF YEARLY REPORT
AND FINANCIAL STATEMENTS
For the six months ended 31 March 2003
(Unaudited)
Table of Contents
Page(s)
General Information................................................. 2
Investment Managers' Report (Euro STOXX 50 LDRS and STOXX 50 LDRS) 3-4
Directors' Report................................................... 5-6
Statement of Assets and Liabilities ............................... 7
Statement of Operations ............................................ 8
Statement of Changes in Net Assets ................................. 9
Notes to the Financial Statements................................... 10-17
Portfolio Listing (Euro STOXX 50 LDRS).............................. 18-19
Portfolio Listing (STOXX 50 LDRS)................................... 20-22
Statement of Significant Changes in Portfolio (Euro STOXX 50 LDRS).. 23-24
Statement of Significant Changes in Portfolio (STOXX 50 LDRS)....... 25-26
General Information
European Exchange-Traded Fund Company plc (the "Company") was incorporated on 16
December 1999 as an open-ended investment company with variable capital under
the laws of Ireland as a public limited company pursuant to the Companies Acts,
1963 to 1999 and the European Communities (Undertakings for Collective
Investment in Transferable Securities) Regulations, 1989, as amended. The
Company's objective is the collective investment in transferable securities of
capital raised from the public and it operates on the principle of risk
spreading.
Board of Directors: Registered Office:
Mr. Peter Blessing (Ireland) Guild House
Mr. John Morgan (Ireland) Guild Street
Mr. Carl O'Sullivan (Ireland) IFSC
Mr. Ronald Spencer (Isle of Man) Dublin 1
Mr. Bernard Hoey (Ireland) (Appointed 4 November 2002) Ireland
Investment Manager: (appointed 31 December 2002) Administrator:
Merrill Lynch Investment Managers, LLC AIB/BNY Fund Management (Ireland) Limited
800 Scudders Mill Road Guild House
Wilmington Guild Street
Delaware 19801 IFSC
U.S.A. Dublin 1
Ireland
Investment Manager: (resigned 31 December 2002) Legal Advisers in Ireland:
Merrill Lynch Investment Managers Limited Arthur Cox
33 King William Street Earlsfort Centre
London EC4R 9AS Earlsfort Terrace
England Dublin 2
Regulated by the Financial Services Authority Ireland
Custodian: Sponsoring Broker:
AIB/BNY Trust Company Limited J & E Davy
Guild House Davy House
Guild Street 49 Dawson Street
IFSC Dublin 2
Dublin 1 Ireland
Ireland
Independent Auditors: Registrar and Transfer Agent:
PricewaterhouseCoopers Computershare Investor Services (Ireland) Limited
Chartered Accountants & Registered Auditors 14 Upper Fitzwilliam Street
George's Quay Dublin 2
Dublin 2 Ireland
Ireland
Company Secretary: Sponsor:
Bradwell Limited Merrill Lynch International
Arthur Cox Building 2 King Edward Street
Earlsfort Terrace London EC1A 1HQ
Dublin 2 England
Ireland
Investment Managers' Report for the period ended 31 March 2003
Euro STOXX 50 LDRS
Subscriptions & Redemptions
During the period under review Euro STOXX 50 LDRS ('the Fund') had two further
subscriptions for a total of 9,000,000 shares, bringing the total number of
shares in issue to 47.7 million.
As of the close of business 31 March 2003 the Administrator confirmed that the
Net NAV per share of the Fund was Euro20.39, giving rise to net funds under
management of Euro972.6 million.
Performance
Performance to 31 March 2003 is as shown below:
Capital Basis Net Basis
Return Fund Index Difference Fund Index Difference
Period (%) (%) (%) (%) (%) (%)
1 Month -4.90 -4.85 -0.05 -4.75 -4.73 -0.02
3 Months -14.69 -14.65 -0.04 -14.44 -14.42 -0.02
6 Months -7.66 -7.60 -0.06 -7.43 -7.23 -0.19
Year to Date -14.69 -14.65 -0.04 -14.44 -14.42 -0.02
1 Year -46.20 -46.17 -0.03 -44.78 -45.08 0.30
Since Launch -60.20 -60.20 0.00 -58.33 -58.39 0.06
Source: Merrill Lynch Investment Managers Limited, AIB/BNY Fund Management
(Ireland) Limited
Capital NAV is compared to the price return of the Dow Jones Euro STOXX 50 Index
(the "Index")
Net NAV is compared to the total return of the Index
Dealing Activity
The period under review also saw two quarterly revisions to the Fund as a result
of the scheduled quarterly reviews of the free-float factors, capping weights
and number of shares in issue by the Index, effective 23 December 2002 and 21
March 2003.
The Fund has no over-the-counter positions in place as at the date of this
report.
Merrill Lynch Investment Managers, Llc
31 March 2003
Investment Managers' Report for the period ended 31 March 2003 (continued)
STOXX 50 LDRS
Subscriptions & Redemptions
During the period under review STOXX 50 LDRS ('the Fund') had one further
subscription for a total of 2,000,000 shares, bringing the total number of
shares in issue to 17.6 million.
As of the close of business 31 March 2003 the Administrator confirmed that the
Net NAV per share of the Fund was Euro20.97, giving rise to net funds under
management of Euro369 million.
Performance
Performance to 31 March 2003 is as shown below:
Capital Basis Net Basis
Return Fund Index Difference Fund Index Difference
Period (%) (%) (%) (%) (%) (%)
1 Month -3.10 -3.07 -0.02 -2.58 -2.59 0.01
3 Months -12.85 -12.82 -0.03 -12.05 -12.04 -0.01
6 Months -9.34 -9.33 -0.01 -8.47 -8.34 -0.14
Year to Date -12.85 -12.82 -0.03 -12.05 -12.04 -0.01
1 Year -43.20 -43.20 0.00 -41.85 -41.81 -0.04
Since Launch -57.75 -57.73 -0.02 -55.81 -55.28 -0.52
Source: Merrill Lynch Investment Managers Limited, AIB/BNY Fund Management
(Ireland) Limited
Capital NAV is compared to the price return of the Dow Jones STOXX 50 Index (the
"Index")
Net NAV is compared to the total return of the Index
Dealing Activity
The period under review also saw two quarterly revisions to the Fund as a result
of the scheduled quarterly reviews of the free-float factors, capping weights
and number of shares in issue by the Index, effective 23 December 2002 and 21
March 2003.
The Fund has no over-the-counter positions in place as at the date of this
report.
Merrill Lynch Investment Managers, Llc
31 March 2003
Directors' Report for the period ended 31 March 2003
The Directors submit their half-yearly report together with the unaudited
financial statements for the period ended 31 March 2003.
Directors' responsibilities
The European Communities (Undertakings for Collective Investment in Transferable
Securities, "UCITS") Regulations, 1989, as amended requires the Directors to
prepare unaudited financial statements on a half-yearly basis for each financial
year. Irish company law requires financial statements which give a true and fair
view of the state of affairs of the Company and of its results of operations for
that year. In those financial statements the directors are required to:
* select suitable accounting policies and then apply them consistently;
* make judgements and estimates that are reasonable and prudent; and
* prepare the financial statements on a going concern basis unless it is
in appropriate to presume that the Company will continue in business.
The Directors are responsible for keeping proper books of account which disclose
with reasonable accuracy at any time the financial position of the Company and
to enable them to ensure that the financial statements are prepared in
accordance with accounting standards generally accepted in Ireland and comply
with the Companies Acts, 1963 to 2001 and the European Communities (Undertakings
for Collective Investment in Transferable Securities) Regulations, 1989, as
amended. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
The measures taken by the Directors to secure compliance with the Company's
obligations to keep proper books of account include the use of appropriate
systems and procedures and employment of competent persons. The books of account
are retained at Guild House, Guild Street, IFSC, Dublin 1.
Principal activities and review of the business
The Company has been formed to provide investors with an opportunity to purchase
shares in two Funds whose investment objectives are to replicate so far as
possible the price and yield performance of a selected equity index (the "Index
") thereby allowing investors to obtain market exposure to the companies
comprising the Index in an easily tradeable form. Each Fund will hold a
portfolio of transferable securities that consists of substantially all of the
component securities of the Index in substantially the same weighting as the
Index. Each Fund's ability to replicate the yield performance of the Index will
be affected by the operating expenses incurred by the Fund and by capital
changes in the Index.
Assets, profits and dividends
At the period-end Euro STOXX 50 LDRS' net assets amounted to Euro972,658,023 (30
September 2002: Euro854,398,425) with net income before expenses for the period of
Euro4,457,335 (31 March 2002: Euro1,765,420) whilst STOXX 50 LDRS' net assets amounted
to Euro369,007,266 (30 September 2002: Euro360,869,758) with net income before
expenses for the period of Euro4,443,272 (31 March 2002: Euro2,532,415).
The Directors intend to declare a dividend in respect of each Fund twice a year
within two months of 31 March and 30 September, respectively. Any dividend
declared will be paid out of each Fund's net income less expenses.
Important events during the period
On 26 September 2002 the Directors decided to reduce the total fee charged to
each Fund from 0.50 per cent of the net asset value of each Fund to 0.35 per
cent of the net asset value of each Fund effective from 1 November 2002. This
resulted in a reduction in the Annual Expenses from 0.30 per cent to 0.25 per
cent of the net asset value of each Fund and a reduction in the Promotional
Expenses from 0.20 per cent to 0.10 per cent of the net asset value of each
Fund.
Directors' Report for the year ended 31 March 2003 (continued)
Post Balance Sheet Events
These were no significant post balance sheet events.
Directors, Secretary and their interests
Neither the Directors and their families nor the Secretary had any beneficial
interests in the shares of the Company at 31 March 2003.
Distribution
The Articles of Association, the Prospectus, and the annual and semi-annual
statements of the Company can be obtained free of charge from the relevant agent
for each country.
Statement of Assets and Liabilities as at 31 March 2003
31 March 31 March 31 March 30 September
2003 2003 2003 2002
EURO STOXX STOXX Combined Combined
50 LDRS 50 LDRS
Notes Euro Euro Euro Euro
Assets
Investments at Market Value 2(e) 972,218,632 368,946,675 1,341,165,307 1,214,707,795
Cash 4 2,723,489 1,380,410 4,103,899 27,873,642
Other Receivables 3 3,952,853 2,641,503 6,594,356 1,192,903
Total Assets 978,894,974 372,968,588 1,351,863,562 1,243,774,340
Liabilities
Annual Expenses 10 (682,487) (237,979) (920,466) (2,349,298)
Promotion Expenses 10 (673,509) (203,343) (876,852) (1,427,859)
Distributions Payable 7 (2,385,000) (3,520,000) (5,905,000) (24,729,000)
Securities Purchased Payable (2,495,955) - (2,495,955) -
Total Liabilities (6,236,951) (3,961,322) (10,198,273) (28,506,157)
Net Assets 972,658,023 369,007,266 1,341,665,289 1,215,268,183
Shareholders' Funds 972,658,023 369,007,266
Shares in issue 5 47,700,000 17,600,000
Net Asset Value per Share 20.39 20.97
The accompanying notes form an integral part of the financial statements.
Statement of Operations for the six months period ended 31 March 2003
2003 2003 Six months Six months
EURO STOXX STOXX period ended period ended
50 LDRS 50 LDRS 31 March 2003 31 March
2002
Combined Combined
Notes Euro Euro Euro Euro
Income
Gross Dividend Income 2(d) 5,726,231 4,964,086 10,690,317 4,907,913
Less: Withholding Tax 2(d) (624,544) (581,229) (1,205,773) (779,121)
Net Dividend Income 5,101,687 4,382,857 9,484,544 4,128,792
Interest Income 2(d) 70,971 18,995 89,966 54,043
Stock Lending Income 8 194,677 21,420 216,097 -
Equalisation 2(f) (910,000) 20,000 (890,000) 115,000
Net Income 4,457,335 4,443,272 8,900,607 4,297,835
Less: Annual Expenses 10 (1,320,714) (574,485) (1,895,199) (1,614,707)
Promotional Expenses 10 (673,509) (178,535) (852,044) (1,180,135)
Stamp Duty - (207,770) (207,770) (94,499)
Total Expenses (1,994,223) (960,790) (2,955,013) (2,889,341)
Income Available for Distribution 2,463,112 3,482,482 5,945,594 1,408,494
Net Realised losses on Securities and 2(b)
Currencies (12,189,369) (1,438,070) (13,627,439) (6,723,662)
Historical Cost (Losses)/ Gains for
the Period (9,726,257) 2,044,412 (7,681,845) (5,315,168)
Net Unrealised (Losses)/ Gains on
Securities and Currencies (83,589,145) (41,546,904) (125,136,049) 141,721,327
Total Recognised (Losses) / Gains (93,315,402) (39,502,492) (132,817,894) 136,406,159
Distributions paid/proposed 7 (2,385,000) (3,520,000) (5,905,000) (1,540,000)
Recognised (Losses)/Gains for the Period
Retained (95,700,402) (43,022,492) (138,722,894) 134,866,159
Each Fund's income, expenses, gains and losses arose from continuing activities.
The accompanying notes form an integral part of the financial statements.
Statement of Changes in Net Assets for the six month period ended 31 March 2003
2003 2003 Six months Six months
EURO STOXX STOXX 50 period ended period ended
50 LDRS 50 LDRS 31 March 2003 31 March
2002
Combined Combined
Euro Euro Euro Euro
Value of Funds at beginning of the period 854,398,425 360,869,758 1,215,268,183 920,748,933
Creation of Shares 213,960,000 51,160,000 265,120,000 410,820,000
Redemption of Shares - - - -
Recognised (Losses) / Gains for the (95,700,402) (43,022,492) (138,722,894) 134,866,159
Period Retained
Value of Funds at end of the period 972,658,023 369,007,266 1,341,665,289 1,466,435,092
The accompanying notes form an integral part of the financial statements.
Notes to the Financial Statements for the six month period ended 31 March 2003
1. Establishment
European Exchange-Traded Fund Company plc (the "Company") was established as an
umbrella fund offering separate classes of shares, each representing interests
in a Fund comprising a distinct portfolio of investments. The following Funds
have been established and approved by the Central Bank of Ireland with the
following investment objectives and policies:
Euro STOXX 50 LDRS
The investment objective of Euro STOXX 50 LDRS is to track closely the Dow Jones
EURO STOXX 50 Index, thereby allowing investors to obtain market exposure to the
companies comprising the Index through the holding of shares in the Fund.
STOXX 50 LDRS
The investment objective of STOXX 50 LDRS is to track closely the Dow Jones
STOXX 50 Index, thereby allowing investors to obtain market exposure to the
companies comprising the Index through the holding of shares in the Fund.
2. Significant Accounting Policies
(a) Basis of preparation
The financial statements have been prepared in accordance with accounting
standards generally accepted in Ireland and Irish statute comprising the
Companies Act, 1963 to 2001, and the European Communities (Undertakings for
Collective Investment in Transferable Securities) Regulations, 1989, as amended.
Accounting standards generally accepted in Ireland in preparing financial
statements giving a true and fair view are those published by the Institute of
Chartered Accountants in Ireland and issued by the Accounting Standards Board.
The financial statements have been prepared under the historical cost convention
except that investments in securities are stated at close of business prices at
the Statement of Assets and Liabilities date.
In order to present a true and fair view of the state of affairs and results of
the Company, the Directors believe that the following departures from the
formats and historical cost rules set out in the schedule to the Companies
(Amendment) Act, 1986 and FRS 3 "Reporting Financial Performance", are necessary
because of the Company's business as an investment fund.
The Profit and Loss account has been presented in the format of a Statement of
Operations. The Company has availed of the exemption permitted to open-ended
investment funds under FRS 1, not to prepare a cash flow statement.
(b) Realised gains and losses
All realised gains and losses are recognised in the Statement of Operations.
(c) Expense recognition
All expenses are recognised in the Statement of Operations on an accruals basis.
(d) Income recognition
Interest and dividends are credited to Investment Income in the Statement of
Operations on an accruals basis. Income is shown gross of non-recoverable
withholding taxes which is disclosed separately in the Statement of Operations,
net of tax credits.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
2. Significant Accounting Policies (continued)
(e) Valuation of securities
Listed investments are valued at mid-market price at the official close of
business price on the principal regulated market, which in the opinion of the
Administrator, constitutes the main market for such investments.
Unlisted investments, if any, are valued at their probable realisation value
determined by the Administrator, approved for the purpose by the Custodian.
Exchange-traded derivative instruments, if any, are valued on each Dealing Day
at the settlement price for such instruments on such market. In the event that
such price is unavailable, the probable realisation value estimated by the
Administrator will be used if approved by the Custodian. Over-the-counter
derivative instruments are valued on each Dealing Day at the settlement price as
provided by the counterparty.
(f) Equalisation
Equalisation is the accrued dividend attributable to Shareholders of each Fund
(dividends and interest earned less fees and expenses incurred since the
previous distribution) on subscription or redemption in the Fund's shares.
(g) Foreign currency
Assets and liabilities arising in foreign currencies have been translated into
Euro at rates of exchange ruling at 31 March 2003. Transactions in foreign
currencies are translated into Euro at the exchange rates ruling at the dates of
the transactions. Exchange differences arising on transactions during the
period have been recognised in the Statement of Operations.
(h) Stock Lending Income
Income from stock lending is received monthly and is credited to investment
income in the Statement of Operations.
3. Other Receivables
Euro STOXX 50 STOXX 50 31 March 2003 30 September 2002
LDRS LDRS Combined Combined
Euro Euro Euro Euro
Reclaims Receivable - - - 13,322
Accrued Income Receivable 1,461,555 2,641,503 4,103,058 1,179,581
Securities Sold Receivable 2,491,298 - 2,491,298 -
3,952,853 2,641,503 6,594,356 1,192,903
4. Credit Institutions
The Company's cash balances are maintained with the Sub-Custodian, the Bank of
New York, Brussels.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
5. Share Capital
The authorised share capital of the Company is Stg #40,000 divided into 40,000
Subscriber Shares of no par value, and 500 billion Participating Shares of no
par value.
Subscriber Shares
There are 7 Subscriber Shares in issue as at 31 March 2003. The Subscriber
Shares' entitlement shall be limited to the amount subscribed and any accrued
income thereon. The Subscriber Shares are not included in the calculation of the
NAV per share.
Participating Shares
Each of the Participating Shares of the Funds entitles the Shareholder to attend
and vote at all meetings held by the Company, as well as participate equally on
a pro rata basis in the dividends and net assets of the Company.
31 March 31 March 30 September 30 September
2002 2002
2003 2003
Euro STOXX 50 STOXX 50 Euro STOXX 50 STOXX 50
LDRS LDRS LDRS LDRS
Euro Euro Euro Euro
Shares in issue at beginning
of period 38,700,000 15,600,000 19,000,000 8,800,000
Subscription for period 9,000,000 2,000,000 23,500,000 7,200,000
Redemption for period - - (3,800,000) (400,000)
Shares in issue at end of 47,700,000 17,600,000 38,700,000 15,600,000
period
Transaction Fee
The Prospectus refers to a Transaction Fee which may be payable to the
Administrator on subscriptions for and/or redemptions of shares. The Transaction
Fee can only be levied in respect of in-specie subscriptions for and/or
redemptions of shares and is charged to cover the costs of the in-specie
subscription and/or redemption.
6. Taxation
Under current law and practice, the Company qualifies as an investment
undertaking as defined in Section 739B of the Taxes Consolidation Act, 1997, as
amended. It is not chargeable to Irish tax on its income or capital gains.
However, Irish tax can arise on the happening of a "chargeable event" in the
Company. A chargeable event includes any distribution payments to shareholders
or any encashment, redemption or transfer of shares. No tax will arise in
respect of chargeable events in respect of a shareholder who is an Exempt Irish
Investor (as defined in Section 739D of the Taxes Consolidation Act, 1997, as
amended) or who is neither Irish resident nor ordinarily resident in Ireland for
tax purposes at the time of the chargeable event, provided, in each case, that
an appropriate valid declaration in accordance with Schedule 2B of the Taxes
Consolidation Act, 1997 (as amended) is held by the Company.
Capital gains, dividends, and interest received by the Company may be subject to
withholding taxes imposed by the country of origin and such taxes may not be
recoverable by the Company or its Shareholders.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
7. Distributions
Euro
Euro STOXX 50 LDRS
Interim Dividend of Euro0.05 per share declared on 31 March 2003 2,385,000
STOXX 50 LDRS
Interim Dividend of Euro0.20 per share declared on 31 March 2003 3,520,000
31st March 2003 31st March Six months Six months
2003
Euro STOXX 50 STOXX 50 period ended period ended
LDRS LDRS 31 March 2003 31 March
2002
Combined Combined
Euro Euro Euro Euro
Dividends payable at beginning of period 19,737,000 4,992,000 24,729,000 10,620,000
Interim Dividend 2,385,000 3,520,000 5,905,000 1,540,000
Dividends paid (19,737,000) (4,992,000) (24,729,000) (10,620,000)
Dividends payable at end of period 2,385,000 3,520,000 5,905,000 1,540,000
8. Efficient Portfolio Management
The Company may employ investment techniques and instruments for efficient
portfolio management purposes. During the year the Company engaged in
stock-lending for efficient portfolio management purposes only, subject to the
conditions and within the limits from time to time laid down by the Central Bank
of Ireland.
The stock-lending agent appointed pursuant to the stock-lending agreement is the
Bank of New York.
Euro STOXX 50 LDRS Fund had the following stocks on loan to JP Morgan Chase, CS
First Boston, Morgan Stanley, Salomon Smith Barney and Fortis Investment
Securities at 31 March 2003:
Description Value Collateral
Euro Euro
Ahold 617,446 742,039
Bayerische Hypo und Vereinsbank 2,100,498 2,356,017
France Telecom 6,448,225 6,978,586
LVMH Moet Hennessy Louis Vuitton 5,393,835 6,249,678
San Paolo IMI 2,528,716 2,800,393
Euro STOXX 50 LDRS earned stock lending income of Euro194,677 (31 March 2002: Nil)
during the period.
STOXX 50 LDRS had no stock on loan to counter-parties at 31 March 2003.
STOXX 50 LDRS earned stock lending income of Euro21,420 (31 March 2002: Nil) during
the period.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
9. Soft Commissions
There are no soft commission arrangements entered into in respect of the
Company.
10. Significant Agreements and Related Party Transactions
The Company has engaged AIB/BNY Trust Company Limited (the "Custodian") in the
provision of trustee and custodial services. The Custodian receives custody fees
based on the Net Asset Value of the Funds, in addition to transaction fees. The
Company has entered into a custodian agreement with the Custodian under which
the Custodian receives a custodian fee payable by the Investment Manager out of
the Annual Expenses.
The Company has delegated the performance of the investment management functions
in respect of the Company to Merrill Lynch Investment Managers, Llc (the "
Investment Manager"), the administrative functions to AIB/BNY Fund Management
(Ireland) Limited (the "Administrator"), and had engaged the Custodian in the
provision of trustee and custodial services to the Company.
Merrill Lynch International (the "Sponsor") has been appointed by the Company as
sponsor of the Company and as distributor of the shares. The Company shall pay
the Sponsor a promotional fee of 0.10% of the Net Asset Value of each Fund. The
Sponsor shall bear its own out of pocket expenses, incurred by it in connection
with its duties as sponsor.
The Company shall pay the Investment Manager 0.25% of the Net Asset Value of
each Fund in respect of the Annual Expenses. The Investment Manager shall take
its own fees and expenses from this amount and shall discharge the Annual
Expenses. The Sponsor absorbs any Annual Expenses of each Fund over 0.25% per
annum of the Net Asset Value of each Fund. No expenses have been absorbed by the
Sponsor for the half year ended 31 March 2003.
The residue of the Annual Expenses below 0.25% per annum of the Net Asset Value
of each Fund is transferred to the Sponsor by the Investment Manager. Annual
Expenses include all fees, costs and expenses connected with the management and
operation of the Company and each Fund, including the fees and reasonable
out-of-pocket expenses of the Investment Manager, the Administrator, the
Registrar and Transfer Agent, the Custodian and any Sub-custodians and STOXX and
all other fees and expenses, but excluding any taxation, commissions and
brokerage fees incurred with respect to the Funds' investments.
The Investment Manager discharged audit fees of Euro19,947 (2002: Euro20,168) and
Directors' fees of Euro14,960. (2001: Euro15,124) across both Funds.
The Company has entered into an investment management agreement with the
Investment Manager under which the Investment Manager receives an investment
management fee and reasonable out of pocket expenses out of the Annual Expenses.
The Company has entered into an administration agreement with the Administrator
under which the Administrator receives an administration fee and reasonable out
of pocket expenses payable by the Investment Manager out of the Annual Expenses.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
10. Significant Agreements and Related Party Transactions (continued)
Related Parties
The Manager, the Investment Manager and the Sponsor are deemed related to the
Company.
Directors
The following Directors are related to the Company:
* Bernard Hoey is Chief Financial Officer of Merrill Lynch Capital
Markets Bank Limited in Dublin and
* Carl O'Sullivan is a partner in the firm of Arthur Cox, the Irish
legal adviser to the Company. Fees paid to Arthur Cox amounted to Euro9,974 for the
period ended 31 March 2003.
11. Financial Instruments Disclosures
In pursuing its investment objectives referred to in Note 1, each Fund holds
financial instruments. Each Fund has availed of the exemption contained in FRS
13 to exclude all short term debtors and creditors from the definition of
financial instruments, and therefore considers that the only financial
instruments held at the Statement of Assets and Liabilities date were its
investments as disclosed in the Portfolio Listings.
The main risks arising from each Fund's financial instruments are market price,
interest rate, credit, liquidity, index, counterparty and foreign currency
risks.
(a) Market price risk
Market risk arises mainly from uncertainty about future prices of financial
instruments held. It represents the potential loss each Fund may suffer through
holding market positions in the face of price movements.
(b) Interest rate risk
The majority of the financial assets held by each Fund are equity shares and
other investments which neither pay interest nor have a maturity date.
(c) Credit risk
Each Fund will be exposed to credit risk on parties with whom it trades and will
also bear the risk of settlement default. Each Fund shall minimise
concentrations of credit risk by undertaking transactions with a large number of
customers and counterparties on recognised and reputable exchanges.
(d) Liquidity risk
Each Fund's assets comprise mainly realisable securities which can be readily
sold. The main liabilities of each Fund are the redemption of any shares that
investors wish to sell and the distributions payable. Each Fund's financial
liabilities mature within one year.
(e) Index risk
There is no assurance that each index will continue to be calculated and
published on the basis described in the Prospectus or that they will not be
amended significantly. The past performance of each index is not necessarily a
guide to future performance.
(f) Fair values of financial assets and financial liabilities
All financial assets and financial liabilities are held at fair value.
(g) Counterparty risk
There is a risk that counterparties may not perform their obligation and that
settlement may not occur.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
11. Financial Instruments Disclosures (continued)
(h) Foreign currency risk
Each Fund's investments may be acquired in a variety of currencies depending on
the denomination of the securities that comprise the relevant index. It is
unlikely the Funds will choose to minimise exposure to currency fluctuation
risks by the use of hedging. However, a substantial portion of the net assets of
each Fund are denominated in Euro with the effect that the Statement of Assets
and Liabilities and Statement of Operations would not be significantly affected
by currency movements.
The following table sets out each Fund's total exposure to foreign currency risk
at period end:
31 March 2003 31 March 2003 30 September 2002 30 September 2002
Currency Euro STOXX 50 STOXX 50 Euro STOXX 50 STOXX 50
LDRS LDRS LDRS LDRS
Euro Euro Euro Euro
Euro 972,658,023 150,490,131 854,398,425 146,493,900
Pound Sterling - 161,890,744 - 153,604,435
Swiss Franc - 56,626,391 - 60,771,423
Net Assets 972,658,023 369,007,266 854,398,425 360,869,758
12. Comparative Table
Euro STOXX 50 Euro STOXX 50 LDRS STOXX 50 STOXX 50
LDRS
LDRS LDRS
NAV NAV per Share NAV NAV per Share
Euro Euro Euro Euro
31 March 2003 972,658,023 20.39 369,040,245 20.97
30 September 2002 854,398,425 22.08 360,869,758 23.13
31 March 2002 1,060,384,267 37.87 406,050,825 36.91
30 September 2001 625,255,491 33.01 293,493,442 33.35
13. Exchange Rates
The following are the exchange rates used to translate foreign currency assets
and liabilities to base currency as at 31 March 2003:
Euro1 = CHF 1.4749
Euro1 = GBP 0.6899
14. Cross Liability
The assets of each Fund may be exposed to the liabilities of other funds within
the Company. The Directors are not aware of any such existing or contingent
liability as at 31 March 2003.
Notes to the Financial Statements for the six month period ended 31 March 2003
(continued)
15. Comparatives
The comparative figures cover the period ended 30 September 2002 for the
Statement of Assets and Liabilities and the six month period ended 31 March 2002
for the Statement of Operations and Statement of Changes.
16. Post Balance Sheet Events
There were no significant post balance sheet events.
17. Approval of Financial Statements
The Directors approved the financial statements on 28 May 2003.
Portfolio Listing as at 31 March 2003 - Euro STOXX 50 LDRS
Nominal Investment Value % of Net
Euro Assets
Transferable Securities Admitted to an Official Stock Exchange listing
Equities
Belgium
1,133,130 Fortis 13,404,928 1.38
Finland
4,715,377 Nokia 59,696,673 6.13
France
99,294 Air Liquide 12,064,221 1.24
1,137,060 Alcatel 7,129,366 0.73
681,069 Aventis 27,399,406 2.82
1,428,290 AXA 15,454,098 1.59
829,370 BNP Paribas 30,437,879 3.13
561,907 Carrefour Supermarche 19,503,792 2.01
335,845 Compagnie de Saint Gobain 8,506,954 0.87
559,589 France Telecom 10,458,718 1.08
128,492 Groupe Danone 14,866,524 1.53
312,936 L'Oreal 17,367,948 1.79
130,867 Lafarge 6,713,477 0.69
221,378 LVMH Moet Hennessy Louis Vuitton 8,005,028 0.82
403,553 Sanofi Synthelabo 18,607,829 1.91
423,281 Societe Generale 20,029,657 2.06
918,602 Suez 9,783,111 1.01
676,781 Total Fina Elf 78,506,596 8.06
1,054,333 Vivendi Universal 12,841,776 1.32
Total France 317,676,380 32.66
Germany
192,958 Allianz 8,760,293 0.90
510,070 BASF 17,398,488 1.79
676,697 Bayer 8,451,946 0.87
322,379 Bayerische Hypo- und Vereinsbank 2,217,968 0.23
807,944 Daimlerchrysler 21,644,820 2.23
581,813 Deutsche Bank 22,399,801 2.30
2,365,977 Deutsche Telecom 23,920,027 2.46
590,399 E.On 22,305,274 2.29
108,956 Muenchener Rueckver 5,720,190 0.59
390,267 RWE 8,000,474 0.82
818,135 Siemens 30,925,503 3.18
Portfolio Listing as at 31 March 2003 - Euro STOXX 50 LDRS (continued)
Nominal Investment Value % of Net
Euro Assets
Equities (continued)
Germany (continued)
217,054 Volkswagen 6,337,977 0.65
Total Germany 178,082,761 18.31
Italy
1,085,139 Assicurazioni Generali 20,487,424 2.11
1,895,267 Enel 9,912,246 1.02
2,548,371 ENI 31,192,061 3.20
1,226,406 San Paolo IMI 7,640,509 0.79
2,333,989 Telecom Italia 14,750,810 1.52
3,641,457 TIM 13,619,049 1.40
4,232,879 Unicredito Italiano 14,772,748 1.51
Total Italy 112,374,847 11.55
Netherlands
1,390,886 ABN Amro 18,637,872 1.92
1,242,262 Aegon 8,546,763 0.88
916,938 Ahold 2,796,661 0.29
1,724,829 ING Groep 18,265,939 1.88
1,256,650 Philips Electronics 18,083,194 1.86
2,051,937 Royal Dutch Petroleum 76,557,769 7.86
562,918 Unilever 30,707,177 3.16
Total Netherlands 173,595,375 17.85
Spain
3,147,436 Banco Bilbao Vizcaya Argentaria 24,014,937 2.47
4,696,163 Banco Santander Central Hispano 27,472,554 2.82
990,475 Endesa 11,043,796 1.14
985,944 Repsol YPF 13,034,180 1.34
4,706,002 Telefonica 40,330,437 4.15
Total Spain 115,895,904 11.92
Rights
414,379 France Telecom Rights 09/04/2003 1,491,764 0.15
Total Investments (cost Euro1,537,200,073) 972,218,632 99.95
Other Net Assets 439,391 0.05
Net Assets 972,658,023 100.00
Portfolio Listing as at 31 March 2003 - STOXX 50 LDRS
Nominal Investment Value % of
Euro Net Assets
Transferable Securities Admitted to an Official Stock Exchange Listing
Equities
Belgium
236,704 Fortis 2,800,208 0.76
Finland
984,849 Nokia 12,468,188 3.38
France
298,058 AXA 3,224,987 0.88
173,250 BNP Paribus 6,358,275 1.72
117,180 Carrefour Supermarche 4,067,318 1.10
65,370 L'Oreal 3,628,035 0.98
192,014 Suez 2,044,949 0.55
141,305 Total Fina Elf 16,391,380 4.45
Total France 35,714,944 9.68
Germany
40,277 Allianz 1,828,576 0.50
106,602 BASF 3,636,194 0.99
141,359 Bayer 1,765,574 0.48
168,747 Daimlerchrysler 4,520,732 1.22
121,438 Deutsche Bank 4,675,363 1.27
494,245 Deutsche Telecom 4,996,817 1.35
123,199 E.On 4,654,458 1.26
22,759 Muenchener Rueckver 1,194,848 0.32
170,915 Siemens 6,460,587 1.75
Total Germany 33,733,149 9.14
Italy
226,674 Assicurazioni Generali 4,279,605 1.16
533,310 ENI 6,527,714 1.77
487,561 Telecom Italia 3,081,386
0.83
Total Italy 13,888,705 3.76
Portfolio Listing as at 31 March 2003 - STOXX 50 LDRS (continued)
Nominal Investment Value % of
Euro Net Assets
Equities (continued)
Netherlands
290,297 ABN Amro 3,889,980 1.06
259,501 Aegon 1,785,367 0.48
359,820 ING Groep 3,810,494 1.03
262,504 Philips Electronics 3,777,432 1.02
428,697 Royal Dutch Petroleum 15,994,685 4.33
117,590 Unilever 6,414,535 1.75
Total Netherlands
35,672,493 9.67
Spain
657,477 Banco Bilbao Vizcaya Argentaria 5,016,549 1.36
981,015 Banco Santander Central Hispano 5,738,938 1.56
983,067 Telefonica 8,424,884 2.28
Total Spain 19,180,371 5.20
Switzerland
244,794 Credit Suisse 3,900,303 1.06
81,464 Nestle 14,774,718 4.00
510,017 Novartis 17,306,866 4.69
144,540 Roche Holdings 7,928,048 2.15
66,256 Swiss Re 2,978,300 0.81
244,024 UBS 9,513,276 2.57
Total Switzerland 56,401,511 15.28
United Kingdom
334,856 Astrazeneca 10,467,892 2.84
463,923 Aviva 2,366,680 0.64
1,351,846 Barclays 7,151,071 1.94
4,603,829 BP 26,772,273 7.26
1,783,893 BT Group 4,059,004 1.10
646,828 Diageo 6,083,934 1.65
1,240,676 Glaxosmithkline 20,012,648 5.42
776,887 HBOS 7,312,873 1.98
1,944,167 HSBC 18,286,445 4.96
1,148,625 Lloyds TSB 5,360,251 1.45
412,128 Prudential 1,842,631 0.50
Portfolio Listing as at 31 March 2003 - STOXX 50 LDRS (continued)
Nominal Investment Value % of
Euro Net Assets
Equities (continued)
United Kingdom (continued)
564,812 Royal Bank of Scotland Group 11,664,598 3.16
1,989,091 Shell Transport & Trading 11,026,485 2.99
1,440,523 Tesco 3,721,352 1.01
14,019,190 Vodafone 22,958,969 6.21
Total United Kingdom 159,087,106 43.11
Total Investments (Cost Euro567,897,326) 368,946,675 99.98
Other Net Assets 60,591 0.02
Net Assets 369,007,266 100.00
Statement of Significant Changes in Portfolio for the six month period ended
31 March 2003
Euro STOXX 50 LDRS
Significant Purchases Nominal Cost
Security Description Euro
Total Fina Elf 131,698 18,145,346
Royal Dutch Petroleum 405,605 17,346,100
Nokia 913,412 13,603,014
ENI 541,443 7,903,475
Telefonica 877,843 7,532,781
Aventis 132,805 7,467,337
Unilever 108,774 6,565,636
ING Groep 410,933 6,236,833
Siemens 158,475 6,167,040
BNP Paribas 159,992 5,971,934
Carrefour Supermarche 141,025 5,785,464
Sanofi Synthelabo 93,568 5,434,682
Daimlerchrysler 155,894 5,366,478
E.On 118,289 5,279,395
Societe Generale 103,272 5,274,286
Banco Santander Central Hispano 907,445 5,200,617
Banco Bilbao Vizcaya Argentaria 610,560 5,199,691
Deutsche Bank 114,733 5,033,266
Deutsche Telekom 457,182 4,674,368
L'Oreal 60,469 4,396,604
ABN Amro 299,815 4,235,291
AXA 326,633 4,162,052
Philips Electronics 242,677 3,997,387
Vivendi Universal 278,222 3,866,188
Assicuraz Generali 207,631 3,798,202
BASF 101,371 3,707,704
Allianz 41,499 3,673,794
Fortis 218,956 3,526,402
Unicredito Italiano 928,686 3,421,999
Telecom Italia 450,992 3,327,269
Tim 703,643 3,131,813
Suez 188,822 3,125,901
Groupe Danone 24,977 3,033,194
Repsol 228,814 2,868,231
Aegon 240,002 2,838,503
RWE 97,694 2,710,000
Air Liquide 19,185 2,561,136
Muenchener Rueckver 21,011 2,546,028
Bayer 130,758 2,470,917
Significant Changes in Portfolio for the six month period ended 31 March 2003
(continued)
Euro STOXX 50 LDRS
Significant Sales Nominal Proceeds
Security Description Euro
Total Fina Elf 23,322 3,062,907
ENI 229,085 2,976,312
E.On 40,481 1,636,691
Deutsche Bank 31,426 1,435,195
Royal Dutch Petroleum 32,805 1,276,142
BASF 15,214 576,707
Groupe Danone 4,266 521,150
Suez 37,614 455,006
Siemens 8,145 342,332
Telefonica 35,679 321,743
Enel 55,471 287,424
ABN Amro 18,869 287,017
Unilever 4,267 240,527
BNP Paribas 5,630 229,453
Banco Santander Central Hispano 35,609 218,392
Repsol Ypf 15,418 203,471
Compagnie de Saint Gobain 7,454 202,736
Banco Bilbao Vizcaya Argentaria 23,836 200,214
Deutsche Telekom 17,941 192,261
Daimlerchrysler 5,898 174,780
Statement of Significant Changes in Portfolio for the six month period ended
31 March 2003 (continued)
STOXX 50 LDRS
Significant Purchases Nominal Cost
Security Description Euro
BP 537,715 3,460,136
Glaxosmithkline 147,761 2,820,540
Vodafone 1,685,599 2,736,171
HSBC 233,768 2,606,051
Novartis 64,486 2,474,043
Total Fina Elf 17,062 2,363,020
Royal Dutch Petroleum 52,198 2,274,010
Nestle 9,793 2,110,210
Nokia 124,509 2,104,285
Royal Bank of Scotland 83,400 1,949,602
Shell Transport & Trading 236,426 1,521,045
Astrazeneca 38,766 1,449,017
UBS 29,841 1,432,063
Roche Holdings 17,376 1,236,799
Lloyds TSB 138,099 1,169,725
Telefonica 113,667 1,085,878
Barclays 156,328 1,081,049
HBOS 93,511 1,032,484
Siemens 20,312 964,989
ENI 68,009 956,507
ING Groep 61,349 946,908
Carrefour 21,399 926,650
Unilever 14,134 909,292
Diageo 78,016 880,744
BNP Paribas 20,913 841,152
Banco Bilbao Vizcaya Argentaria 79,567 763,888
Banco Santander Central Hispano 117,928 732,322
Daimlerchrysler 20,863 715,429
AXA 48,397 696,412
Deutsche Telekom 59,414 688,626
E.On 15,034 679,949
Deutsche Bank 14,677 647,233
ABN Amro 42,431 633,483
BT Group 214,521 613,006
L'Oreal 7,858 588,466
Credit Suisse 29,605 573,575
Philips Electronics 31,742 573,344
Allianz 5,942 569,575
Fortis 30,914 559,093
Swiss Re 7,964 552,988
Statement of Significant Changes in Portfolio for the six month period ended
31 March 2003 (continued)
STOXX 50 LDRS
Significant Sales Nominal Proceeds
Security Description Euro
Novartis 32,918 1,219,802
UBS 12,897 625,438
Total Fina Elf 4,036 536,761
ENI 39,319 511,147
Diageo 31,380 319,965
E.On 7,518 304,689
Deutsche Bank 5,743 264,165
Royal Dutch Petroleum 2,455 95,377
BASF 1,958 74,424
Suez 5,675 68,668
Glaxosmithkline 3,429 60,021
ABN Amro 2,626 40,307
Fortis 2,359 36,721
Daimlerchrysler 603 18,083
Astrazeneca 443 14,678
Shell Transport & Trading 1,520 8,661
Siemens 109 4,594
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QBLFXXEBEBBV
