nq093010eef.htm
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
_______________________________
 
Investment Company Act file number  811-04632
 
The European Equity Fund, Inc.
(Exact name of registrant as specified in charter)

345 Park Avenue
New York, NY  10154
(Address of principal executive offices)             (Zip code)
 

Paul Schubert
100 Plaza One
Jersey City, NJ 07311
(Name and address of agent for service)
 
Registrant's telephone number, including area code:  (201) 593-6408
Date of fiscal year end:  12/31
 
Date of reporting period: 9/30/10

ITEM 1.
SCHEDULE OF INVESTMENTS


THE EUROPEAN EQUITY FUND, INC.
SEPTEMBER 30, 2010 (unaudited)
 

 
 
SCHEDULE OF INVESTMENTS
 
Shares
  
Description
  
Value(a)
  
INVESTMENTS IN GERMAN
SECURITIES – 43.8%
      
   
COMMON STOCKS – 40.5%
  
   
AIRLINES – 3.8%
  
 
187,000
    
Deutsche Lufthansa*
  
$
3,441,862
    
   
AUTOMOBILES – 4.2%
  
 
60,000
    
Daimler*
    
3,804,795
    
   
CHEMICALS – 6.2%
  
 
21,000
    
Lanxess
    
1,151,962
    
 
11,000
    
Linde
    
1,433,527
    
 
16,000
    
Wacker Chemie
    
2,955,828
    
     
5,541,317
    
   
CONSTRUCTION
MATERIALS – 1.0%
  
 
18,000
    
HeidelbergCement
    
868,486
    
   
DIVERSIFIED
TELECOMMUNICATION
SERVICES – 3.6%
  
 
240,000
    
Deutsche Telekom
    
3,287,225
    
   
ELECTRIC UTILITIES – 1.9%
  
 
57,000
    
E.ON
    
1,682,799
    
   
ELECTRICAL
EQUIPMENT – 2.0%
  
 
80,000
    
Tognum
    
1,773,824
    
   
INDUSTRIAL
CONGLOMERATES – 4.5%
  
 
22,000
    
Rheinmetall
    
1,456,348
    
 
25,000
    
Siemens
    
2,642,105
    
     
4,098,453
    
   
INSURANCE – 2.0%
  
 
16,000
    
Allianz
    
1,810,403
    
   
INTERNET SOFTWARE &
SERVICES – 2.0%
  
 
110,000
    
United Internet
    
1,780,649
    
   
PERSONAL PRODUCTS – 1.0%
  
 
15,000
    
Beiersdorf
    
919,260
    
   
PHARMACEUTICALS – 1.9%
  
 
24,000
    
Bayer
    
1,675,551
    
   
SOFTWARE – 4.2%
  
 
25,000
    
SAP
    
1,238,135
    
 
21,000
    
Software
    
2,539,533
    
     
3,777,668
    
 
 
 
Shares
  
Description
  
Value(a)
  
   
THRIFTS & MORTGAGE
FINANCE – 2.2%
  
 
88,000
    
Aareal Bank*
  
$
1,959,614
    
       
Total Common Stocks
(cost $31,006,173)
    
36,421,906
    
   
PREFERRED STOCKS – 3.3%
  
   
AUTOMOBILES – 1.3%
  
 
10,000
    
Volkswagen
(cost $951,062)
    
1,208,346
    
   
HOUSEHOLD PRODUCTS – 2.0%
  
 
34,000
    
Henkel & Co.
(cost $1,288,680)
    
1,828,420
    
       
Total Preferred Stocks
(cost $2,239,742)
    
3,036,766
    
       
Total Investments in German
Securities
(cost $33,245,915)
    
39,458,672
    
INVESTMENTS IN FRENCH
COMMON STOCKS – 17.5%
      
   
COMMERCIAL BANKS – 3.9%
  
 
60,000
    
Societe Generale
    
3,460,022
    
   
HEALTH CARE EQUIPMENT &
SUPPLIES – 2.3%
  
 
30,000
    
Essilor International
    
2,066,595
    
   
HOTELS, RESTAURANTS &
LEISURE – 2.0%
  
 
50,000
    
Accor
    
1,827,942
    
   
MULTI-UTILITIES – 2.4%
  
 
60,000
    
GDF Suez
    
2,150,537
    
   
OIL, GAS &
CONSUMABLE FUELS – 1.8%
  
 
32,000
    
Total
    
1,651,201
    
   
TEXTILES, APPAREL &
LUXURY GOODS – 5.1%
  
 
31,000
    
LVMH Moet Hennessy
Louis Vuitton
    
4,552,760
    
       
Total Investments in French
Common Stocks
(cost $15,378,700)
    
15,709,057
    


Shares
  
Description
  
Value(a)
  
INVESTMENTS IN SPANISH
COMMON STOCKS – 9.1%
      
   
COMMERCIAL BANKS – 4.3%
  
 
300,000
    
Banco Santander
  
$
3,815,032
    
   
DIVERSIFIED
TELECOMMUNICATION
SERVICES – 4.1%
  
 
150,000
    
Telefonica
    
3,719,012
    
   
INDEPENDENT POWER
PRODUCERS & ENERGY
TRADERS – 0.7%
  
 
200,000
    
Iberdrola Renovables
    
665,525
    
       
Total Investments in Spanish
Common Stocks
(cost $5,782,232)
    
8,199,569
    
INVESTMENTS IN DUTCH
COMMON STOCKS – 7.9%
      
   
CHEMICALS – 2.1%
  
 
36,000
    
Koninklijke DSM
    
1,846,546
    
   
DIVERSIFIED FINANCIAL
SERVICES – 2.2%
  
 
195,000
    
ING Groep*
    
2,025,444
    
   
ENERGY EQUIPMENT &
SERVICES – 2.3%
  
 
110,000
    
SBM Offshore
    
2,086,932
    
   
FOOD PRODUCTS – 1.3%
  
 
40,000
    
Unilever
    
1,197,017
    
       
Total Investments in Dutch
Common Stocks
(cost $6,689,177)
    
7,155,939
    
INVESTMENTS IN SWISS
COMMON STOCKS – 6.6%
      
   
ELECTRICAL EQUIPMENT – 1.6%
  
 
70,000
    
ABB*
    
1,483,980
    
   
INSURANCE – 2.4%
  
 
9,000
    
Zurich Financial Services
    
2,121,711
    
   
METALS & MINING – 2.6%
  
 
120,000
    
Xstrata
    
2,302,751
    
       
Total Investments in Swiss
Common Stocks
(cost $5,114,254)
    
5,908,442
    
 
 
 
Shares
  
Description
  
Value(a)
  
INVESTMENTS IN BRITISH
COMMON STOCKS – 4.5%
  
   
COMMERCIAL BANKS – 3.5%
  
 
2,000,000
    
Lloyds Banking Group*
  
$
2,335,521
    
 
1,100,000
    
Royal Bank of Scotland*
    
818,173
    
     
3,153,694
    
   
COMMERCIAL SERVICES &
SUPPLIES – 1.0%
  
 
35,000
    
Aggreko
    
865,737
    
   
Total Investments in British
Common Stocks
(cost $3,417,161)
    
4,019,431
    
INVESTMENTS IN FINNISH
COMMON STOCKS – 3.8%
  
   
AUTO COMPONENTS – 1.7%
  
 
45,000
    
Nokian Renkaat
    
1,547,182
    
   
CONSTRUCTION &
ENGINEERING – 1.0%
  
 
38,000
    
Yit
    
901,953
    
   
MACHINERY – 1.1%
  
 
22,000
    
Metso
    
1,009,535
    
   
Total Investments in Finnish
Common Stocks
(cost $2,880,250)
    
3,458,670
    
INVESTMENTS IN DANISH
COMMON STOCKS – 2.4%
  
   
CHEMICALS – 1.1%
  
 
50,000
    
Christian Hansen Holding*
    
1,011,137
    
   
ELECTRICAL EQUIPMENT – 1.3%
  
 
30,000
    
Vestas Wind Systems*
    
1,132,034
    
   
Total Investments in Danish
Common Stocks
(cost $2,784,322)
    
2,143,171
    
INVESTMENTS IN ITALIAN
COMMON STOCKS – 2.0%
  
   
COMMERCIAL BANKS – 2.0%
  
 700,000
  
UniCredit
(cost $1,422,533)
    
1,789,521
    
 

Shares
  
Description
  
Value(a)
  
INVESTMENTS IN NORWEGIAN
COMMON STOCKS – 1.0%
  
   
FOOD PRODUCTS – 1.0%
  
 
1,000,000
    
Marine Harvest
(cost $817,928)
  
$
881,481
    
INVESTMENTS IN BELGIAN
COMMON STOCKS – 0.9%
  
   
DIVERSIFIED FINANCIAL
SERVICES – 0.9%
  
 
37,000
    
KBC Ancora*
(cost $917,201)
    
811,556
    
   
Total Investments in Common and
Preferred Stocks – 99.5%
(cost $78,449,673)**
    
89,535,509
    
   
Other Assets and Liabilities,
Net – 0.5%
    
444,463
    
   
NET ASSETS – 100.0%
  
$
89,979,972
    
 
 
For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent semi-annual or annual financial statements.
 
  *  Non-income producing security.
 
  **  The cost for federal income tax purposes was $79,031,380. At September 30, 2010, net unrealized appreciation for all securities based on tax cost was $10,504,129. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $16,486,438 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $5,982,309.
 
  (a)  Value stated in US dollars.
 
 

 
Fair Value Measurements
 
 
Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
 
 
The following is a summary of the inputs used as of September 30, 2010 in valuing the Fund's investments.
 
Category
  
Level 1
  
Level 2
  
Level 3
  
Total
  
Common Stocks and/or Other Equity Investments(b)
  
Germany
  
$
39,458,672
    
$
—
    
$
—
    
$
39,458,672
    
France
    
15,709,057
      
—
      
—
      
15,709,057
    
Spain
    
8,199,569
      
—
      
—
      
8,199,569
    
Netherlands
    
7,155,939
      
—
      
—
      
7,155,939
    
Switzerland
    
5,908,442
      
—
      
—
      
5,908,442
    
United Kingdom
    
4,019,431
      
—
      
—
      
4,019,431
    
Finland
    
3,458,670
      
—
      
—
      
3,458,670
    
Denmark
    
2,143,171
      
—
      
—
      
2,143,171
    
Italy
    
1,789,521
      
—
      
—
      
1,789,521
    
Norway
    
881,481
      
—
      
—
      
881,481
    
Belgium
    
811,556
      
—
      
—
      
811,556
    
Total
  
$
89,535,509
    
$
—
    
$
—
    
$
89,535,509
    
 
There have been no transfers in and out of Level 1 and Level 2 fair value measurements during the period ended September 30, 2010.
 
(b)  See Schedule of Investments for additional detailed categorizations.
 



ITEM 2.
CONTROLS AND PROCEDURES
   
 
(a)The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.
   
 
(b)There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal controls over financial reporting.
   
ITEM 3.
EXHIBITS
   
 
Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.



 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Registrant:
The European Equity Fund, Inc.
   
By:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
November 23, 2010


Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.


By:
/s/Michael G. Clark
Michael G. Clark
President
   
Date:
November 23, 2010
   
   
   
By:
/s/Paul Schubert
Paul Schubert
Chief Financial Officer and Treasurer
   
Date:
November 23, 2010