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General information                                   1

Report of the management board            2

Balance sheet                                                5

Profit and loss account                               5

Cash flow summary                                    5

Notes                                                             6

Other data                                                     9

Spread of net assets                                   10

 

 

 

Coolsingel 120

Postbus 973

NL-3000 AZ Rotterdam

Tel.: +31 - 10 - 224 12 24

Fax: +31 - 10 - 411 52 88

Internet: www.robeco.com

 

The prospectus is available at the company's office and via www.robeco.com.

 

 

The economic recovery that began the previous year continued in the first half of 2004. Consumer and business confidence in the future showed an upward trend. This was reflected by increasing capital expenditure and consumer spending. The North American and Asian regions took the lead. The long-awaited recovery of the labor market finally materialized in the United States. The rapidly growing Chinese economy remained another important stimulus for the global economy. In Japan growth is no longer just driven by an increase in exports, but also by domestic spending, which has been growing for the first time in a long while. Continental Europe is still the lagging region although here too there is reason for cautious optimism. Monetary authorities were increasingly forced to begin reversing their accommodative measures of the past years. The US FederalReserve, for instance, raised its official rates for the first time in four years. The trend of falling prices came to an end, however, inflation is still low for the time being.

 

The equity markets had a defensive start in 2004. The energy, utilities and consumer staples sectors had the best performance in the first half of 2004. The cautious attitude of the market was mainly the result of uncertainty regarding interest rates. Strong economic growth and rising oil prices gave the impression that interest rates could only go up. The Federal Reserve indeed decided to raise rates on 30 June. Corporate earnings developed favorably all over the world. There were two reasons for this: businesses benefited from the effects of the cost-saving operations of the last years while sales increased at the same time.

We consider 2004 to be a transition year with moderately positive returns. Investors have to get used to a new interest-rate climate first, before they start looking at the sound fundamental development of companies and the stock market's very reasonable valuation.

 

 

 

In the first half of 2004, the share price of Robeco rose from EUR 20.92 to EUR 21.85. Assuming reinvestment of the dividend of EUR 0.36 per share distributed in May 2004, this is an investment result of 6.1%. Based on net asset value, which rose from EUR 21.01 to EUR 21.94, the investment result was 6.1%. The fund's benchmark, the MSCI World Index, rose 7.6% over the same period.

The lag against the benchmark is attributable to stock selection within the various sectors. The other major investment decisions contributed slightly positively to relative performance. In the first six months of 2004 an above-average position was taken in the US dollar against the euro on several occasions, which turned out favorably. The overweight in the energy sector and the underweight in the information technology sector were good decisions and contributed positively to the result. Japan, in which the fund held an above-average position, was one of the world's best-performing markets.

Stock selection within the consumer discretionary, information technology and telecommunication services sectors contributed negatively. The responsible positions are clearly identifiable. Within the consumer discretionary sector the position in Chinese company Denway Motors was the biggest loser. The stock had risen sharply in the second half of 2003, but measures by the Chinese government to curb economic growth caused this stock to decline in the reporting period.

Within information technology, several smaller stocks were included in the portfolio which had a clearly negative impact on performance. Examples include Business Objects and Seagate Technologies. Several big names such as EMC and Nokia did not do well either. The absence of AT&T Wireless in the portfolio led to a lagging result in the telecommunication services sector. This stock rallied sharply due to the takeover struggle between Vodafone and Cingular (BellSouth's and SBC's mobile division).

 

 

 

Several changes were made in the portfolio. The weight of financials was reduced, mainly by reducing the weight in banks in the United States. These have benefited from huge demand for mortgages and other consumer credit (credit cards) for years. Low money-market rates paid on deposits from retail clients, also helped. Large sums were then invested in mortgage loans, most of which are linked to capital-market rates. The difference between money-market and capital-market rates was pure profit for the banks. We expect money-market rates to increase faster than capital-market rates in the next months, which will make this difference less profitable.

The weight in consumer discretionary was not changed and remained below average. US consumers kept spending throughout the recession, thanks to low interest rates and a tax cut. Now that both of these factors have disappeared, we expect consumers to reduce their spending. The portfolio contains no US car makers and only a few retailers.

The weight of consumer staples however has been raised. Coca-Cola, Gillette and Japanese company Ito Yokado were purchased. The weight in health care remained above average, with a continued emphasis on the services, suppliers and biotechnology subsectors. Earnings growth here is much higher than that of the larger pharmaceutical companies.

 

 

The weight of the energy sector remained high. It is expected that an oil price of between USD 30 and 35 per barrel is a reasonable reflection of political risks. Refinery margins, which are expected to remain high and demand for suppliers to the oil industry, necessary for more efficient drilling of existing wells, may cause surprises. Within the energy sector, weight was moved from pure exploration companies (Occidental Petroleum) to refinery (Valero and also Royal Dutch, which has a lot of refinery capacity) and suppliers (Schlumberger). The interest in the utilities sector was slightly increased via purchases in RWE (Germany) and Edison International (United States), which are attractive for stock-specific reasons.

The weight in materials and industrials remained unchanged.

The weight in information technology remained lower than the benchmark. However, the focus was gradually shifted to Asia by purchases of Samsung Electronics and TSMC. Both companies are low-valuation alternatives for makers of mobile phones and chips. Cisco, Nokia and Texas Instruments were sold. The weight of telecommunication services was reduced by sales in Japan (NTT and KDDI), where there is fierce competition in mobile services.

 

Rotterdam, 3 August 2004

 

The management board

Marnix C. Vriezen

Mark R. Glazener

Volker Wytzes

EUR x million

 

 

EUR x million

 

 

indirect method, EUR x million

 

 

Robeco N.V. is a Dutch investment company with a variable capital within the meaning of Article 28 of the 1969 Dutch Corporate Income Tax Act. Therefore, no corporate income tax is payable provided income after deduction of costs is distributed directly in the form of shareholder dividends. Robeco N.V. is subject to the EC directive containing rules for Undertakings for Collective Investment in Transferable Securities (UCITS). Under the terms of the Dutch Investment Institutions Supervision Act ('Wtb', Wet toezicht beleggingsinstellingen), Robeco N.V. was granted a license by De Nederlandsche Bank N.V. (the Dutch central bank) on 26 April 2002, permitting trade of its shares in other EC member states.

As a result of changes to the Guidelines for Annual Reporting, with effect from the 2004 financial year changes in the value of investments, both realized and unrealized, are reported in the Profit and loss account, and the Reserve for capital gains and losses is reported under Other reserves. The change has no effect on the shareholders' equity as at 31 December 2003 and 30 June 2004. The effect on the result for the period 1 January 2003 through 30 June 2003 amounts to EUR -99 million, and over the period 1 January 2004 through 30 June 2004 EUR 363 million. Comparative figures in this report have been adjusted accordingly where necessary.

 

Robeco N.V. is an open-end investment company, meaning that, barring exceptional circumstances, Robeco N.V. issues and repurchases its shares on a daily basis via the intermediary at prices approximating net asset value. Robeco Investment Consulting B.V. functions as the intermediary between Robeco N.V. and investors for the issuance and repurchase of shares, as a result of which Robeco N.V. issues and repurchases its shares at net asset value. The abovementioned margin between the net asset value and the bid and offer prices, and the associated costs, are for the account and risk of the intermediary. The intermediary will distribute any positive results, calculated on a cumulative basis, to the funds on a quarterly basis. Distribution will be in proportion to the positive contribution of each fund to the intermediary's result. A buffer is maintained to cover any future losses.

 

 

The accounting principles for the valuation of assets and liabilities and determination of the result are unchanged, and as such are in accordance with the annual financial statements. Amounts are expressed in millions of euros.

 

Robeco N.V. is affiliated to the entities belonging to Robeco Groep N.V. The affiliation with Robeco Groep N.V. is the result of the possibility of having decisive control or a substantial influence on the fund's business policy. Robeco Groep N.V. belongs to the Rabobank Group. The management structure of Robeco Groep N.V., in which significant authorities are allocated to its independent supervisory board, is such that Rabobank does not have a meaningful say in or influence on the fund's business policy. Robeco Groep N.V. pursues an independent investment policy on behalf of its affiliated investment companies, taking into account the interests of the investors involved. Besides services of other market parties, Robeco N.V. also uses the services of one or more of these affiliated entities including transactions relating to securities, treasury, derivatives,

custody, securities lending, and sale and purchase of its own shares, as well as management activities. Transactions are executed at market rates.

 

Various independent research institutions provide services to the company to support its decision-making process. These institutions are paid by means of soft-dollar arrangements with brokers.

 

 

Investing implies that positions are taken. As it is possible to use various (derivative) instruments to construct an identical position, the selection of derivatives is subordinate to the positioning of a portfolio. Positions in derivative financial instruments are presented off-balance sheet, but are inextricably connected with existing on-balance sheet positions. No further explanation is therefore given of individual results on derivatives positions. In our published information, attention is given primarily to the overall position, and secondarily to the nature and volume of the financial instruments employed.

Liabilities and receivables ensuing from forward exchange transactions and futures are not included in the Balance sheet. They are, however, explained in the Notes to the balance sheet under the heading Commitments not shown in the balance sheet. Unrealized results of forward exchange transactions are accounted for in the Balance sheet under either Accounts payable or Accounts receivable. Unrealized results of futures are accounted for in the Balance sheet under either Accounts receivable or Accounts payable arising from securities transactions. The results are determined by valuing forward exchange transactions and futures at their real value. For forward exchange transactions, this value is based on currency rates and reference interest rates at closing date. The real value of futures is determined on the basis of market prices and other market quotations at closing date.

 

 

At balance sheet date, shares to the amount of EUR 2.5 billion (EUR 1.4 billion at the end of last year) had been lent. To cover the risk of non-restitution, adequate collateral was demanded and obtained; this collateral is not included in the Balance sheet.

Includes balances in current accounts, call money and time deposits.

 

The company's authorized share capital amounts to EUR 800 million, divided into 800,000,000 ordinary shares with a nominal value of EUR 1 each. As of 30 June 2004 the number of shares outstanding was 301,733,356. Net asset value per share amounted to EUR 21.94. In May 2004 the company distributed dividend to the amount of EUR 0.36 per share.

 

 

The futures contracts purchased at balance sheet date represent an additional investment of JPY 18 billion. The forward exchange transactions current at closing date represent purchases of AUD 71 million, CAD 80 million, EUR 48 million and JPY 11,931 million, against sales of CHF 113 million, USD 161 million and GBP 15 million. Futures contracts and forward exchange transactions are included in the Spread of net assets at the end of this report. Unrealized results of these transactions at closing date are included in the Profit and loss account.

 

The expense ratio expresses the costs charged to the fund during the reporting period as a percentage of the average assets1) entrusted during the reporting period. The expense ratio as shown does not include brokerage costs and exchange fees relating to investment transactions. These have been discounted in the cost price or the sales value of the investments, as is normal practice in the securities industry. The expense ratio was 0.43% during the reporting period. In addition to the costs of the fund's asset management such as administration, the management costs in the expense ratio also include the costs of the external auditor, other external advisers, regulators, costs relating to reports required by law, such as the annual and semiannual reports, and the costs relating to the meetings of shareholders. Other costs mainly relate to the custody fee charged by third parties for the custody of the fund's securities portfolio.

With effect from 1 October 2004, the management fee on the average assets entrusted will be raised from 0.84% to 1.00% per annum. Furthermore, a service fee will be introduced to cover formal and operational costs such as the production of annual reports and the fund's administration. The service fee for Robeco N.V. will be 0.12% per annum. A discount of 0.02% will apply for the service fee on the assets in excess of EUR 1 billion, with a further discount of 0.02% on the assets in excess of EUR 5 billion.

Rotterdam, 3 August 2004

 

The management board

 

Statement in conformity with article 21, paragraph 2, sections b and c, of the Dutch Investment Institutions Supervision Decree (Btb, Besluit toezicht beleggingsinstellingen).

The company knows of only one party to be considered a major investor within the meaning of the Btb, namely Stichting Aandelen-Rekeningen Robeco-Groep. During the period under review, no transactions as referred to in article 21, paragraph 2, section c, of the Btb took place.

No external audit has been conducted.