<PAGE>
------------------------------------------
SUMMARY OF GENERAL INFORMATION
--------------------------------------
THE FUND
The United Kingdom Fund Inc. (the "Fund") is a diversified, closed-end
management investment company whose shares trade on the New York Stock Exchange.
Its investment objective is long-term capital appreciation through investments
primarily in United Kingdom equities. The Fund is managed by Mercury Asset
Management International Channel Islands Ltd. (formerly known as Warburg
Investment Management International (Jersey) Ltd.), relying on investment advice
from Mercury Asset Management International Ltd. (formerly known as Warburg
Investment Management International Ltd.).
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transactions section of newspapers under the designation "Utd
KingFd" or "UnitKingdm". The Fund's New York Stock Exchange trading symbol is
UKM. Weekly comparative net asset value (NAV) and market price information about
the Fund shares are published each Monday in THE WALL STREET JOURNAL, THE NEW
YORK TIMES, and BARRON'S as well as other newspapers in a table called "Closed
End Funds".
Shareholders interested in receiving the quarterly newsletter entitled "Closed
End Fund Focus" should call 1-800-543-6217 or 1-212-888-6941 and request to be
placed on the mailing list or send a request by mail to the Fund's address.
DIVIDEND REINVESTMENT PLAN-- SUMMARY
An automatic Dividend Reinvestment Plan ("the Plan") is available to provide
shareholders with automatic reinvestment of their dividend income and capital
gains distributions in additional shares of the Fund's common stock. A brochure
describing the Plan is available from the Plan Agent, The Bank of New York, by
calling: 1-800-432-8224.
If you wish to participate and your shares are held in your own name, no
action is required on your part. However, if your shares are held in the name of
a brokerage firm, bank or other nominee, you should instruct your nominee to
participate in the Plan on your behalf. If your nominee is unable to participate
on your behalf you should request it to register your shares in your own name
which will enable you to participate in the Plan.
[LOGO]
The United Kingdom Fund Inc.
Quarterly Report
June 30, 1995
<PAGE>
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LETTER TO SHAREHOLDERS
--------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present to you the Quarterly Report of The United Kingdom
Fund Inc. On June 30, 1995, the end of the period under review, the Fund's net
assets totalled $54.6 million. This represents a net asset value per share of
$13.62, a rise of 76.8% from its initial value after taking into account
underwriting discounts, commissions, offering expenses and distributions. This
compares with an increase of 97.2% in the FT-SE Actuaries All-Share Index over
the same time period. At the end of the period under review, the Fund was quoted
at $11.25 per share on the New York Stock Exchange, which represents a 17.40%
discount to the Fund's net asset value per share.
On July 25, 1995 and July 27, 1995, the names of the Fund's Investment Manager
and Investment Adviser, respectively, were changed to Mercury Asset Management
International Channel Islands Ltd. and Mercury Asset Management International
Ltd. These changes resulted from the sale of the investment banking business of
S.G. Warburg Group plc (the "Warburg Group") to Swiss Bank Corporation on July
2, 1995. As a result of the sale, on July 26, 1995 Mercury Asset Management
Group plc ("MAM"), which previously was 75% owned by Warburg Group, became a
fully independent company, 25% owned by existing MAM shareholders with the
balance held by Warburg Group shareholders, who prior to the sale, indirectly
owned the same shares. MAM indirectly, wholly owns the Fund's Investment
Adviser, which in turn wholly owns the Fund's Investment Manager. The sale did
not result in a "change of control" of MAM, the Investment Manager or the
Investment Adviser, and none of these entities expect the sale to affect MAM,
the Fund or its shareholders in any significant manner.
We also enclose an investment review and United Kingdom market outlook
together with a summary of the major portfolio investments.
Yours sincerely,
<TABLE>
<S> <C>
[SIG] [SIG]
Anthony M. Solomon Richard J. Oldfield
Chairman of the Board President
</TABLE>
<PAGE>
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REPORT OF INVESTMENT MANAGER
--------------------------------------------------------------------------------
INVESTMENT REVIEW
During the second quarter of 1995, your Fund experienced a 3.9% rise in the
net asset value, which compared with a 4.1% increase in the FT-SE Actuaries
All-Share Index. Year to date, the Fund's net asset value rose by 10.5%, while
the FT-SE Actuaries All-Share Index rose by 11.0%. These figures are recorded in
total return and dollar based terms.
This strong equity performance was achieved despite some weakness towards the
quarter end owing to Prime Minister John Major's resignation on June 22, 1995
from his post as leader of the Conservative Party. On the economic front, the
first signs of a slowdown in the rate of domestic economic growth led to
improved sentiment towards the outlook for interest rates; this was reinforced
by the Chancellor's decision in May to leave short-term interest rates
unchanged.
FT-SE 100 Index companies performed broadly in line with the overall market
and returned 6.7%, while the index of small capitalization companies reversed a
poor first quarter, returning 8.1%; medium sized companies continued to
underperform, with the FT-SE Mid-250 Index returning 5.8%. These figures are in
pound sterling terms. The conclusion of the reporting season reflected
underlying profit growth in line with forecasts, equating to growth of around
15% since 1993. Dividend growth, at 11%, again clearly exceeded expectations. In
sector terms, pharmaceutical stocks constituted the best performing area of the
market, in part due to speculation that Zeneca might be a prospective bid target
for a major European or U.S. drug company. Tobacco shares were also strong,
buoyed by Richemont's move to purchase the outstanding minority interest of
Rothmans. Elsewhere, differential sector performances were less marked than they
have been for some time. Certain cyclical sectors, such as engineering,
performed well while others, such as building materials, lagged behind the
market rise.
Over the quarter, equities enjoyed little support from the U.K. bond market;
long gilt yields remained at around 8.5%. However, this analysis masks a sharp
rally at the beginning of the period and a fall at the end, the latter
attributable to nervousness regarding the political situation. The initial rally
was sparked by signs of weakening economic activity both in Britain and overseas
(particularly in the U.S.) which consequently resulted in lower interest rate
expectations. The key domestic indicator that led the market to rethink its view
of inflationary and interest rate pressures was the first quarter GDP estimate,
which was revised downwards to 0.7%. This followed the monthly monetary meeting
during which the Chancellor declined the Governor of the Bank of England's
advice to raise interest rates.
The Fund's and the FT-SE Actuaries All-Share Index's sector weightings
expressed as a percentage of total equities held at June 30, 1995 are outlined
below:
<TABLE>
<CAPTION>
% FT-SE
Actuaries
% U.K. All-Share
Fund Index
--------- --------------
<S> <C> <C>
Mineral Extraction........................... 9.2 8.9
General Manufacturing........................ 31.0 19.3
Consumer Goods............................... 18.8 19.4
Services..................................... 21.6 19.7
Utilities.................................... 9.4 12.7
Finance...................................... 10.0 16.3
Investment Trusts............................ 0.0 3.7
</TABLE>
2
<PAGE>
ECONOMIC AND MARKET OUTLOOK
Increasing evidence of a mild slowdown in the U.K. economy has endorsed the
Chancellor's decision to leave rates unchanged. We still believe that short-term
interest rates will peak at no more than 7.5% in the U.K. We continue to expect
GDP growth of around 3% this year, with further weakness in the very near term
likely to be offset by the impact of tax cuts in the November Budget. Despite
the Chancellor's insistence that anti-inflationary policy is a government
priority, it seems likely that some fiscal easing is required to boost both
consumer confidence and the Conservative Party's popularity.
The conclusion of the December year-end reporting season reinforced the
existing trend, confirming a 15% earnings growth rate for 1994. We continue to
expect earnings to grow by 13% this year and a further 11% in 1996.
Rationalization and cost cutting, primarily derived from takeover activity, will
remain a key generator of this growth. However, we expect the recovery in the
manufacturing sector to continue and for this, in time, to lead to increased
consumer confidence.
Global bond markets will continue to influence the U.K. equity market, mostly
reflecting the economic outlook in the U.S. We believe that short-term interest
rates in the U.S. are unlikely to rise significantly from the current level of
6%, with a relaxation of monetary policy possible later this year. Fears of a
deep recession are likely to prove unfounded, given improving consumer
confidence levels, and equity market valuations appear underpinned by the
improved cash generation of U.S. companies. Further reductions in short rates
are also possible in the core economies of Continental Europe.
The outlook for the U.K. economy remains positive; an increased level of
manufacturing investment, together with continued consumer resistance to price
rises, should keep inflation within the government's 1 - 4% target range.
Political factors could potentially destabilize this position. Notwithstanding
the Conservative Party's reaffirmed support of Prime Minister John Major (by
reelecting him leader of the Conservative Party on July 4, 1995), political
uncertainties and the increasing proximity of the next general election could
lead to investor nervousness. However, under this economic scenario, we believe
that the expected strong growth in profits and dividends justifies U.K. equities
as our favored asset class.
3
<PAGE>
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PORTFOLIO SUMMARY
--------------------------------------------------------------------------------
Our strategy during the quarter was to add to holdings in smaller companies
that we believed held the prospect of strong earnings growth. We purchased a
holding in Scholl, the footcare company and established a position in Unipalm
Group, a rapidly growing provider of connections to the Internet. A holding in
CI Group was bought during the offer by Ash & Lacy. This metals company is
experiencing a significant benefit from the lower level of pound sterling. We
added to BICC, which is expected to demonstrate a powerful recovery in earnings
over the next two years.
We sold the holding in Grand Metropolitan due to reduced earnings expectations
and took profits on part of the Whitecroft holding.
The Fund's ten largest equity holdings as of June 30, 1995:
SHELL TRANSPORT & TRADING
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 751p
Prospective Earnings per share (to December 1996)....... 55.8p
Prospective Earnings Multiple........................... 13.5x
</TABLE>
Shell Transport & Trading ("Shell") is a leading oil company with substantial
production, refining and petrochemical activities. The chemicals interests
should benefit from a recent improvement in margins and rising oil production
should lead to higher profits from Shell's upstream activities. Shell's plastics
business should see a significant improvement resulting from the recent rise in
polymer prices.
STANDARD CHARTERED
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 337p
Prospective Earnings per share (to December 1996)....... 41.6p
Prospective Earnings Multiple........................... 8.1x
</TABLE>
Standard Chartered is a U.K. based banking group that is rapidly recovering
following a period of disappointing results. Standard Chartered has significant
earnings growth potential based on U.K. economic recovery and its strong
presence in the fast growth markets of the Asia Pacific Region and Africa.
Consequently, the shares are trading at an attractively low multiple.
EAST MIDLANDS ELECTRICITY
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 642p
Prospective Earnings per share (to March 1996).......... 75.8p
Prospective Earnings Multiple........................... 8.5x
</TABLE>
East Midlands Electricity is a medium-sized regional electricity company with
excellent dividend growth prospects. It has strong finances and also holds a
share in the National Grid Company, which will be floated in 1995. The
management team is committed to concentrating on the core electricity
distribution business and the sale of Ambassador, the security systems
operation, has recently been announced. A special dividend is likely to follow
the sale of the holding in the National Grid Company.
POWERGEN
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 483p
Prospective Earnings per share (to March 1996).......... 52.3p
Prospective Earnings Multiple........................... 9.2x
</TABLE>
PowerGen, a leading power generator in England and Wales, continues to reduce
its costs. In February 1995, the U.K. Government sold its remaining 40% holding
in the company. As part of the Government's share sale, PowerGen bought back 8%
of its share-capital. PowerGen has stated that it intends to pursue a policy of
strong dividend growth.
4
<PAGE>
GREAT UNIVERSAL STORES
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 587p
Prospective Earnings per share (to March 1996).......... 40.0p
Prospective Earnings Multiple........................... 14.7x
</TABLE>
Great Universal Stores is a retail, mail order, property and financial group
with a strong balance sheet and consistent earnings record. Current trading in
the mail order division has been strong and there are further rationalization
benefits which can be achieved. The company has recently announced a special
dividend of 30p a share, in addition to its normal progressive dividend policy.
Further ways of increasing shareholder value are awaited by investors.
GLAXO WELLCOME
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 771p
Prospective Earnings per share (to June 1996)........... 51.4p
Prospective Earnings Multiple........................... 15.0x
</TABLE>
Glaxo Wellcome is a leading international pharmaceutical company. Following
the takeover of Wellcome by Glaxo, there is substantial scope for cost reduction
in eliminating duplicated research and marketing expenses. A new research
facility at Stevenage which recently opened will enhance its drug discovery and
development capabilities.
BRITISH PETROLEUM
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 450p
Prospective Earnings per share (to December 1996)....... 38.1p
Prospective Earnings Multiple........................... 11.8x
</TABLE>
British Petroleum is a leading international oil company with a substantial
exploration and production profile. Its downstream activities have performed
well and chemicals should show a large recovery in margins helped by increased
volumes. Expectations of firm crude oil prices should underpin profits growth.
JOHNSTON GROUP
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 355p
Prospective Earnings per share (to December 1996)....... 49.1p
Prospective Earnings Multiple........................... 7.2x
</TABLE>
Johnston Group is a diversified industrial group involved in road surfacing,
quarrying, the manufacture of concrete pipes, road sweepers, fire fighting
equipment and washroom equipment. The concrete pipes division has performed
exceptionally well due to substantial ordering by water companies who are
spending heavily to meet tighter environmental standards. We expect a continuing
recovery in Johnston Group's profits.
WHITECROFT
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 172p
Prospective Earnings per share (to March 1996).......... 12.2p
Prospective Earnings Multiple........................... 14.1x
</TABLE>
Whitecroft is a diversified industrial group with interests in building
products, commercial lighting, textiles and medical cotton fiber. It has
recovered strongly from near bankruptcy two years ago and is seeing good demand
for its products. Earnings growth from the existing businesses is expected to
remain at high levels and may now be supplemented by the acquisition of
companies in related areas.
BRITISH AIRWAYS
<TABLE>
<S> <C>
Market Price at 06/30/95................................ 412p
Prospective Earnings per share (to July 1996)........... 39.1p
Prospective Earnings Multiple........................... 10.5x
</TABLE>
British Airways operates international and domestic scheduled and charter air
services. It is experiencing strong demand for passenger and freight services
and is benefiting from increased premium passenger traffic. It has taken a stake
in USAir and in Quantas, the Australian carrier.
5
<PAGE>
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The United Kingdom Fund Inc.
Statement of Investments
June 30, 1995 (unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------
<C> <S> <C>
Shares Description Value
--------------------------------------------------------------
INVESTMENTS IN UNITED KINGDOM SECURITIES--
95.6% OF NET ASSETS
Common Stocks--95.6%
Banks--9.6%
200,000 Abbey National plc Ord 10p........... $1,489,083
150,000 Barclays plc Ord L1.................. 1,611,980
400,000 Standard Chartered plc Ord 25p....... 2,144,533
------------
5,245,596
------------
Building Materials & Merchants--7.7%
250,000 BPB Industries plc Ord 50p........... 1,234,936
101,000 Cape plc Ord 25p..................... 310,114
306,000 Johnston Group plc Ord 10p........... 1,728,195
250,000 Marley plc Ord 25p................... 461,361
400,000 Norcros plc Ord 25p.................. 489,997
------------
4,224,603
------------
Chemicals--3.2%
250,000 Allied Colloids plc Ord 10p.......... 497,156
200,000 Wardle Storeys plc Ord 10p........... 1,240,902
------------
1,738,058
------------
Diversified Industrials--4.3%
50,000 Charter plc Ord 2p (Regd.)........... 722,269
600,000 Whitecroft plc Ord 25p............... 1,641,809
------------
2,364,078
------------
Electricity--7.3%
200,000 East Midlands Electricity plc
Ord 56 9/11p....................... 2,042,716
250,000 PowerGen plc Ord 50p................. 1,923,001
------------
3,965,717
------------
Electronics--4.6%
165,000 Beales Hunter plc Ord 20p............ 601,122
200,000 BICC plc Ord 50p..................... 944,995
200,000 General Electric Co. plc Ord 5p...... 976,813
------------
2,522,930
------------
Engineering-General--4.2%
750,000 Bridon plc Ord 25p................... 1,598,854
1,850,000 CI Group Plc Ord 10p................. 706,360
------------
2,305,214
------------
Engineering-Vehicles--2.9%
521,535 Lucas Industries plc Ord 25p......... 1,564,004
------------
Food Producers--5.5%
255,000 Barr (AG) plc Ord 25p................ 1,513,185
510,000 Canadian Pizza plc Ord 10p........... 551,724
1,000,000 Finlay (James) Ord 25p............... 938,631
------------
3,003,540
------------
Health Care--2.0%
375,000 Scholl plc Ord 5p.................... 1,097,721
------------
Household Goods--2.4%
317,500 Royal Doulton plc Ord L1............. 1,318,339
------------
Leisure & Hotels--0.9%
265,000 Inspirations plc Ord 10p............. 484,827
------------
Media--2.6%
150,000 Pearson plc Ord 25p.................. 1,419,878
------------
<CAPTION>
--------------------------------------------------------------
Shares Description Value
<C> <S> <C>
--------------------------------------------------------------
Oil & Gas--10.4%
200,000 British Gas plc Ord 25p.............. $ 921,131
250,000 British Petroleum plc Ord 25p........ 1,791,751
250,000 Shell Transport & Trading plc Ord 25p
(Regd.)............................ 2,986,915
------------
5,699,797
------------
Pharmaceuticals--3.4%
150,000 Glaxo Wellcome plc Ord 25p........... 1,841,069
------------
Retailers-Food--2.3%
450,000 Nurdin & Peacock plc Ord 10p......... 1,274,311
------------
Retailers-General--7.6%
200,000 Great Universal Stores plc Ord 25p... 1,870,898
100,000 Kingfisher plc Ord 25p............... 676,133
175,000 Menzies (John) plc Ord 25p........... 1,595,275
------------
4,142,306
------------
Spirits, Wines & Ciders--0.4%
185,000 Merrydown plc Ord 25p................ 226,624
------------
Support Services--2.9%
420,000 Unipalm Group plc Ord 5p*............ 1,576,901
------------
Textiles & Apparel--4.2%
350,000 Thomas French & Sons plc Ord 10p..... 434,316
165,000 Shiloh plc Ord 25p................... 351,748
905,000 Sirdar plc Ord 25p................... 1,482,957
------------
2,269,021
------------
Tobacco--2.8%
200,000 BAT Industries plc Ord 25p........... 1,530,446
------------
Transport--4.4%
250,000 British Airways plc Ord 25p.......... 1,638,627
150,000 Ocean Group plc Ord 25p.............. 742,155
------------
2,380,782
------------
Total Common Stocks
(cost $42,150,118)................. 52,195,762
------------
UNITED STATES SHORT-TERM INVESTMENT--
0.3% OF NET ASSETS
Principal
Amount
(000)
---------
US$ 178 Federated Trust for Short-term
U.S. Government Securities
(cost $178,021)--0.3%.............. 178,021
------------
Total Investments
(cost $42,328,139)--95.9%.......... 52,373,783
------------
Cash and other assets in excess of
liabilities--4.1%.................. 2,253,248
------------
Net Assets--100.0%................... $ 54,627,031
------------
------------
Number of shares issued and
outstanding........................ 4,011,655
------------
------------
Net asset value per share............ $13.62
</TABLE>
----------
*Non-income producing security.
6
<PAGE>
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The United Kingdom Fund Inc.
Quarterly Results of Operations* (unaudited)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Net Realized and
Unrealized
Net Investment Income/ Gain/(Loss) on
Investments and
Investment Income Pound Sterling Market
(Loss) Transactions Net Asset Value Value**
---------------------- ---------------------- -------------------- ------------------------ ---------
Quarter Ended Total Per Share Total Per Share Total Per Share High Low High
------------------------- --------- ----- --------- ----- --------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
June 30, 1995............ $ 512 $ 0.13 $ 316 $ 0.08 $ 1,708 $ 0.43 $ 13.96 $ 13.10 $ 11.75
--------- ----- --------- ----- --------- ---------
--------- ----- --------- ----- --------- ---------
June 30, 1994............ $ 378 $ 0.09 $ 198 $ 0.05 $ (833) $ (0.21) $ 12.68 $ 11.98 $ 12.000
September 30, 1994....... 514 0.13 309 0.08 3,505 0.88 13.48 12.16 11.750
December 31, 1994........ 1,187 0.30 993 0.24 (605) (0.15) 13.64 12.75 11.875
March 31, 1995........... 297 0.07 119 0.03 1,608 0.40 13.18 12.49 11.000
--------- ----- --------- ----- --------- ---------
--------- ----- --------- ----- --------- ---------
$ 2,376 $ 0.59 $ 1,619 $ 0.40 $ 3,675 $ 0.92
--------- ----- --------- ----- --------- ---------
--------- ----- --------- ----- --------- ---------
June 30, 1993............ $ 240 $ 0.06 $ 68 $ 0.02 $ 714 $ 0.18 $ 11.36 $ 10.75 $ 10.875
September 30, 1993....... 531 0.13 355 0.08 2,605 0.65 12.04 10.50 12.125
December 31, 1993........ 155 0.04 (33) -- 4,688 1.17 12.91 11.58 13.875
March 31, 1994........... 460 0.12 288 0.07 (2,200) (0.55) 13.68 12.31 13.875
--------- ----- --------- ----- --------- ---------
--------- ----- --------- ----- --------- ---------
$ 1,386 $ 0.35 $ 678 $ 0.17 $ 5,807 $ 1.45
--------- ----- --------- ----- --------- ---------
--------- ----- --------- ----- --------- ---------
<CAPTION>
Quarter Ended Low Volume**
------------------------- --------- ---------
<S> <C> <C>
June 30, 1995............ $ 10.75 434,900
June 30, 1994............ $ 10.250 481,500
September 30, 1994....... 10.500 516,300
December 31, 1994........ 10.500 748,300
March 31, 1995........... 10.500 433,900
June 30, 1993............ $ 9.500 713,700
September 30, 1993....... 10.500 576,300
December 31, 1993........ 10.625 734,200
March 31, 1994........... 10.375 904,100
</TABLE>
------------------------------
* Totals expressed in thousands of dollars except for per share amounts and
NYSE trading volume of the Fund's common stock.
** As reported on the New York Stock Exchange.
7
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<PAGE>
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<PAGE>
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DIRECTORS AND OFFICERS
<TABLE>
<S> <C>
ANTHONY M. SOLOMON, Chairman of the Board and
Director
RICHARD J. OLDFIELD, President
GEORGE F. BENNETT, Director
LIVIO BORGHESE, Director
* SIR ARTHUR BRYAN, Director
PETER STORMONTH DARLING, Director
LEON LEVY, Director
* J. MURRAY LOGAN, Director
* JAMES S. MARTIN, Director
JAMES M. DONALD, Vice President, Treasurer and
Assistant Secretary
STEVEN GOLANN, Senior Vice President, Secretary and
Assistant Treasurer
THADDEA M. FELDMAN, Assistant Secretary
</TABLE>
* Member of the Audit Committee
----------------------------------------------------
EXECUTIVE OFFICES--
245 Park Avenue
8th Floor
New York, New York 10167
(For latest net asset value and market data, please
call (212) 272-2479; regarding shareholder inquiries
and requests for Fund reports, please call
1-800-432-8224.)
INVESTMENT MANAGER--
Mercury Asset Management International Channel
Islands Ltd.
Forum House, Grenville Street
St Helier, Jersey JE4 8RL
Channel Islands
INVESTMENT ADVISER--
Mercury Asset Management International Ltd.
33 King William Street
London EC4R 9AS
England
ADMINISTRATOR--
Bear Stearns Funds Management Inc.
245 Park Avenue
New York, New York 10167
CUSTODIAN--
Custodial Trust Company
101 Carnegie Center
Princeton, New Jersey 08540
TRANSFER AGENT AND REGISTRAR--
The Bank of New York
Shareholder Relations Department-11E
P.O. Box 11258
Church Street Station
New York, New York 10286
LEGAL COUNSEL--
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
INDEPENDENT AUDITORS--
Ernst & Young LLP
787 Seventh Avenue
New York, New York 10019
This report, including the Statement of Investments and Quarterly Results of
Operations, is transmitted to the shareholders of The United Kingdom Fund Inc.
for their information. The financial information included herein is taken from
the records of the Fund without audit by the Fund's independent auditors who
do not express an opinion thereon. This is not a prospectus, circular or
representation intended for use in the purchase of shares of the Fund or any
securities mentioned in this report.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
Comparisons between changes in the Fund's net asset value per share and
changes in the FT-SE Actuaries All-Share Index should be considered in light
of the Fund's investment policy and objectives, the characteristics and
quality of the Fund's investments, the size of the Fund and variations in the
U.S. dollar/pound sterling exchange rate.
