<PAGE>
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present to you the Quarterly Report of The United Kingdom
Fund Inc. (the "Fund"). On June 30, 1997, the end of the period under review,
the Fund's net assets totalled $62.5 million. This represents a net asset value
per share of $15.58, a rise of 169.91% from its initial value in August 1987
after taking into account underwriting discounts, commissions, offering expenses
and distributions. This compares with an increase of 175.03% in the FTSE
All-Share Index (U.S.$) over the same time period. At the end of the period
under review, the Fund was quoted at $13.50 per share on the New York Stock
Exchange, which represents a 13.35% discount to the Fund's net asset value per
share.
We also enclose an investment review and United Kingdom market outlook
together with a summary of the major portfolio investments.
Yours sincerely,
[SIG] [SIG]
Anthony M. Solomon J. Loughlin Callahan
Chairman of the Board President and Treasurer
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INVESTMENT MANAGER
- --------------------------------------------------------------------------------
INVESTMENT REVIEW
During the second quarter of 1997, your Fund experienced a rise in net asset
value of 4.17% which compared with an increase of 6.30% in the value of the FTSE
All-Share Index. These results are recorded in total return and U.S. dollar
based terms.
The continued strength of U.S. and European stock markets and the buoyant
domestic economy inspired U.K. equities to reach new highs. The market took the
Labour victory in the General Election in stride and was further encouraged by
the decision to give the Bank of England control over interest rates.
The FTSE-100 Index returned 7.8% over the quarter helped by strong
performances from banks and pharmaceuticals. Smaller companies performed poorly
with a negative return of 2.7%, with even lower returns from those companies in
the manufacturing sectors. The FTSE Mid 250 Index continued to underperform with
a negative return of 1.6%, which was due to the impact of sterling's strength on
the competitiveness of U.K. industrial companies. Surprisingly, domestic sectors
such as Leisure & Hotels and Breweries lagged the market's rise as investors
focused on the negative consequences that higher sterling could have for
tourism.
The best performing areas of the equity market were Gas Distribution, Banks,
Pharmaceuticals and Electricity. Overseas buying of the major U.K. drug stocks
drove share prices up sharply. In utilities, BG (formerly British Gas) benefited
from a satisfactory outcome of its appeal to the Monopolies & Merger Committee
and the electricity sector featured a bid for The Energy Group. Banks continued
their secular out-performance ahead of the building society conversions.
Industrial manufacturing stocks generally performed badly as sterling's strength
and rising interest rates dissuaded investors from investing in the companies
which were particularly adversely affected. The Paper and Packaging sector
suffered a severe de-rating and the Diversified Industrials sector was dragged
lower by BTR (formerly British Tire & Rubber) its principal component.
The U.K. gilt market rose as a result of the Chancellor's move to allow the
Bank of England to set interest rates. Longer dated stocks performed best
returning 8.1%. With inflation seemingly well under control, index-linked stocks
remained subdued and returned only 1.7% (in sterling terms), a little ahead of
cash.
The Fund's and the FTSE All-Share Index's sector weightings expressed as a
percentage of total equities held at June 30, 1997 are outlined below:
<TABLE>
<CAPTION>
% OF FTSE
% U.K. ALL-SHARE
FUND INDEX
------------ -------------
<S> <C> <C>
Mineral Extraction....................... 10.1 10.0
General Manufacturing.................... 26.4 13.9
Consumer Goods........................... 26.1 18.0
Services................................. 15.9 21.5
Utilities................................ 10.4 10.5
Finance.................................. 11.1 22.9
Investment Trusts........................ 0.0 3.2
</TABLE>
2
<PAGE>
ECONOMIC & MARKET OUTLOOK
The outlook for the U.K. domestic economy for the remainder of 1997 is for
continued consumer-led economic expansion. The conversion and flotation of three
building societies over the last three months has released substantial sums into
the hands of consumers. Personal disposable incomes are also showing a
significant increase in the current year which could keep spending growth at a
high level. Despite the Chancellor's stated aim of preventing a spending boom,
the Budget failed to dampen down burgeoning consumer expenditure. To maintain
inflation at the present subdued level, it is likely that the Bank of England
will raise interest rates further. A backdrop of steadily rising interest rates
suggests that sterling's period of abnormal strength is not yet over, with
possible severe consequences for U.K. industries.
Industrial companies are faced with renewed sterling strength, particularly
against the European currencies, which have depreciated on the prospect of a
weak euro. Export orders have been falling at their fastest rate since 1991, a
trend which is expected to continue. Although factory output is anticipated to
increase on the back of rising domestic orders, companies which rely on exports
are now experiencing falling export prices and reduced order books. There is
also increasing evidence of pricing pressures for U.K. manufacturers in their
domestic market-place from imports. The recovery in Continental European
economies will be helpful for those companies with overseas manufacturing
plants; however, the negative translation effect of sterling's appreciation is
still likely to outweigh any benefit to U.K. companies.
Despite the very buoyant domestic economy, the Bank of England's strategy of
steadily increasing interest rates may succeed in heading off an upturn in
inflation. The outlook for the U.K. fixed interest market has improved with the
Advance Corporation Tax changes in the Budget which have increased the relative
yield attractions of gilts compared with equities. This is a positive background
for long-dated gilts where the combination of increased buying by pension funds
and a declining supply will lead to lower yields. Shorter dated gilts will be
affected by base rate increases and consequently may under-perform the longer
end of the market. Overall gilts offer reasonable value with further prospects
for capital appreciation.
The outlook for the U.K. equity market remains mixed. Manufacturers are
suffering from lower export orders and pressures on pricing from importers in
the U.K. market, whereas some suppliers to the consumer side of the economy are
enjoying substantial upturns in business as customers receive their building
society windfalls. Elsewhere, the banks and pharmaceutical stocks have seen
heavy buying from overseas investors which has driven the FTSE-100 Index to
levels which are probably unsustainable in the short term. Other domestic stocks
such as gas, water and electricity now offer less value than they had
previously. Although small and medium-sized companies have lagged larger
companies by a considerable degree over the last twelve months and are now
selling at substantially lower ratings, it may be some time before investors
focus on value and take advantage of the lower ratings by switching from the
market leaders. U.K. equities are likely to remain volatile with continuing
divergence in performance between different sectors and stocks. Overall the
equity market is probably due a period of consolidation before making further
significant progress.
3
<PAGE>
- --------------------------------------------------------------------------------
PORTFOLIO SUMMARY
- --------------------------------------------------------------------------------
The Fund's strategy over the quarter was to increase the cash holding within
the portfolio. We reduced Abbey National, which had performed well ahead of the
conversion of several of the leading building societies into banks. We trimmed
holdings of smaller stocks with partial sales of Universal Ceramic Materials,
Paramount Foods (formerly known as Canadian Pizza), and several other companies.
The holdings of National Westminster Bank, Anglian Water and Shell Transport &
Trading were reduced to increase the portfolio's cash resources.
The Fund's ten largest equity holdings as of June 30, 1997 were:
SHELL TRANSPORT & TRADING
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 410p
Prospective Earnings per share (to December 1997)........... 20.2p
Prospective Earnings Multiple............................... 20.3x
</TABLE>
Shell Transport & Trading is a leading oil company with substantial
production, refining and petrochemical activities. Profits from oil exploration
and production are expected to grow, helped by the recent strength in the price
of crude oil. Cash flow remains highly positive, despite a substantial increase
in exploration expenditure and we continue to expect strong dividend progression
for at least the next two years.
BRITISH PETROLEUM
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 747p
Prospective Earnings per share (to December 1997)........... 47.4p
Prospective Earnings Multiple............................... 15.7x
</TABLE>
British Petroleum ("BP") is a leading international oil company with a
substantial exploration and production profile. BP continues to develop its oil
production interests in the Gulf of Mexico, Colombia and the region West of
Shetlands. It is planning to cut its refining capacity to match production with
customer demand and has reduced the cyclicality of its chemicals operations.
Strong cash flow from the company may see a sharp reduction in the level of
borrowings and we expect excellent dividend progression.
GLAXO WELLCOME
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 1240p
Prospective Earnings per share (to December 1997)........... 57.4p
Prospective Earnings Multiple............................... 21.6x
</TABLE>
Glaxo Wellcome is a leading international pharmaceuticals company which is
expected to return to strong earnings growth in 1998. Although its patents on
Zovirax and Zantac expire this year, sales of newer drugs are likely to increase
rapidly. New compounds to treat hepatitis (B&C), malaria and influenza could
have significant long-term potential.
BARCLAYS
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 1192p
Prospective Earnings per share (to December 1997)........... 107.3p
Prospective Earnings Multiple............................... 11.1x
</TABLE>
Barclays has shown a strong recovery in banking profits following a reduction
in bad debts and success in controlling costs through branch closures and
centralization of service functions. Demand for consumer credit is now growing
and the residential mortgage business is expected to develop further this year.
We believe that substantial further cost savings can be achieved through the
introduction of new technology and staff reductions. BZW, the securities arm of
Barclays, is expected to lift its return on capital to more satisfactory levels.
4
<PAGE>
BRITISH AIRWAYS
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 685p
Prospective Earnings per share (to March 1998).............. 54.7p
Prospective Earnings Multiple............................... 12.5x
</TABLE>
British Airways operates international and domestic scheduled air services. It
is experiencing strong demand for passenger and freight services and is
benefiting from increased premium passenger traffic. Major cost cutting programs
should lead to further substantial improvements in profitability. It has
announced a proposed alliance with American Airlines, which is currently being
reviewed by various regulatory authorities.
NATIONAL WESTMINSTER BANK
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 808p
Prospective Earnings per share (to December 1997)........... 76.7p
Prospective Earnings Multiple............................... 10.5x
</TABLE>
National Westminster Bank is a leading retail bank in the U.K. Like other
clearing banks it is undergoing a strategy of branch closures and reductions in
its workforce. It is rapidly expanding its investment banking activities and in
the last two years it has increased its investment management and corporate
advisory capabilities. Although the company has recently suffered from a setback
in its derivatives operation, profits are expected to continue their steady
growth, helped by a lack of bad debts and increasing fee income.
JOHNSTON GROUP
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 453p
Prospective Earnings per share (to December 1997)........... 40.2p
Prospective Earnings Multiple............................... 11.3x
</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 roadsweeper business has grown strongly
and the concrete pipes division has also performed well due to substantial
ordering by water companies who are spending heavily to meet tighter
environmental standards. Johnston Group was successful in its defense against a
hostile tender offer by the conglomerate, TT Group.
SCHOLL
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 288p
Prospective Earnings per share (to December 1997)........... 17.8p
Prospective Earnings Multiple............................... 16.2x
</TABLE>
Scholl is a footwear and healthcare group which is undergoing a major
restructuring. The new chief executive has begun to re-focus the company on its
areas of greatest strength. It has disposed of its herbal remedies and French
antiseptic cleanser businesses and is also likely to dispose of further European
activities. This would provide funds for a beneficial global link-up with
Schering-Plough, the owner of the Dr. Scholl's brand in the U.S.
JOHN MENZIES
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 467p
Prospective Earnings per share (to March 1998).............. 40.7p
Prospective Earnings Multiple............................... 11.4x
</TABLE>
John Menzies is a major wholesaler of books, newspapers, magazines, home
entertainment products and office supplies with a very efficient distribution
network. It is a leading retail news agent with 250 outlets and also owns the
U.K. retail chain Early Learning Centre which sells educational toys for
pre-school children. Early Learning Centre has suffered from a more competitive
retail environment for toys but is expected to recover in the current year.
Menzies acts as the exclusive U.K. distributor for Nintendo and sales of the
Nintendo 64 home entertainment system should lead to a substantial improvement
in profits.
5
<PAGE>
FINLAY (JAMES)
<TABLE>
<S> <C>
Market Price as of 06/30/97................................. 110p
Prospective Earnings per share (to December 1997)........... 8.1p
Prospective Earnings Multiple............................... 12.4x
</TABLE>
Finlay (James) is a major tea producer, owning tea estates in Kenya and
Bangladesh. It also has a stake in a Ugandan tea estate and manages a group of
estates on behalf of the Sri Lankan government. Finlay (James) also produces
special teas, including instant tea and packaged tea on an exclusive basis for
J. Sainsbury plc, one of Britain's major supermarket chains. Finlay (James)
continues to recover from previous ill-considered diversification attempts and
is expected to show strong profit growth over the next few years.
6
<PAGE>
- ----------------------------------------------------
THE UNITED KINGDOM FUND INC.
STATEMENT OF INVESTMENTS
JUNE 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------------------
<C> <S> <C>
INVESTMENTS IN UNITED KINGDOM SECURITIES--
101.2% OF NET ASSETS
COMMON STOCKS--101.2%
ALCOHOLIC BEVERAGES--3.3%
250,000 Allied Domecq plc Ord 25p................................... $ 1,795,795
270,000 Merrydown plc Ord 25p....................................... 247,208
---------------
2,043,003
---------------
BANKING--11.2%
100,000 Abbey National plc Ord 10p.................................. 1,365,054
150,000 Barclays plc Ord 100p....................................... 2,976,484
200,000 National Westminster Bank plc Ord 100p...................... 2,688,491
---------------
7,030,029
---------------
BUILDING MATERIALS & MERCHANTS--8.8%
476,000 Cape plc Ord 25p............................................ 1,311,417
300,000 Johnston Group plc Ord 10p.................................. 2,259,830
550,000 Norcros plc Ord 25p......................................... 654,643
454,000 Universal Ceramic Materials plc Ord 5p...................... 812,457
344,370 Vibroplant plc Ord 5p....................................... 447,153
---------------
5,485,500
---------------
CHEMICALS--4.8%
600,000 Manders plc Ord 25p......................................... 1,478,254
55,000 Wolstenholme Rink plc Ord 25p............................... 590,552
300,000 Yorkshire Group plc Ord 25p................................. 958,867
---------------
3,027,673
---------------
DIVERSIFIED INDUSTRIALS--2.9%
200,000 Wardle Storeys plc Ord 10p.................................. 1,375,042
200,000 Whitecroft plc Ord 25p...................................... 412,846
---------------
1,787,888
---------------
ELECTRICITY--1.7%
300,000 National Grid Group plc Ord 10p............................. 1,096,205
---------------
ELECTRONICS & ELECTRICAL EQUIPMENT--5.0%
315,000 Beales Hunter plc Ord 20p................................... 610,903
425,000 CML Microsystems plc Ord 5p................................. 1,022,334
250,000 General Electric Co. plc Ord 5p............................. 1,494,068
---------------
3,127,305
---------------
ENGINEERING-GENERAL--2.5%
306,186 Ash & Lacy plc Ord 5p....................................... 828,275
1,250,000 Beauford plc Ord 10p........................................ 707,498
---------------
1,535,773
---------------
ENGINEERING-VEHICLES--2.8%
500,000 LucasVarity plc Ord 25p..................................... 1,731,288
---------------
FOOD PRODUCERS--7.4%
275,000 Barr (AG) plc Ord 25p....................................... 1,785,391
170,500 CPL Aromas plc Ord 10p...................................... 293,765
1,000,000 Finlay (James) plc Ord 25p.................................. 1,822,847
450,000 Paramount Foods plc Ord 10p................................. 711,659
---------------
4,613,662
---------------
HEALTH CARE--3.2%
425,000 Scholl plc Ord 5p........................................... 2,034,055
---------------
HOUSEHOLD GOODS--1.1%
182,500 Royal Doulton plc Ord100p................................... 712,429
---------------
<CAPTION>
- ----------------------------------------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------------------
<C> <S> <C>
LEISURE & HOTELS--2.6%
355,000 Inspirations plc Ord 10p.................................... $ 404,813
142,000 Inspirations plc 7.7% Convertible Preference 20p............ 203,293
350,000 MacDonald Hotels plc Ord 5p................................. 1,010,889
---------------
1,618,995
---------------
OIL & GAS--11.8%
200,000 BG plc Ord 25p.............................................. 735,797
250,000 British Petroleum plc Ord 25p............................... 3,106,746
200,000 Centrica plc Ord 5p*........................................ 243,879
480,000 Shell Transport & Trading plc Ord 25p (Regd.)............... 3,272,134
---------------
7,358,556
---------------
PHARMACEUTICALS--5.0%
150,000 Glaxo Wellcome plc Ord 25p.................................. 3,096,342
---------------
RETAILERS-FOOD--2.6%
54,000 Greggs plc Ord 20p.......................................... 1,604,604
---------------
RETAILERS-GENERAL--6.4%
106,250 Courts plc Ord 25p.......................................... 1,001,993
250,000 John Menzies plc Ord 25p.................................... 1,858,221
100,000 Kingfisher plc Ord 25p...................................... 1,135,325
---------------
3,995,539
---------------
TEXTILES & APPAREL--3.5%
350,000 French plc Ord 10p.......................................... 314,628
165,000 Shiloh plc Ord 25p.......................................... 377,679
1,550,000 Sirdar plc Ord 25p.......................................... 1,509,467
---------------
2,201,774
---------------
TOBACCO--2.9%
200,000 BAT Industries plc Ord 25p.................................. 1,789,553
---------------
TRANSPORT--4.5%
250,000 British Airways plc Ord 25p................................. 2,848,718
---------------
WATER--7.2%
150,000 Anglian Water plc Ord 100p.................................. 1,626,828
100,000 South West Water plc Ord 100p............................... 1,173,614
250,000 Wessex Water plc Ord 60p.................................... 1,679,268
---------------
4,479,710
---------------
Total Common Stocks
(cost $48,282,535)........................................ 63,218,601
---------------
UNITED STATES SHORT-TERM INVESTMENT--
0.5% OF NET ASSETS
317,763 Federated Investors, Trust for Short-Term U.S. Government
Securities +--(cost $317,763)............................. 317,763
---------------
Total Investments
(cost $48,600,298)--101.7%................................ 63,536,364
---------------
Liabilities in excess of cash and other assets--(1.7%)...... (1,043,668)
---------------
NET ASSETS--100.0%.......................................... $ 62,492,696
---------------
---------------
NUMBER OF SHARES ISSUED AND OUTSTANDING..................... 4,011,655
---------------
---------------
NET ASSET VALUE PER SHARE................................... $15.58
---------------
---------------
</TABLE>
- ------------------
* Non-income producing security.
+ Money market fund.
7
<PAGE>
-----------------------------------------------
THE UNITED KINGDOM FUND INC.
DIVIDEND REINVESTMENT
AND CASH PURCHASE PLAN
TERMS AND CONDITIONS
-----------------------------------------------
1. Each shareholder of The United Kingdom Fund Inc. (the "Fund") will have all
distributions automatically reinvested by The Bank of New York (the "Plan
Agent"), in Fund shares pursuant to the Fund's Dividend Reinvestment and Cash
Purchase Plan. Shareholders who do not wish to participate in the Plan may elect
to receive all distributions in cash paid by check in U.S. dollars mailed
directly to the shareholder by the Plan Agent, as dividend paying agent.
2. Plan Agent serves as agent for the shareholders in administering the Plan.
If the directors of the Fund declare a dividend, participants in the Plan will
receive the equivalent in stock in the Fund valued at the lower of market price
or net asset value, in either case as determined on the record date for that
dividend. Whenever market price is equal to or exceeds net asset value at the
time shares are valued for the purpose of determining the number of shares
equivalent to the cash dividend or distribution, participants will be issued
shares of the Fund at a price equal to the greater of net asset value or an
amount equal to 95% of the then current market price of the Fund's shares. The
Fund will not issue shares under the Plan below net asset value. If net asset
value exceeds the market price of Fund shares at such time, or if the Fund
should declare a dividend or other distribution payable only in cash (i.e., if
the Board of Directors should preclude reinvestment at net asset value), the
Plan Agent will, as agent for the participants, buy Fund shares in the open
market, on the New York Stock Exchange or elsewhere, for the participants'
accounts. If, before the Plan Agent has completed its purchases, the market
price exceeds the net asset value of a Fund share, the average per share
purchase price paid by the Plan Agent may exceed the net asset value of the
Fund's shares, resulting in the acquisition of fewer shares than if the dividend
or distribution had been paid in shares issued by the Fund.
3. Participants have the option of making additional cash payments to the Plan
Agent, quarterly, in any amount from U.S. $100 to U.S. $3,000, for investment in
the Fund's common stock. The Plan Agent will use all funds received from
participants to purchase Fund shares in the open market on or about March 15,
June 15, September 15 and December 15 of each year. Any voluntary cash payments
received more than 30 days prior to these dates will be returned by the Plan
Agent, and interest will not be paid on any uninvested cash payments. To avoid
unnecessary cash accumulations, and also to allow ample time for receipt and
processing by the Plan Agent, participants should send in voluntary cash
payments to
be received by the Plan Agent approximately ten days before March 15, June 15,
September 15 or December 15, as the case may be. Optional cash payments must be
made in U.S. dollars. Optional cash payments drawn on a non-U.S. bank will be
subject to collection fees and must be collected by the foregoing quarterly
dates to be invested. A participant may withdraw a voluntary cash payment by
written notice, if the notice is received by the Plan Agent not less than 48
hours before the payment is to be invested.
4. The Plan Agent maintains all shareholder accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by shareholders for personal and tax records. Shares in the account of
each Plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each shareholder's proxy will include those
shares purchased pursuant to the Plan.
5. In the case of shareholders, such as banks, brokers or nominees, which hold
shares for others who are the beneficial owners, the Plan Agent will administer
the Plan on the basis of the number of shares certified from time to time by the
shareholder as representing the total amount registered in the shareholder's
name and held for the account of beneficial owners who are to participate in the
Plan. Shareholders whose shares are held in the name of a broker or nominee
should consult with the broker or nominee to determine whether they should
participate in the Plan or how they may withdraw from the Plan.
6. There is no charge to participants for reinvesting dividends or capital
gains distributions. The Plan Agent's fees for the handling of reinvestment of
dividends and distributions will be paid by the Fund. There will be no brokerage
charges with respect to shares issued directly by the Fund as a result of
dividends or capital gains distributions payable either in stock or cash.
However, each participant will pay a pro rata share of brokerage commissions
incurred with respect to the Plan Agent's open market purchases in connection
with the reinvestment of dividends or capital gains distributions. The Plan
Agent may use its wholly-owned subsidiary, BNY Brokerage Inc., for trading
activity relating to the Plan, on behalf of Plan participants.
7. With respect to purchases for voluntary cash payments, the Plan Agent will
charge U.S. $2.00 for each purchase for a participant, plus a pro rata share of
the brokerage commission. Brokerage charges for purchasing small amounts of
stock for individual accounts through the Plan are expected to be less than the
usual brokerage charges for these transactions
8
<PAGE>
because the Plan Agent will be purchasing stock for all participants in blocks
and prorating the lower commission thus attainable.
8. The automatic reinvestment of dividends and distributions will not relieve
participants of any U.S. income tax that may be payable on such dividends or
distributions.
9. Participants in the Plan may effect "book-to-book" transfers, which involve
transferring shares from an existing participant account in the Plan to a new
participant account, by contacting the Plan Agent.
10. Experience under the Plan may indicate that changes are desirable.
Accordingly, the Fund reserves the right to amend or terminate the Plan as
applied to any voluntary cash payments made and any dividend or distribution
paid subsequent to notice of the change sent to the members of the Plan at least
90 days before the record date for such dividend or distribution. The Plan also
may be amended or terminated by the Plan Agent by at least 90 days' written
notice to members of the Plan. All correspondence concerning the Plan should be
directed to the Plan Agent, the Bank of New York, at P.O. Box 11002, Church
Street Station, New York, New York, 10249.
9
<PAGE>
- ------------------------------------------------------------------
DIRECTORS AND OFFICERS
ANTHONY M. SOLOMON, Chairman of the Board and Director
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
J. LOUGHLIN CALLAHAN, President and Treasurer
STEVEN W. GOLANN, Vice President
RITA J. KLEINMAN, Secretary
THADDEA M. FELDMAN, Assistant Secretary
AMANDA J. MARSH, Assistant Secretary
* Member of the Audit Committee
- ----------------------------------------------------
EXECUTIVE OFFICES--
245 Park Avenue
15th Floor
New York, New York 10167
(For latest net asset value and market data, please call (212) 272-2323;
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
ADDITIONAL INFORMATION
This report, including the Statement of Investments, 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 FTSE 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.
<PAGE>
-------------------------------------------
SUMMARY OF GENERAL INFORMATION
---------------------------------------
THE FUND
The United Kingdom Fund Inc. 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., (Regulated by IMRO), relying on
investment advice from Mercury Asset Management International Ltd. (Regulated by
IMRO)
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 "UKing". 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" and are also available on REUTERS under the designation "MAMINDEX".
Shareholders interested in receiving the quarterly newsletter entitled "Closed
End Fund Focus" should call 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 AND CASH PURCHASE PLAN--SUMMARY
An automatic Dividend Reinvestment and Cash Purchase 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 and
the opportunity to purchase additional shares of the Fund on a quarterly basis.
Information describing the Plan is available from the Plan Agent, The Bank of
New York, by calling: 1-800-432-8224.
All shareholders are automatically enrolled in the Dividend Reinvestment Plan
unless they have elected to receive distributions in cash. Therefore, if you
wish to participate and your shares are held in your own name, no action is
required on your part. If you have previously elected to receive distributions
in cash and now wish to participate in the plan, please call the Plan Agent at
the number above. 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.
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THE UNITED KINGDOM FUND INC.
QUARTERLY REPORT
JUNE 30, 1997
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