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SIGNATURE JAMES M. DONALD
TITLE VICE PRESIDENT
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> MAR-31-1998
<INVESTMENTS-AT-COST> 46523622
<INVESTMENTS-AT-VALUE> 69220709
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</TABLE>
Report of Independent Auditors
To the Shareholders and Board of Directors of
The United Kingdom Fund Inc.
In planning and performing our audit of the financial
statements of The United Kingdom Fund Inc. for the year
ended March 31, 1998, we considered its internal control,
including control activities for safeguarding securities,
in order to determine our auditing procedures for the purpose
of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, not to provide
assurance on the internal control.
The management of The United Kingdom Fund Inc. is responsible
for establishing and maintaining internal control. In fulfilling
this responsibility, estimates and judgments by management are
required to assess the expected benefits and related costs of
controls. Generally, controls that are relevant to an audit
pertain to the entity's objective of preparing financial
statements for external purposes that are fairly presented
in conformity with generally accepted accounting principles.
Those controls include the safeguarding of assets against
unauthorized acquisition, use or disposition.
Because of inherent limitations in internal control, errors
or fraud may occur and not be detected. Also, projection
of any evaluation of internal control to future periods is
subject to the risk that it may become inadequate because of
changes in conditions or that the effectiveness of the design
and operation may deteriorate.
Our consideration of the internal control would not necessarily
disclose all matters in the internal control that might be
material weaknesses under standards established by the American
Institute of Certified Public Accountants. A material weakness
is a condition in which the design or operation of one or more
of the internal control components does not reduce to a
relatively low level the risk that errors or fraud in amounts
that would be material in relation to the financial statements
being audited may occur and not be detected within a timely
period by employees in the normal course of performing their
assigned functions.
However, we noted no matters involving the internal control
and its operation, including controls for safeguarding securities,
that we consider to be material weaknesses as defined above at
March 31, 1998.
This report is intended solely for the information and use of
the board of directors and management of The United Kingdom Fund
Inc. and the Securities and Exchange Commission.
ERNST & YOUNG LLP
May 11, 1998
The United Kingdom Fund Inc.
Results of Special Meeting of Shareholders (unaudited)
On February 25, 1998, a special meeting of shareholders
of the Fund was held and the following matters were voted upon:
(1) To approve a new investment management agreement between the
Fund and Mercury Asset Management International Channel Islands
Ltd., the Fund's investment manager.
Votes For Votes Against Votes Withheld Non-Votes
2,098,970 519,776 13,091 1,379,818
(2) To approve a new investment advisory agreement between
Mercury Asset Management International Channel Islands Ltd.,
and Mercury Asset Management International Ltd., the Fund's
investment adviser.
Votes For Votes Against Votes Withheld Non-Votes
2,094,610 522,076 15,151 1,379,818
