<PAGE>
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present to you the Third Quarter Report of The Europe Fund,
Inc. On September 30, 1995, the end of the period under review, the Fund's net
assets totalled $149.5 million. This represents a net asset value per share of
$14.86, a rise of 53.13% from its initial value after taking into account
underwriting discounts, commissions, offering expenses and distributions. This
compares with a 65.45% increase in the MSCI Europe Index over the same time
period. At the end of the period under review, The Europe Fund, Inc. was quoted
at $13.00 per share on the New York Stock Exchange, which represents a 12.52%
discount to the Fund's net asset value per share.
We also enclose an investment review and European market outlook together with
a summary of the major portfolio investments.
Yours sincerely,
[SIGNATURE] [SIGNATURE]
Anthony M. Solomon Richard J. Oldfield
Chairman of the Board President
<PAGE>
INVESTMENT REVIEW
During the third quarter of 1995, your Fund experienced a rise in net asset
value of 5.17%, which compared with an increase of 4.31% in the value of the
MSCI Europe Index. These results are recorded in total return and dollar-based
terms.
European equity markets generally rose during the quarter, driven by a benign
interest rate background. The economic background is little changed
fundamentally, although the rate of growth has slowed slightly. Inflation
remains subdued, confidence is at a low ebb and fiscal pressures are intense in
many countries. Market returns were closely clustered with Sweden and Finland
performing particularly well on the back of good company results. The worst
performing of the major markets was France, as sentiment was undermined by
concerns over budgetary measures coupled with disappointing half year results.
In Italy, political uncertainty continues to weigh heavily on sentiment. The
ground gained by the Lira on the back of a potential EMU entry was lost by the
general turmoil in European currencies following remarks by the German finance
minister. In Spain, inflation expectations have improved substantially over the
last few months as the Peseta appreciated to a level higher than that of the
beginning of the year and commodity prices started easing.
ECONOMIC AND MARKET OUTLOOK
Interest rates are expected to stay low, with further reductions possible in
the short-term rates in the core economies of Europe. Fiscal problems which had
temporarily been overlooked by the market remain unresolved. Long bond yields in
the U.K., Italy and Spain are not expected to fall further following reductions
already seen this year. On the whole, corporate results are generally improving
and strong earnings growth is still expected to continue in certain areas of the
market throughout 1996. However, the slowing down of growth and weakening of
confidence have meant that stock selection is becoming increasingly important.
PORTFOLIO SUMMARY
During the three-month period to September 30, 1995, the Fund purchased new
holdings in Christiana Bank and Nutricia and added to holdings in TFI, Bayer,
Avesta Sheffield, Praktiker and Unidanmark. Holdings in Nokia, Rhoen Klinikum
and Royal Bank of Scotland were reduced.
2
<PAGE>
The Fund's and the MSCI Europe Index's country weightings expressed as a
percentage of total equities held at September 30, 1995 are outlined below:
<TABLE>
<CAPTION>
FUND MSCI EUROPE INDEX
--------- ---------------------
<S> <C> <C>
Austria............................................................... -- 0.7
Belgium............................................................... -- 2.3
Czech Republic........................................................ 0.2 --
Denmark............................................................... 0.9 1.6
Finland............................................................... 4.6 1.6
France................................................................ 18.1 12.6
Germany............................................................... 13.9 13.8
Hungary............................................................... 0.7 --
Ireland............................................................... 1.2 0.6
Italy................................................................. 0.9 4.8
Luxembourg............................................................ 0.8 --
Netherlands........................................................... 5.5 8.0
Norway................................................................ 2.4 1.0
Portugal.............................................................. 1.0 --
Spain................................................................. 3.0 3.5
Sweden................................................................ 9.9 4.3
Switzerland........................................................... 6.0 11.4
Turkey................................................................ 0.2 --
United Kingdom........................................................ 30.7 33.8
--------- -----
100.0% 100.0%
</TABLE>
The Fund's ten largest equity holdings at September 30, 1995 were:
NOKIA AB
Nokia, headquartered in Finland, is comprised of four business units:
telecommunications, mobile phones, consumer electronics and cable & machinery.
The company sustained losses in 1992 but after substantial restructuring in the
consumer electronics division and strong orders in the telecommunications and
mobile phone operation--stimulated further by the benefits of the Finnish
devaluation--the prospects have been transformed. The modest rating compared to
similar companies in the sector and the consistent flow of new orders leaves
scope for further strong performance.
TOTAL SA
Total is one of the leading French oil companies. It has the highest reserve
replacement ratio amongst its European peer group at over 200% and the second
lowest finding cost ratio. Total has a strong balance sheet and its production
profile is set to double by the year 2000 with discoveries in the Far East and
Latin America. In view of the earnings outlook the stock is attractively valued,
relative to its European peer group.
ASEA AB
Asea forms 50% of the Asea Brown Boveri Group (ABB), having merged its
activities with those of the Swiss industrial, Brown Boveri, in the 1980s. ABB,
which is predominately involved in the provision of infrastructure, divides its
activities between more than 1,000 companies and is present in over 130
countries worldwide. The bulk of its activities is related to the
3
<PAGE>
general and subsequent distribution of power, while the remainder comprises a
diverse spread ranging from transportation and robotics to financial services.
Geographically, while predominately involved in Europe, ABB has, in recent
years, sought to expand its activities in the Far East. ABB has been proactive
in switching its manufacturing facilities from high cost countries towards lower
cost countries and is well placed to benefit from a recovery in infrastructure
expenditures both in Europe and in lesser developed countries which are
experiencing a gradually rising trend in infrastructure spending.
BUT SA
But is the second largest distributor of furniture and consumer durables in
France. The sale of Carrefour's 30% stake to institutional investors in France
and abroad has increased liquidity for what is a very interesting growth company
operating in a specialist niche area.
TELEVISION FRANCAISE
TFI is the leading TV channel in France. It has the highest audience ratings
and holds 54% of the TV advertising market. The group's financial position is
extremely sound with a strong net cash position. The current share price does
not take full account of the company's earnings outlook and is trading at a
discount to the French media sector.
BRITISH BIOTECHNOLOGY GROUP PLC
The company is one of the leading biotechnology companies in the U.K. with
several products showing promise in clinical trials. The leading development
candidate is Batimastat, the anti-cancer drug, which should release phase III
trial results during 1995. Although the company will not report any significant
profits before 1997, it is active in several areas which could produce
blockbuster drugs. The company is relatively attractively valued and there
appears to be a chance of further progress over the next year.
RHOEN KLINIKUM
The company operates 2 health care clinics, a neurological clinic, an
addiction treatment center and a cardiovascular surgery unit. The cardiovascular
surgery unit accounts for approximately 10% of heart operations in West Germany
and has the lowest mortality rate in the country. The company's profitability is
effectively underwritten by the inefficiency of its state run competitors. Rhoen
operates within the same fee structure as public hospitals and, thus, any
efficiencies achieved relative to its competitors result in improved margins.
The state system has been brought under increased pressure by the process of
reunification. This has provided a major opportunity for Rhoen Klinikum, which
has moved quickly, to establish itself in eastern Germany. The company is a well
managed and rationalized provider of acute hospital services. Its expanding
range of services and geographical locations should provide solid earnings
growth in the foreseeable future.
CIPE FRANCE
Cipe is the French leader in telesurveillance with a market share exceeding
35%. It offers a complete range of services, including the supply of equipment,
installation and maintenance of telesurveillance devices. Since its founding in
1986, the company has grown by over 20% per year. Cipe has a strong balance
sheet and is expected to benefit from a continuing strong growth rate in
customer numbers, as the underdeveloped security services market in France
expands.
4
<PAGE>
GKN PLC
GKN operates in the automotive components and defense engineering markets.
Recent interim results were well above expectations, driven mainly by the
automotive division. Orders for the second half remain strong. Demand rose
strongly in continental Europe and Britain. The company remains financially
sound and is one of the leading organizations in the sector.
BAYER AG
Bayer is one of the world's most diversified companies with business in
chemicals, healthcare and imaging technology. The company reported half year
results ahead of market expectations. Stronger volume and pricing were the
driving force behind the progress. The recent interest rate cuts in the U.S.,
Germany and other continental European countries heightens the prospect that the
interest rate cycle may be peaking, which has helped to renew interest in the
chemicals sector as a whole, and for Bayer in particular.
5
<PAGE>
- -----------------------------------------------
THE EUROPE FUND, INC.
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 1995 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
COMMON STOCKS & WARRANTS -- 84.1%
<C> <S> <C>
CZECH REPUBLIC--0.2%
10,000 +Central European Media..... $ 252,500
--Consumer Goods
-------------
252,500
-------------
DENMARK--0.7%
24,900 Unidanmark AS............... 1,090,465
--Banking
-------------
1,090,465
-------------
FINLAND--0.9%
9,700 Finnair Oy.................. 75,939
--Transportation--Airlines
70,000 +Outokumpu Oy............... 1,243,252
--Metals--Non-Ferrous
60,000 +Outokumpu Oy "A"
(Warrants)(a)............. 9,815
--Metals--Non-Ferrous
-------------
1,329,006
-------------
FRANCE--16.4%
23,000 BIC......................... 1,985,463
--Recreation & Other
Consumer Goods
13,500 But SA...................... 3,545,616
--Services
43,460 Cipe France................. 2,742,961
--Business & Public Services
12,000 Ecco Travail Temporaire..... 885,640
--Business & Public Services
30,000 Elf Aquitaine............... 2,029,643
--Energy Sources
6,900 Esso Francaise.............. 803,551
--Energy Sources
40,000 Michelin.................... 1,758,251
--Tire & Rubber
8,000 Pinault Printemps Redoute... 1,700,430
--Merchandising
6,932 Societe Eurafrance.......... 2,060,533
--Financial Services
30,000 Television Francaise........ 2,968,422
--Broadcasting & Publishing
66,000 Total SA Class B............ 4,004,316
--Energy Sources
-------------
24,484,826
-------------
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
GERMANY--9.6%
11,440 +AGAB AG.................... $ 1,206,327
--Financial Services
1,320 +AGAB AG (Warrants)(b)...... 1,206
--Financial Services
10,000 Bayer AG.................... 2,558,875
--Chemicals
40,000 Deutsche Bank AG............ 1,912,970
--Banking
42,000 Deutsche Pfandbrief Und
Hypothekenbank............ 1,889,631
--Banking
3,000 Felton and Guilleaume....... 558,875
--Utilities--Electric & Gas
1,750 Fresenius AG................ 1,500,879
--Health & Personal Care
16,000 HeidelBerger Zement
(Warrants)(c)............. 140,598
--Building Materials &
Components
7,900 Kiekert AG.................. 488,717
--Automobiles
23,200 Leifheit AG................. 1,076,415
--Appliances & Household
Durables
4,500 Mannesmann AG............... 1,483,656
--Machinery & Engineering
1,260 Marschollek Lautenschlager
Partners (Ordinary)....... 850,334
--Financial Services
18,550 Praktiker Bau Und........... 642,241
--Appliances & Household
Durables
-------------
14,310,724
-------------
HUNGARY--0.6%
16,000 +Gedeon Richter............. 292,800
--Pharmaceutical
Distribution
15,000 Pannonplast Muanyagipari.... 196,050
--Consumer Goods
18,200 +Pharmavit (GDR) (1)........ 161,434
--Health & Personal Care
10,000 Primagaz Hungaria........... 287,100
--Utilities--Electric & Gas
-------------
937,384
-------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
IRELAND--1.1%
200,000 Irish Continental Group
PLC....................... $ 1,623,075
--Transportation--Shipping
-------------
1,623,075
-------------
ITALY--0.8%
34,500 Industrie Natuzzi SPA (ADS)
(CNV 1 Ordinary) (2)...... 1,229,062
--Appliances & Household
Durables
-------------
1,229,062
-------------
LUXEMBOURG--0.7%
12,000 Safra Republic Holding...... 1,044,000
--Banking
-------------
1,044,000
-------------
NETHERLANDS--5.0%
17 +A.B. Capital Fund*......... 466,498
--Business & Public Services
150,000 Elsevier.................... 1,929,957
--Broadcasting & Publishing
29,000 Nutricia Ver Bedrj.......... 2,189,606
--Food & Household Products
5,000 Polynorm NV................. 530,346
--Metals--Steel
18,000 Ver Ned Uitgevers Bezit..... 2,395,029
--Broadcasting & Publishing
-------------
7,511,436
-------------
NORWAY--2.2%
810,000 Christiania Bank OG......... 1,927,493
--Banking
118,750 Schibsted AS................ 1,393,935
--Broadcasting & Publishing
-------------
3,321,428
-------------
PORTUGAL--0.9%
100,000 Banco Espirito Santo
(Registered).............. 1,372,707
--Banking
-------------
1,372,707
-------------
SPAIN--2.7%
87,499 +Banco Espanol de Credito
(Registered).............. 582,096
--Banking
20,000 Banco Santander............. 840,500
--Banking
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
42,837 Estacion Subterraneos....... $ 794,114
--Services
133,097 Europistas Concesionaria
Espanola SA............... 1,025,817
--Business & Public Services
350,000 +Sotogrande................. 820,623
--Finance
-------------
4,063,150
-------------
SWEDEN--9.0%
40,000 Asea AB..................... 3,964,332
--Electrical & Electronics
30,000 Autoliv AB.................. 1,825,869
--Electronic Components
93,000 Avesta--Sheffield........... 1,011,467
--Metals--Steel
18,000 Elekta AB (B Free).......... 770,106
--Electrical & Electronics
2,200 Hennes & Mauritz............ 141,345
--Merchandising
62,500 Securitas AB (Series B)..... 2,241,821
--Health & Personal Care
42,100 Svedala Industrie........... 1,267,506
--Machinery & Engineering
94,000 Svenska Stal AB (Series A).. 1,002,031
--Metals--Non-Ferrous
80,000 Svenska Stal AB (Series B).. 858,555
--Metals--Non-Ferrous
20,000 Terra Mining (Series A)..... 357,251
--Multi-Industry
-------------
13,440,283
-------------
SWITZERLAND--5.4%
3,240 +Adia SA (Bearer)........... 593,717
--Business & Public Services
560 Bobst AG (Bearer)........... 869,808
--Machinery & Engineering
4,410 Fust AG..................... 1,327,618
--Appliances & Household
Durables
1,900 Hilti AG (Participating
Certificates)............. 1,707,679
--Industrial Components
3,775 Landis & Gyr SA
(Registered).............. 2,322,317
--Electrical & Electronics
1,330 Phoenix Mecano.............. 673,124
--Capital Equipment
300 Sig Schweizerische.......... 636,126
--Machinery & Engineering
-------------
8,130,389
-------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
TURKEY--0.2%
372,000 Erciyas Biracilik........... $ 231,012
--Beverages & Tobacco
-------------
231,012
-------------
UNITED KINGDOM--27.7%
150,000 Allied--Domecq PLC
(Ordinary)................ 1,276,487
--Beverages & Tobacco
100,000 Amersham International PLC
(Ordinary)................ 1,540,792
--Health & Personal Care
200,000 Bemrose Corp. PLC
(Ordinary)................ 1,280,043
--Forest Products & Paper
Materials
415,809 Birkby PLC (Ordinary)....... 1,107,218
--Real Estate
250,000 British Airport Authority
PLC (Ordinary)............ 1,982,783
--Business & Public Services
200,000 +British Biotechnology Group
PLC (Ordinary)............ 2,812,934
--Health & Personal Care
30 +British Biotechnology Group
PLC (Warrants)(d)......... 163
--Health & Personal Care
250,000 Cable & Wireless PLC
(Ordinary)................ 1,646,969
--Telecommunications
115,915 Cadbury Schweppes PLC
(Ordinary)................ 874,458
--Food & Household Products
74,000 Domestic & General Group
(Ordinary)................ 1,588,075
--Insurance
500,000 Fisons PLC.................. 2,030,685
--Health & Personal Care
200,000 GKN PLC (Ordinary).......... 2,612,631
--Machinery & Engineering
200,000 Grand Metropolitan PLC
(Ordinary)................ 1,409,628
--Beverages & Tobacco
150,000 Great Universal Store PLC... 1,409,825
--Merchandising
<CAPTION>
- ----------------------------------------------------------
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
666,666 Halma PLC (Ordinary)........ $ 1,812,076
--Machinery & Engineering
400,000 Hays PLC (Ordinary)......... 2,187,135
--Business & Public Services
318,000 Hewden--Stuart Plant PLC
(Ordinary)................ 718,626
--Construction & Housing
160,000 Jarvis Porter Group PLC..... 704,182
--Forest Products & Paper
Materials
500,000 Mai PLC (Ordinary).......... 2,552,184
--Financial Services
200,000 Marks & Spencer PLC
(Ordinary)................ 1,371,305
--Merchandising
150,000 Pearson PLC (Ordinary)...... 1,405,084
--Broadcasting & Publishing
100,000 Reuters Holdings PLC
(Ordinary)................ 884,770
--Business & Public Services
300,000 Royal Bank of Scotland PLC
(Ordinary)................ 2,129,257
--Banking
195,000 Serco Group PLC (Ordinary).. 1,124,779
--Business & Public Services
75,000 Thorn EMI PLC (Ordinary).... 1,746,725
--Appliances & Household
Durables
60,000 Unilever PLC (Ordinary)..... 1,199,448
--Food & Household Products
750,000 +Waterford Wedgwood PLC
(Units)................... 758,544
--Food & Household Products
220,000 Wolseley PLC (Ordinary)..... 1,275,500
--Building Materials &
Components
-------------
41,442,306
-------------
Total Common Stocks & Warrants
(cost--$113,898,396)........ 125,813,753
-------------
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
SHARES/
FACE AMOUNT DESCRIPTION VALUE
<CAPTION>
- ----------------------------------------------------------
<C> <S> <C>
PREFERRED STOCKS -- 6.3%
FINLAND--3.3%
70,000 Nokia AB (Oy).............. $ 4,907,574
--Electrical & Electronics
-------------
4,907,574
-------------
GERMANY--3.0%
2,590 Marscholleck Lautenschlager
Partners (Non-Voting).... 1,673,258
--Financial Services
3,011 Rhoen Klinikum
(Non-Voting)............. 2,751,705
--Health & Personal Care
-------------
4,424,963
-------------
Total Preferred Stocks
(cost--6,061,529).......... 9,332,537
-------------
CONVERTIBLE BONDS -- 3.3%
FINLAND--0.7%
FIM4,550,000 Lounais Suomen Sah, 7.425%
due 3/29/2001............ 1,004,826
--Utilities--Electric & Gas
-------------
1,004,826
-------------
FRANCE--0.8%
FF5,331,730 Virbac, 5% due
12/31/2001............... 1,165,850
--Health & Personal Care
-------------
1,165,650
-------------
NETHERLANDS--1.6%
NLG4,000,000 Draka Holding, 4.5% due
5/18/2001................ 2,418,000
--Finance
-------------
2,418,000
-------------
<CAPTION>
- ----------------------------------------------------------
SHARES/
FACE AMOUNT DESCRIPTION VALUE
- ----------------------------------------------------------
<C> <S> <C>
NORWAY--0.2%
NK1,200,000 Saga Petroleum, 9% due
12/31/1999............... $ 321,009
--Energy Sources
-------------
321,009
-------------
Total Convertible Bonds
(cost--$4,497,083)......... 4,909,485
-------------
OTHER INVESTMENTS -- 0.2%
UNITED KINGDOM--0.2%
GBP215,016 Carlton Communications PLC
Loan Note Certificates,
2.256% due 1/31/99 (cost
$318,331)................ 339,790
--Business & Public
Services
-------------
339,790
-------------
Total Investments--93.9%
(cost -- $124,775,339)... 140,395,565
Unrealized Appreciation on
Foreign Currency
Contracts--0.0% (e)...... 6,520
Other Assets in Excess of
Liabilities--6.1%........ 9,134,689
-------------
Net Assets--100.0%......... $149,536,774
-------------
-------------
</TABLE>
<TABLE>
<S> <C>
- ------------------
(a) The warrants enable the holder to subscribe to one 'A' share for every 6
warrants held at a price of FM 92.6 per share unitl June 28, 1996.
(b) The warrants enable the holder to subscribe to one ordinary share for every
warrant held at DM 304 per share until March 11, 1996.
(c) The warrants enable the holder to subscribe to one ordinary share for every
10 warrants held at DM 1215 per share until June 13, 2000.
(d) The warrants enable the holder to subscribe to one ordinary share for every
warrant held at GBP 5.25 per share until January 31, 1996.
(e) Foreign Currency contracts as of September 30, 1995 are as follows:
<CAPTION>
- --------------------------------------------------------------------------------
EXPIRATION CURRENCY CURRENCY
DATE PURCHASED VALUE SOLD VALUE
<S> <C>
- ---------------------------------------------------------
October Finnish
1995 Marka $ 688,635 U.S. Dollar $ 682,115
- ---------------------------------------------------------
Total Foriegn Currency
Contracts........... $ 688,635 $ 682,115
--------- ---------
--------- ---------
- ---------------------------------------------------------
<FN>
(1) Global Depositary Receipt (GDR).
(2) American Depositary Shares (ADS).
+ Non-income producing security.
* Investment in restricted security with an aggregate value of $466,498. The
investment was acquired on October 22, 1990 for $759,153, and it represents
0.31% of net assets at September 30, 1995.
</TABLE>
9
<PAGE>
-------------------------------------------------------------
DIRECTORS AND OFFICERS
ANTHONY M. SOLOMON, Chairman of the Board and
Director
RICHARD J. OLDFIELD, President
GEORGE F. BENNETT, Director
* SIR ARTHUR BRYAN, Director
PETER STORMONTH DARLING, Director
LEON N. LEVY, Director
* J. MURRAY LOGAN, Director
* JAMES S. MARTIN, Director
FRANCOIS-XAVIER ORTOLI, Director
STEVEN W. GOLANN, Vice President and Secretary
JAMES M. DONALD, Vice President, Treasurer and
Assistant Secretary
THADDEA M. FELDMAN, Assistant Secretary
* Member of the Audit Committee
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.
------------------------------------------------
EXECUTIVE OFFICES--
780 Third Avenue
New York, New York 10017
(For latest net asset value and requests for Fund
Reports, please call 1 (800) 543-6217 or (609)
282-4600.)
INVESTMENT MANAGER--
Mercury Asset Management International Channel Islands
Limited
Forum House
Grenville Street
St. Helier, Jersey
Channel Islands
INVESTMENT ADVISER--
Mercury Asset Management International Ltd.
33 King William Street
London EC4R 9AS
England
ADMINISTRATOR--
Princeton Administrators, L.P.
P.O. Box 9011
Princeton, New Jersey 08543
CUSTODIAN--
Morgan Guaranty Trust Co.
60 Victoria Embankment
London EC4Y OJP
England
TRANSFER AGENT AND REGISTRAR--
The Bank of New York
101 Barclay Street
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 is for shareholder
information. This is not a
prospectus intended for use in the
purchase or sale of Fund shares.
<PAGE>
------------------------------------------------
SUMMARY OF GENERAL INFORMATION
-------------------------------------------
THE FUND
The Europe Fund, Inc. (the "Fund") is a closed-end investment company whose
shares trade on the New York Stock Exchange. The Fund seeks long-term capital
appreciation through investment primarily in European equity securities. The
Fund is managed by Mercury Asset Management International (Jersey) Limited,
relying on investment advice from Mercury Asset 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
"Europe Fd." The Fund's New York Stock Exchange trading symbol is EF. Weekly
comparative net asset value (NAV) and market price information about the Fund's
shares are published each Monday in THE WALL STREET JOURNAL and THE NEW YORK
TIMES and 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 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 (800) 524-4458.
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.
TRANSFER AGENT:
The Bank of New York
Telephone Inquiries: 1-800-432-8224
Address Shareholder Inquiries To:
Shareholder Relations Department - 11 E
P.O. Box 11258
Church Street Station
New York, NY 10286
Send Certificates for Transfer and Address Changes to:
Receive and Deliver Department - 11 W
P.O. Box 11002
Church Street Station
New York, NY 10286
[LOGO]
THE EUROPE FUND, INC.
QUARTERLY REPORT
SEPTEMBER 30, 1995
