<PAGE>
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present to you the First Quarter Report of The Europe Fund,
Inc. On March 31, 1997, the end of the period under review, the Fund had net
assets of $191.6 million. This represents a net asset value per share of $19.04,
a rise of 122.9% from its initial value on May 3, 1990, after taking into
account underwriting discounts, commissions, offering expenses and assuming
reinvestment of dividends. This compares with a 117.9% increase in the MSCI
Europe (US$) Index over the same time period. At the end of the period under
review, The Europe Fund, Inc. was quoted at $15.25 per share on the New York
Stock Exchange, which represents a 19.91% discount to the Fund's net asset value
per share and a rise of 65.6% from its initial value on May 3, 1990, assuming
reinvestment of dividends.
We also enclose an investment review and European 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>
INVESTMENT REVIEW
During the first quarter of 1997, your Fund experienced a rise in net asset
value of 4.73% and a decrease in market value of 5.43%, which compared with an
increase of 4.88% in the value of the MSCI Europe Index. These results are
recorded in total return and dollar based terms, with net dividends reinvested.
The economic background during the period remained difficult, with weak growth
and subdued domestic demand. Economic statistics attracted particular attention
ahead of the deadline for the Maastricht Ecomonic Monetary Union ("EMU")
convergence criteria. Inflation targets appear likely to be met, with consumer
price index levels continuing to fall (in February, to 1.7% in Germany, 2.4% in
Italy and 2.5% in Spain). Budget deficit targets, however, will not be helped by
the still subdued industrial production, a lack of improvement in industrial
orders, continuing high unemployment, and few signs of improvement in business
and consumer confidence. Governments aspiring to meet Maastricht criteria are
therefore expected to have to rely upon low interest rates and weaker currencies
to stimulate activity and confidence, while fiscal policy has remained highly
restrictive. Within the markets, financials were generally strong, particularly
banks in the core European markets, fueled by speculation over merger activity.
Corporate restructuring continued to be a strong theme, driven primarily by
speculation and a number of deals. Although growth companies continued to
generally perform well, there were indications of the market becoming more
selective as highly rated companies whose profits failed to meet expectations
underperformed sharply.
ECONOMIC AND MARKET OUTLOOK
Despite the fiscal restraint evident for EMU qualification, we believe
industrial activity should show improved momentum, boosted by the interest rate
declines of the last year, currency weakness and the end of the destocking
process which has been holding back growth. Profitability should also be
supported by a translation of the shareholder value rhetoric of recent times
into material results and higher returns in the future. A key factor this year
will be the prospects for, and structure of the EMU. Some volatility,
particularly in the southern European markets, can be expected. In our view, the
markets continue to underestimate the potential offered by deregulation (e.g.,
temporary employment, media), structural changes (e.g., outsourcing) and
cultural changes in the corporate sector. With its emphasis upon stock
selection, we expect the Fund to be well placed to benefit from the above trends
at a time when economic growth in Europe is likely to be confined to certain
specific sections of the economies.
The performance (in U.S. dollars) of MSCI Indices for several European markets
is listed below:
<TABLE>
<CAPTION>
MSCI MARKETS (RATES OF RETURN TO MARCH 31, 1997)
% CHANGE WITH NET DIVIDENDS REINVESTED
- ------------------------------------------------------------------------------------------------------------------------------
COUNTRY 12 MONTHS 3 MONTHS 1 MONTH
- --------------------------------------------------------------------------------------- ----------- ----------- -----------
<S> <C> <C> <C>
Austria................................................................................ -2.8% -2.7% 1.1%
Belgium................................................................................ 19.8 5.5 1.5
Denmark................................................................................ 27.2 6.7 3.1
Finland................................................................................ 45.9 5.8 0.6
France................................................................................. 18.4 5.9 3.1
Germany................................................................................ 20.6 11.3 7.3
Italy.................................................................................. 14.7 1.3 2.5
Netherlands............................................................................ 27.4 5.7 2.4
Norway................................................................................. 28.9 3.4 3.0
Spain.................................................................................. 30.4 -1.3 4.0
Sweden................................................................................. 33.6 6.7 4.7
Switzerland............................................................................ 5.7 10.3 5.8
United Kingdom......................................................................... 28.7 1.2 1.1
</TABLE>
SOURCE: MSCI PERSPECTIVES
2
<PAGE>
PORTFOLIO SUMMARY
During the three month period to March 31, 1997, the Fund purchased new
holdings in Credito Italiano, Luxottica Group, Mediolanum, Roche Holdings and
Unilever.
The Fund's and the MSCI Europe Index's country weightings expressed as a
percentage of total equities held at March 31, 1997 are outlined below:
<TABLE>
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Austria........................... --% 0.7%
Belgium........................... -- 2.1
Czech Republic.................... 1.0 --
Denmark........................... 1.2 1.6
Finland........................... 0.6 1.2
France............................ 16.1 12.4
Germany........................... 10.7 15.5
Ireland........................... 0.6 0.6
Italy............................. 6.5 5.3
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Luxembourg........................ 1.4% --%
Netherlands....................... 11.0 8.5
Norway............................ 3.2 1.0
Spain............................. 1.4 3.8
Sweden............................ 11.5 4.5
Switzerland....................... 10.7 10.4
United Kingdom.................... 24.1 32.4
--------- -----
100.0% 100.0%
--------- -----
--------- -----
</TABLE>
The Fund's ten largest equity holdings at March 31, 1997 were:
TOTAL
Total is one of the leading French oil companies. It has the highest reserve
replacement ratio among its European peer group at over 200% and the second
lowest finding cost ratio. Total has a strong balance sheet and we expect its
production profile to increase by 70% by the year 2000 as a result of
discoveries made in the Far East and Latin America. In view of the earnings
outlook, we believe that the stock is attractively valued relative to its
European peer group.
ROCHE HOLDINGS
Roche is Switzerland's second largest pharmaceuticals group and is
attractively valued, especially in relation to its U.S. peers. It has a very
strong financial position, which should allow it to take part in the continuing
consolidation of the pharmaceutical sector. There are a number of promising
drugs in development (particularly in the cardiovascular, virology and obesity
areas) and which should allow for sustainable high single-digit sales growth as
new products take over from current drugs. In addition, diagnostics sales are
expected to grow strongly over the next few years, with new opportunities in
disease management. Roche has also recently acquired Tastemaster (a U.S. based
manufacturer of flavors), which strengthens its fragrances and flavors division.
HAYS
The group operates in the business services and distribution market. It has a
strong position in its UK domestic market as well as enticing expansion
opportunities abroad. A string of successful acquisitions has trebled the
company's market value over the last seven years. We believe recent results
indicate that above average growth may be expected in the medium-term.
BAYER
Bayer is a diversified company, with businesses in chemicals, healthcare and
imaging technology and remains a core holding within the pan-European chemicals
sector. Management is very eager to embrace the concept of shareholder value and
has continued in their restructuring efforts and extended incentive programs.
3
<PAGE>
ABB
Asea Brown Boveri Group (ABB), which is primarily involved in the provision of
infrastructure services, divides its activities between more than 1,000
companies and is present in over 130 countries worldwide. The bulk of its
business is related to the generation and subsequent distribution of power,
while the remainder of its activities is spread among such diverse areas as
transportation, robotics and 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, in our opinion, is well placed to benefit from a recovery in infrastructure
expenditure both in Europe and in lesser developed countries.
COMPAGNIE GENERALE DES EAUX
Compagnie Generale des Eaux is a multi-industry company with principal
activities in the water, energy, waste management, construction and property
areas. The organization's expected strong increase in international service
sales (primarily in the U.S. and U.K.), its industrial reorganization, as well
as lower losses in the property and construction sectors, make the company an
increasingly attractive investment.
RHOEN KLINIKUM
The company operates two 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 western
Germany and has the lowest mortality rate in that 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. We believe that the
company is a well managed and rationalized provider of acute hospital services.
We expect that its expanding range of services and geographical locations should
provide solid earnings growth in the foreseeable future.
UNILEVER
Unilever is one of the world's largest producers of consumer goods involved in
the production of foods, drinks, detergents, and personal products. While
trading conditions continue to remain difficult, the company is in the midst of
a restructuring process under the leadership of a dynamic new management group.
As part of the restructuring process, the company has recently decided to sell
its specialty chemicals division, which may result in shareholder value.
ELF AQUITAINE
Elf Aquitaine is an integrated oil company with chemicals, pharmaceuticals and
beauty products interests. The company aims to break through a 12% return on
equity target within the medium term (extending its current objective of
reaching 10% by 1998), while accelerating growth in upstream production and
specialty chemicals. Further cost cutting, disciplined capital allocation and
management focus on shareholder value creation are central tenets of this
strategy. The company continues to trade at a discount to the European oil
sector average, but with a gross yield of 40% above that of the sector.
4
<PAGE>
AUTOLIV
Autoliv is an automotive component company operating in three core areas: seat
belts, air bags and child safety. Following its merger with Morton
International's automotive division in October 1996, the company is now the
world's largest car safety company, with the broadest product range and widest
geographic coverage. Considerable operational synergies in sales, purchasing,
production, research and development may be possible as a result of the merger.
The company's main opportunities are in the U.S. due to the merger with Morton,
and in Germany, where it is not yet a major supplier to the German automotive
sector. Both as a result of the merger, and through greater efficiencies in the
manufacturing process, Autoliv should continue to be able to boost its margins
in the coming years.
5
<PAGE>
- -----------------------------------------------
THE EUROPE FUND, INC.
SCHEDULE OF INVESTMENTS
AS OF MARCH 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS & WARRANTS -- 82.7%
CZECH REPUBLIC--0.9%
50,000 +Central European Media Enterprises Ltd.
(Series A)............................... $ 1,662,500
--Consumer Goods
-------------
1,662,500
-------------
DENMARK--1.0%
37,516 Unidanmark (Series A)...................... 2,012,737
--Banking
-------------
2,012,737
-------------
FINLAND--0.5%
50,000 Outokumpu Oy............................... 944,464
--Metals--Non Ferrous
-------------
944,464
-------------
FRANCE--14.0%
14,240 +Axime..................................... 1,688,718
--Electrical & Electronics
23,000 BIC........................................ 3,501,603
--Recreation & Other Consumer Goods
28,600 But........................................ 1,604,167
--Services
16,955 Cipe France................................ 2,122,394
--Business & Public Services
32,808 Compagnie Generale des Eaux................ 4,469,038
--Business & Public Services
40,000 Elf Aquitaine.............................. 4,109,687
--Energy Sources
8,000 Pinault Printemps Redoute.................. 3,447,293
--Merchandising
2 Sligos..................................... 277
--Computer Services
67,745 Total (Class B)............................ 5,873,405
--Energy Sources
-------------
26,816,582
-------------
GERMANY--5.2%
89,841 BASF....................................... 3,392,868
--Chemicals
112,000 Bayer...................................... 4,659,393
--Chemicals
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
33,769 Bayerische Hypotheken Und Wechsel Bank..... $ 1,180,154
--Banking
16,000 +Bayerische Hypotheken Und Wechsel Bank
Warrants (a)............................. 743,316
--Banking
-------------
9,975,731
-------------
IRELAND--0.6%
107,970 Bank of Ireland............................ 1,079,291
--Banking
-------------
1,079,291
-------------
ITALY--5.6%
2,000,000 +Credito Italiano Call Warrants (b)........ 775,510
--Banking
560,000 Ente Nazionale Idrocarburi................. 2,905,882
--Oil Refining & Marketing
69,000 Industrie Natuzzi (ADR).................... 1,647,375
--Appliances & Household Durables
50,000 Luxottica Group (ADR)...................... 2,656,250
--Health & Personal Care
319,000 +Mediolanum................................ 2,843,427
--Insurance
-------------
10,828,444
-------------
LUXEMBOURG--1.2%
12,000 Safra Republic Holdings.................... 2,334,000
--Banking
-------------
2,334,000
-------------
NETHERLANDS--9.5%
34,600 Aalberts Industries........................ 793,451
--Capital Equipment
150,000 Elsevier................................... 2,439,870
--Broadcasting & Publishing
15,500 Gucci Group (NY Registered)................ 1,117,938
--Consumer Goods
93,377 ING Groep.................................. 3,680,103
--Financial Services
15,067 Nutricia Ver Bedrj......................... 2,330,238
--Food & Household Products
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
21,300 Unilever................................... $ 4,162,082
--Consumer Goods
180,000 Ver Ned Uitgevers Bezit.................... 3,705,402
--Broadcasting & Publishing
-------------
18,229,084
-------------
NORWAY--2.8%
810,000 Christiania Bank Kreditkasse............... 2,983,132
--Banking
39,500 Fokus Bank................................. 347,221
--Finance
100,000 Schibsted.................................. 2,030,888
--Broadcasting & Publishing
-------------
5,361,241
-------------
SPAIN--1.2%
17 +A.B. Capital Fund*........................ 370,323
--Business & Public Services
7,100 Acerinox................................... 1,000,473
--Materials
350,000 +Sotogrande................................ 884,137
--Finance
-------------
2,254,933
-------------
SWEDEN--10.0%
41,000 ABB (Series B)............................. 4,648,637
--Electrical & Electronics
90,000 Autoliv.................................... 3,889,354
--Electrical & Electronics
100,000 Avesta Sheffield........................... 1,082,036
--Metals-Steel
18,000 Elekta (Series B).......................... 592,663
--Electrical & Electronics
4,500 Elekta (Series B) New...................... 145,776
--Electrical & Electronics
6,480 Hennes & Mauritz........................... 868,061
--Merchandising
70,000 Hoganas (Series B)......................... 2,221,160
--Machinery & Engineering
68,169 Securitas (Series B)....................... 1,954,900
--Health & Personal Care
120,000 Svedala Industri........................... 2,341,976
--Machinery & Engineering
80,000 Svenska Stal (Series B).................... 1,460,416
--Metals-Non Ferrous
-------------
19,204,979
-------------
SWITZERLAND--9.3%
3,376 Adecco..................................... 1,099,544
--Services
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
1,310 Baloise Holding Ltd. (Registered).......... $ 2,674,583
--Insurance
560 Bobst (Bearer)............................. 826,389
--Machinery & Engineering
2,688 Novartis (Registered)...................... 3,333,867
--Health & Personal Care
600 Roche Holdings............................. 5,185,417
--Health & Personal Care
3,000 SMH (Bearer)............................... 1,666,667
--Consumer Goods
2,100 +Stratec Holding (Series B) (Registered)... 2,945,833
--Medical Supplies
-------------
17,732,300
-------------
UNITED KINGDOM--20.9%
512,000 Amvesco (Ordinary)......................... 2,886,249
--Financial Services
265,000 Bemrose Corp. (Ordinary)................... 1,894,545
--Forest Products & Paper Materials
415,809 Birkby (Ordinary).......................... 1,349,680
--Real Estate
250,000 British Airport Authority (Ordinary)....... 2,111,897
--Business & Public Services
700,620 British Biotechnology Group (Ordinary)..... 2,890,187
--Health & Personal Care
200,000 GKN (Ordinary)............................. 3,288,643
--Machinery & Engineering
250,000 Great Universal Store (Ordinary)........... 2,742,591
--Merchandising
666,666 Halma (Ordinary)........................... 1,950,285
--Machinery & Engineering
550,000 Hays (Ordinary)............................ 4,926,391
--Business & Public Services
501,163 +LucasVarity (Ordinary).................... 1,614,376
--Machinery & Engineering
380,000 Marks & Spencer (Ordinary)................. 3,044,584
--Merchandising
100,000 Reuters Holdings (Ordinary)................ 1,017,326
--Business & Public Services
85,000 Schroders (Ordinary)....................... 2,207,220
--Finance
195,000 Serco Group (Ordinary)..................... 2,201,715
--Business & Public Services
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
200,000 United News & Media (Ordinary)............. $ 2,478,398
--Broadcasting & Publishing
200,000 Vendome Luxury Group (Units)............... 1,676,370
--Merchandising
220,000 Wolseley (Ordinary)........................ 1,777,117
--Building Materials & Components
-------------
40,057,574
-------------
Total Common Stocks & Warrants
(cost--$115,315,195)..................... 158,493,860
-------------
PREFERRED STOCKS -- 4.1%
GERMANY--4.1%
17,363 Marschollek, Lautenschlaeger Und Partner
(Non-Voting)............................. 3,642,879
--Financial Services
35,412 Rhoen Klinikum (Non-Voting)................ 4,245,534
--Health & Personal Care
-------------
7,888,413
-------------
Total Preferred Stocks
(cost--$3,335,797)....................... 7,888,413
-------------
<CAPTION>
- ----------------------------------------------------------------------------
FACE MARKET
AMOUNT DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BONDS -- 1.1%
FINLAND--0.5%
FIM 4,550,000 Lansivoima, 7.425% due 3/29/01............. $ 988,151
--Utilities--Electric & Gas
-------------
988,151
-------------
FRANCE--0.6%
FF 5,331,730 Virbac, 5% due 1/01/01..................... 1,126,317
--Health & Personal Care
-------------
1,126,317
-------------
Total Convertible Bonds
(cost--$1,897,753)....................... 2,114,468
-------------
OTHER INVESTMENT -- 0.2%
UNITED KINGDOM--0.2%
L 215,016 Carlton Communications
Loan Note Certificates,
2.256% due 1/31/99
--Business & Public Services
(cost--$318,331)......................... 353,379
-------------
Total Investments--88.1%
(cost--$120,867,076) (c)................. 168,850,120
Unrealized Depreciation on Foreign Currency
Exchange Contracts-- (0.1)% (d).......... (131,050)
Other Assets in Excess of
Liabilities--12.0%....................... 22,906,047
-------------
Net Assets--100.0%......................... $ 191,625,117
-------------
-------------
</TABLE>
- ------------------------------
+ Non-income producing security.
ADR American Depository Receipt
* Investment in restricted security with an aggregate value of $370,323,
representing 0.19% of net assets at March 31, 1997. The investment was
acquired on October 22, 1990 and September 5, 1991 for $759,153.
(a) The warrants enable the holder to subscribe to one ordinary share for
every one warrant held at DM 433 per share until June 15, 1999.
(b) The warrants enable the holder to subscribe to one ordinary share for
every one warrant held at ITL 1705 per share until November 30, 1997.
(c) The United States Federal income tax basis of the Fund's investments
at March 31, 1997 was $120,867,076 and, accordingly, net unrealized
appreciation for United States Federal income tax purposes was $47,983,044
(gross unrealized appreciation--$50,101,276; gross unrealized
depreciation--$2,118,232).
(d) Foreign Currency Exchange Contracts as of March 31, 1997 are as
follows:
<TABLE>
<CAPTION>
Net
Contracts In Unrealized
to Exchange Settlement Appreciation
Sales Deliver For Date Value (Depreciation)
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DEM 3,764,095 $2,224,642 4/1/97 $2,256,381 ($ 31,739)
GBP 2,868,250 4,631,937 4/2/97 4,713,969 (82,032)
GBP 635,270 1,026,787 4/3/97 1,044,066 (17,279)
----------- --------- ------------
$7,883,366 $8,014,416 ($ 131,050)
----------- --------- ------------
----------- --------- ------------
</TABLE>
8
<PAGE>
-------------------------------------------------------------
DIRECTORS AND OFFICERS
ANTHONY M. SOLOMON, Chairman of the Board and Director
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
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
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.
This report is for shareholder information. This is not a prospectus intended
for use in the purchase or sale of Fund shares.
------------------------------------------------
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 Ltd.
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 9095
Princeton, New Jersey 08543-9095
CUSTODIAN--
The Bank of New York
Avenue des Arts 35
1040 Brussels
Belgium
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
<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 Channel Islands Ltd.,
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
"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," and are also
available on Reuters under "MAMINDEX."
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.
DISTRIBUTION REINVESTMENT AND CASH PURCHASE PLAN-SUMMARY
An automatic Distribution Reinvestment and Cash Purchase 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 (800) 524-4458.
All shareholders are automatically enrolled in the 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, your
nominee may have elected to receive distributions in cash on your behalf, and if
you wish to participate, 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
MARCH 31, 1997
