<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, 1998, the end of the period under review, the Fund's net
assets totaled $200.3 million. This represents a net asset value per share of
$19.90, a rise of 12.35% per annum from its initial value after taking into
account underwriting discounts, commissions, offering expenses and assuming
reinvestment of dividends and distributions. This compares with a 12.94% per
annum 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 $17.00 per share on
the New York Stock Exchange, which represents a 14.57% discount to the Fund's
net asset value per share, and a rise of 9.28% per annum from its initial value,
assuming reinvestment of dividends and distributions.
We also enclose an investment review and European market outlook, together
with a summary of the major portfolio investments.
Yours sincerely,
/s/ Anthony M. Solomon /s/ J. Loughlin Callahan
Anthony M. Solomon J. Loughlin Callahan
Chairman of the Board President and Treasurer
<PAGE>
INVESTMENT REVIEW
During the third quarter of 1998, your Fund experienced a decrease in net
asset value of 15.93%, which compared with a fall of 14.42% in the value of the
MSCI Europe Index. These results are recorded in total return and U.S. dollar
based terms, with net dividends and distributions reinvested.
This has been a very poor quarter for investors in European equities--the FTA
Europe index fell by 19.8% in local currency terms. Dollar based investors
suffered slightly less, with the same index adjusted to U.S. dollars falling by
15.2%. The Fund's NAV fell over the period, penalized by its exposure to the
shares of smaller companies. European markets have shown particularly high
levels of volatility. Of the major markets, only the U.K. and Italy outperformed
the MSCI Europe Index.
The best performing sectors were utilities, telecommunications and some
non-cyclical consumer goods. Banks and other financials led the fall, due to
emerging markets and capital markets exposure.
Markets were also undermined by profit warnings from large companies such as
ICI, Alcatel, UBS and Philips. Corporate activity continued to be a factor in
supporting share prices, but not as much as the previous quarter. Notable deals
included the mergers between British Petroleum and Amoco, and between British
Telecom and AT&T's international long distance operations.
ECONOMIC REVIEW
Economic recovery continued in Europe over the quarter. France registered the
most positive upward change. Consumption of manufactured products is expected to
have increased by 2% in the quarter and car sales registered a strong rise, up
33% from last year's third quarter. In the whole of Western Europe, car sales in
September were up 6.9% year-on-year, showing little concern for the turmoil in
the stock markets. Employment picked up in August in both France (+2%) and
Germany (+0.3%). The economic situation remained favorable in most of the
peripheral countries, such as Spain, which are benefiting from historically low
interest rates.
Although surveys of European manufacturers' confidence indicated a fall in
August, domestic demand remained strong, mitigating the effect of decreased
foreign demand. European consumer confidence has continued to improve, reaching
a record high level during this quarter.
Inflation reached 1.2% in August on a year-on-year basis in Europe, benefiting
from lower import prices. Industrial utilization remains well below capacity,
also helping to keep inflation pressures low.
Overall, we are encouraged that most balance sheets are strong with few signs
of excessive stockbuilding or financial excesses as consumer and corporate
borrowing have remained muted.
OUTLOOK
Despite a deteriorating global economic outlook, the prospects for European
equities remain positive. GDP growth in Europe is likely to remain resilient,
while inflationary pressures are benign, even in the peripheral economies. This
should allow EMU convergence to take place closer to the German interest rate
level. In fact, in the first week of October, we saw interest rate cuts in six
European countries: the U.K., Spain, Portugal, Ireland, Denmark and Switzerland.
Furthermore, corporate restructuring is likely to continue and, together with
the prospect of further consolidation of companies, should also support European
stock markets.
2
<PAGE>
The Fund's and the MSCI Europe Index's country weightings expressed as a
percentage of total market value as at September 30, 1998 are outlined below:
<TABLE>
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Austria*.......................... -- 0.5%
Belgium*.......................... -- 2.6
Denmark........................... -- 1.3
Finland*.......................... 1.8% 1.6
France*........................... 18.7 12.9
Germany*.......................... 13.2 15.1
Ireland*.......................... 1.2 0.7
Italy*............................ 11.3 6.6
Netherlands*...................... 14.4 7.6
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Norway............................ 0.7% 0.6%
Portugal*......................... -- 0.9
Spain*............................ 3.3 4.4
Sweden............................ 3.4 3.9
Switzerland....................... 10.4 10.3
United Kingdom.................... 21.6 31.0
--------- -----
100.0% 100.0%
--------- -----
--------- -----
</TABLE>
* denotes original EMU participant.
PORTFOLIO SUMMARY
During the quarter we continued to increase our holdings in Numico and
Siemens, after reassessing our positive stance on non-cyclical consumer goods
and expectations about Siemens' ongoing restructuring program. We purchased
Electrolux in the expectation of margin improvement following a restructuring
program, and Establissements Economiques du Casino Guichard-Perrachen on similar
cost saving expectations. Profits were realized in cyclical sectors, with sales
of Svenska Stal and Acerinox. Reductions were made in the oil sector.
The Fund's ten largest equity holdings at September 30, 1998 were:
MARSCHOLLEK LAUTENSCHLAEGER UND PARTNER (MLP) (PREFERRED STOCK)
MLP is Germany's leading independent insurance broker and provides a broad
range of insurance and financial services to university graduates in Germany,
where it holds high market shares among doctors and dentists. Expanding its
client base to graduates of other disciplines as well as broadening its product
range is expected to provide further strong earnings growth over the coming
years.
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 its earnings
outlook, we believe that the stock is attractively valued relative to its
European peer group.
PINAULT PRINTEMPS REDOUTE
Pinault Printemps Redoute is France's leading diversified retail group. Its
highly regarded management oversees the superior growth of Rexel (the world
leader in electrical products retailing), Conforama (household equipment),
Printemps (department stores), La Redoute (mail order), FNAC (books and music
retailer) and Guilbert (office supplies). We expect this company to benefit from
any improvement in consumer spending in France.
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 for cardiovascular, virology and
3
<PAGE>
obesity treatment) 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 acquired Tastemaster (a
U.S.-based manufacturer of flavors), which strengthens its fragrances and
flavors division.
ING GROEP
ING Groep is one of the highest quality financial groups in Europe. It
benefits from a strong position in Dutch banking and insurance and has a
fast-growing emerging country life insurance business, which is expected to
drive future growth.
NOVARTIS
Novartis is a well-managed scientific company, and is one of the leading
companies in its sector worldwide. Having a broad product range in
pharmaceuticals and agrochemicals, together with a restructuring opportunity in
its nutritional enterprises, affirms our belief that Novartis offers
shareholders an attractively valued investment opportunity.
VIVENDI
Vivendi is a conglomerate with principal activities in the water, energy,
waste management, construction and property areas. The company's expected strong
increase in international service sales (primarily in the U.S. and U.K.), its
industrial reorganization, and lower losses in its property and construction
businesses, make the company an increasingly attractive investment.
HAYS
The Hays Group operates in the business services and distribution market. It
has a strong position in its U.K. domestic market as well as expansion
opportunities abroad.
SIEMENS
Siemens is a German conglomerate involved in a wide range of activities,
including telecommunications equipment, power generation, transportation and
lighting. Its shares have underperformed the local market for a number of years.
Despite a number of restructuring plans, the company has failed to deliver a
sustainable turnaround in its operating performance. The new Chief Financial
Officer, using EVA (Economic Value Added), is the driving force behind a radical
review of the company's 16 divisions. Spin-offs and disposals of underperforming
activities and peripheral assets appear to be on the horizon. Financial
communication should be improved, notably with the adoption of U.S. GAAP
(Generally Accepted Accounting Principles) for the 1999-2000 fiscal year. We
expect the size and scope of this restructuring plan to become clearer over the
coming months.
POLYGRAM
PolyGram is the world's leading music company with a market share of 16%,
being particularly strong in France and Germany. Best selling artists include
Sheryl Crow, Elton John, Andrea Bocelli and U2. It also operates a film
business, which is expected to break even in the year 2000 (box office successes
include Bean, The Game and Sleepers). In May 1998, Canadian spirits and
entertainment group Seagram agreed to purchase PolyGram (75% owned by Philips)
for $10.4 billion, with up to 20% of the amount being paid in Seagram shares,
which amounts to paying 115 Dutch guilders (or $60.87 as at September 30, 1998)
per PolyGram share for shareholders opting for cash. The deal, which should be
completed by the end of November 1998, would give Seagram, who also owns
Universal, a 22% world market share in music, with revenues balanced between
Europe and North America.
4
<PAGE>
ECONOMIC AND MONETARY UNION (EMU)
Certain European countries have agreed to enter into EMU, in an effort, among
other things, to reduce barriers between countries, increase competition among
companies, reduce government subsidies in certain industries, and reduce or
eliminate currency fluctuations among these countries. EMU establishes a single
common European currency (the "euro") that will be introduced on January 1, 1999
and is expected to replace the existing national currencies of all EMU
participants by July 1, 2002. Upon introduction of the euro, certain securities
(beginning with government and corporate bonds) will be redenominated in the
euro and, thereafter, will be listed, traded and will make dividend and other
payments only in euros.
- If the euro, or EMU as a whole, does not take effect as planned, the
Fund's investments could be adversely affected. For example, sharp
currency fluctuations, exchange rate volatility and other disruptions of
the markets could occur.
- Withdrawal from EMU by a participating country could also have a negative
effect on the Fund's investments, for example, if securities redenominated
in euros are transferred back into that country's national currency.
- Gains or losses resulting from the euro conversion may be taxable to Fund
shareholders under foreign tax laws.
- Computer, accounting, and trading systems must be capable of recognizing
the euro as a distinct currency. Like other investment companies and
business organizations, the Fund could be adversely affected if the
systems used by the Investment Manager, the Investment Adviser, the Fund's
other service providers, or entities with which the Fund or its service
providers do business do not properly address this issue prior to euro
conversion over the first weekend of 1999 (January 1 through January 3).
These issues may negatively affect the operations of the companies the
Fund invests in as well. The Investment Manager and Investment Adviser
have taken steps that they believe are reasonably designed to prepare
their systems and operations for the euro conversion. As of the date of
this report, however, there can be no assurance that these steps will be
sufficient to avoid any adverse impact to the Fund.
YEAR 2000 COMPLIANCE DISCLOSURE
Many computer systems and other electronically controlled equipment used by
companies and other business organizations throughout the world express dates
using only the last two digits of the year, and thus will require modification
or replacement to accommodate the Year 2000 and beyond in order to avoid
malfunctions and consequential widespread commercial disruption.
The Fund could be adversely affected if the computer systems and equipment
used by its service providers or the companies in which it invests, or other
organizations with which any of them deal, do not properly address this problem
before January 1, 2000. The Investment Manager and the Investment Adviser have
taken steps that they believe are reasonably designed to address that the
computer systems and equipment it uses are adequate to deal with Year 2000
issues and to seek the same of its suppliers and the Fund's other service
providers. As of the date of this report, however, there can be no assurance
that these steps will be sufficient to avoid any adverse impact to the Fund.
5
<PAGE>
- ----------------------------------------------
THE EUROPE FUND, INC.
SCHEDULE OF INVESTMENTS
AS OF SEPTEMBER 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
<C> <S> <C>
MARKET
SHARES DESCRIPTION VALUE
<CAPTION>
- ----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS--92.4%
FINLAND--1.7%
50,000 Hackman Oy (Series A)...................... $ 1,646,736
--Consumer Goods
96,194 Metra (Series B)........................... 1,866,929
--Machinery & Engineering
-------------
3,513,665
-------------
FRANCE--18.1%
20,000 Accor...................................... 4,183,579
--Leisure & Tourism
20,000 Elf Aquitaine.............................. 2,460,301
--Energy Sources
10,000 Establissements Economiques du Casino
Guichard-- Perrachen..................... 1,005,839
--Consumer Goods
22,500 +Flo (Groupe).............................. 1,033,433
--Consumer Goods
7,000 Guilbert................................... 862,351
--Merchandising
10,000 Hachette Filipacchi Medias................. 1,869,259
--Consumer Goods
5,500 Louis Vuitton.............................. 749,039
--Consumer Goods
35,000 Marionnaud Parfumeries..................... 1,345,866
--Merchandising
60,000 +Naf Naf................................... 640,889
--Consumer Goods
36,250 Pinault Printemps Redoute.................. 5,227,248
--Merchandising
15,000 PSA Peugeot Citroen........................ 2,552,873
--Automobiles
49,032 Societe Generale d'Entreprises............. 1,828,705
--Construction & Housing
45,000 Total (Class B)............................ 5,655,843
--Energy Sources
30,325 Valeo...................................... 2,159,439
--Consumer Goods
24,000 Vivendi.................................... 4,768,212
--Business & Public Services
-------------
36,342,876
-------------
GERMANY--8.4%
112,000 Bayer...................................... 4,217,839
--Chemicals
12,500 Bayerische Hypo-und Vereinsbank............ 917,609
--Banking
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
27,500 Daimler-Benz............................... $ 2,294,470
--Automobiles
45,000 Metro...................................... 3,123,452
--Merchandising
80,000 Siemens.................................... 4,406,911
--Electrical & Electronics
35,000 Veba....................................... 1,817,314
--Utilities
-------------
16,777,595
-------------
IRELAND--1.1%
130,000 Bank of Ireland............................ 2,308,433
--Banking
-------------
2,308,433
-------------
ITALY--11.0%
420,000 Banca Intesa............................... 1,762,468
--Banking
170,000 Banca Popolare di Brescia.................. 3,187,115
--Banking
840,000 Credito Italiano (Ordinary)................ 3,489,434
--Banking
27,650 Gucci Group (NY Registered)................ 998,856
--Consumer Goods
90,000 Industrie Natuzzi (ADR).................... 1,777,500
--Appliances & Household Durables
300,000 La Rinascente.............................. 2,622,872
--Merchandising
150,000 Luxottica Group (ADR)...................... 1,678,125
--Health & Personal Care
125,000 Mondadori Arnoldo Editore.................. 1,448,346
--Broadcasting & Publishing
650,000 Telecom Italia............................. 3,098,509
--Telecommunications
600,000 Telecom Italia Mobile...................... 1,923,681
--Telecommunications
-------------
21,986,906
-------------
NETHERLANDS--14.0%
50,100 Akzo Nobel................................. 1,776,643
--Chemicals
27,210 +Equant.................................... 1,399,931
--Telecommunications
64,000 Hagemeyer.................................. 1,714,029
--Consumer Goods
110,000 ING Groep.................................. 4,942,970
--Financial Services
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
83,763 Numico..................................... $ 2,841,828
--Food & Household Products
75,000 PolyGram................................... 4,255,432
--Consumer Goods
50,000 Unilever................................... 3,138,646
--Consumer Goods
100,000 Ver Ned Uitgevers Bezit.................... 4,117,818
--Broadcasting & Publishing
20,000 Wolters Kluwer............................. 3,828,830
--Broadcasting & Publishing
-------------
28,016,127
-------------
NORWAY--0.6%
50,000 Ekornes.................................... 384,252
--Consumer Goods
400,000 NCL Holdings............................... 889,848
--Leisure & Tourism
-------------
1,274,100
-------------
SPAIN--3.2%
17 +A.B. Capital Fund*........................ 25,574
--Business & Public Services
375,000 Banco Bilbao Vizcaya....................... 4,110,022
--Banking
100,000 Endesa..................................... 2,248,217
--Utilities
-------------
6,383,813
-------------
SWEDEN--3.3%
200,000 ABB (Series B)............................. 1,794,601
--Electrical & Electronics
80,000 Electrolux (Series B)...................... 1,048,760
--Consumer Goods
112,500 Hoganas (Series B)......................... 1,703,916
--Machinery & Engineering
36,719 +Pricer (Series B)......................... 99,545
--Electrical & Electronics
37,169 Securitas (Series B)....................... 1,901,760
--Business Services
-------------
6,548,582
-------------
SWITZERLAND--10.1%
9,000 Adecco..................................... 3,328,767
--Services
6,887 +Barry Callebaut........................... 1,564,099
--Food & Household Products
600 Kuoni Reisen Holdings...................... 1,816,871
--Leisure & Tourism
3,000 Novartis (Registered)...................... 4,799,567
--Health & Personal Care
475 Roche Holdings (Bearer).................... 5,102,740
--Health & Personal Care
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
6,000 The Swatch Group (Bearer).................. $ 3,594,809
--Consumer Goods
-------------
20,206,853
-------------
UNITED KINGDOM--20.9%
512,000 Amvescap (Ordinary)........................ 2,964,572
--Financial Services
200,000 Bemrose (Ordinary)......................... 1,124,076
--Forest Products & Paper Materials
200,000 Boots (Ordinary)........................... 3,440,148
--Consumer Goods
250,000 British Airport Authority (Ordinary)....... 2,544,878
--Business & Public Services
220,000 Diageo (Ordinary).......................... 2,022,827
--Food & Household Products
400,000 GKN (Ordinary)............................. 4,010,608
--Machinery & Engineering
70,000 Glaxo Wellcome (Ordinary).................. 2,065,787
--Health & Personal Care
250,000 Great Universal Store (Ordinary)........... 2,825,047
--Merchandising
1,000,000 Halma (Ordinary)........................... 1,774,410
--Machinery & Engineering
300,000 Hays (Ordinary)............................ 4,485,267
--Business & Public Services
200,000 Marks & Spencer (Ordinary)................. 1,525,483
--Merchandising
195,000 Serco Group (Ordinary)..................... 3,513,077
--Business & Public Services
200,000 SmithKline Beecham (Ordinary).............. 2,207,400
--Health & Personal Care
600,000 Thomson Travel (Ordinary).................. 1,375,380
--Leisure & Tourism
200,000 United News & Media (Ordinary)............. 1,884,780
--Broadcasting & Publishing
1,000,000 Verity Group (Ordinary).................... 993,330
--Consumer Goods
220,000 Wolseley (Ordinary)........................ 1,102,002
--Building Materials & Components
60,000 Zeneca Group (Ordinary).................... 2,119,104
--Health & Personal Care
-------------
41,978,176
-------------
Total Common Stocks
(cost--$157,536,695)..................... 185,337,126
-------------
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
PREFERRED STOCKS--4.4%
GERMANY--4.4%
12,000 Marschollek, Lautenschlaeger Und Partner
(Non-Voting)............................. $ 6,015,935
--Financial Services
30,000 Rhoen Klinikum (Non-Voting)................ 2,721,494
--Health & Personal Care
-------------
8,737,429
-------------
Total Preferred Stocks
(cost--$2,822,502)....................... 8,737,429
-------------
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
SHARES DESCRIPTION VALUE
- ----------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BONDS--0.1%
GERMANY--0.1%
DEM 224,000 Metro International Finance 0% due
09/07/2013............................... $ 137,614
--Merchandising
-------------
Total Convertible Bonds
(cost--$125,299)......................... 137,614
-------------
Total Investments--96.9%
(cost--$160,484,496) (a)................. 194,212,169
Other Assets in Excess of
Liabilities--3.1%........................ 6,156,398
-------------
Net Assets--100.0%......................... $ 200,368,567
-------------
-------------
</TABLE>
- ------------------
+ Non-income producing security.
ADR American Depositary Receipt.
* Investment in restricted security with an aggregate value of $25,574,
representing 0.01% of net assets at September 30, 1998. The investment was
acquired on October 22, 1990 and September 5, 1991 and has an adjusted
basis of $334,461.
(a) The United States Federal income tax basis of the Fund's investments at
September 30, 1998 was $160,484,496 and, accordingly, net unrealized
appreciation for United States Federal income tax purposes was $33,727,673
(gross unrealized appreciation--$47,481,436; gross unrealized
depreciation--$13,753,763).
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. MAGUIRE, Assistant Secretary
AMANDA J. MARSH, Assistant Secretary
* Member of the Audit Committee
- ------------------------------------------------------
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 1-609-282-4600.)
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>
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 or any securities mentioned in
this report.
Comparisons between changes in the Fund's net asset value per share and changes
in the MSCI Europe Index should be considered in light of the Fund's investment
policy and objectives, the characteristics and quality of the Fund's investments
and the size of the Fund.
<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." Daily NAV and market price information is
available on the internet at www.wsj.com.
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
A 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
SEPTEMBER 30, 1998
