<PAGE>
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
Dear Shareholder:
We are pleased to present to you the Semi-Annual Report of The Europe Fund,
Inc. On June 30, 1998, the end of the period under review, the Fund's net assets
totaled $238.3 million. This represents a net asset value per share of $23.67, a
rise of 15.17% per annum from its initial value on May 3, 1990, after taking
into account underwriting discounts, commissions, offering expenses and assuming
reinvestment of dividends and distributions. This compares with a 15.55% 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 $21.25 per share on
the New York Stock Exchange, which represents a 10.22% discount to the Fund's
net asset value per share and a rise of 12.62% 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 second quarter of 1998, your Fund experienced an increase in net
asset value of 4.27%, which compared with an increase of 5.14% 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.
The second quarter saw a reversal of the market leadership seen in the first
quarter, when the peripheral markets performed best. In general terms over the
second quarter, the "European Core Markets" outperformed. The exception to this
was Finland, the best performing market over the period, which was driven high
by concentration in the paper & pulp sector and a strong performance by Nokia on
the announcement of a joint venture with Ericsson and Psion. Both Italy and
Spain saw profit taking after a strong performance in the first quarter. The
worst performing market was Norway, which suffered in the wake of weak oil
prices. The best performing sectors were technology, telecommunications,
business services, automobiles and auto components. The auto sector benefited
from the takeover of Rolls-Royce motor cars by Volkswagen and the merger between
Chrysler and Daimler Benz. With the exception of the pharmaceutical sector,
where there were some disappointments, in broad terms, first quarter results
were generally in line or slightly ahead of expectations. Corporate activity
continued to be one of the driving factors behind the markets over the period.
In addition to the deals already mentioned, there were a number of transactions
in the banking sector. Fortis finally gained control of Generale de Banque in
Belgium and Credito Italiano announced a merger with Unicredito in Italy. Other
deals included a buyout of SGB by Suez Lyonnaise, the acquisition of Courtaulds
by Akzo and the purchase of PolyGram by Seagram.
Mutual fund flows were also supportive of the market on a pan-European basis.
Italian equity mutual fund net sales averaged $3.2 billion per month over the
past three months, slightly down on the monthly average for the first quarter.
However, German and Spanish sales accelerated sharply. Germany recorded $2.6
billion in April, compared with a monthly average of $0.9 billion for the first
quarter. Spain recorded $2.3 billion in April, up from $1 billion monthly
average in the first quarter.
In broad terms, the economic trends seen in the first quarter in Europe
continued through the second quarter. Economic recovery continued as increased
consumer expenditure compensated for slower export growth in the wake of the
Asian crisis. Western European car registrations, for example, rose by 7.2%
year-on-year in June, and by 7.6% for the first half of the year.
The recovery appears to be more fragile in Germany, where there has been some
deterioration in business confidence levels over recent months. Given the
structural deflationary pressures of European Monetary Union (EMU) it is
unlikely that German rates will rise from current levels in the near future.
Consumer confidence has continued to improve gradually so far this year.
The economic recovery in France is more firmly established. Unemployment to
June 1998 has now fallen for seven consecutive months. Consumer confidence
continues to improve and has so far not fueled inflationary pressure. Indeed,
French inflation has fallen to just 1%.
The mini economic boom in the peripheral markets caused by the convergence of
European interest rates continued during the second quarter. Italian GDP growth
may reach 4% and with low inflation and considerable spare capacity there is
scope for a sustained period of strong growth. Spanish GDP growth has already
reached nearly 4% and is expected to remain buoyant over the next two years. As
with Italy, spare capacity and high unemployment suggest that it will be some
time before the buoyant level of domestic demand fuels inflationary pressures.
ECONOMIC AND MARKET OUTLOOK
The risks in Europe continue to be the impact of the Asian crisis on 1998
earnings, the possibility of an upset on EMU, or a sharp correction on Wall
Street. This said, the markets remain supported by corporate activity and strong
mutual fund inflows. Provided these two trends remain intact, we believe these
stock markets are well underpinned at current levels.
2
<PAGE>
EUROPEAN ECONOMIC AND MONETARY UNION (EMU)
Certain European countries have agreed to enter into EMU, in an effort to,
among other things, reduce barriers between countries, increase competition
among companies, reduce government subsidies in certain industries, and reduce
or eliminate currency fluctuations among these countries. Among other things,
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, trade and 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 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.
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 strategy of the Investment Manager and the
Investment Adviser is to ensure 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.
PORTFOLIO SUMMARY
Adecco and Siemens were added to the portfolio over the quarter. Adecco offers
good quality earnings growth and reflects the continued repositioning of the
portfolio to benefit from the domestic economic recovery in Europe. Siemens
should benefit from some significant restructuring measures over the next six
months as management disposes of underperforming non-core businesses. We took
some profits on Pinault Printemps Redoute and Vivendi, and sold our holdings in
Elsevier.
3
<PAGE>
The Fund's and the MSCI Europe Index's country weightings expressed as a
percentage of total market value at June 30, 1998 are outlined below:
<TABLE>
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Austria........................... -- 0.5%
Belgium........................... -- 2.5
Czech Republic.................... 0.5% --
Denmark........................... 1.2 1.3
Finland........................... 2.3 1.4
France............................ 17.6 13.0
Germany........................... 10.1 15.4
Ireland........................... 1.2 0.7
Italy............................. 7.6 6.2
<CAPTION>
MSCI
FUND EUROPE INDEX
--------- ---------------
<S> <C> <C>
Netherlands....................... 14.2% 7.9%
Norway............................ 1.5 0.7
Portugal.......................... -- 0.8
Spain............................. 4.1 4.5
Sweden............................ 3.7 4.3
Switzerland....................... 11.6 10.7
United Kingdom.................... 24.4 30.1
--------- -----
100.0% 100.0%
--------- -----
--------- -----
</TABLE>
The Fund's ten largest equity holdings at June 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 the product
range is expected to provide further strong earnings growth over the coming
years.
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.
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.
BANCO BILBAO VIZCAYA
BBV has demonstrated over the past couple of years impressive financial
strength and management skills. This leading Spanish bank has now built a very
well established Latin American network, thanks to some opportunistic
acquisitions. We expect profit growth from this area, as well as from the BBV
2000 cost cutting plan for the Spanish banking activities. The current boom in
the Spanish mutual fund industry should also boost profitability this year.
ROYAL DUTCH PETROLEUM
The Royal Dutch/Shell Group is the largest oil company in the world and among
the ten biggest chemical companies. Because of its diversity, the Group's
earnings are less sensitive to oil prices than is the case with other oil
companies. We believe that the restructuring now being implemented by management
should yield positive results in the medium term. Merger discussions with Texaco
are ongoing in relation to the U.S. downstream operations of Shell. News on the
rationalization of the European refining and marketing business is expected in
the near future, while the chemicals business is also being
4
<PAGE>
reorganized. Management is strongly committed to improving the Group's return on
capital, while the Group's financial flexibility (cash and cash equivalents in
excess of $12 billion) is expected to be used in a manner more rewarding to
shareholders.
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 in the cardiovascular, virology and obesity
areas) 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.
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 its restructuring efforts and extended incentive programs.
VIVENDI
Vivendi 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 UK), its industrial reorganization, as well as lower losses in the property
and construction sectors, make the company an increasingly attractive
investment.
GKN
GKN operates in the automotive components and defense engineering markets.
Recent European car sales were well above expectations. We believe that the
company is financially sound and is one of the leading organizations in its
sector. It offers good earnings visibility in its non-cyclical business (CHEP
and Westland), and has scope for acquisitions.
5
<PAGE>
PROXY RESULTS
During the six-month period ended June 30, 1998, The Europe Fund, Inc.
shareholders voted on the following proposals at a special shareholders'
meeting on February 25, 1998. The description of the proposals and number of
shares voted are as follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES VOTED SHARES VOTED SHARES
FOR AGAINST ABSTAINING
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To approve the new investment management agreement........................... 5,933,364 256,570 149,790
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED SHARES
FOR AGAINST ABSTAINING
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To approve the new investment advisory agreement............................. 5,928,076 253,779 157,869
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Also, during the six-month period ended June 30, 1998, The Europe Fund, Inc.
shareholders voted on the following proposals at the annual shareholders'
meeting on June 3, 1998. The description of the proposals and number of
shares voted are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHARES
SHARES VOTED WITHHELD/
FOR VOTED AGAINST
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. To elect the Fund's Board of Directors: George F. Bennett........... 7,535,435 73,810
Sir Arthur Bryan............ 7,548,047 61,198
Peter Stormonth Darling..... 7,529,866 79,379
Leon Levy................... 7,546,995 62,250
J. Murray Logan............. 7,554,582 54,663
James S. Martin............. 7,525,526 83,719
Francois-Xavier Ortoli...... 7,503,988 105,257
Anthony M. Solomon.......... 7,542,855 66,390
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
SHARES VOTED SHARES VOTED SHARES
FOR AGAINST ABSTAINING
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
2. To ratify the selection of Ernst & Young LLP
as the Fund's independent auditors........... 7,547,425 18,016 43,804
- -------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
- ----------------------------------------------
THE EUROPE FUND, INC.
SCHEDULE OF INVESTMENTS
AS OF JUNE 30, 1998 (UNAUDITED)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
VALUE
SHARES DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
COMMON STOCKS & WARRANTS--92.5%
CZECH REPUBLIC--0.5%
50,000 +Central European Media Enterprises (Series
A)....................................... $ 1,081,250
--Consumer Goods
-------------
1,081,250
-------------
DENMARK--1.1%
30,000 Unidanmark (Series A)...................... 2,692,810
--Banking
-------------
2,692,810
-------------
FINLAND--2.2%
55,000 Hackman Oy (Series A)...................... 2,239,626
--Consumer Goods
96,194 Metra (Series B)........................... 3,116,843
--Machinery & Engineering
-------------
5,356,469
-------------
FRANCE--17.0%
12,000 Accor...................................... 3,350,772
--Leisure & Tourism
28,600 But........................................ 1,585,873
--Merchandising
25,000 Elf Aquitaine.............................. 3,506,890
--Energy Sources
22,500 Flo (Groupe)............................... 1,162,225
--Consumer Goods
7,000 Guilbert................................... 1,104,382
--Merchandising
10,000 Hachette Filipacchi Medias................. 2,888,027
--Consumer Goods
60,000 +Naf Naf................................... 910,966
--Consumer Goods
10,000 Pinault Printemps Redoute.................. 6,054,130
--Merchandising
45,420 PSA Peugeot Citroen........................ 3,218,087
--Automobiles
45,420 Societe Generale d'Entreprises (SGE)....... 2,143,011
--Construction & Housing
50,000 Total (Class B)............................ 6,485,684
--Energy Sources
30,000 Valeo...................................... 3,059,658
--Consumer Goods
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
VALUE
SHARES DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
24,000 Vivendi.................................... $ 5,113,293
--Business & Public Services
-------------
40,582,998
-------------
GERMANY--5.5%
112,000 Bayer...................................... 5,787,281
--Chemicals
40,000 Metro...................................... 2,412,105
--Merchandising
40,000 Siemens.................................... 2,437,554
--Electrical & Electronics
35,000 Veba....................................... 2,349,728
--Utilities
-------------
12,986,668
-------------
IRELAND--1.1%
130,000 Bank of Ireland............................ 2,651,254
--Banking
-------------
2,651,254
-------------
ITALY--7.4%
420,000 Banca Intesa............................... 2,345,321
--Banking
170,000 Banca Popolare di Brescia.................. 3,207,277
--Banking
840,000 Credito Italiano (Ordinary)................ 4,388,781
--Banking
90,000 Industrie Natuzzi (ADR).................... 2,340,000
--Appliances & Household Durables
300,000 La Rinascente.............................. 2,981,555
--Merchandising
150,000 Luxottica Group (ADR)...................... 2,325,000
--Health & Personal Care
-------------
17,587,934
-------------
NETHERLANDS--13.7%
11,500 Akzo Nobel................................. 2,552,044
--Chemicals
27,650 Gucci Group (NY Registered)................ 1,465,450
--Consumer Goods
64,000 Hagemeyer.................................. 2,763,900
--Consumer Goods
110,000 ING Groep.................................. 7,190,460
--Financial Services
75,335 Numico..................................... 2,355,027
--Food & Household Products
110,000 Royal Dutch Petroleum...................... 6,089,218
--Oil Refining & Marketing
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
VALUE
SHARES DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
50,000 Unilever................................... $ 3,960,347
--Consumer Goods
100,000 Ver Ned Uitgevers Bezit.................... 3,626,638
--Broadcasting & Publishing
20,000 Wolters Kluwer............................. 2,740,345
--Broadcasting & Publishing
-------------
32,743,429
-------------
NORWAY--1.5%
450,000 Christiania Bank Kreditkasse............... 1,869,419
--Banking
100,000 Schibsted.................................. 1,669,471
--Broadcasting & Publishing
-------------
3,538,890
-------------
SPAIN--4.0%
17 +A.B. Capital Fund*........................ 30,418
--Business & Public Services
7,100 Acerinox................................... 942,417
--Materials
125,000 Banco Bilbao Vizcaya....................... 6,400,872
--Banking
100,000 Endesa..................................... 2,182,966
--Utilities
-------------
9,556,673
-------------
SWEDEN--3.6%
200,000 ABB (Series B)............................. 2,777,083
--Electrical & Electronics
112,500 Hoganas (Series B)......................... 2,505,004
--Machinery & Engineering
36,719 +Pricer (Series B)......................... 215,427
--Electrical & Electronics
37,169 Securitas (Series B)....................... 1,815,674
--Business Services
80,000 Svenska Stal (Series B).................... 1,200,901
--Metals
-------------
8,514,089
-------------
SWITZERLAND--11.3%
9,000 Adecco..................................... 4,053,333
--Services
1,200 Baloise Holding Ltd. (Registered).......... 981,333
--Insurance
6,887 Barry Callebaut............................ 1,482,831
--Food & Household Products
3,500 Hero (Bearer).............................. 2,373,663
--Food & Household Products
600 Kuoni Reisen Holdings...................... 2,974,815
--Leisure & Tourism
2,688 Novartis (Registered)...................... 4,467,168
--Health & Personal Care
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
VALUE
SHARES DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
600 Roche Holdings (Bearer).................... $ 5,884,444
--Health & Personal Care
6,000 The Swatch Group (Bearer).................. 4,630,123
--Consumer Goods
-------------
26,847,710
-------------
UNITED KINGDOM--23.6%
512,000 Amvescap (Ordinary)........................ 4,993,897
--Financial Services
265,000 Bemrose (Ordinary)......................... 1,928,608
--Forest Products & Paper Materials
175,000 Boots (Ordinary)........................... 2,897,351
--Consumer Goods
250,000 British Airport Authority (Ordinary)....... 2,696,858
--Business & Public Services
220,000 Diageo (Ordinary).......................... 2,609,825
--Food & Household Products
27,500 Forth Ports (Ordinary)..................... 296,654
--Business Services
400,000 GKN (Ordinary)............................. 5,091,934
--Machinery & Engineering
70,000 Glaxo Wellcome (Ordinary).................. 2,100,798
--Health & Personal Care
250,000 Great Universal Store (Ordinary)........... 3,292,917
--Merchandising
1,551,910 Halma (Ordinary)........................... 3,182,624
--Machinery & Engineering
300,000 Hays (Ordinary)............................ 5,026,910
--Business & Public Services
250,000 Marks & Spencer (Ordinary)................. 2,273,780
--Merchandising
86,666 Reuters Group (Ordinary)................... 989,813
--Business & Public Services
98,765 Schroders (Ordinary)....................... 2,545,812
--Finance
195,000 Serco Group (Ordinary)..................... 4,496,458
--Business & Public Services
200,000 Smithkline Beecham (Ordinary).............. 2,434,258
--Health & Personal Care
500,000 Thomson Travel (Ordinary).................. 1,558,925
--Leisure & Tourism
200,000 United News & Media (Ordinary)............. 2,794,395
--Broadcasting & Publishing
796,805 Verity Group (Ordinary).................... 1,129,236
--Consumer Goods
220,000 Wolseley (Ordinary)........................ 1,291,157
--Building Materials &
Components
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
VALUE
SHARES DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
60,000 Zeneca Group (Ordinary).................... $ 2,572,977
--Health & Personal Care
-------------
56,205,187
-------------
Total Common Stocks
(cost--$147,823,163)..................... 220,345,361
-------------
PREFERRED STOCKS--4.3%
GERMANY--4.3%
15,000 Marschollek, Lautenschlaeger Und Partner
(Non-Voting)............................. 7,302,703
--Financial Services
30,000 Rhoen Klinikum (Non-Voting)................ 2,887,887
--Health & Personal Care
-------------
10,190,590
-------------
Total Preferred Stocks
(cost--$2,970,991)....................... 10,190,590
-------------
<CAPTION>
- ----------------------------------------------------------------------------
MARKET
FACE VALUE
AMOUNT DESCRIPTION (NOTE 1)
- ----------------------------------------------------------------------------
<C> <S> <C>
CONVERTIBLE BONDS--0.0%
GERMANY--0.0%
DEM 224,000 Metro International Finance 0%
09/07/2013............................... $ 123,310
--Merchandising
-------------
Total Convertible Bonds
(cost--$125,299)......................... 123,310
-------------
Total Investments--96.8%
(cost--$150,919,453) (a)................. $ 230,659,261
Unrealized Depreciation on Foreign Currency
Exchange Contracts--0.0% (b)............. (6,645)
Other Assets in Excess of
Liabilities--3.2%........................ 7,635,252
-------------
Net Assets--100.0%......................... $ 238,287,868
-------------
-------------
</TABLE>
- ------------------------------
+ Non-income producing security.
ADR American Depositary Receipt.
* Investment in restricted security with an aggregate value of $30,418,
representing 0.01% of net assets at June 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 June 30, 1998 was $150,919,453 and, accordingly, net unrealized
appreciation for United States Federal income tax purposes was $79,739,808
(gross unrealized appreciation--$81,023,124; gross unrealized
depreciation--$1,283,316).
(b) Foreign currency exchange contracts entered into hedge purchase and
sale commitments as of June 30, 1998 were as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Net
In Unrealized
Contracts to Exchange Settlement Appreciation
Purchases Receive For Date Value (Depreciation)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
GBP 107,440 $ 179,511 7/1/98 $179,135 $ (376)
GBP 37,500 62,625 7/2/98 62,524 (101)
GBP 148,440 247,524 7/3/98 247,494 (30)
GBP 15,070 25,076 7/6/98 25,126 50
-------------
$ (457)
-------------
-------------
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
Net
In Unrealized
Contracts to Exchange Settlement Appreciation
Sales Deliver For Date Value (Depreciation)
- ------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FRF 3,076,020 $2,015,741 7/1/98 $2,025,363 $ (9,623)
NOK 4,975,760 647,380 7/2/98 643,945 3,435
-------------
$ (6,188)
-------------
Total $ (6,645)
-------------
-------------
- ------------------------------------------------------------------------
</TABLE>
DEM German Deutschemark
FRF French Franc
GBP British Pound
NOK Norwegian Krone
9
<PAGE>
- --------------------------------------------------------------------------------
THE EUROPE FUND, INC.
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
ASSETS
Investments, at value (cost $150,919,453) (Note 1).......... $ 230,659,261
Domestic cash............................................... 7,237,887
Foreign cash (Note 1)....................................... 49,095
Receivable for securities sold.............................. 2,671,039
Withholding tax refunds receivable.......................... 455,278
Dividends receivable........................................ 417,492
Interest receivable......................................... 31,135
Prepaid expenses............................................ 351
---------------
Total assets.......................................... 241,521,538
---------------
LIABILITIES
Payable for securities purchased............................ 2,760,651
Investment management fee payable (Note 2).................. 150,525
Administration fee payable (Note 2)......................... 48,474
Net unrealized depreciation on foreign currency exchange
contracts.................................................. 6,645
Accrued expenses and other liabilities...................... 267,375
---------------
Total liabilities..................................... 3,233,670
---------------
NET ASSETS.................................................. $ 238,287,868
---------------
---------------
Net Assets consist of:
Common Stock, $.001 par value (Authorized 100,000,000
shares) (Note 4)......................................... $ 10,066
Paid-in surplus........................................... 129,454,057
Accumulated undistributed net investment income........... 1,808,243
Accumulated undistributed net realized gain on
investments.............................................. 27,296,780
Net unrealized appreciation on investments and foreign
currency related transactions............................ 79,718,722
---------------
Net Assets................................................ $ 238,287,868
---------------
---------------
Net Asset Value per share
($238,287,868 DIVIDED BY 10,066,319 shares of common stock
issued and outstanding).................................... $23.67
-------
-------
</TABLE>
See Notes to Financial Statements.
10
<PAGE>
- --------------------------------------------------------------------------------
THE EUROPE FUND, INC.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED
JUNE 30, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
NET INVESTMENT INCOME
Income
Dividends....................................... $ 3,277,193
Interest........................................ 88,037
---------------
3,365,230
Less: Withholding tax on foreign source
dividends...................................... 395,017
---------------
Total income................................ 2,970,213
---------------
Expenses
Investment management fee (Note 2).............. 803,642
Administration fee (Note 2)..................... 270,726
Custodian fees.................................. 78,839
Directors' fees and expenses.................... 71,787
Shareholder servicing fees...................... 35,857
Legal fees...................................... 31,586
Audit fees...................................... 23,307
Reports to shareholders......................... 18,292
NYSE listing fee................................ 12,030
Insurance expense............................... 5,486
Miscellaneous................................... 11,036
---------------
Total expenses.............................. 1,362,588
---------------
Net investment income............................. 1,607,625
---------------
</TABLE>
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY
RELATED TRANSACTIONS
<TABLE>
<S> <C> <C>
Net realized gain (loss) from:
Investments--net................................ $ 21,343,594
Foreign currency related transactions........... (151,903) 21,191,691
--------------
Change in unrealized appreciation on:
Investments--net................................ 24,094,085
Foreign currency related transactions........... 20,365 24,114,450
-------------- --------------
Net realized and unrealized gain on investments
and foreign currency related transactions........ 45,306,141
--------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS........................................ $ 46,913,766
--------------
--------------
</TABLE>
See Notes to Financial Statements.
11
<PAGE>
- --------------------------------------------------------------------------------
THE EUROPE FUND, INC.
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS
ENDED FOR THE
JUNE 30, YEAR ENDED
1998 DECEMBER 31,
(UNAUDITED) 1997
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations:
Net investment income....................................... $ 1,607,625 $ 1,529,378
Net realized gain on investments and foreign currency
related transactions....................................... 21,191,691 26,092,504
Change in unrealized appreciation on investments and foreign
currency related transactions.............................. 24,114,450 6,218,247
------------ ------------
Net increase in net assets resulting from operations.......... 46,913,766 33,840,129
------------ ------------
Dividends and distributions to shareholders from:
Net investment income ($0.00 and $0.144 per share,
respectively).............................................. -- (1,448,724)
Net realized gain on investments and foreign currency
related transactions ($0.00 and $2.380 per share,
respectively) (Note 1)..................................... -- (23,980,156)
------------ ------------
Net decrease in net assets resulting from dividends and
distributions................................................ -- (25,428,880)
------------ ------------
Total increase................................................ 46,913,766 8,411,249
------------ ------------
NET ASSETS
Beginning of period......................................... 191,374,102 182,962,853
------------ ------------
End of period (including accumulated undistributed net
investment income of $1,808,243 and $200,618,
respectively).............................................. $238,287,868 $191,374,102
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements.
12
<PAGE>
- --------------------------------------------------------------------------------
THE EUROPE FUND, INC.
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following per share data and ratios have been derived from information
provided in the financial statements:
<TABLE>
<CAPTION>
FOR THE FOR THE YEAR ENDED
SIX MONTHS ENDED DECEMBER 31,
JUNE 30, 1998 -----------------------------------------------------
(UNAUDITED) 1997 1996 1995 1994 1993
---------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period...... $ 19.01 $ 18.18 $ 14.32 $ 12.56 $ 12.74 $ 10.74
---------------- --------- --------- --------- --------- ---------
Operations:
Net investment income*.................. 0.16 0.15 0.12 0.14 0.12 0.12
Net realized and unrealized gain on
investments and foreign currency
related transactions................... 4.50 3.20 4.80 2.50 0.66 2.63
---------------- --------- --------- --------- --------- ---------
Total from operations..................... 4.66 3.35 4.92 2.64 0.78 2.75
---------------- --------- --------- --------- --------- ---------
Dividends and distributions to shareholders from:
Net investment income................... -- (0.14) (0.16) (0.10) (0.15) (0.07)
Net realized gain on investments and
foreign currency related
transactions........................... -- (2.38) (0.90) (0.78) (0.81) (0.68)
---------------- --------- --------- --------- --------- ---------
Total dividends and distributions..... -- (2.52) (1.06) (0.88) (0.96) (0.75)
---------------- --------- --------- --------- --------- ---------
Net asset value, end of period............ $ 23.67 $ 19.01 $ 18.18 $ 14.32 $ 12.56 $ 12.74
---------------- --------- --------- --------- --------- ---------
---------------- --------- --------- --------- --------- ---------
Per share market value, end of period..... $ 21.25 $ 17.06 $ 16.13 $ 12.75 $ 10.75 $ 13.00
---------------- --------- --------- --------- --------- ---------
---------------- --------- --------- --------- --------- ---------
Total investment return, market value+.... 24.54% 21.00% 34.78% 26.26% (10.21)% 39.40%
Net assets at end of period (000
omitted)................................. $ 238,288 $ 191,374 $ 182,963 $ 144,190 $ 126,431 $ 128,272
Ratio of expenses to average weekly net
assets................................... 1.24%** 1.26% 1.42% 1.42% 1.42% 1.46%
Ratio of net investment income to average
weekly net assets........................ 1.47%** 0.77% 0.74% 1.01% 0.90% 1.17%
Portfolio turnover rate................... 26% 39% 48% 52% 68% 184%
</TABLE>
- --------------------------
* Based on average shares outstanding during the period.
** Annualized.
+ Total investment return, market value, is based on the change in market
price of a share during the period and assumes reinvestment of dividends and
distributions at actual prices pursuant to the Fund's distribution
reinvestment and cash purchase plan. Total investment return for periods of
less than one full year are not annualized.
See Notes to Financial Statements.
13
<PAGE>
- ----------------------------------------------
THE EUROPE FUND, INC.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
- ------------------------------------------
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The Europe Fund, Inc. (the "Fund") was incorporated in Maryland on February 8,
1990, as a closed-end, diversified management investment company. The Fund's
investment objective is long-term capital appreciation through investment
primarily in European equity securities.
The following is a summary of significant accounting policies followed by the
Fund in the preparation of its financial statements.
SECURITY VALUATION: All securities for which current market quotations are
readily available are valued at the last sale price prior to the time of
determination, or, if there is no sales price on such date, and if bid and ask
quotations are available, at the mean between the last current bid and asked
prices. Securities that are traded over-the-counter, if bid and asked quotations
are available, are valued at the mean between the current bid and asked prices,
or, if quotations are not available, are valued as determined in good faith by
the Board of Directors of the Fund. Short-term investments having a maturity of
60 days or less are valued at amortized cost. Securities and assets for which
current market quotations are not readily available are valued at fair value as
determined in good faith by the Board of Directors of the Fund.
SECURITY TRANSACTIONS AND INVESTMENT INCOME: Securities transactions are
recorded on the trade date. Realized gains and losses on sales of investments
are calculated on the identified cost basis. Dividend income is recorded on the
ex-dividend date, or as soon as the Fund is informed of the dividend, and
interest income is recorded on an accrual basis.
FOREIGN CURRENCY TRANSLATION: The books and records of the Fund are maintained
in U.S. dollars. Foreign currency amounts and transactions are translated into
U.S. dollars on the following basis:
(i) market value of investment securities, other assets and liabilities at a
10:00 a.m. midpoint rate of exchange on valuation date.
(ii) purchases and sales of investment securities, income and expenses at the
10:00 a.m. midpoint rate of exchange prevailing on the respective dates
of such transactions.
The resultant exchange gains and losses are included in the Statement of
Operations.
The Fund does not isolate that portion of the results of operations resulting
from changes in foreign exchange rates on investments from the fluctuations
arising from changes in market prices of securities held. Such fluctuations are
included with the net realized and unrealized gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of foreign currencies, currency gains
or losses realized between the trade and settlement dates on securities
transactions, and the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year-end, resulting
from changes in the exchange rate.
FOREIGN CURRENCY AS OF JUNE 30, 1998 CONSISTS OF:
<TABLE>
<CAPTION>
UNITS COST VALUE
------------ ------------ ------------
<S> <C> <C> <C>
British Pound....... 435 $ 728 $ 725
Dutch Guilder....... 41,400 20,262 20,317
Spanish Peseta...... 554,426 3,640 3,607
Swiss Franc......... 39,007 24,450 24,446
------------ ------------
$ 49,080 $ 49,095
------------ ------------
------------ ------------
</TABLE>
The Fund holds foreign currency in order to facilitate the purchases of foreign
securities.
FORWARD CURRENCY EXCHANGE CONTRACTS: The Fund enters into forward currency
exchange contracts to hedge certain purchase and sale commitments denominated in
foreign currencies. The Fund may enter into forward currency exchange contracts
to purchase or sell a specific currency at a future date, which may be any fixed
number of days from the date of the contract agreed upon by the parties, at a
price set at the time of the contract. Fluctuations in the value of forward
currency exchange contracts are recorded for book purposes
14
<PAGE>
as unrealized gains or losses by the Fund. If the Fund enters into a closing
transaction, the Fund will realize a gain or loss equal to the difference
between the value of the forward currency contracts to sell and the forward
currency contracts to buy. Risks may arise from the potential inability of a
counterparty to meet the terms of a contract and from unanticipated movements in
the value of foreign currencies relative to the U.S. dollar.
TAXES: No provision has been made for United States Federal income taxes
because the Fund intends to meet the requirements of the United States Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to shareholders.
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: The Fund records dividends and
distributions to its shareholders on the ex-dividend date. The Fund intends to
distribute to shareholders annually by the end of January an amount equal to at
least 7% of the Fund's net asset value determined as of the beginning of the
previous calendar year. If, for any calendar year, the aggregate of net
investment income and net realized capital gains (if any) is less than 7% of the
Fund's net asset value as of the beginning of that calendar year, the difference
will be distributed from the Fund's paid-in surplus. Income dividends and
capital gains distributions are determined in accordance with income tax
regulations, which may differ from generally accepted accounting principles.
USE OF ESTIMATES: The Fund's financial statements are prepared in accordance
with generally accepted accounting principles which may require the use of
management estimates and assumptions. Actual results could differ from those
estimates.
NOTE 2. TRANSACTIONS
WITH AFFILIATES AND
AGREEMENTS
The Fund has entered into Agreements with Mercury Asset Management International
Channel Islands Ltd. (the "Investment Manager"), and Mercury Asset Management
International Ltd. (the "Investment Adviser").
The Investment Management Agreement provides that the Fund will pay the
Investment Manager a fee, computed weekly and payable monthly, at the following
rates: 0.75% of the Fund's average weekly net assets up to $250 million, and
0.65% of such assets in excess of $250 million. The Investment Manager makes
investment decisions on behalf of the Fund on the basis of recommendations from
the Investment Adviser subject to the overall supervision of the Board of
Directors. The Investment Manager pays a fee to the Investment Adviser for
services rendered. The Investment Manager and Investment Adviser are
subsidiaries of Mercury Asset Management Ltd, whose immediate parent is Mercury
Asset Management Group Ltd. The ultimate parent of Mercury Asset Management
Group Ltd is Merrill Lynch & Co., Inc.
The Fund has entered into an Administration Agreement with Princeton
Administrators, L.P. ("Administrator"). The Administration Agreement provides
that the Fund will pay the Administrator a fee at the annual rate of 0.25% of
the Fund's average weekly net assets up to $200 million and 0.20% on such assets
in excess of $200 million. The Administrator performs administrative services
necessary for the operation of the Fund, including maintaining certain books and
records of the Fund and preparing certain reports and documents required by laws
and regulations, and provides the Fund with administrative office facilities.
The Administrator is a wholly-owned affiliate of Merrill Lynch & Co., Inc.
Certain directors and officers of the Fund are also directors and officers of
either the Investment Manager, the Investment Adviser and/or Mercury Asset
Management Ltd, an indirect subsidiary of Merrill Lynch & Co., Inc.
NOTE 3. INVESTMENT
TRANSACTIONS
Purchases and sales of investment securities, other than U.S. government
securities and short-term investments, for the six months ended June 30, 1998
were $55,870,751 and $57,819,343, respectively.
NOTE 4. CAPITAL
There are 100 million shares of $.001 par value common stock authorized. Of the
10,066,319 shares outstanding at June 30, 1998, Mercury owned 900 shares in
respect of the Fund's initial seed capital and reinvested distributions.
15
<PAGE>
NOTE 5. QUARTERLY
RESULTS OF OPERATIONS*
<TABLE>
<CAPTION>
NET REALIZED
AND
UNREALIZED
GAIN ON
INVESTMENTS
NET AND FOREIGN
INVESTMENT CURRENCY
INVESTMENT INCOME/ (LOSS) RELATED
INCOME TRANSACTIONS
------------------ ----------------- -------------------
PER PER PER
QUARTER ENDED TOTAL SHARE TOTAL SHARE TOTAL SHARE
- -------------------- -------- -------- -------- ------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
March 31, 1996...... $ 424 $ 0.04 $ (87) $(0.01) $ 15,704 $ 1.56
June 30, 1996....... 1,803 0.18 1,181 0.12 9,752 0.97
September 30,
1996............... 848 0.08 232 0.02 7,151 0.71
December 31, 1996... 553 0.06 (84) (0.01) 15,605 1.56
-------- -------- -------- ------- --------- --------
Total............... $ 3,628 $ 0.36 $ 1,242 $ 0.12 $ 48,212 $ 4.80
-------- -------- -------- ------- --------- --------
-------- -------- -------- ------- --------- --------
March 31, 1997...... $ 565 $ 0.06 $ (44) $ 0.00 $ 8,707 $ 0.86
June 30, 1997....... 1,922 0.19 1,303 0.12 10,616 1.06
September 30,
1997............... 974 0.10 327 0.03 12,450 1.23
December 31, 1997... 582 0.06 (57) 0.00 538 0.05
-------- -------- -------- ------- --------- --------
Total............... $ 4,043 $ 0.41 $ 1,529 $ 0.15 $ 32,311 $ 3.20
-------- -------- -------- ------- --------- --------
-------- -------- -------- ------- --------- --------
March 31, 1998...... $ 754 $ 0.06 $ 228 $ 0.02 $ 36,547 $ 3.63
June 30, 1998....... 2,216 0.22 1,380 0.14 8,759 0.87
-------- -------- -------- ------- --------- --------
$ 2,970 $ 0.28 $ 1,608 $ 0.16 $ 45,306 $ 4.50
-------- -------- -------- ------- --------- --------
-------- -------- -------- ------- --------- --------
</TABLE>
- ------------------------
* Totals expressed in thousands of dollars except per share amounts.
NOTE 6. PER SHARE
SELECTED QUARTERLY
FINANCIAL DATA
<TABLE>
<CAPTION>
NET ASSET MARKET
VALUE PRICE*
------------ ------------------
QUARTER ENDED HIGH LOW HIGH LOW VOLUME**
- -------------------------------- ------- ------- -----
<S> <C> <C> <C> <C> <C>
March 31, 1996...... $15.88 $14.34 $13 7/8 $12 3/4 2,258
June 30, 1996....... 16.96 16.02 14 1/4 13 1,579
September 30,
1996............... 17.62 16.38 15 5/8 13 1/4 1,580
December 31, 1996... 19.23 17.80 17 1/4 15 3/8 1,342
March 31, 1997...... 18.90 18.04 17 3/8 15 1/4 1,331
June 30, 1997....... 20.35 18.40 17 3/4 15 5/8 1,084
September 30,
1997............... 21.51 19.80 19 1/8 16 1/4 1,142
December 31, 1997... 21.81 18.47 18 1/4 15 1/2 1,472
March 31, 1998...... 22.74 18.75 20 3/4 16 1,557
June 30, 1998....... 24.49 22.95 22 5/8 19 7/8 1,420
</TABLE>
- ------------------------
* Based on closing prices as reported on the New York Stock Exchange.
** In thousands.
16
<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.
The accompanying financial statements as of June 30, 1998 were not audited and
accordingly, no opinion is expressed on them.
<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
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.
SEMI-ANNUAL REPORT
JUNE 30, 1998
