LETTER TO MR. CLARE M. TORREY FROM ALLEN W. DULLES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP80R01731R000300090054-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 14, 2016
• Document Release Date: March 31, 2003
• Sequence Number: 54
• Publication Date: March 21, 1959
• Content Type: LETTER

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2 1 MAR 1Sy:
Mr. Clare M. Torre T/
Clore. Forgan & Co.
40 Wall Street
New York S. Now York
Dear Clare:
I have year letter of 4 March. It blue been a
real pleasure to recommend you for read issloe to
the Council an Foreign Relations and I have sent
a
letter to this elect to Walter Mallory in which I
also quo the first two paragraphs of your l teer.
I know all shoot this wa nt tee expreass ersy real
appreciation for your support,
in regard to the
Clever joins me in s best wishes and
kindest personal regards to roes both.
Sincerely.
Allen 1. Doll" a
Director
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O/DC14 d 17 Mar 59
Rewritten:AWDu11es:blp 20 Mar 59
Distribution:
Original - Addressee
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VOSTIMMT NO.
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GLORE, FORGAN & CO.
40 WALL STREET
NEW YORK 5
March 4, 1959
Hon. Allen W. Dulles
c/o Department of State
Washington, D. C.
A good many years ago you were kind enough to sponsor me for membership in
the Council on Foreign Relations which I greatly enjoyed during the time I resided
in New York. However, when the family moved to the country in 1941, I resigned
feeling that I could not attend the evening meetings. Now, as you may know, Sue
has taken a part in a Broadway production; John and Michael, the twins, are at
the University of Pennsylvania and the University of California, respectively;
little Susan is at school in Switzerland; and our youngest, Jim, who is eleven,
is at the Fay School in Southborough, Massachusetts. Sue and I have rented our
home in New Jersey and are living in a New York apartment. We shall probably
continue to do so indefinitely.
I am writing to ask if there is any means whereby I may be readmitted to the
Council. I know that in other clubs or associations there is some provision for
the re-entry of former members. Nhile this may not be the case in the Council,
might not some consideration be given on the waiting list to a former member? I 25X1
am very anxious indeed to rejoing, and feel I could contribute more substantial
toward the conferences than in my previous incarnation. 5X1
liminary prospectus of a fund for investment in ~ the Common Market, with the origina-
tion and development of which I have had a great deal to do.
I am sure that you and Clover would like to know that our daughter, Katharine,
gave birth to her third child, a boy, at the Wellesley Newton Hospital near Boston,
on February 26. They are to name him Thomas Eliot after a relative of Mr. Forknerts,
who happens to be a poet. Her two other children, aged respectively 2-1/2 and 1,
are fine and so indeed is Katie. I do hope that young Allen is showing some improve-
ment. I know what a difficult time he has had and how hard it must be for you and
Clover.
I do hope I shall see you one of these days in New York. In the meantime, with
most cordial greetings to you and Clover, I air)
e-_ ~If~
Clare M. Torrey
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Enc
 PRELIMINARY PROSPECTUS DATED MARCH 3, 1959.
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nares
Eurofund, Inc.
(A European Common Market Fund)
COMMON STOCK
Par Value $1 Per Share
N? 4601
oS0.0
o ~b THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
-! o SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
J . PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
?d) o q REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
.08C"0
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w Custodian and Transfer Agent: Bankers Trust Company, New York, N. Y.
y U ..y
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Discounts
Price to
w a and Proceeds to
A Public Commissions(1) Company(2)
N ??C)
a.3 Per Share ....................... $20 $ $
A4.p Total ............................ $50000000 $ $
(1) Eurofund has agreed to indemnify the Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.
4 o a a (2) Before deduction of expenses payable by Eurofund in connection with its organization and the issuance
: ~ o Go and distribution of the Common Stock covered by this Prospectus, estimated at $
a
U O y
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_ uw`? These shares are offered subject to prior sale and when, as and if issued and accepted by the
a.( --? Underwriters, including the undersigned and others named herein, and subject to the approval of Messrs.
? d ; Cleary, Gottlieb, Friendly & Hamilton, counsel for the Underwriters, and Messrs. Burke & Burke,
8,s N counsel for Eurofund, and to certain further conditions. It is expected that certificates for the shares
.'' ti c will be ready for delivery on or about , 1959, at the office of Glore, Forgan & Co.,
a ? 40 Wall Street, New York, N. Y., against Payment therefor in New York funds.
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to , 4 W - The date of this Prospectus is 1959.
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No dealer, salesman or other person has been authorized to give any information or. to- make
any representation other than as contained in this Prospectus in connection with the offer con-
tained in this Prospectus, and information or representations not herein contained, if given or
made, must not be relied upon as having been authorized by Eurofund or by the Underwriters.
This Prospectus does not constitute an offer by Eurofund or by the Underwriters in any State
or Country to any person to whom it is unlawful to make such offer in such State or Country.
TABLE OF CONTENTS
Page
Eurofund .........................
Investment Objectives and Policy .......................................
Use of Proceeds ..................... .........................
................................................
Investment Restrictions
Investment Advisers ....................................................
The Common Market ...................................................
Management ..... .........................
Capitalization ............................ '.........................
Dividends and Tax Status ......................''.........................
Custodian and Transfer Agent ............. ...................
Auditors ..... .. ' .........................
Legal Opinions
Underwriting . . . . . . . . . . . . . . . . . . . . . . ...........~ .........................
Registration Statement ........................ ...................
IN CONNECTION WITH THIS OFFERING,'' THE UNDERWRITERS MAY OVER-
ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE
MARKET PRICE OF THE COMMON STOCK AT LEVELS ABOVE THOSE WHICH
MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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? EUROFUND
Eurofund, Inc. ("Eurofund"), incorporated in Maryland on February 25, 1959, is a closed-end
non-diversified investment company. It is felt that there is in the United States an increasing
interest in the European Common Market and its possible investment opportunities, and that
American investors may wish a medium for investing in the Common Market. It is the purpose of
Eurofund to provide a means through which American investors may participate in an extensive
investment portfolio supervised by a management informed on European investment opportunities
and on the measures of risk inherent therein.
Since Eurofund is a closed-end investment company, its shares are not redeemable. However,
subject to provisions of law, Eurofund's Board of Directors has discretion to repurchase shares
when available at a repurchase price below their net asset value.
INVESTMENT OBJECTIVES AND POLICY
Based on the belief that the Common Market will further the development and expansion of
business and industry in its six member countries, Eurofund intends to invest primarily in equity
securities of companies operating in those countries. Eurofund believes that such a policy will
contribute to the attainment of capital appreciation, which is its principal objective. While the
earning of dividend or interest income will be given due consideration, it will normally be deemed
of secondary importance.
Although Eurofund intends to emphasize equity investments in companies having substantial
operations in the Common Market countries (including the overseas territories and non-European
countries which have special relations with Common Market countries and which, under the
European Economic Community Treaty, may be associated with the Common Market), it may
from time to time make equity investments in companies operating in other selected European
countries, including the United Kingdom. Also, there may be periods when prudent policy will
require a reduction in equity positions and increased commitments in senior securities or in the
obligations of European governments or of the United States of America. Accordingly, Eurofund
will avoid rigid investment policies which could prevent it from adapting its investment portfolio
to changing political or economic conditions.
The advantages of reasonable diversification of investments will be recognized, but Eurofund
will not be limited as to the proportion of its assets that may be invested in any company or
the proportion. of the securities of any issuer it may acquire. Eurofund does not propose to
concentrate its investments in particular industries and will not in any event invest more than
25% of its total assets in any one industry. Neither does Eurofund propose to invest in companies
for the purpose of exercising management or control; however, investments made for other
purposes may nevertheless in some cases result in Eurofund having a controlling interest in some
company or companies.
Eurofund may also make loans other than through the purchase of senior securities or govern-
ment obligations, but it is expected that under ordinary conditions any such loan will also involve
an equity interest in the borrower or considerations other than the earning of interest income.
It will be the policy of Eurofund to purchase and sell securities from time to time to carry out
its investment policies but not for trading purposes. Because of the usual risks involved in invest-
ing, there can be no assurance that Eurofund's investment policy will result in the attainment of
its objectives.
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 Eurofund has authority to deal in foreign exchange in connection with the purchase arRd sale
of its portfolio securities, and also has authority to sell forward foreign exchange as a hedge in an
effort to minimize the effects of possible currency devaluation. Such hedging against a decline in
the value of a currency does not of course eliminate fluctuations in the prices of the securities
purchased in such currency or prevent loss if the prices of such securities should decline. Eurofund
intends to pursue an investment policy that will give reasonable assurance of suitable convertibility
of its capital and income. It is expected that the exchange control regulations presently existing
in the Common Market countries will not materially restrict Eurofund, in following such a policy,
from making desirable investments in any of those countries. It should be recognized, however,
that exchange control regulations have, in the past, restricted foreign investment in countries of
the Common Market. Future exchange control regulations, if any are adopted, could restrict
Eurofund in pursuing its investment policies.
USE OF PROCEEDS
While Eurofund intends to invest the net proceeds of this offering in accordance with the
foregoing investment policies, there may be a period of ':time before the entire net proceeds may be
advantageously invested in securities of companies operating in the Common Market. Therefore,
Eurofund may invest part of such proceeds, on a temporary basis, in United States or European
government obligations. No portion of such proceeds has at this time been allocated for the
purpose of making any particular investment.
INVESTMENT RESTRICTIONS
Eurofund may not, without approval of holders of a majority of its outstanding stock:
(a) Sell securities short, or purchase securities on margin, or participate on a joint or
joint and several basis in any trading account in any securities.
(b) Act as an underwriter of securities, provided that this shall not limit Eurofund's
right to purchase securities for its investment portfolio.
(c) Invest in the securities of other investment companies except through purchases in
the open market where no more than a customary broker's commission is paid or in connection
with a merger or consolidation.
(d) Purchase or sell commodities or commodities contracts.
rchase or retain securities of any issuer if any officer or director of Eurofund or its
P
u
(e)
investment advisers or any officer or director thereof (a) owns beneficially more than one-half
of 1% of the securities of that issuer and (b) such persons owning more than one-half of 1%
of such securities together own beneficially more than 5% of the securities of such issuer.
(f) Purchase real estate, except as may be necessary for the operation of its affairs,
provided that this shall not limit Eurofund's right to acquire for its investment portfolio
securities of real estate companies.
(g) Borrow money other than (i) through' the issuance of debt securities having a
maturity date of not less than five years from the date of issue and in an aggregate amount
outstanding at any one time not in excess of 25% of Eurofund's total assets, and (ii) as a
temporary measure for extraordinary or emergency purposes, and then only in an aggregate
amount not in excess of 10% of Eurofund's total', assets.
(h) Issue preferred stock.
In addition, The Investment Company Act of 1940 sets forth certain other restrictions with respect
to Eurofund's investments, principally as to transactions with affiliated persons.
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INVESTMENT ADVISERS
Eurofund will receive advice from two investment advisers, one European and the other
American.
European Investment Adviser
Eurofund Beratungs A.G. (Eurofund Advisory Corporation), a Swiss corporation with offices
at 7 Kaufhausgasse, Basle, Switzerland, organized and wholly owned by the partners of E.
Gutzwiller & Cie., a private bank located in Basle, and the partners of R. de Lubersac & Cie., a
private bank located in Paris, has been retained as Eurofund's European Investment Adviser.
The European Investment Adviser has contracts with the following four banks:
Banque de Bruxelles (Benelux)
Credit Commercial de France (France)
Dresdner Bank (Germany)
Banca Commerciale Italiana (Italy)
These four banks, all prominent in their respective countries, are believed to be well suited for
observing and evaluating, among other matters, the effect of the Common Market on specific
securities issued by companies operating within its boundaries. These banks conduct a general
banking business and each of them has in excess of 150 branches and agencies. Their financial
statements show total deposits ranging from approximately $150,000,000 in the case of one of the
banks to approximately $1,300,000,000 in the case of two of them. These banks and their prede-
cessors have all been in business for more than 60 years.
The contracts with the banks provide that the facilities and services of their research depart-
ments will be available to the European Investment Adviser. The European Investment Adviser
will receive information and reports relating to particular securities from the banks and will be
able to call upon them for specific analyses, memoranda and opinions. The European Investment
Adviser will analyze the information received from the banks, and refer it and such other informa-
tion as it may initiate or receive, with its own evaluations and recommendations, to the American
Investment Adviser, by which it will be reviewed and presented to Eurofund's Board of Directors
(or its Executive Committee), which will make the final decision with respect to all investment
matters.
E. Gutzwiller & Cie., besides being represented on the boards of several well known European
companies, is one of the sponsors of Societe Internationale de Placements (a Swiss company
which manages a series of investment trusts with total assets of about $200,000,000), advises
Unifonds, an investment trust holding German securities, and is sales representative for a number
of American investment companies in Europe. R. de Lubersac & Cie. has close ties with E.
Gutzwiller & Cie., and is active on European exchanges and in financial markets in various parts
of the world. It is represented on the boards of a number of important European companies.
Eurofund American Advisory Company, Inc., a New York corporation with offices at 14 Wall
Street, New York, New York, has been retained as Eurofund's American Investment Adviser.
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Eurofund American Advisory Company, Inc. was organized, and is wholly owned, by the
partners of Glore, Forgan & Co., a member firm of the New York Stock Exchange which
carries on a general investment banking business. Glore, Forgan & Co. acts as underwriter and
financial adviser, and as dealer and broker with respect to all types of corporate and municipal
securities.
The American Investment Adviser has retained Bankers Trust Company to furnish such
advice regarding economic factors and trends, and such background information, as it may be in
a position to furnish and as may be useful to the American Investment Adviser in connection with
the American Investment Adviser's function of furnishing investment advice to Eurofund and its
review of investment advice received from Eurofund's European Investment Adviser. Eurofund's
accounting and clerical requirements in connection with its portfolio and cash will be supplied
by Bankers Trust Company as general custodian. Eurofund's other accounting and clerical
requirements in New York City, and those of its American Investment Adviser, will be supplied
by Bankers Trust Company under its contract with the American Investment Adviser.
General
Contracts have been entered into between Eurofund and each of the two investment advisers.
Each of these contracts will remain in effect until the.', first annual meeting of Eurofund's stock-
holders, and, provided it is approved at such meeting, thereafter from year to year if approved at
least annually by the Board of Directors or by votei of a majority of Eurofund's outstanding
voting securities. However, each contract may be terminated by Eurofund on sixty days notice
or by the investment adviser on six months notice, and terminates automatically if assigned.
Pursuant to these contracts, each of the investment advisers will provide Eurofund with invest-
ment advice and research, for which the investment adviser will bear all the expense. In addition,
each investment adviser will pay the compensation and expenses of any officers, directors, or
employees of Eurofund who may also be partners, officers, directors, or employees of such invest-
ment adviser or of any of its stockholders. The investment advisers will also bear the cost of
certain of Eurofund's accounting, statistical and clerical requirements. The European Investment
Adviser will compensate the four European banks retained by it for their services. Eurofund
will compensate Bankers Trust Company for its services as general custodian, transfer agent
and dividend disbursing agent, and the American Investment Adviser will compensate Bankers
Trust Company for its other services referred to above.
For all of their services, the European and American Investment Advisers, together, will
receive compensation at the annual rate of 9/16 of 1o%o:' of the value of Eurofund's net assets, pay-
able quarterly and computed on the basis of net asset value on the last Friday of each quarter.
The European Investment Adviser will receive 2/3 of this total compensation and the American
Investment Adviser 1/3. The contracts between Eurofund and each of the investment advisers
provide that, if and to the extent that the total expenses of Eurofund (including compensation to
the investment advisers but excluding taxes and interest) in any fiscal year exceed 1% of Euro-
fund's average net assets during that year, based onl computations made at least quarterly, the
total compensation of the investment advisers in such', year will be reduced by the amount of any
such excess. Each investment adviser will bear such proportionate part of the reduction as its
compensation bears to the total compensation of both investment advisers. For this purpose, the
term "expenses" does not include any costs in connection with Eurofund's organization or the
issuance or distribution of securities issued by it or any brokerage commissions or other costs
of acquiring or disposing of its portfolio securities or' any costs incurred or arising other than in
the ordinary course of Eurofund's business.
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The.contraets between Eurofund and each of the investment advisers provide that neither
investment adviser, nor any stockholder of either of them (including Glore, Forgan & Co., E.
Gutzwiller & Cie. and R. de Lubersac & Cie.), may be paid, directly or indirectly, any brokerage
commissions in connection with securities transactions for Eurofund's account during the existence
of the contract.
Mr. Ernest Gutzwiller, a director of Eurofund, is a partner of E. Gutzwiller & Cie. and of
R. de Lubersac & Cie. Mr. Raoul de Lubersac, a director of Eurofund, is a partner of R. de
Lubersac & Cie. Mr. J. Russell Forgan, a director and the President of Eurofund, and Mr.
Charles J. Hodge, a director of Eurofund, are partners of Glore, Forgan & Co.
THE COMMON MARKET
Since World War II there has been a strong movement in Europe toward economic and
political integration of various countries. While most of the Western European nations have
participated in the work of the Organization for European Economic Cooperation (OEEC) and in
certain other cooperative institutions and arrangements, the most far-reaching steps toward
integration have been taken by six countries : France, the Federal Republic of Germany, Italy,
Belgium, the Netherlands and Luxembourg.
The first combined action taken by these six nations was the creation, by treaty signed April
18, 1951, of the European Coal and Steel Community. By the provisions of that treaty the
signatory nations agreed to eliminate restrictions and discriminations inhibiting the free movement
within the Community of coal, steel and certain related products.
The same six nations took further action toward economic and political integration with the
signing in Rome of two additional treaties on March 25, 1957. One of these treaties provided
for the creation of the European Atomic Energy Community (EURATOM) for the development
and administration of a joint atomic energy program. The other treaty established the European
Economic Community.
European Economic Community Treaty
The European Economic Community Treaty (Treaty) provides that within 12 to 15 years
from January 1, 1958, a European Common Market (ECM) is to be created by progressively
removing restrictions and discriminations and by taking other measures to make possible the free
movement within the European Economic Community of goods, labor, services and capital. The
first steps toward the creation of the Common Market were taken January 1, 1959. With respect
to the movement of goods within the ECM each of the six countries that are members of the
European Economic Community reduced its tariffs by 10% while enlarging its import quotas to
permit the entry of an additional 20% (measured by total value) of goods subject to these quotas.
The Treaty does not require the elimination of tariffs and restrictions on imports from
countries outside the ECM; instead, with respect to such imports the ECM Countries are progres-
sively to establish a common tariff. In principle, this common tariff is fixed at the level of the
average of the rates imposed by the six countries. Under this formula, for the Benelux countries
(Belgium, Luxembourg and the Netherlands) and Germany the common tariff in most instances
will tend to be higher than the tariffs now imposed; for France and Italy it will tend to be some-
what lower. For certain listed products the formula of an arithmetic average does not apply; the
common tariff is fixed by the Treaty or is left to future negotiation.
In addition to provisions for eliminating trade barriers erected by the governments of the
six countries, the Treaty contains antitrust provisions designed to minimize the interference with
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MAP OF THE EUROPEAN COMMON MARKET
1957 population figures for the ECM Countries are as follows:
Belgium ........................ !, ......... 8,989,000
Luxembourg 314,000
France ......................... 44,000,000
West Germany ............................ 51,470,000
Italy ..... ........ .. 48,353,000
Netherlands .................... 11,009,000
Total ............... .......... 164,135,000
Source: OEEC, Industrial Statistics, 1900-1957.
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'trade that may result from restrictive agreements or monopolistic practices. The Treaty provides
that procedures and sanctions to give effect to the antitrust provisions are to be promulgated by
January 1, 1961. Until such procedures and sanctions have entered into force, the Treaty provides
that the governments of the ECM Countries shall, in conformity with the law of their countries and
the antitrust provisions of the Treaty, "rule upon the admissibility of any understanding and upon
any improper advantage taken of a dominant position in the Common Market."*
The Treaty contains certain escape provisions as well as requirements that certain subjects
be dealt with by consultation and agreement. It is not possible to predict at this time what the
effect of these provisions will be upon the attainment of the Treaty's objectives.
Mechanisms for Development and Assistance
Since the creation of the Common Market is expected to involve some diversion and re-
channeling of the flow of trade, with a resultant dislocation of industry and manpower, the
Treaty establishes a European Social Fund to assist and facilitate the reemployment of workers
by helping to finance occupational retraining and resettlement. The respective contributions of
the member governments to this Fund are to be fixed from year to year in accordance with a
scale set forth in the Treaty.
In addition, the Treaty creates a European Investment Bank which has the task of contribut-
ing to the balanced and orderly development of the Common Market. The Bank, by loans and
guarantees, is to facilitate the financing of projects for developing the less developed regions of
the Community and for modernizing or converting existing enterprises. It may also facilitate the
financing of projects for creating new activities called for by the progressive establishment of the
Common Market as well as of projects of common interest to several ECM Countries ; but only
where such projects are of such size or nature as to preclude financing by the means available
in an individual ECM country.
The Bank is to have capital equivalent to one billion U. S. dollars subscribed by the ECM
Countries, to be paid in over a period of time. It may raise additional funds by borrowing in
international capital markets or from member governments. The total amount of its loans and
guarantees outstanding at any one time may not exceed 250% of its subscribed capital.
In addition to the Social Fund and the Investment Bank, provision is made for a Development
Fund for overseas territories, to be contributed by the governments of the ECM Countries in an
aggregate amount equivalent to 581.25 million U. S. dollars to be paid in over a five year period.
This Fund is to be used to finance projects for social institutions and economic investments in the
overseas territories of the ECM Countries.
The Treaty also contains procedures for the granting of mutual assistance when any of the
ECM Countries is confronted with balance of payments difficulties.
Major Institutions of the Community
The responsibility for carrying out the purposes of the Treaty is entrusted to institutions
established pursuant to its provisions. These institutions consist principally of a Council of
Ministers, an Economic Commission, a Court and an Assembly.
The Council of Ministers and the Economic Commission have the responsibility for supervis-
ing and facilitating the establishment and operation of the Common Market. The Council of
* Taken from translation of the Treaty published by the Secretariat of the Interim Committee for the
Common Market and Euratom, Brussels.
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Ministers is responsible, in addition, for assuring coordination of the general economic policies
of the governments of the ECM Countries.
The Council of Ministers consists of one representative of each of the six governments.
The Commission is composed of nine members chosen by agreement of the governments.
They serve for fixed terms and are to act for the general interests of the Community without
seeking or accepting instructions from any government or other body.
The Court has the responsibility for assuring the proper interpretation and application of the
Treaty. It consists of seven judges chosen by agreement of the governments.
The Assembly, which convenes annually and may also meet in extraordinary sessions, reviews
the work of the Economic Commission and, by vote of censure, can compel the resignation, in a
body, of the members of the Commission. The Assembly consists of 142 delegates appointed by
the Parliaments of the ECM Countries from among their members.
Some Economic Aspects of the Common Market
The European Coal and Steel Community, which' came into being in 1952, has experienced
a substantial increase in trade in coal, iron ore and steel among member countries of the Com-
munity, as is shown in Table I.
Table I '1
III
Trade Among the European Coal and Steel Community Countries
(Thousands of Metric Tons)
Iron andl Coal and
Steel Products
Iron Ore
Coal Briquettes
1952
...........................
2,108.4 ~!
9,404.4
16,315
1953
...........................
2,899.2
10,470.0
19,916
1954
...........................
4,153.8
10,828.8
23,600
1955
5,664.1 III
13,521.5
23,236
1956 ........................... 5,079.7
14,067.6
19,707
1957 (Preliminary) ............. 5,711.5:1
14,317.3
19,822
Increase for Period 1952-1957 .... 170.9%
52.2%
21.5%
Source: European Coal and Steel Community, Sixth General 'Report on the Activities of the Community, Vol. H.
The creation of the Common Market may likewise result in increases in trade among the
ECM Countries with respect to a wide range of goods. Another possible effect of the Common
Market may be increased specialization and mechanization of production so as to take advantage
of the economies of large scale production made possible by a mass market. To the extent that
these effects are realized, they should manifest themselves in expanded investment, increased
productivity, lower production costs, rising national income, higher levels of consumer expendi-
tures and generally increased trade.
Enterprises in the ECM Countries are taking account of the Common Market in their business
planning. Some firms are studying the desirability of consolidating or relocating their plants as
well as realigning production in order to concentrate' on lines that can best be produced in the
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competitive climate of a larger market. There have also been announcements of mergers and
cooperative arrangements among enterprises.
The reorganizing and regrouping of enterprises to meet the new conditions of the Common
Market will presumably require capital. Some capital may also be needed by American firms to
finance the establishment of production facilities in the Community. After the Common Market
becomes fully effective, firms exporting into the Community will face a common tariff while firms
producing within the Community will be able to sell their goods anywhere in the ECM Countries
free of tariffs or restrictions. As a result, some American firms are finding it desirable either
to establish plants of their own in the Common Market or to make partnership or other coopera-
tive arrangements with established Common Market firms. In addition, other American firms
which have never before done substantial business with the ECM Countries are being attracted
by the prospect of applying American mass production and distribution techniques to this new
large market.
The six ECM Countries are among the most highly developed and industrialized nations of
the world. During the post-war period the economies of these countries have shown persistent
growth. The pace of this growth since 1949 in selected industrial sectors compared to U. S.
results is shown by Table II.
Table II
Indices of Industrial Production
1953=100
Total
Industrial
Production Manufacturing Textiles Basic Metals Metal Products Chemical
ECM US ECM US ECM US ECM US ECM US ECM US
1950 ..... 80 84 80 83 90 107 82 87 75 69 74 83
1951 ..... 92 90 92 89 96 103 100 95 90 78 90 93
1952 ..... 94 93 93 92 90 99 107 88 96 87 87 94
1953 ..... 100 100 100 100 100 100 100 100 100 100 100 100
1954 ..... 110 93 110 93 106 91 114 82 113 90 116 100
1955 ..... 122 104 123 103 107 102 137 106 132 99 130 112
1956 ..... 132 107 134 106 114 100 146 105 146 103 142 118
1957 ..... 141 107 144 107 122 95 154 100 154 105 155 121
The aggregate of the Gross National Products (GNP) of the ECM Countries rose from the
equivalent of 75 billion U. S. dollars in 1950 to 139 billion dollars in 1956-an increase of 86%
in six years. The average annual rate of increase was 10.9% per year. During the same period
the GNP of the United States increased 46%, or at an average annual rate of 6:5%. It should be
noted, however, that part of the increase in the value of the aggregate GNP of the ECM Countries
may be attributable to the fact that during the period in quesion, prices rose faster in certain of
those countries than in the United States. Table III shows the growth of population and GNP
for both the ECM Countries and the United States.
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Table III
Population and Gross National Product
GNP in Billions Year-to-Year
Population in Thousands' U.S. Dollars2 % Change in GNP
ECM
1950 ................. 155,236
1951 ................. 156,660
1952 ................. 157,769
1953 ................. 158,911
1954 ................. 160,171
1955 ................. 161,443
1956 ................. 162,836
1957 ................. 164,135
U.S. ECM U.S. ECM U.S.
151,683 74.91 288.5 -
154,360 91.56 332.8 +22.2
157,028 !102.85 350.7 +12.3
159,636 107.97 368.4 + 5.0
162,417 115.32 366.0 + 6.8
165,271 126.47 396.5 + 9.7
168,174 139.47 420.5 +10.3
171,229
Foreign currencies were converted into $ U. S. equivalents by using the official exchange rates in effect during the
1950-1956 period. Figures are expressed in prices current during the year in question.
' Source: OEEC, Industrial Statistics, 1900-1957.
2 Source: OEEC, Statistics of National Product and Expenditure, No. 2, 1938 and 1947 to 1955 and General
Statistics, No. 1, 1958. The 1956 figures were expressed in national currencies. For this table they have
been converted to $ U. S. equivalents using the 1956 official exchange rates found in International Mone-
tary Fund, International Financial Statistics, Vol. 12,'No. 2. Comparable data for 1957 GNP are not yet
available.
Table IV shows a comparison of production of steel, passenger automobiles and electrical
energy in the ECM Countries and the United States.
Table IV
Representative Industrial Production
Belgium .....................
France .......................
Germany ....................
Italy ........................
Luxembourg .................
Netherlands .................
Totals ...............
United States ................
' Source :
(a) ECM: Communaute Europeenne du
nary figures for 1958.
from the ECM monthly.averages, using
Ofciel des Communautes Europeennes,
5 Source: OEEC, Industrial Statistics, 1900-1957. Comparable data for 1958 are not yet available.
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Steel (Thousands Automobiles Electrical
of Metric Tons)' (Thousands) Energy5
1957 1958 ~ 1957 1958 (Billion KWH)
6,267
14,100
27,973
6,787
3,493
1,185
59,805
102,300
6,001:1 - -
12.6
14,592 11 723.8 -
57.6
26,273 959.0 -
89.3
6,266 325.9 -
42.7
3,379', - -
1.2
1,435', - -
12.6
57,946 2,008.72 2,483.13
77,343' 6,133.34 4,2434
de l'Acier, Haute Autorite, Division des Statistiques.
(b) U. S.: American Iron and Steel Institute.
2 Source : OEEC, Industrial Statistics, 1900-1957.
3 Individual country totals were not available. The figure given was computed
Fourth Quarter estimates. Source : Communautes Europeennes, Journal
2d. Year, No. 6 (January 30, 1959).
4 Source : Standard & Poors, Industry Surveys.
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Table V shdws a comparison between the ECM Countries and the United States with respect
to the growth of private consumption and gross domestic fixed capital formation.
Table V
Expenditure for Private Consumption and Gross
Domestic Fixed Capital Formation
Fixed Capital
Private Consumption Fixed Capital Formation Formation
(Billions U. S. Dollars) (Billions U. S. Dollars) as % of GNP
ECM U. S. ECM U. S. ECM U. S.
1950 .............. $50.75 $194.12 $13.25 $50.43 17.69% 17.48%
1951 .............. 59.39 208.55 16.29 54.38 17.79 16.34
1952 .............. 65.80 218.55 18.39 55.14 17.88 15.72
1953 .............. 69.15 230.77 19.43 58.76 18.00 15.95
1954 .............. 73.30 236.79 21.33 X9.85 18.50 16.35
1955 .............. 79.57 254.33 24.87 66.91 19.66 16.88
1956 .............. 90.05 267.54 28.05 72.48 20.11 17.24
Foreign currencies were converted into $ U. S. equivalents by using the official exchange rates in effect during the
1950-1956 period. Figures are expressed in prices current during the year in question.
Source:
1950-1955: OEEC, Statistics of National Product and Expenditure, No. 2, 1938 and 1947 to 1955. Saar figures
not included.
1956: OEEC, General Statistics, No. 1, 1958. The 1956 figures were expressed in national currencies. For this
table they have been converted to $ U. S. equivalents using the 1956 official exchange rates found in International
Monetary Fund, International Financial Statistics, Vol. 12, No. 2. Comparable data for 1957 are not yet available.
Conclusions that may be drawn from Table V should be tempered by the relative significance
of price increases in the two economies, as is noted above in the paragraph preceding Table III.
Overseas Territories
An additional stimulant to the economic growth of the Common Market Countries may come
from the development of overseas territories specially tied to one or another of the six countries.
These include such rich and potentially productive areas as French West Africa, French Equa-
torial Africa and the Belgian Congo. Under the Treaty, imports from such overseas territories are
to have free entry into the Common Market, in order that, as the Common Market develops,
industry in the ECM Countries will have access, on a tariff-free basis, to certain key raw materials.
The Treaty further provides for measures to be taken which, when completed, should put all ECM
Countries in an equal position, both as to trade and investment, with respect to the overseas
territories. It is believed that this provision may tend to encourage the flow of development capital
and the extension of the activities of European enterprises into those territories.
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Free Trade Area "
During the period that the Treaty was under negotiation the United Kingdom proposed that
the benefits of the Treaty with respect to tariff and quota liberalization should be made available
to all of the seventeen members of the Organization fore European Economic Cooperation through
the establishment of a Free Trade Area. Negotiations for the creation of a Free Trade Area were
conducted during 1958 until they were suspended last November. While. it appears probable that
further efforts will be made to reach an agreement on some formula for minimizing the disadvan-
tages to European countries not members of the Common Market, no prediction can be made at
this time as to whether such efforts will succeed or as to, the nature of any such formula that might
ultimately be adopted.
In the event that no such agreement is reached it is'; possible that economic cooperation among
the ECM Countries and other Western European nations may be adversely affected.
MANAGEMENT
The officers and directors of Eurofund,
principal occupations.
S. Sloan Colt,
Chairman of the Board of Directors,
415 Madison Avenue,
New York 17, N. Y.
J. Russell Forgan,
President and Director,
40 Wall Street,
New York 5, N. Y.
Coleman Burke,
Director,
One Wall Street,
New York 5, N. Y.
Howard S. Cullman,
Director,
161 Front Street,
New York 38, N.
Raoul de Lubersac,
Director,
9 Boulevard Malesherbes,
Paris, France
George F. Ferris,
Director,
140 Cedar Street,
New York 6, N. Y.
Ernest Gutzwiller,
Director,
9 Boulevard Malesherbes,
Paris, France
Robert T. Haslam,
Director,
Three Hanover Square,
New York 4, N. Y.
Inc. are listed below with a brief statement of their
Director, Bankers Trust Company; formerly
President and formerly Chairman of the
Board of Directors of Bankers Trust Com-
pany
Partner, Glore, Forgan & Co.
Partner, Burke & Burke and Partner,
Bourne, Schmid, Burke & Noll
President and Director, Cullman Bros.;, Inc.
Partner, R. de Lubersac & Cie.
irector Raymond
Director,
and
President
tional, Inc.
Partner, E. Gutzwiller & Cie. and Partner,
R. de Lubersac & Cie.
Director, W. R. Grace & Co.; Director and
member of Executive Committee, Ameri-
can Electric Power Corporation; formerly
Vice President and Director, Standard Oil
Company (New Jersey)
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Charles J. Hodge, Partner, Glore, Forgan & Co.
Director,
40 Wall Street,
New York 5, N. Y.
Hobart C. Ramsey, Chairman of the Board of Directors and
Director, Chief Executive Officer, Worthington
99 Park Avenue, Corporation
New York 16, N. Y.
Philip D. Reed, Chairman Finance Committee and Director,
Director, General Electric Company; , formerly
570 Lexington Avenue, Chairman of the Board of Directors,
New York 22, N. Y. General Electric Company
Pieter van den Berg, President and Director, North American
Director, Philips Company, Inc.
100 East 42nd Street,
New York 17, N. Y.
Arthur K. Watson, President and Director, IBM World Trade
Director, Corp.
821 United Nations Plaza,
New York 17, N. Y.
Charles de Lubersac, Associate, R. de Lubersac & Cie.
Vice President,
9 Boulevard Malesherbes,
Paris, France
Philippe Gutzwiller, Associate, R. de Lubersac & Cie.
Vice President,
14 Wall Street,
New York 5, N. Y.
Archer W. Bachman, Assistant Vice President, Bankers Trust
Treasurer, Company
14 Wall Street,
New York 5, N. Y.
Philip K. Hills, Jr., Associate, Burke & Burke
Secretary,
One Wall Street,
New York 5, N. Y.
John C. Harned, Associate, Glore, Forgan & Co.
Assistant Secretary,
40 Wall Street,
New York 5, N. Y.
Prior to the commencement of the sale to the public of the shares covered by this Prospectus,
the number of directors of Eurofund will be increased. The names of the additional directors and
data regarding them will be set forth in the Prospectus prior to the commencement of such sale.
Such additional directors will include the following: Francois A. Smets, Director and General
Manager, Banque de Bruxelles; Hugues Jequier, Director, Credit Commercial de. France; and
Gustav Gluck, Deputy General Manager, Dresdner Bank. In addition, Banc.4 Commerciale
Italiana will be represented on the Board of Eurofund by another such additional director to be
named.
The remuneration of officers and directors of Eurofund who are also officers, directors, part-
ners or employees of the American Investment Adviser or of Glore, Forgan & Co.' will be paid by
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the American Investment Adviser and the remuneration of officers and directors of Eurofund who
are officers, directors, partners or employees of the European Investment Adviser or of E.
Gutzwiller & Cie. or R. de Lubersac & Cie. will be paid by the European Investment Adviser. It
is estimated that the remuneration of all other officers and directors of Eurofund, which will be
paid by Eurofund, will not exceed $75,000 in the aggregate during the current fiscal period of
Eurofund.
CAPITALIZATION
The authorized capital of Eurofund consists of 8,000,000 shares of Common Stock, par value
$1 per share, with equal voting rights and equal rights with respect to dividends and assets. Each
share, when issued, will be fully paid and non-assessable, and will have no conversion rights.
Eurofund does not intend to make any continuous offering of additional shares, but its Board
of Directors may issue additional shares, up to the amount authorized in its charter, at such time or
times as the Board may determine. Stockholders do not have preemptive rights, but the issuance
of any additional shares of Common Stock will be subject to the requirements of the Investment
Company Act of 1940, including the requirement that'' shares may not be sold at a price below
their then current net asset value (exclusive of any distributing commission or discount) except
in connection with an offering to stockholders or with the consent of a majority of Eurofund's
Common stockholders.
Eurofund may, at some time in the future, apply for the listing of its shares on the New York
Stock Exchange or other stock exchanges, but no such listing is presently contemplated.
DIVIDENDS AND TAX STATUS
Eurofund intends to qualify as a regulated investment company and to enjoy the preferred
United States income tax status accorded to such companies. In order to qualify as a regulated
investment company, Eurofund is required to distribute as dividends each year not less than 90%
of its net income, exclusive of long-term capital gains. Any such distributions will be made in
United States dollars. Eurofund is subject to United States income tax at the ordinary corporate
tax rates only on its undistributed net income, exclusive of long-term capital gains.
Eurofund expects to retain for reinvestment its realized long-term capital gains after paying
the tax thereon at the 25% rate. Consequently, Eurofund's stockholders will be required to report,
for United States income tax purposes, their proportionate share of Eurofund's long-term capital
gains so retained, but will obtain a credit for the 25% tax paid thereon by Eurofund. In the case of
stockholders whose effective capital gains tax bracket is below the maximum 25% rate, this credit
will result in a reduction in the net amount of income tax which would be payable by the individual
stockholder if such capital gains were to be actually distributed to him. The stockholder will also
be entitled to add to the tax basis of his Eurofund stock an amount equal to 75% of such capital
gains retained by Eurofund for reinvestment.
Eurofund expects, under normal conditions, to invest more than 50% of its total assets in
securities of foreign corporations, in which event its stockholders will be able to take advantage
of the provisions of Section 853 of the United States Internal Revenue Code. Under this Section,
a stockholder who is a citizen or resident of the United States must include in his gross income
both cash dividends received by him from Eurofund and the amount Eurofund advises him is his
proportionate share of income tax withheld by foreign governments from interest and dividends
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c paid oil E-urofund's investments. However, under Section 853, the stockholder will also be entitled
to take the amount of foreign tax withheld as a credit against his United States income tax. The
stockholder, as an alternative, may treat the foreign tax withheld as a deduction from gross income
in computing his taxable income, rather than as a tax credit, if that should be to his advantage. In
substance, this will enable a stockholder who is a citizen or resident of the United States to benefit
from the same foreign tax credit or deduction that he would receive if he were an individual owner
of foreign securities, and were to pay foreign income taxes on the income therefrom. As in the
case of individuals receiving income directly from foreign sources, the above-described tax credit
and deduction are subject to certain limitations set forth in the Internal Revenue Code.
Eurofund expects, under normal conditions, to select investments which will result in its
deriving at least 80% of gross income from sources outside the United States, in which event
dividends paid to non-resident alien stockholders and foreign corporations will not be subject
to United States withholding taxes, and non-resident aliens and foreign corporations will not be
subject to any other United States income taxes on such dividends. Under these circumstances,
non-resident aliens and foreign corporations will be entitled to a refund from the United States
government of the 25% capital gains tax paid by Eurofund on their proportionate share of any
long-term capital gains retained by Eurofund for reinvestment.
CUSTODIAN AND TRANSFER AGENT
Bankers Trust Company has been retained to act as general custodian of all of Eurofund's cash
and securities. Since Eurofund intends to invest primarily in foreign securities, the custodian is
authorized, upon the approval of Eurofund, to establish accounts in foreign currencies and to
engage in foreign exchange transactions with foreign banks, banking firms and trust companies,
and to cause securities of Eurofund to be held in any office of Bankers Trust Company abroad
or for the account of Bankers Trust Company in European branches of one or more American
banks or, subject to Eurofund's obtaining from the Securities and Exchange Commission the
required exemption under the Investment Company Act of 1940, in one or more other banking
institutions approved by Eurofund, including the four European banks listed above under "Invest-
ment Advisers". Bankers Trust Company is also Eurofund's transfer agent and dividend dis-
bursing agent.
AUDITORS
Peat, Marwick, Mitchell & Co., 70 Pine Street, New York 2, New York, have been selected
as independent public accountants for Eurofund for the year ending December 31, 1959.
LEGAL OPINIONS
Legal matters in connection with this offering will be passed upon for Eurofund by Messrs.
Burke & Burke, One Wall Street, New York 5, New York, and for the Underwriters by Messrs.
Cleary, Gottlieb, Friendly & Hamilton, 52 Wall Street, New York 5, New York.
UNDERWRITING
The Underwriters named below have severally agreed, on the terms and conditions set forth
in the Underwriting Agreement between the Company and Glore, Forgan & Co., as representative
17
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of the Underwriters, to purchase from the Company all the Common Stock offered hereby in the
following respective numbers of shares :
Number of
Shares to be
Name Address Purchased
Glore, Forgan & Co. 40 Wall Street
New York 5, N. Y.
Total ................ 2, 500,000
The Company has been advised by Glore, Forgan & Co., as representative of the Underwriters,
that the Underwriters propose to offer the Common Stock to the public initially at the offering
price set forth on the cover page of this Prospectus and to certain selected dealers at such price
less a concession of $ per share, and that the Underwriters and such selected dealers may
grant a reallowance of $ per share on sales to other dealers; and that thereafter the public
offering price and concessions and reallowances to dealers may be changed by the Representative.
All such selected and other dealers are to be members of the National Association of Securities
Dealers, Inc. or brokers and dealers in foreign countries agreeing to conform to the Rules of Fair
Practice of such Association.
REGISTRATION STATEMENT
Eurofund has filed with the Securities and Exchange Commission, Washington, D. C., a
Registration Statement under the Securities Act of 1933, as amended, relating to the shares of
its Common Stock offered hereby. For further information with respect to Eurofund and its
Common Stock, reference is made to such Registration Statement and the exhibits filed therewith.
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