def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES
EXCHANGE ACT OF 1934 (Amendment
No. )
Filed by the
Registrant þ
Filed by a Party other than the
Registrant o
Check the appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
þ Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Section 240.14a
THE KOREA FUND, INC.
(Name of Registrant as Specified In
Its Charter)
(Name of Person(s) Filing Proxy
Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
|
|
þ
|
No fee required.
|
|
o
|
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1)
and 0-11.
|
|
|
|
|
(1)
|
Title of each class of securities to which transaction applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to which transaction applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
Rule 0-11
(Set forth the amount on which the filing fee is calculated and
state how it was determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of transaction:
|
|
|
o
|
Fee paid previously with preliminary materials.
|
|
o
|
Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
|
|
|
|
|
(1)
|
Amount Previously Paid:
|
|
|
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
TABLE OF CONTENTS
The Korea Fund, Inc.
Dear
Fellow Stockholders:
The Annual Meeting of Stockholders (the Annual
Meeting) of The Korea Fund, Inc. (the Fund) is
to be held at 9:30 a.m., Eastern time, on Wednesday,
October 28, 2009, at the offices of Allianz Global
Investors Fund Management LLC, 1345 Avenue of the Americas
(at
54th
55th Streets),
49th floor, New York, New York 10105. Stockholders who are
unable to attend the Annual Meeting are strongly encouraged to
vote by proxy, which is customary in corporate meetings of this
kind. A Proxy Statement regarding the Annual Meeting, a proxy
card for your vote at the Annual Meeting, and an
envelope postage-prepaid in which to
return your proxy card are enclosed. You may also vote through
the Internet or by telephone by following the instructions on
the enclosed proxy card.
At the Annual Meeting, your Board will be seeking your support
to elect two Class III Directors (the
Proposal). Your Board has three classes of
Directors, and stockholders are asked to elect the Directors of
one of those classes at each annual meeting of stockholders.
Further your Board is soliciting views as to whether the Fund
should continue in existence in its current form. There is a
separate portion of the proxy card following the Proposal, to
permit you to express your views on this question. The reasons
for asking our stockholders views on this question, as
well as the reasons that the Board believes that the Funds
operations should continue, are set forth in the section
entitled Question Should the Fund continue in
its current form? in the attached proxy statement.
Your Board has carefully considered these matters and recommends
that you vote in favor of the nominees for Class III
Directors and encourages you to express your support for
continuing the Fund in its current form.
Your Board looks forward to meeting stockholders at the Annual
Meeting at which time we shall be available to discuss any
issues of interest to you with regard to our Fund. Further, our
Hong Kong based investment manager will present the investment
case to stockholders via teleconference. For stockholders unable
to attend this meeting the investment managers
presentation will be available subsequently on the Funds
website, www.thekoreafund.com.
Yours very sincerely,
Julian Reid
Chairman of the Board,
on behalf of the Board
STOCKHOLDERS ARE URGED TO SIGN AND DATE THE ENCLOSED PROXY
CARD AND MAIL IT IN THE ENCLOSED POSTAGE-PREPAID ENVELOPE, OR TO
VOTE THROUGH THE INTERNET OR BY TELEPHONE, SO AS TO ENSURE A
QUORUM AT THE MEETING. THIS IS IMPORTANT WHETHER YOU OWN FEW OR
MANY SHARES. WE ALSO URGE YOU TO RESPOND TO THE QUESTION ON THE
PROXY CARD.
THE KOREA
FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
The Korea Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders (the
Meeting) of The Korea Fund, Inc. (the
Fund) has been called to be held at the offices of
Allianz Global Investors Fund Management LLC, 1345 Avenue
of the Americas (at
54th
55th Streets),
49th Floor, New York, New York 10105, on Wednesday,
October 28, 2009 at 9:30 a.m., Eastern time,
|
|
|
|
1.
|
To elect two Class III Directors of the Fund, each to hold
office for a term of three years and until his successor shall
have been duly elected and qualified; and
|
|
|
|
|
2.
|
To transact such other business as may properly come before the
Meeting or any adjournments or postponements thereof.
|
In addition, the Board will be soliciting the views of
stockholders on the question of whether the Fund should continue
in existence in its current form. Although this matter will not
be called for a formal vote at the Meeting, there is a separate
section of the proxy card to permit stockholders to express
their views as to the continuation of the Fund, and the Board
will announce the results of stockholder polling on this
question at the Meeting. See Question Should
the Fund continue in its current form? in the attached
proxy statement for more information.
The Board of Directors has fixed the close of business on
September 4, 2009 as the record date for the determination
of stockholders entitled to notice of, and to vote at, the
Meeting or any postponement or adjournment thereof. The enclosed
proxy is being solicited on behalf of the Board of Directors.
By order of the Board of Directors of the Fund
Thomas J. Fuccillo
Secretary
New York, New York
September 22, 2009
It is important that your shares be represented at the
Meeting in person or by proxy, no matter how many shares you
own. If you do not expect to attend the Meeting, please
complete, date, sign and return the applicable enclosed proxy or
proxies in the accompanying envelope, which requires no postage
if mailed in the United States, or vote through the Internet or
by telephone. Please mark and mail your proxy or proxies, or
vote through the Internet or by telephone, promptly in order to
save the Fund any additional costs of further proxy
solicitations and in order for the Meeting to be held as
scheduled.
PROXY
STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of The Korea
Fund, Inc., a Maryland corporation (the Fund), for
use at the Annual Meeting of Stockholders, to be held at the
offices Allianz Global Investors Fund Management LLC
(AGIFM), 1345 Avenue of the Americas (at
54th
55th Streets),
49th Floor, New York, New York 10105, on Wednesday,
October 28, 2009 at 9:30 a.m., Eastern time (the
Meeting), and at any adjournments or postponements
thereof.
This Proxy Statement, the Notice of Annual Meeting of
Stockholders, and the proxy card are first being mailed to
stockholders on or about September 22, 2009 or as soon as
practicable thereafter.
The Board has fixed the close of business on September 4,
2009 as the record date (the Record Date) for the
determination of stockholders of the Fund entitled to notice of,
and to vote at, the Meeting and any postponement or adjournment
thereof. Stockholders on the Record Date will be entitled to one
vote for each full share and a proportionate fraction of a vote
for each fractional share held, with no cumulative voting
rights, with respect to each matter on which they are entitled
to vote. As of the Record Date, there were
10,446,041 shares of common stock of the Fund outstanding
(the Shares).
If the enclosed proxy is executed and returned, that vote may
nevertheless be revoked at any time prior to its use by written
notification received by the Fund (addressed to the Funds
Secretary at the Funds principal executive offices, 1345
Avenue of the Americas, New York, New York 10105), by the
execution of a later-dated proxy, by the Funds receipt of
a subsequent valid Internet or telephone vote, or by attending
the Meeting and voting in person. Proxies voted through the
Internet or by telephone may be revoked at any time before they
are voted in the same manner that proxies voted by mail may be
revoked. Please note that merely attending the Meeting without
voting will not revoke a valid proxy.
All properly executed proxies received in time for the Meeting
(as explained on the enclosed proxy card) will be voted as
specified in the proxy. Unless instructions to the contrary are
marked, proxies will be voted FOR the election of
the Class III Director nominees, Ronaldo A. da Frota
Nogueira and Richard A. Silver (the Proposal).
The presence at the Meeting, in person or by proxy, of
stockholders entitled to cast a majority of the votes entitled
to be cast thereat shall be necessary and sufficient to
constitute a quorum for the transaction of business. For
purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker
non-votes will be treated as shares that are
present, but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees for which
the broker or nominee has neither received instructions from the
beneficial owner or other persons entitled to vote nor
discretionary power to vote on a particular matter. Accordingly,
stockholders are urged to forward their voting instructions
promptly. Abstentions and broker non-votes will have the effect
of a vote against the Proposal.
The Board has also used the opportunity of this proxy statement
and the Meeting to submit a question to stockholders to solicit
their views on whether the Fund should continue in its current
form (the Question). A separate section has been
created on the proxy card following the Proposal to permit
stockholders to express their views on the Question.
(Stockholders also may express their views at the Meeting.) The
Question will not be called for a formal vote at the Meeting,
but the results of polling on the Question will be announced at
the Meeting and there will be an opportunity for discussion
regarding the Question. Stockholders of the Fund as of the
Record Date are entitled to respond to the Question. As the
Question will not be called for a formal vote, and the purpose
of the Question is to solicit the views of the Funds
beneficial owners as to the nature of the Funds
continuation, shareholders with no response for the Question and
broker non-votes
will not be taken into account by the Board. Similarly, the
Board does not intend to solicit responses regarding the
2
Question or to solicit additional responses on the Question if
there is no quorum at the Meeting. The Board will evaluate the
results of voting on the Question based not only on the
difference between the number of shares supporting and opposing
continuation of the Fund, but also based on the total number of
shares responding to the Question. In addition, a response to
the Question may be withdrawn or changed in the same manner as a
vote on the Proposal.
The Fund provides periodic reports to all stockholders, which
highlight relevant information, including investment results and
a review of portfolio changes. You may receive an additional
copy of the Funds annual report for its fiscal year ended
June 30, 2009 and a copy of the Funds semi-annual
report for the six-month period ended December 31, 2008,
without charge, by calling the Funds stockholder servicing
agent at
(800) 331-1710
or writing the Fund at 1345 Avenue of the Americas,
New York, New York 10105.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 28,
2009
The 2009 Proxy Statement and the Annual Report to Stockholders
for the fiscal year ended June 30, 2009 are available at
www.thekoreafund.com.
PROPOSAL:
ELECTION OF CLASS III DIRECTORS
The Board of Directors is divided into three classes, with each
Director serving for a term of three years. Two Class III
Directors are up for election at the Meeting. The terms of the
Class I and Class II Directors do not expire this year.
Persons named in the accompanying proxy card intend, in the
absence of contrary instructions, to vote all proxies in favor
of the election of the nominees listed below as Class III
Directors of the Fund, to serve for a term of three years and
until their successors are duly elected and qualified, or his
earlier death, resignation, retirement or removal.
Messrs. Nogueira and Silver are currently Class III
Directors. The nominees have consented to stand for election and
to serve if elected. If any nominee should be unable to serve,
an event not now anticipated, the proxies will be voted for such
person, if any, as shall be designated by the Board of Directors
to replace that nominee. The Board of Directors has approved the
nomination of Messrs. Nogueira and Silver as the
Class III Directors. If Mr. Nogueira is elected,
pursuant to the Funds retirement policy, the term for
which he is elected would be his final term.
3
Information
Concerning the Nominees
The following table sets forth certain information concerning
the nominees for Class III Directors of the Fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Portfolios in
|
|
Other
|
|
|
|
|
Year
|
|
|
|
Fund Complex
|
|
Directorships
|
Name,
|
|
Position(s)
|
|
First
|
|
|
|
Overseen by
|
|
Held by
|
Address*
|
|
Held with
|
|
Became a
|
|
Principal Occupation(s) During
|
|
Director/
|
|
Director/
|
and Age
|
|
the Fund
|
|
Director
|
|
the Past 5 Years
|
|
Nominee
|
|
Nominee
|
|
Ronaldo A. da Frota Nogueira (71)
|
|
Director
|
|
|
2000
|
|
|
Director of the Fund; Director and Chief Executive Officer, IMF
Editora Ltd. (financial publisher). Formerly, Chairman of the
Certification Committee and Director, APIMEC Nacional (Brazilian
Association of Investment Professionals and Analysts)
(1996-2008);
Member, Board of the Association of Certified International
Investment Analysts (ACIIA)
(2001-2009);
Director of DWS Global Commodities Stock Fund, Inc.
(2004-2005)
and DWS Global High Income Fund, Inc.
(1992-2005).
|
|
|
1
|
|
|
None
|
Richard A. Silver (62)
|
|
Director
|
|
|
2006
|
|
|
Director of the Fund; Retired. Formerly, Executive Vice
President, Fidelity Investments
(2000-2005).
|
|
|
1
|
|
|
None
|
4
Information
Concerning Continuing Directors
The following table sets forth certain information regarding the
Funds Class I and Class II Directors. As noted
above, these Directors are not up for election this year. They
each will serve until the applicable stockholder meeting noted
below and his successor is elected and has qualified, or his
earlier death, resignation, retirement or removal.
Class I
Directors Serving until 2010 Annual Meeting of
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Portfolios in
|
|
Other
|
|
|
|
|
Year
|
|
|
|
Fund Complex
|
|
Directorships
|
Name,
|
|
Position(s)
|
|
First
|
|
|
|
Overseen by
|
|
Held by
|
Address*
|
|
Held with
|
|
Became a
|
|
Principal Occupation(s) During
|
|
Director/
|
|
Director/
|
and Age
|
|
the Fund
|
|
Director
|
|
the Past 5 Years
|
|
Nominee
|
|
Nominee
|
|
Julian Reid (65)
|
|
Director and
Chairman of
the Board
|
|
|
2004
|
|
|
Director and Chairman of the Board of the Fund; Director and
Chairman of 3a Funds Group (since 1998); President of the
Saffron Fund, Inc. (2004); Director and Chairman of the Saffron
Fund, Inc.
(1994-2004,
Chairman since 1998); Director and Chairman of Morgans
Walk Properties Ltd.
(2002-2006)
(residential property owner/ manager); Director of JF China
Region Fund, Inc. (since 1997); Director and Chairman of
Prosperity Voskhod Fund Ltd. (since 2006); Director (since
2007) and Chairman (since 2008) of ASA Ltd.
|
|
|
1
|
|
|
None
|
Christopher Russell (60)
|
|
Director
|
|
|
2004
|
|
|
Director of the Fund; Director of Enhanced Index Funds pcc
(since 2002); Candover Investments plc (private equity) (since
2004); JP Morgan Fleming Japanese Smaller Companies Investment
Trust plc (since 2006); Hanseatic Asset Management LBG (asset
management company) (since 2008); The Association of Investment
Companies Ltd (trade body representing UK investment companies)
(since 2009); Schroders (C.I.) Ltd. (private bank) (since 2009);
Castle Asia Alternative pcc Ltd (fund of Asian hedge funds)
(since 2009); Salters Management Company (charitable
endowment) since 2003. Associate of Gavekal Research (since
2001).
|
|
|
1
|
|
|
None
|
5
Class II
Directors Serving until 2011 Annual Meeting of
Stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
|
Year
|
|
|
|
|
Portfolios in
|
|
|
Other
|
Name,
|
|
Position(s)
|
|
First
|
|
|
|
|
Fund Complex
|
|
|
Directorships
|
Address*
|
|
Held with
|
|
Became a
|
|
|
Principal Occupation(s) During
|
|
Overseen by
|
|
|
Held by
|
and Age
|
|
the Fund
|
|
Director
|
|
|
the Past 5 Years
|
|
Director
|
|
|
Director
|
|
Kesop Yun**
(64)
|
|
Director
|
|
|
1999**
|
|
|
Director of the Fund; Professor, College of Business
Administration, Seoul National University, Seoul, Korea.
Formerly Director of DWS Global Commodities Stock Fund, Inc.
(2004-2005)
and DWS Global High Income Fund, Inc.
(2001-2005).
|
|
|
1
|
|
|
None
|
|
|
|
* |
|
For purposes of Fund business, all Directors may be contacted at
the following address:
c/o Allianz Global
Investors Fund Management LLC, 1345 Avenue of the Americas,
New York, New York 10105. |
|
** |
|
Mr. Yun previously served on the Board of the Fund from
1984 to 1988. |
All Directors are considered by the Fund not to be
interested persons (as defined in
Section 2(a)(19) of the Investment Company Act of 1940, as
amended (the 1940 Act)) of the Fund, the Funds
investment manager, RCM Capital Management LLC (RCM
or the Manager), or the Funds sub-adviser, RCM
Asia Pacific Limited (RCM AP or the
Sub-Adviser).
As of August 31, 2009, the dollar range of equity
securities in the Fund owned by each Director was as follows:
|
|
|
|
|
|
|
|
|
Aggregate Dollar Range of
|
|
|
|
|
Equity Securities in All Funds
|
|
|
Dollar Range of Equity
|
|
Overseen by Director in Family
|
Name of Director
|
|
Securities in the Fund
|
|
of Investment Companies*
|
|
Ronaldo A. da Frota Nogueira
|
|
$50,001 - $100,000
|
|
$50,001 - $100,000
|
Julian Reid
|
|
$1 − $10,000
|
|
$1 − $10,000
|
Christopher Russell
|
|
$10,001 − $50,000
|
|
$10,001 − $50,000
|
Richard A. Silver
|
|
$50,001 − $100,000
|
|
$50,001 − $100,000
|
Kesop Yun
|
|
None**
|
|
None
|
|
|
|
* |
|
There are no other funds in the same family of investment
companies as the Fund. |
|
** |
|
Mr. Yun, as a professor at Seoul National University, is
subject to the Code of Professional Ethics of Government
Officials, which currently prevents him from owning real
estate or financial assets in foreign countries (including
securities of the Fund). |
As of August 31, 2009, no officer of the Fund owned shares
of the Fund. As of August 31, 2009, all Directors and
officers of the Fund as a group owned less than 1% of the
outstanding shares of the Fund.
Section 16(a) Beneficial Ownership Reporting
Compliance The Funds Directors and certain
officers, investment advisers, certain affiliated persons of the
investment advisers and persons who own more than 10% of any
class of outstanding securities of the Fund are required to file
forms reporting their relationship with the Fund and reports of
ownership and changes in ownership of the Funds securities
with the Securities and Exchange Commission (the
SEC) and the New York Stock Exchange (the
NYSE). These persons and entities are required by
SEC regulation to furnish the Fund with copies of all such forms
they file. Based solely on a review of these forms furnished to
the Fund, the Fund believes that each of the Directors and
relevant officers, investment advisers and relevant affiliated
persons of the investment advisers and the persons who
beneficially own more than 10% of the Funds Shares has
complied with all applicable filing requirements during the
Funds fiscal year ended June 30, 2009, except that
due to administrative oversight, late Form 3 filings were
made for certain reporting persons of the Fund, including RCM
Asia Pacific Ltd., PIMCO Advisors
6
Fund Management LLC, Gregory M. Siemons, Stuart Winchester,
Annette Wargon, Monica Poon, and Eric Lai. In January 2009,
three amended Form 3s and one amended Form 4 were
filed solely for the purpose of attaching omitted powers of
attorney for various reporting persons of the Fund.
As of September 9, 2009, the following stockholders owned
beneficially more than 5% of the Funds outstanding Shares
as reported to the SEC pursuant to Rule 13d-1 of the
Securities Exchange Act of 1934:
|
|
|
|
|
|
|
|
|
Name and Address of
|
|
Amount and Nature of
|
|
|
Title of Class
|
|
Beneficial Owner
|
|
Beneficial Ownership
|
|
Percent of Class
|
|
Common Stock
|
|
City of London Investment
|
|
2,331,386 shares1
|
|
22.32%
|
|
|
Group, PLC
c/o City
of London Investment Management Company Limited, 10 Eastcheap,
London, EC3M ILX, England
|
|
|
|
|
Common Stock
|
|
Lazard Asset Management LLC
|
|
195,150 shares
|
|
8%
|
|
|
|
1 |
|
City of London Investment Group, PLC is deemed to have sole
voting power and sole investment power with respect to the above
number of shares through its control of City of London
Investment Management Company Limited. |
Except as noted above, to the best of the Funds knowledge,
as of September 9, 2009, no other person owned beneficially
more than 5% of the Funds outstanding Shares.
Committees
of the Board Board Meetings
The Board of Directors of the Fund participated in six meetings
of the Board held in person or by telephone during the fiscal
year ended June 30, 2009. Each Director attended all
meetings of the Board of Directors and of all committees of the
Board on which he served as a regular member.
The Board of Directors seeks to have at least a majority of its
members present at annual stockholder meetings. At the
Funds most recent annual stockholder meeting on
October 29, 2008, all of the Directors attended in person.
The Board of Directors has an Executive Committee, an Audit and
Compliance Committee, a Valuation Committee, a Governance,
Nominating and Remuneration Committee, an Investment Committee,
a Contracts Committee and a Korean Affairs Committee.
Audit and
Compliance Committee
The Board has an Audit and Compliance Committee consisting of
those Directors who are not interested persons (as
defined in the 1940 Act) of the Fund (Independent
Directors) and chaired by Mr. Silver. The Audit and
Compliance Committee met four times during the fiscal year ended
June 30, 2009. The members of the Audit and Compliance
Committee are independent, as independence is defined in the
listing standards of the New York Stock Exchange applicable to
closed-end funds. The Audit and Compliance Committees
purposes are (i) to oversee the integrity of the
Funds financial statements, the Funds compliance
with legal and regulatory requirements, the qualifications and
independence of the Funds independent registered public
accounting firm, the performance of the Funds internal
control systems and independent registered public accounting
firm and, as appropriate, the internal controls of certain Fund
service providers; (ii) to oversee the quality and
objectivity of the Funds financial statements and the
independent audit thereof; (iii) to exercise direct
responsibility for the appointment, compensation, retention and
oversight of the work performed by the Funds independent
registered public accounting firm for the purpose of preparing
or issuing an audit report or performing other audit, review or
attest services for the Fund; (iv) to act as a liaison
between the Funds independent registered public accounting
firm and the Board; (v) to oversee the Funds
compliance with legal and regulatory requirements, including
through periodic meetings with and review of reports provided by
the Funds Chief Compliance Officer; and (vi) to
prepare an audit
7
committee report as required by Item 407 of
Regulation S-K,
to be included in the Funds annual proxy statement
relating to the election of directors.
The Board of Directors has adopted a charter for the Audit and
Compliance Committee. The charter, which was revised as of
April 28, 2009, is available at the Funds website:
www.thekoreafund.com.
Audit and Compliance Committees Pre-Approval
Policies and Procedures. The Audit and
Compliance Committee must approve in advance the engagement of
the Funds independent registered public accounting firm to
provide (i) audit or permissible non-audit services to the
Fund and (ii) non-audit services to RCM or its control
affiliates that relate directly to the Funds operations
and financial reporting. The Audit and Compliance Committee
preapproves such services on at least an annual basis, and
receives at least annually a report of all audit and non-audit
services rendered in the previous calendar year by the
Funds independent registered public accounting firm for
the Fund and its Affiliated Fund Service Providers (defined
on page 12). Such services, including services provided to
Affiliated Fund Service Providers, may be preapproved by
the Audit and Compliance Committee Chairman, or by any other
member of the Audit and Compliance Committee who is an
Independent Director and to whom such responsibility has been
delegated, so long as the aggregate fees for such services do
not exceed certain maximum amounts. In such case, the Audit and
Compliance Committee must be notified of such preapproval at its
next regularly scheduled meeting.
At a meeting held on October 29, 2008, the Audit and
Compliance Committee and the Board of Directors of the Fund,
including a majority of the Independent Directors, selected
PricewaterhouseCoopers LLP (PWC) to act as the
independent registered public accounting firm for the Fund for
the fiscal year ending June 30, 2009. The Board of
Directors intends to select the independent registered public
accounting firm for the Fund for the fiscal year ending
June 30, 2010 at its October 2009 meeting. The Funds
financial statements for the fiscal years ended June 30,
2009 and June 30, 2008 were audited by PWC.
Audit and
Compliance Committee Report
In connection with the audited financial statements as of and
for the fiscal year ended June 30, 2009 included in the
Funds 2009 Annual Report (the Annual Report),
at a meeting held on August 20, 2009, the Audit and
Compliance Committee considered and discussed the audited
financial statements with management and the independent
registered public accounting firm, and discussed the audit of
such financial statements with the independent registered public
accounting firm.
The Audit and Compliance Committee also discussed with the
independent registered public accounting firm the matters
required to be discussed by Statement on Auditing Standards
No. 61 (Communications with Audit Committees). The
independent registered public accounting firm provided to the
Committee the written and oral disclosures required by
Rule 3526 (Communications with Audit Committees Concerning
Independence) of the Public Company Accounting Oversight Board
(United States), and the Audit and Compliance Committee
discussed with representatives of the independent registered
public accounting firm their firms independence.
The members of the Audit and Compliance Committee are not
professionally engaged in the practice of auditing or accounting
and are not employed by the Fund for accounting, financial
management or internal control. Moreover, the Audit and
Compliance Committee relies on and makes no independent
verification of the facts presented to it or representations
made by management or the independent registered accounting
firm. Accordingly, the Audit and Compliance Committees
oversight does not provide an independent basis to determine
that management has maintained appropriate accounting and
financial reporting principles or policies, or internal controls
and procedures, designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the
Audit and Compliance Committees considerations and
discussions referred to above do not provide assurance that the
audit of the Funds financial statements has been carried
out in accordance with the auditing standards of the Public
Company Accounting Oversight Board (United States) generally
8
accepted in the United States of America or that the financial
statements are presented in accordance with accounting
principles generally accepted in the United States of America.
Based on its consideration of the audited financial statements
and the discussions referred to above with management and the
independent registered public accounting firm and subject to the
limitation on the responsibilities and role of the Audit and
Compliance Committee set forth in the Audit and Compliance
Committees Charter and those discussed above, the Audit
and Compliance Committee of the Fund recommended to the
Funds Board of Directors that the audited financial
statements be included in the Funds Annual Report.
Governance,
Nominating and Remuneration Committee
The Governance, Nominating and Remuneration Committee is
composed of all of the Independent Directors and is chaired by
Mr. Nogueira. The members of the Committee are independent,
as independence is defined in the listing standards of the New
York Stock Exchange applicable to closed-end funds. The
Governance, Nominating and Remuneration Committee met once
during the fiscal year ended June 30, 2009.
The primary purposes and responsibilities of the Committee are
(i) reviewing governance standards of the Board in light of
best practices (with the understanding that the Board will seek
to conform its practices to what it perceives to be best
practices); (ii) screening and nominating candidates for
election to the Board as independent Directors in the event that
a position is vacated or created; (iii) setting any
necessary standards or qualifications for service on the Board;
(iv) reviewing any policy matters affecting the operation
of the Board and Board committees and making recommendations to
the Board as deemed appropriate by the Committee; and
(v) establishing and reviewing Director compensation.
Directors receive no fees for service on the Governance,
Nominating and Remuneration Committee.
The Committee requires that Director candidates have a college
degree or equivalent business experience. The Committee may take
into account a wide variety of factors in considering Director
candidates, including (but not limited to) (i) availability
and commitment of a candidate to attend meetings and perform his
or her responsibilities on the Board; (ii) relevant
industry and related experience; (iii) educational
background; (iv) financial expertise; (v) an
assessment of the candidates ability, judgment and
expertise; and (vi) overall diversity of the Boards
composition.
The Board of Directors has adopted a written charter for the
Governance, Nominating and Remuneration Committee. The charter,
which was revised as of August 27, 2007, is available at
the Funds website, www.thekoreafund.com.
The Committee will consider and evaluate nominee candidates
properly submitted by stockholders on the same basis as it
considers and evaluates candidates recommended by other sources.
Appendix A to the charter, as it may be amended from
time to time by the Committee, sets forth procedures that must
be followed by stockholders to properly submit a nominee
candidate to the Committee. Those procedures are set forth in
the paragraph below. Recommendations not properly submitted in
accordance with these procedures will not be considered by the
Committee. The Governance, Nominating and Remuneration Committee
has full discretion to reject nominees recommended by
stockholders, and there is no assurance that any such person
properly recommended and considered by the Committee will be
nominated for election to the Board of the Fund.
Stockholders must submit any nominee recommendation for the
Committees consideration in writing to the Fund, to the
attention of the Chairman or Secretary of the Fund, at the
address of the principal executive offices of the Fund not less
than ninety (90) days nor more than one hundred and twenty
(120) days prior to the date of the Board or stockholder
meeting at which the nominee would be elected. The stockholder
recommendation must include: (i) a statement in writing
setting forth (A) the name, age, date of birth, business
address, residence address and nationality of the person
recommended by the stockholder (the candidate);
(B) the class and number of all shares of the Fund
9
owned of record or beneficially by the candidate, as reported to
such stockholder by the candidate; (C) any other
information regarding the candidate called for with respect to
director nominees by paragraphs (a), (d), (e) and
(f) of Item 401 of
Regulation S-K
or paragraph (b) of Item 22 of
Rule 14a-101
(Schedule 14A) under the Securities Exchange Act of 1934,
as amended (the Exchange Act), adopted by the
Securities and Exchange Commission (or the corresponding
provisions of any regulation or rule subsequently adopted by the
Securities and Exchange Commission or any successor agency
applicable to the Fund); (D) any other information
regarding the candidate that would be required to be disclosed
if the candidate were a nominee in a proxy statement or other
filing required to be made in connection with solicitation of
proxies for election of Directors pursuant to Section 14 of
the Exchange Act and the rules and regulations promulgated
thereunder; and (E) whether the recommending stockholder
believes that the candidate is or will be an interested
person of the Fund (as defined in the 1940 Act) and, if
not an interested person, information regarding the
candidate that will be sufficient for the Fund to make such
determination; (ii) the written and signed consent of the
candidate to be named as a nominee and to serve as a Director if
elected; (iii) the recommending stockholders name as
it appears on the Funds books; (iv) the class and
number of all shares of the Fund owned beneficially and of
record by the recommending stockholder; and (v) a
description of all arrangements or understandings between the
recommending stockholder and the candidate and any other person
or persons (including their names) pursuant to which the
recommendation is being made by the recommending stockholder.
Executive
Committee
The Executive Committee is empowered with, and the Directors
have delegated to such Committee, all of the powers of the
Directors that are not otherwise delegated and that may lawfully
be exercised by an executive committee. The Executive Committee
is authorized to act when the full Board of Directors is not in
session. Mr. Reid serves on the Executive Committee.
Messrs. Nogueira, Russell, Silver and Yun serve as
alternate members on the Executive Committee. Directors receive
no fees for service on the Executive Committee. The Executive
Committee did not meet during the fiscal year ended
June 30, 2009.
Valuation
Committee
The Board of the Fund has a Valuation Committee consisting of
all Directors. Directors receive no fees for service on the
Valuation Committee. The Committee oversees the determination of
the value of the portfolio securities and other assets held by
the Fund and determines or causes to be determined the fair
value of such securities and assets for which market quotations
are not readily available in accordance with the
1940 Act. The Valuation Committee reviews and approves
procedures for the fair valuation of the Funds portfolio
securities and periodically reviews information from the Manager
and Sub-Adviser regarding fair value determinations made
pursuant to Board-approved procedures. The Valuation Committee
met once during the fiscal year ended June 30, 2009, and
the full Board considered valuation matters at each quarterly
Board meeting.
The Board of Directors adopted a written charter for the
Valuation Committee on July 29, 2009. The charter is
available at the Funds website, www.thekoreafund.com.
Investment
Committee
The Board has an Investment Committee consisting of all
Directors and chaired by Mr. Russell. Directors receive no
fees for service on the Investment Committee. The Board has
delegated to the Committee the responsibility to monitor the
performance of the Fund and its peer group of funds. The
Investment Committee met four times during the fiscal year ended
June 30, 2009. In addition, the Chairman of the Investment
Committee coordinates with an independent third party consultant
that reviews and provides quarterly reports to the Board
regarding the performance and portfolio characteristics of the
Fund.
10
Contracts
Committee
The Contracts Committees primary function is to review the
Funds contractual arrangements with RCM and RCM AP and
their affiliates. The Committee also reviews contractual and
financial arrangements with other parties related to transfer
agency, custody, investment accounting and other services. The
Committee is composed of all of the Independent Directors and
meets at least annually to review the Funds contractual
and financial arrangements. The Contracts Committee met twice
during the fiscal year ended June 30, 2009. The Contracts
Committee Charter was adopted on April 22, 2008 and is
available on the Funds website, www.thekoreafund.com.
Korean
Affairs Committee
The Board has a Korean Affairs Committee consisting of all
Directors and chaired by Mr. Yun. Directors receive no fees
for service on the Korean Affairs Committee. The Board has
delegated to the Committee the responsibility to monitor the
political, economic and market developments (particularly of the
securities industry and its regulation) in South Korea. The
Korean Affairs Committee met four times during the fiscal year
ended June 30, 2009. The Chairman of the Korean Affairs
Committee reported on developments in South Korea at each
quarterly Board meeting.
Services
Billed by PWC to the Fund.
Audit Fees. Audit Fees are fees related to the
audit and review of the financial statements included in annual
reports and registration statements, and other services that are
normally provided in connection with statutory and regulatory
filings or engagements. For the Funds last two fiscal
years, the Audit Fees billed by PWC are shown in the table below:
|
|
|
|
|
Fiscal Year Ended
|
|
Audit Fees
|
|
June 30, 2009
|
|
$
|
93,151
|
|
June 30, 2008
|
|
$
|
79,998
|
|
Audit-Related Fees. Audit-Related Fees are
fees related to assurance and related services that are
reasonably related to the performance of the audit or review of
financial statements, but not reported under Audit
Fees above, including accounting consultations,
attestation reports and comfort letters. For the Funds
last two fiscal years, the Audit-Related Fees billed by PWC are
shown in the table below.
|
|
|
|
|
Fiscal Year Ended
|
|
Audit-Related Fees
|
|
June 30, 2009
|
|
$
|
0
|
|
June 30, 2008
|
|
$
|
0
|
|
Tax Fees. Tax Fees are fees associated with
tax compliance, tax advice and tax planning, including services
relating to the filing or amendment of federal, state or local
income tax returns, regulated investment company qualification
reviews, and tax distribution and analysis reviews. The table
below shows, for the Funds last two fiscal years, the
aggregate Tax Fees billed by PWC to the Fund.
|
|
|
|
|
Fiscal Year Ended
|
|
Tax Fees
|
|
June 30, 2009
|
|
$
|
25,500
|
|
June 30, 2008
|
|
$
|
16,000
|
|
All Other Fees. All Other Fees are fees
related to services other than those reported above under
Audit Fees, Audit-Related Fees and
Tax Fees. For the Funds last two fiscal years,
no such fees were billed by PWC to the Fund.
During the periods indicated in the tables above, no services
described under Audit-Related Fees, Tax
Fees or All Other Fees were approved pursuant
to the de minimis exception.
11
Services
Billed by PWC to the Funds Manager and Affiliated
Fund Service Providers.
PWC billed no Audit-Related Fees, Tax
Fees or All Other Fees to RCM or any entity
controlling, controlled by or under common control with RCM that
provides ongoing services to the Fund (Affiliated
Fund Service Provider) for engagements directly
related to the Funds operations and financial reporting,
during the Funds last two fiscal years.
Non-Audit
Services
The following table sets forth the aggregate fees that PWC
billed during the Funds last two fiscal years for
non-audit services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Non-Audit Fees Billed to
|
|
|
|
|
Total Non-Audit
|
|
RCM and Affiliated Fund
|
|
|
|
|
Fees Billed to Fund
|
|
Service Providers
|
|
Total of Columns
|
Fiscal Year Ended
|
|
(A)
|
|
(B)
|
|
A and B
|
|
June 30, 2009
|
|
$
|
25,500
|
|
|
$
|
5,213,650
|
|
|
$
|
5,239,150
|
|
June 30, 2008
|
|
$
|
16,000
|
|
|
$
|
3,451,353
|
|
|
$
|
3,467,353
|
|
The Funds Audit and Compliance Committee gave careful
consideration to the non-audit related services provided by PWC
to the Fund, RCM and Affiliated Fund Service Providers,
and, based in part on certain representations and information
provided by PWC, determined that the provision of these services
was compatible with maintaining PWCs independence.
Stockholder
Communications with the Board of Directors
The Board of Directors of the Fund has adopted procedures by
which Fund stockholders may send communications to the Board.
Stockholders may mail written communications to the Board to the
attention of the Board of Directors, The Korea Fund, Inc.,
c/o Thomas
J. Fuccillo, Chief Legal Officer (CLO), Allianz
Global Investors Fund Management LLC, 1345 Avenue of the
Americas, New York, NY 10105. Stockholder communications must
(i) be in writing and be signed by the stockholder and
(ii) identify the class and number of Shares held by the
stockholder. The CLO or his designee is responsible for
reviewing properly submitted stockholder communications. The CLO
shall either (i) provide a copy of each properly submitted
stockholder communication to the Board at its next regularly
scheduled Board meeting or (ii) if the CLO determines that
the communication requires more immediate attention, forward the
communication to the Directors promptly after receipt. The CLO
may, in good faith, determine that a stockholder communication
should not be provided to the Board because it does not
reasonably relate to the Fund or its operations, management,
activities, policies, service providers, Board, officers,
stockholders or other matters relating to an investment in the
Fund or is otherwise routine or ministerial in nature. These
procedures do not apply to (i) any communication from an
officer or Director of the Fund, (ii) any communication
from an employee or agent of the Fund, unless such communication
is made solely in such employees or agents capacity
as a stockholder, or (iii) any stockholder proposal
submitted pursuant to
Rule 14a-8
under the Securities Exchange Act of 1934, as amended (the
Exchange Act), or any communication made in
connection with such a proposal.
In addition, the Chairman of the Board is happy to receive
communications directly from any stockholder at
julianreid@btopenworld.com.
12
Executive and Other Officers of the Fund. The
table below provides certain information concerning the
executive officers of the Fund and certain other officers who
perform similar duties. Officers hold office at the pleasure of
the Board and until their successors are appointed and qualified
or until their earlier resignation or removal. Officers and
employees of the Fund who are principals, officers, members or
employees of the Manager, the Sub-Adviser or their affiliates
are not compensated by the Fund.
|
|
|
|
|
|
|
Name, Address*
|
|
Position(s)
|
|
Length of
|
|
|
and Date of Birth
|
|
with the Funds
|
|
Time Served
|
|
Other Positions
|
|
Robert Goldstein
4 Embarcadero Center,
San Francisco, CA 94111
2/8/1963
|
|
President and
Chief Executive Officer
|
|
Since April 2007
|
|
Managing Director, Chief Operating Officer and General Counsel
of RCM Capital Management LLC; Member of RCMs Management
Committee; Mr. Goldstein joined RCM in 1996. Prior to
joining RCM, Mr. Goldstein was an associate in the
New York, London and Prague offices of Weil,
Gotshal & Manges where his practice primarily focused
on cross-border transactions and general corporate matters.
|
|
|
|
|
|
|
|
Brian S. Shlissel
11/14/1964
|
|
Treasurer,
Principal
Financial and Accounting
Officer
|
|
Since April 2007
|
|
Executive Vice President, Director of Fund Administration,
Allianz Global Investors Fund Management LLC; President and
Chief Executive Officer of 33 funds in the Allianz Global
Investors Fund Complex; Treasurer, Principal Financial and
Accounting Officer of 45 funds in the Allianz Global Investors
Fund Complex. Formerly, Director of 6 funds in the Allianz
Global Investors Fund Complex.
|
|
|
|
|
|
|
|
Thomas J. Fuccillo
03/22/1968
|
|
Vice President, Secretary and
Chief Legal
Officer
|
|
Since April 2007
|
|
Senior Vice President, Senior Counsel, Allianz Global Investors
of America L.P., Vice President, Secretary and Chief Legal
Officer of 78 funds in the Allianz Global Investors
Fund Complex; Formerly, Vice President and Associate
General Counsel, Neuberger Berman, LLC
(1991-2004).
|
|
|
|
|
|
|
|
Lawrence G. Altadonna
03/10/1966
|
|
Assistant
Treasurer
|
|
Since April 2007
|
|
Senior Vice President, Allianz Global Investors
Fund Management LLC; Treasurer, Principal Financial and
Accounting Officer of 33 funds in the Allianz Global Investors
Fund Complex; Assistant Treasurer of 45 funds in the
Allianz Global Investors Fund Complex.
|
|
|
|
|
|
|
|
Richard J. Cochran
01/23/1961
|
|
Assistant
Treasurer
|
|
|
|
Vice President, Allianz Global Investors Fund Management LLC;
Assistant Treasurer of 78 Funds in the Allianz Global Investors
Fund Complex; formerly, Tax Manager, Teachers Insurance Annuity
Association/College Retirement Equity Fund (TIAA-CREF)
(2002-2008).
|
|
|
|
|
|
|
|
Youse Guia
680 Newport Center
Drive, Suite 250
Newport Beach, CA
92660
09/03/1972
|
|
Chief
Compliance
Officer
|
|
Since April 2007
|
|
Senior Vice President, Group Compliance Manager, Allianz Global
Investors of America L.P.; Chief Compliance Officer of 78 funds
in the Allianz Global Investors Fund Complex; Formerly,
Vice President, Group Compliance Manager, Allianz Global
Investors of America L.P.
(2002-2004);
Audit Manager, PricewaterhouseCoopers LLP (1996-2002).
|
13
|
|
|
|
|
|
|
Name, Address*
|
|
Position(s)
|
|
Length of
|
|
|
and Date of Birth
|
|
with the Funds
|
|
Time Served
|
|
Other Positions
|
|
Lagan Srivastava
09/20/1977
|
|
Assistant
Secretary
|
|
Since April 2007
|
|
Assistant Secretary of 78 funds in the Allianz Global Investors
Fund Complex; formerly, Research Assistant, Dechert LLP
(2004-2005);
Research Assistant, Swidler Berlin Shereff Friedman LLP
(2002-2004).
|
|
|
|
* |
|
Unless otherwise noted, the address of the Funds officers
is
c/o Allianz
Global Investors Fund Management LLC, 1345 Avenue of the
Americas, New York, New York 10105. |
Transactions
with and Remuneration of Directors and Officers
The Boards remuneration policy is to emphasize commitment
to the Fund, involvement in Fund issues and attendance by
Directors at Board meetings. Directors receive an annual
retainer fee of $15,000, except the Chairman of the Board, who
receives an additional $12,000 annual retainer fee. Each
Independent Director receives a fee, paid by the Fund, of $3,000
per Directors meeting attended. The Chairman of the Audit
and Compliance Committee receives an additional $7,000 annual
fee for serving in that capacity. Each Independent Director also
receives $3,000 per Audit and Compliance Committee meeting
(unless only compliance matters are discussed) and Contracts
Committee meeting attended (there is a $3,000 annual maximum
remuneration for attendance at Contracts Committee meetings).
In addition, each Independent Director is eligible to receive a
per diem fee for a full day of $1,500 or a pro-rated fee for a
lesser period as compensation for taking on special assignments
at the request of the Board. Such special assignments must be
approved in advance by the Governance, Nominating and
Remuneration Committee, except that special assignments for
which compensation will be less than $5,000 may be approved in
advance by the Chairman of the Governance, Nominating and
Remuneration Committee. A report regarding compensation for such
assignments is provided to the Governance, Nominating and
Remuneration Committee at its next regular meeting.
RCM supervises the Funds investments, pays the
compensation and certain expenses of its personnel who serve as
officers of the Fund, and receives a management fee for its
services. The Funds other officers are also officers,
employees, or stockholders of RCMs affiliates and are paid
a salary by those firms. The Fund makes no direct payments to
its officers.
The following Compensation Table provides the aggregate
compensation received by each Director from the Fund for the
fiscal year ended June 30, 2009. For the calendar year
ended December 31, 2008, the Directors and nominees
received the compensation set forth in the table below for
serving as Directors of the Fund and other funds in the same
fund complex as the Fund. None of the Directors
serves on any other registered investment company in the fund
complex advised by RCM and its affiliates. The Fund does not pay
retirement benefits to its Directors.
14
Compensation
Table
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Compensation from the
|
|
|
Aggregate Compensation
|
|
Fund and Fund Complex*
|
|
|
from the Fund for the
|
|
Paid to Directors/Nominees for the
|
Independent Director/Nominee
|
|
Fiscal Year Ended June 30, 2009
|
|
Calendar Year Ended December 31, 2008
|
|
Ronaldo A. da Frota Nogueira
|
|
$
|
39,000
|
|
|
$
|
42,000
|
|
Julian Reid
|
|
$
|
51,000
|
|
|
$
|
54,000
|
|
Christopher Russell
|
|
$
|
39,000
|
|
|
$
|
42,000
|
|
Richard A. Silver
|
|
$
|
46,000
|
|
|
$
|
49,000
|
|
Kesop Yun
|
|
$
|
39,000
|
|
|
$
|
42,000
|
|
|
|
|
* |
|
The Fund Complex includes only funds advised by
RCM and its affiliates. |
Required Vote. Election of the nominees for
Class III Directors, Messrs. Nogueira and Silver,
requires the affirmative vote of the holders of a majority of
Shares present in person or by proxy and entitled to vote
thereon.
The
Directors unanimously recommend that you vote FOR the election
of each nominee set forth in the Proposal.
15
Question
Should the Fund continue in its current form?
The Board is soliciting the views of stockholders regarding
whether the Fund should continue in its current form. The
reasons for soliciting the views of stockholders and the reasons
that the Board believes that the Funds operations should
continue are set forth below.
In January 2009, the Fund paid a distribution to stockholders of
approximately $220.3 million of its long-term and
short-term capital gains. The Board of Directors of the Fund
decided for compelling reasons set out hereunder to pay the
distribution to a stockholder in newly issued Fund shares,
unless the stockholder elected to receive cash. The Board also
decided to cap the total amount of cash to be distributed by the
Fund at 20% of the aggregate dollar amount of the total
distribution. As noted in the December 10, 2008 press
release announcing the plan for the distribution, one of the
primary reasons for going forward with the capped cash election
dividend was to avoid the unintended liquidation of the Fund at
a time that, due to exceptional market conditions, may not have
been advantageous to stockholders (based on the Funds net
asset value at the time, the ongoing viability of the Fund in
light of the assets remaining after a cash distribution of
capital gains was uncertain). In light of that decision, the
Board deemed it appropriate to seek the view of stockholders
regarding the future of the Fund. Specifically, the Board
decided to solicit the views of stockholders regarding the
continuation of the Fund at the 2009 annual stockholder meeting,
provided that more normal market conditions had resumed by that
time. The purpose of soliciting stockholder views was to give
stockholders the opportunity to consider carefully, hopefully in
more normal market conditions, if the Fund should continue its
operations.
The Board believes that the exceptional market driven
circumstances leading to the capped cash election dividend have
now subsided and more normal conditions for the Fund have
resumed. As of September 2, 2009, the Korean market (as
measured by the KOSPI, the Funds benchmark) is up 104.74%
on a total return basis since its low on November 20, 2008,
and is up 55.34% since the Funds December 10, 2008
press release. Therefore, consistent with the December 2008
press release, the Board has determined to solicit the views of
stockholders whether the Fund should continue in its current
form. For these and the reasons set forth below, the Board of
Directors encourages stockholders to express their support for
the continuation of the Fund in its current form.
In connection with its consideration of this matter, the Board
sought the views of RCM AP as to its long term outlook for the
Korean equity market. RCM AP reported to the Board that it was
optimistic regarding Koreas economic outlook and that it
believed Korean equities were a sound investment for the long
term based on RCM APs belief that:
|
|
|
|
|
The Korean economy should recover at a faster pace from current
global recession and post higher growth than other developed
economies following the stabilization of the global economy in
the next several years due to:
|
|
|
|
|
|
solid export growth led by major companies enhanced
competitiveness in the global markets, stronger financial
position and significant investment in research and
development; and
|
|
|
|
the Korean governments economic expansionary measures
(including aggressive stimulus measures, measures for financial
industry stabilization and infrastructure investment) supported
by a sound fiscal position (i.e., budget surplus).
|
|
|
|
|
|
There will be long term growth in the Korean economy driven by:
|
|
|
|
|
|
continued strong growth of Korean exports as a result of
diversified and balanced export destinations and a strong
exposure to fast growing economies such as China and other
emerging countries;
|
|
|
|
the structural change of economic development from capital
intensive manufacturing toward a service-driven economy,
supported by a commitment from the current government to promote
deregulation to improve service industries
competitiveness; and
|
16
|
|
|
|
|
various new business initiatives developed by diverse and
leading companies that are transforming themselves with
technology and capital accumulated from traditional business
areas, including expansion into green technology.
|
RCM AP also noted that the OECD projects Koreas real GDP
growth to be the third highest among OECD members from
2011-2017.
|
|
|
|
|
There are several structural growth drivers for the Korean stock
market, including that:
|
|
|
|
|
|
Korean household asset composition is expected to shift from
real estate, cash and deposits to sophisticated financial
investments as Koreans seek higher return investments;
|
|
|
|
Koreas fast aging population is expected to stimulate
further this shift of household assets to the Korean stock
market; and
|
|
|
|
Rapidly expanding corporate pensions are expected to seek higher
return assets to secure the longer life expectancy.
|
|
|
|
|
|
The Korean stock market looks attractive in terms of valuation
for long term investors because:
|
|
|
|
|
|
traditional discount factors, measured on a price/earnings and
price/book basis, known as the Korea discount
(including Korean companies heavy use of debt, poor
corporate governance, low domestic equity ownership, capital
intensive structure, low payout, low focus on delivery of
returns to capital, limited management equity ownership and poor
minority holder protection) have begun to improve gradually
since the Asian crisis in 1997; and
|
|
|
|
higher earnings visibility and lower profit volatility support a
smaller valuation discount.
|
RCM AP informed the Board that the key risks to their optimistic
long-term view on the Korean market are:
|
|
|
|
|
the possibility that prolonged global recession may cap
sustainable growth of Korean exports;
|
|
|
|
the higher level of leverage by Korean households may limit
consumption growth potential; and
|
|
|
|
the uncertainty on the future of North Korea and its impact on
South Korea from political and economic standpoints.
|
The Board also requested a report from AGIFM, which provides
investor relations, stockholder servicing and marketing services
to the Fund, regarding the position of the Fund in the market
and possible alternatives for the Fund (including open-ending,
share repurchases, tender offers, converting to an interval
fund, initiating a managed distribution policy, mergers,
liquidation and investment repositioning). AGIFM recommended to
the Board that the Fund continue in its current form based on,
among other things:
|
|
|
|
|
The high trading volume for the Fund;
|
|
|
|
The high demand for and interest in the Fund;
|
|
|
|
The market outlook of potential investors in the Fund;
|
|
|
|
The marketing opportunities for the Fund; and
|
|
|
|
The costs and benefits of alternatives for the Fund other than
continuation in its current form.
|
The Board of Directors of the Fund, which is composed solely of
Independent Directors, unanimously determined to encourage
stockholders to express their support for continuation of the
Fund in its current form. In determining that the Fund should
continue in its current form, the Directors considered, among
others, the factors below:
|
|
|
|
|
The report of RCM AP regarding the long term outlook for the
Korean equity market, including their optimistic view of the
long-term market outlook and the potential risks.
|
17
|
|
|
|
|
The report of AGIFM regarding the Funds position in the
market and possible alternatives for the Fund, including their
recommendation that the Fund continue in its current form.
|
|
|
|
The Funds discount, which has ranged from 3.29% to 14.03%
since the January 29, 2009 distribution and was 9.32% on
August 28, 2009, and the Boards proven willingness to
take action to address the Funds discount as necessary.
|
|
|
|
The Funds expense ratio of 1.43% as of June 30, 2009
and the projected expense ratio of 1.30% based on the fiscal
year 2010 budget prepared by the Funds administrator.
|
|
|
|
The current level of the Funds net assets. The Funds
net assets on August 31, 2009 were $352,625,443.
|
|
|
|
That concentration of the Funds investments, liquidity of
the Funds holdings and relative stability of the
Funds asset base support the closed-end fund structure.
|
|
|
|
That the Fund permits stockholders to achieve exposure to the
Korean markets with the benefit of the expertise of RCM AP.
|
|
|
|
The Funds capital gains position. As of August 31,
2009, the Funds unrealized gains amounted to approximately
$101.3 million. The Fund has deferred realized capital
losses of approximately $50.2 million and a capital loss
carryforward of approximately $32.1 million, which may
offset any realized capital gains.
|
Because the Board is subject to a continuing obligation to make
decisions that it believes are in the best interests of the
Fund, the Board will take steps to follow the outcome of the
polling only if it makes an independent determination that such
action would be in the Funds best interests at the time
(although the results of the stockholder polling are
non-binding, the outcome would be taken seriously into
consideration by the Board as it evaluates the future of the
Fund). In other words, the outcome of the polling would
constitute one key factor in the total mix of information that
the Board would consider in its ongoing evaluation of the future
of the Fund. The Board also takes other key factors into account
in such evaluations, including the costs and benefits of
possible alternatives to continuing the Fund in its current form
(e.g., (i) transaction costs, service provider
costs, regulatory costs and costs of any stockholder votes
associated with implementing a potential alternative,
(ii) the effect on the expense ratio, discount, net asset
value and market price of the Fund, (iii) the liquidity of
Fund shares and (iv) any tax repercussions).
The Board will weigh the outcome of the polling as a factor
in its ongoing consideration of the future of the Fund based not
only on the difference between the number of shares supporting
and opposing continuation of the Fund, but also based on the
total number of shares responding to the Question. Respond
For if you support continuation of the Fund in its
current form. Respond Against if you oppose
continuation of the Fund in its current form.
18
ADDITIONAL
INFORMATION
Manager, Sub-Adviser and
Sub-Administrator. RCM, the Manager, is located
at Four Embarcadero Center, San Francisco, California
94111. The Manager retains its affiliate, RCM AP, as Sub-Adviser
to manage the Funds investments. RCM AP is located at
21st Floor, Cheung Kong Centre, 2 Queens Road
Central, Hong Kong.
RCM was founded as Rosenberg Capital Management and began
managing assets in 1970. RCM is wholly owned by RCM US Holdings
LLC (US Holdings). US Holdings is a Delaware limited
liability company. RCM AP was formed in 2006 and licensed by the
Hong Kong SFC and registered with the SEC in January of 2007.
RCM AP is succeeding to all of Allianz Global Investors Hong
Kong Limiteds equity management business in Hong Kong. RCM
AP and RCM are affiliated companies under common control that
are part of the same investment platform. RCM and RCM AP are
wholly owned indirect subsidiaries of Allianz SE, a publicly
traded insurance and financial services company.
AGIFM is the Funds sub-administrator and has its principal
offices at 1345 Avenue of the Americas, New York, New York 10105.
Legal
Proceedings
The disclosure below relates to AGIFM, certain of its affiliates
and their employees. The events described below occurred prior
to the appointment of AGIFM as sub-administrator. The Manager,
the Sub-Adviser and AGIFM believe that these matters are not
likely to have a material adverse effect on the Fund or their
ability to perform their respective investment advisory and
administration activities relating to the Fund.
In June and September 2004, AGIFM and certain of its affiliates
agreed to settle, without admitting or denying the allegations,
claims brought by the SEC, the New Jersey Attorney General and
the California Attorney General alleging violations of federal
and state securities laws with respect to certain open-end funds
for which the Manager serves as investment adviser. Two
settlements (with the SEC and New Jersey) related to an alleged
market timing arrangement in certain open-end funds
sub-advised by an affiliate of AGIFM. In February 2006, the
plaintiffs voluntarily dismissed RCM from the consolidated
market timing lawsuits. Two settlements (with the SEC and
California) related to the alleged use of cash and fund
portfolio commissions to finance shelf-space
arrangements with broker-dealers for open-end funds. AGIFM and
its affiliates agreed to pay a total of $68 million to
settle the claims related to market timing and
$20.6 million to settle the claims related to shelf-space.
In addition to monetary payments, the settling parties agreed to
undertake certain corporate governance, compliance and
disclosure reforms related to market timing, brokerage
commissions, revenue sharing and shelf-space arrangements, and
consented to cease and desist orders and censures. None of the
settlements alleged that any inappropriate activity took place
with respect to the Fund.
Since February 2004, AGIFM and certain of its affiliates and
their employees have been named as defendants in eleven lawsuits
filed in various jurisdictions, which have been transferred to
and consolidated for pre-trial proceedings in a multi-district
litigation proceeding in the U.S. District Court for the
District of Maryland. The lawsuits generally relate to the same
allegations that are the subject of the regulatory proceedings
discussed above. The lawsuits seek, on behalf of fund
stockholders or the funds themselves, among other things,
unspecified compensatory damages plus interest and, in some
cases, punitive damages, the rescission of investment advisory
contracts, the return of fees paid under those contracts,
restitution and waiver of or return of certain sales charges
paid by fund stockholders.
The Manager, the Sub-Adviser and AGIFM believe that these
matters are not likely to have a material adverse effect on the
Fund or on the Managers, the Sub-Advisers or
AGIFMs ability to perform their respective investment
advisory or administration services relating to the Fund.
The foregoing speaks only as of the date of this document.
19
Other
Matters
The Board of Directors does not know of any matters to be
brought before the Meeting other than the proposals mentioned in
this Proxy Statement. The appointed proxies will vote on any
other business that comes before the Meeting or any adjournment
or postponement thereof in their discretion.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person
or by telephone by officers of the Fund or personnel of AGIFM.
The Fund will reimburse banks, brokers, and other persons
holding the Funds shares registered in their names or in
the names of their nominees for their expenses incurred in
sending proxy material to, and obtaining proxies from, the
beneficial owners of such shares.
Solicitation of proxies for the Proposal is being made primarily
by the mailing of this Proxy Statement with its enclosures on or
about September 22, 2009.
In the event that sufficient votes in favor of the Proposal are
not received by October 28, 2009, the persons named as
appointed proxies on the enclosed proxy card may propose one or
more adjournments of the Meeting to permit further solicitation
of proxies. Any such adjournment will require the affirmative
vote of a majority of the votes entitled to vote at the Meeting
and present thereat in person or by proxy, and will be effective
to adjourn the Meeting without further notice to a date not more
than 120 days following the Record Date. The persons named
as appointed proxies on the enclosed proxy card will vote in
favor of such adjournment those proxies that they are entitled
to vote in favor of the Proposal. They will vote against any
such adjournment those proxies required to be voted against the
Proposal. The costs of any such additional solicitation and of
any adjourned session will be borne by the Fund.
Stockholder
Proposals
Stockholders wishing to submit proposals pursuant to
Rule 14a-8
under the Exchange Act for inclusion in the proxy statement for
the Funds 2010 annual meeting of stockholders should send
their written proposals to the Secretary of the Fund,
c/o Allianz
Global Investors Fund Management LLC, at 1345 Avenue of the
Americas, New York, New York 10105 by May 25, 2010. The
timely submission of a proposal does not guarantee its inclusion.
For nominations of candidates for election as Directors (other
than nominations made by or at the recommendation of the
Directors) or other business to be properly brought before the
annual meeting by a stockholder, the stockholder must comply
with the Funds By-Laws, which, among other things, require
that the stockholder must give timely notice thereof in writing
to the Secretary of the Fund, the stockholder must be a
stockholder of record, and the notice must contain the
information about the nomination or other business that is
required by the Funds By-Laws. To be timely, any such
notice must be delivered to or mailed by certified mail, return
receipt requested, and received at the principal executive
offices of the Fund not later than 90 days nor more than
120 days prior to the date of the meeting; provided,
however, that if less than 100 days notice or prior
public disclosure is given or made to stockholders, any such
notice by a stockholder to be timely must be so received not
later than the close of business on the 10th day following
the earlier of the day on which such notice of the date of the
annual or special meeting was given or such public disclosure
was made.
The Fund may exercise discretionary voting authority with
respect to stockholder proposals for the Meeting that are not
included in the Proxy Statement and form of proxy, but that were
timely received
20
by the Fund. Discretionary voting authority is the ability to
vote proxies that stockholders have executed and returned to the
Fund on matters not specifically reflected on the form of proxy.
By order of the Board of Directors of the Fund
Thomas J. Fuccillo
Secretary
September 22, 2009
21
PROXY CARD
THE KOREA
FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders October 28,
2009
The undersigned hereby appoints Brian Shlissel, Thomas J.
Fuccillo and Lawrence G. Altadonna, and each of them, the
proxies of the undersigned, with full power of substitution in
each of them, to represent the undersigned and to vote all
shares of The Korea Fund, Inc. that the undersigned is entitled
to vote at the Annual Meeting of Stockholders of The Korea Fund,
Inc. to be held at the offices of Allianz Global Investors
Fund Management LLC, 1345 Avenue of the Americas (at
54th
55th Streets),
49th Floor, New York, New York 10105, on Wednesday,
October 28, 2009 at 9:30 a.m., Eastern time, and at
any adjournment or postponement thereof. The undersigned
acknowledges receipt of the Notice of Annual Meeting of
Stockholders and accompanying Proxy Statement and revokes any
proxy previously given with respect to the meeting.
THIS PROXY, IF PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED. IF NO INSTRUCTIONS ARE INDICATED ON A PROPERLY
EXECUTED PROXY, THE UNDERSIGNEDS VOTE WILL BE CAST
FOR THE PROPOSAL. THIS PROXY WILL BE VOTED IN THE
DISCRETION OF THE PERSONS NAMED AS PROXIES WITH RESPECT TO ANY
OTHER MATTER THAT PROPERLY COMES BEFORE THE MEETING.
A separate section of this Proxy Card has been created to permit
the undersigned to express a view as to whether the Fund should
continue in existence in its current form (the
Question). Although the Question will not be called
for a formal vote at the Annual Meeting of Stockholders, the
results of the polling on the Question will be announced at the
Annual Meeting of Stockholders.
Note: Please sign this proxy exactly as your name or
names appear hereon. Each joint owner should sign. Trustees and
other fiduciaries should indicate the capacity in which they
sign. If a corporation, partnership or other entity, this
signature should be that of a duly authorized individual who
should state his or her title.
Signature
Date:
Signature (if held jointly)
Date:
Title if a corporation, partnership or other entity
FOLD
HERE
YOUR VOTE IS IMPORTANT, NO MATTER HOW MANY SHARES YOU OWN. THE
MATTERS WE ARE SUBMITTING FOR YOUR CONSIDERATION ARE SIGNIFICANT
TO THE FUND AND TO YOU AS A FUND STOCKHOLDER. PLEASE
TAKE THE TIME TO READ THE PROXY STATEMENT AND CAST YOUR VOTE AS
DESCRIBED BELOW.
|
|
|
|
Mail:
|
Simply sign, date, and complete the reverse side of this proxy
card and return it in the postage paid envelope provided.
|
|
|
Internet:
|
Log on to www.proxyvote.com. Make sure to have the voting
instruction card available when you plan to vote your shares and
submit your views on the Question.
|
|
|
Phone:
|
Call 1-800-454-8683 and have the voting instruction card
available. Follow the instructions.
|
PROXY
CARD
THE KOREA
FUND, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders October 28,
2009
TO VOTE, MARK ONE BOX IN BLUE OR BLACK INK.
Example: x
|
|
|
|
|
|
|
|
|
PROPOSAL:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.
|
|
Election of Class III Directors
|
|
FOR
|
|
AGAINST
|
|
WITHHOLD
|
|
|
|
|
|
|
|
|
|
1.a.
|
|
Ronaldo A. da Frota Nogueira
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
1.b.
|
|
Richard Silver
|
|
o
|
|
o
|
|
o
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
QUESTION:
|
|
FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
|
|
|
|
|
|
|
|
|
|
Should the Fund continue in existence in its current form?
|
|
o
|
|
o
|
|
o
|
Respond For if you support continuation of the Fund
in its current form. Respond Against if you oppose
continuation of the Fund in its current form.