-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, dgPiQMPta4CCl0Gw/CIIENidnGsuvrqaMakRWPn5WYhQXSVcJ4/yk+QZgG5/h4Fw JmxaEUZGRDcUK//BQTWUzA== 0000203142-95-000007.txt : 19950609 0000203142-95-000007.hdr.sgml : 19950609 ACCESSION NUMBER: 0000203142-95-000007 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19941231 FILED AS OF DATE: 19950306 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: KOREA FUND INC CENTRAL INDEX KEY: 0000748691 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 133226146 STATE OF INCORPORATION: MD FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-04058 FILM NUMBER: 95518751 BUSINESS ADDRESS: STREET 1: 345 PARK AVE STREET 2: C/O SCUDDER STEVENS & CLARK INC CITY: NEW YORK STATE: NY ZIP: 10154 BUSINESS PHONE: 6173305464 N-30D 1 SEMIANNUAL REPORT - THE KOREA FUND, INC. THE KOREA FUND, INC. Semiannual Report December 31, 1994 A closed-end investment company seeking long-term appreciation of capital through investment in Korean securities. Investment objective and policies * long-term capital appreciation through investment in Korean securities Investment characteristics * investments in a broad spectrum of Korean industries * closed-end investment company * first United States investment company authorized to invest in Korean securities * a vehicle for international diversification through participation in the Korean economy GENERAL INFORMATION Executive offices The Korea Fund, Inc. 345 Park Avenue New York, NY 10154 Telephone: Daily net asset value: 212-326-6444 For Fund Information: 1-800-349-4281 Transfer agent, registrar and dividend reinvestment plan agent For account information: 617-328-5000 x6406 State Street Bank and Trust Company P.O. Box 8200 Boston, MA 02266-8200 Custodian Brown Brothers Harriman & Co. Subcustodian-Citibank, N.A.--Seoul office Legal counsel Debevoise & Plimpton Independent Accountants Coopers & Lybrand L.L.P. New York Stock Exchange Symbol -- KF Contents Letter to Shareholders 3 Investment Summary 7 Portfolio Summary 8 Investment Performance 9 Investment Portfolio 11 Financial Statements 19 Financial Highlights 22 Notes to Financials 23 Report of Independent Accountants 27 Tax Information 28 Dividend Reinvestment and Cash Purchase Plan 29 Investment Manager 30 Korean Adviser 30 Officers and Directors 31 Comparisons between changes in the Fund's net asset value per share and changes in the Korea Stock Exchange Index should be considered in light of the Fund's investment policy and objective, the characteristics and quality of the Fund's investments, the size of the Fund, and variations in the won/dollar exchange rate. This report is sent to the shareholders of The Korea Fund, Inc. for their information. It is not a prospectus, circular, or representation intended for use in the purchase or sale of shares of the Fund or of any securities mentioned in the report. Letter to Shareholders Dear Shareholders: During the six months ended December 31, 1994, the net asset value (NAV) per share of your Fund rose 10.7% from $18.66 to $20.65 after distributions of $0.15 per share. These distributions were from long-term capital gains. The Fund's closing share price on the New York Stock Exchange on December 31, 1994, was $22.75, a 10.17% premium over net asset value. Over the same period the index of the Korea Stock Exchange rose from 933.36 to 1027.39, an increase of 10.1%, and the Korean won rose 2.0% in value relative to the U.S. dollar from 0.001241 to 0.001266. The Portfolio The Fund is broadly diversified by industry sector. As of December 31, 1994, 16.9% of the Fund's portfolio was invested in electronics; 11.9% in telecommunications; 2.1% in chemicals; 8.9% in the construction and building material sector and 11.2% in the automotive sector. Since the September 1994 report, we have made a number of adjustments to the portfolio. We liquidated holdings of Sunkyong Industrial, Il Dong Pharmaceuticals and Dae Ryung Industries. We have also reduced a number of holdings in the portfolio. With the proceeds from these sales we have taken a position in Kumho Preferred, Dongsuh Securities Preferred, Kumho Construction Preferred and Daewoong Pharmaceuticals. The Fund's five largest equity investments in order of market value are as follows: Samsung Electronics Co., Korea Mobile Telecom, Hyundai Motor Services, Keum Kang Ltd. and Samsung Fire and Marine Insurance Co. As a group, these holdings account for 36% of the equity portfolio. All of these companies have been described in previous reports, so we have selected five others to continue our practice of providing you with descriptions of your Fund's holdings: Korea Green Cross Korea Green Cross is Korea's second largest drug manufacturer and has the world's largest market share for hepatitis vaccines. It offers a wide line of ethical products, especially vaccines. Prescription drugs account for 80% of total sales. Sales grew as a result of steady overseas demand for hepatitis vaccines and domestic sales of new products such as anti-cancer and anti-viral agents. The company plans to introduce eight new products, including a vaccine for chicken pox. Sammi Steel Sammi Steel is Korea's largest and the world's third largest specialty steel maker. It commenced operations as Korea's first specialty steel maker in 1969 and now controls about 41% of the production of domestic stainless steel sheets and 36% of the production of specialty steel. The company has the capacity to produce 1.5 million tons of 1,800 kinds of steel products annually. Sales rose due to strong demand from the domestic automotive, shipbuilding and machinery industries. In June 1989, Sammi Steel purchased the special steel production and distribution division of Rio Algom, Atlas Specialty Steels and Atlas Stainless Steels, and Al Tech Specialty Steel in New York. Shinwon Shinwon is the largest exporter of sweaters in Korea. It is expanding domestic sales by increasing retail outlets and brand promotion activities. Shinwon has added to its product line and now sells sweaters, knitwear, jackets, carpet and handbags. By setting up operations in low-cost countries such as China, Shinwon has substantially improved its export competitiveness. The Hong Kong subsidiary has taken over the ownership of its Chinese and Indonesian plants. In the future, the company plans to set up apparel plants in Russia and Southeast Asia, as well as a sweater plant in South America. Haitai Confectionery Haitai Confectionery is Korea's oldest and second largest confectionery company. It is the industry leader in a variety of confectionery products such as biscuits, sweets, chocolates, ice creams and chewing gum. The company introduced cavity preventing gum in the first half of 1994. As the parent company of the Haitai group, it has eight affiliates in industries ranging from food and beverage manufacturing to service, retail and trading. Haitai Confectionery entered the European and U.S. markets with the shipment of gum to the UK and a contract to export candy for Sunkist. Tongyang Nylon Tongyang Nylon is Korea's largest manufacturer of nylon and tire cords. The company has expanded into a wide range of businesses, including electronics, synthetic resins, PET bottles and engineering plastics. It has added production facilities for propylene and polypropylene, which have commenced full commercial operations. Tong Yang Nylon is also planning production of parts for airbags used in automobiles. It has started construction of caprolactam and staple fiber plants in Anyang. The company plans to sell its Taejon plant and transfer some Anyang production facilities to Sri Lanka. Stock Market, Economy and Politics During the six-month period ended December 31, 1994, the Korea composite Stock Price Index reached a historical high of 1138.75 on November 8, 1994 but since then the market began to decline sharply recording 1027.39 on December 31, 1994. Among the most significant causes for the decline of stock prices were the government's tight monetary policy to control inflation and investors' concerns over high interest rates. The Bank of Korea announced that the Korean economy is estimated to have grown 8.3% in 1994. This higher than expected growth was mainly from strong industrial production activities, increased facilities investments and strong exports as the world economy has improved. In 1994, exports and facilities investments are estimated to have increased by around 17% and 20%, respectively. The level of inflation, as measured by the Consumer Price Index, is around 5.7%. Looking forward, the Korean economy is expected to grow approximately 7% to 7.5% in real terms in 1995. The major factors for this strong growth will be increasing exports, government infrastructure spending and a pick up in domestic consumer spending. Inflation will be around 6%. Inflationary pressures center around rising consumer spending, increases in public utility rates and the level of wage rate increases. With the Korean economy growing faster than originally expected, inflation became a major government concern. The strength of the Korean economy with heavy facilities investments and large foreign capital inflow has led to concerns of overheating and particularly high inflation. As a result, fears of tighter liquidity by the government have driven the interest rate on three-year corporate bonds (the benchmark Korean interest rate) up by approximately 2% in 1994 and have negatively affected the stock market. The interest rate on three-year corporate bonds was around 14.25% on December 31, 1994. While concerns over inflation and higher interest rates have been recent negative factors, there are some major positives as well. These include Korea's strong economic fundamentals: high GDP growth and strong corporate earnings outlook. Furthermore, the introduction of the real name system on real estate transactions on July 1, 1995, the expected increase in the foreign ownership limitation of Korean shares and the favorable tax treatment of Korean shares for securities transactions will make the stock market more attractive relative to other forms of investment. The average net profit of Korean listed manufacturing companies has risen approximately 60-70% in 1994 and will rise by more than 25 to 30% in 1995. The reduced financing costs during the past two years and strong demand from overseas markets for Korean products have helped Korean companies achieve higher profits. On December 1, 1994, the government increased the foreign ownership limit by two percent to 12%, except for POSCO and KEPCO, for which the limit remains 8%. It is expected that the limit will be increased to 15% during 1995. As the market opens up further to foreign investors, more overseas capital inflow is expected, adding to liquidity. The successful implementation of the real name system for financial transactions in 1993 has prompted the government to announce that the same real name system will be implemented for real estate transactions, starting July 1, 1995. The main purpose of the law is to discourage real estate speculation and prevent property prices from rising out of control. The new law bans the current practice of borrowing names for property registration, thereby avoiding taxes. Before the law is implemented, many property holdings are expected to be sold and the proceeds may flow into the stock market. The government's tax reform plan will be another positive factor for the market. The government plans to impose a tax on individual aggregate financial income exceeding 40 million won (approximately $50,000) beginning in 1996. However, capital gains on stock investments will not be taxed until after 1998. Since the imposition of a capital gains tax on stock transactions will be deferred, a significant portion of assets invested in other financial instruments is expected to flow into the stock market. Developments on the political front also look favorable. Recently, the United States and North Korea announced that they would lift restrictions on the entry of merchant ships and commodities between the two countries. This recent development clearly indicates that North Korea is ready to open its economy to the West in order to improve domestic conditions. Economic cooperation between North Korea and the outside world would facilitate economic development of the North. It will also reduce the possibility of a sudden collapse of the North Korean economy and hence the burden to South Korea once re-unification takes place. In order to take advantage of this new opportunity, many South Korean business leaders went to North Korea to establish joint ventures in the special free trade economic zone of Rajin-Sonbong, designated by the North Korean government for foreign investments. Our stock market outlook remains positive. Many Korean companies have very attractive valuations because of strong future earnings expectations. In addition, a significantly improved political and social environment will also have a positive impact. Ongoing government reforms, industrial structural adjustments, and accelerated financial liberalization will improve investors' confidence and continue to provide substantial and attractive investment opportunities. Dividend Reinvestment Plan The Korea Fund invests with a long-term view. Capital gains distributions will vary from year to year, depending on investment conditions and portfolio considerations. The Fund's Dividend Reinvestment and Cash Purchase Plan offer you a convenient way to have your dividends and capital gains distributions reinvested in shares of the Fund. Your participation is automatic unless you or the bank broker or other nominee holding shares beneficially owned by you specifies otherwise. We believe this Plan is attractive for shareholders. Its features are more fully described on page 29. Of particular interest is the ability of Plan participants to reinvest their dividends and capital gains distributions at up to 5% discount to the Fund's share price on the New York Exchange (but not less than the net asset value) when the Fund's shares are selling at a premium to net asset value. A Team Approach to Investing The Korea Fund, Inc. is managed by a team of Scudder investment professionals who each play an important role in the Portfolio's management process. Team members work together to develop investment strategies and select securities for the Portfolio. They are supported by Scudder's large staff of economists, research analysts, traders, and other investment specialists who work in our offices across the United States and abroad. We believe Scudder's team approach benefits Korea Fund investors by bringing together many disciplines and leveraging Scudder's extensive resources. Lead Portfolio Manager John J. Lee has set Fund investment strategy and overseen its daily operation since 1991. Mr. Lee joined Scudder's global equity area in 1991. Nicholas Bratt, Portfolio Manager, has been a member of the Portfolio team since 1984 and has over 20 years of experience in worldwide investing. Mr. Bratt, who has been at Scudder since 1976, is the head of Scudder's Global Equity Department. Other Information The Fund's NAV is published every Monday in The Wall Street Journal under the heading "Closed End Funds." The Fund's NAV is also published in The New York Times and Barron's. As a service to overseas shareholders, the Fund's NAV is listed daily in The Financial Times ("FT"). For your information the NAV of the Fund and other Scudder managed closed-end funds can be found in the "FT Managed Funds Service" section under the heading "other offshore funds" below the Scudder, Stevens & Clark banner. We are pleased that you have chosen to invest in The Korea Fund, Inc. and we welcome any questions or comments you may have. Respectfully, /s/Nicholas Bratt /s/Juris Padegs Nicholas Bratt Juris Padegs President Chairman of the Board The Korea Fund, Inc. Investment Summary as of December 31, 1994 - ----------------------------------------------------------------------------- Historical Information Life of Fund
Total Return (%) --------------------------------------------------------------- Market Value Net Asset Value(a) Index(b) ------------------- ------------------- ------------------- Average Average Average Cumulative Annual Cumulative Annual Cumulative Annual ------------------- ------------------- ------------------- Current Quarter -12.87 -- -3.68 -- -2.20 -- Fiscal Year to Date 4.03 -- 11.32 -- 10.07 -- One Year -4.64 -4.64 24.84 24.84 18.61 18.61 Three Year 85.05 22.77 101.00 26.20 68.17 18.92 Five Year -16.15 -3.46 41.05 7.12 13.08 2.49 Ten Year 685.07 22.88 786.09 24.38 621.18 21.84
- ----------------------------------------------------------------------------- Per Share Information and Returns (a) Yearly periods ended December 31 A chart in the form of a bar graph appears here, illustrating the Fund Total Return (%) and Index Total Return (%) with the exact data points listed in the table below. 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 ------------------------------------------------------------------------------------- Net Asset Value (b). $ 4.46 $ 8.16 $11.28 $15.93 $18.55 $11.10 $10.55 $10.62 $16.64 $20.65 Income Dividends.... $ .18 $ .11 $ .29 $ .11 $ .08 $ -- $ .06 .04 .01 -- Capital Gain Distributions....... $ -- $ .03 .68 1.74 1.88 2.20 .34 .20 -- .15 Total Return (%).... 22.69 85.05 44.48 55.97 22.79 -28.36 -2.05 2.71 56.77 24.84
(a) Total investment return based on per share net asset value reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value of the Fund during each period. (b) Net asset value per share through 1988 has been adjusted for a 200% stock dividend paid in October 1988. (c) Korea Stock Price ("KOSPI") Past results are not necessarily indicative of future performance of the Fund. The Korea Fund, Inc. Portfolio Summary as of December 31, 1994 - ----------------------------------------------------------------------------- Diversification - ----------------------------------------------------------------------------- Common Stocks 90% Convertible Bonds 7% Preferred Stocks 3% ---- 100% ==== A graph in the form of a pie chart appears here, illustrating the exact data points in the above table. - ----------------------------------------------------------------------------- Sectors - ----------------------------------------------------------------------------- Sector breakdown of the Fund's equity securities Technology 17% Financial 13% Communications 12% Durables 12% Construction 9% Manufacturing 8% Consumer Staples 7% Consumer Discretionary 6% Health 4% Other 12% ---- 100% ==== A graph in the form of a pie chart appears here, illustrating the exact data points in the above table. - -------------------------------------------------------------------------- Ten Largest Equity Holdings - -------------------------------------------------------------------------- 1. Samsung Electronics Co., Ltd. Major electronics company 2. Korea Mobile Telecom Mobile telecommunication company 3. Hyundai Motor Services Co., Ltd. Auto parts and services 4. Keum Kang Co., Ltd. Construction company and manufacturer of building materials 5. Samsung Fire and Marine Insurance Insurance company 6. Cheil Food and Chemical Co., Ltd. Korea's largest sugar refiner and major integrated food processor 7. Korea Long Term Credit Bank Major commercial bank 8. Hansol Paper Manufacturing Co., Ltd. Paper manufacturer 9. Hankook Tire Manufacturing Co., Ltd. Major tire manufacturer 10. Yuhan Corporation Pharmaceutical corporation The Korea Fund, Inc. Investment Performance (MOUNTAIN CHART TITLE) KOREA FUND INVESTMENT PERFORMANCE History (in terms of N.Y.S.E. Value) of a $10,000 Investment in Fund Shares Assuming Reinvestment of Capital Gains and Income Distributions Through the Fund's Dividend Reinvestment Plan vs. the S&P 500*
(CHART DATA) CAPITAL GAINS SHARE VALUE OF TOTAL SHARE DISTRIBUTION INITIAL S&P TOTAL VALUE REINVESTED INVESTMENT RETURN $10000 $10000 $10000 $10000 11983 11983 11983 9972 11875 11875 11875 10159 11458 11458 11458 11095 12292 12292 12292 11906 11787 11250 11250 11422 15393 14692 14692 13395 20632 19692 19692 15286 29440 27817 27817 16186 32537 30709 30625 15054 30103 28411 28333 15905 56221 53061 52917 19304 62087 58597 58438 20265 67523 63039 62396 21689 51016 47628 45938 16801 73921 69011 66563 17755 65476 61127 58958 18925 59075 54750 50000 18993 80516 74621 65625 19608 108121 100205 88125 21000 97003 89900 79063 22837 133542 123540 105000 25283 109297 101112 85938 25801 73983 68442 57188 25017 71567 66198 55313 26571 44506 41173 30625 22930 48402 44777 31250 24976 56630 52389 36563 28611 54694 50598 35313 28520 57251 52736 36250 30052 50380 46407 31563 32576 47388 43651 29688 31761 46392 41813 28438 32345 49876 45787 30625 33368 57001 52328 35000 35054 52421 48123 32188 36585 61073 56068 37500 36763 59037 54197 36250 37711 97766 89706 60000 38587 78417 71952 48125 37122 89619 82230 55000 37277 107003 98181 65313 39097 93227 85541 56875 39091 (Data plotted quarterly from 8/84 to 12/31/94.)
(MOUNTAIN CHART TITLE) KOREA FUND INVESTMENT PERFORMANCE History (in terms of Net Asset Value) of a $10,000 Investment in Fund Shares Assuming Reinvestment of Capital Gains and Income Distributions Through the Fund's Dividend Reinvestment Plan* (CHART DATA)
CAPITAL GAINS TOTAL NET DISTRIBUTIONS NET ASSET VALUE OF ASSET VALUE REINVESTED INITIAL INVESTMENT 10000 10000 10000 10072 10072 10072 10268 10269 10268 10197 10197 10197 10287 10287 10287 10083 9624 9624 12598 12025 12025 16796 16030 16030 21224 20054 20054 23020 21726 21667 23315 22004 21944 31873 30082 30000 31788 30001 29918 31515 29422 29122 33685 31447 30332 38620 36055 34776 41695 38926 37545 40580 37609 34346 52539 46693 42823 62236 57679 50726 55541 51474 45269 65403 60505 51425 64510 59679 49866 60372 55851 46667 50252 46489 38844 42972 39754 29570 46216 42755 29839 45050 41676 29086 42750 39558 27608 45385 41806 28737 45269 41699 28360 54322 50039 34032 46127 42489 28898 42982 39467 26398 46494 42683 28549 46844 43004 28764 49908 45818 30645 50128 46018 30780 72886 66877 44731 74814 68646 46914 81734 74896 50162 94467 86679 57662 90990 83489 55511 (Data plotted quarterly from 8/84 to 12/31/94.) The data set forth above should not be construed as an indication of the record of a shareholder's investment in the Fund based on market prices; nor should it be construed as a representation of the future performance of the Fund's net asset value. * The Korea Fund, Inc. performance charts make the following key assumptions: 1. The data have been adjusted to reflect a stock dividend paid in October 1988. 2. Investment income reinvested at the greater of the following on the valuation date: (a) Net asset value per share or (b) 95% of the mean market price per share. 3. No adjustments have been made for U.S. income taxes. Korean taxes are reflected. 4. Initial $10,000 investment was made at initial public offering price and at initial net asset value price. The Standard & Poor's 500 Stock Index is a widely followed, unmanaged index of 500 industrial, transportation, utility and financial companies widely regarded as representative of the equity market in general.
[LOGO]The Korea Fund, Inc. Investment Portfolio as of December 31, 1994 ================================================================================
Principal Market Amount (e) Value ($) - ----------------------------------------------------------------------------------------------------------------------------------- COMMERCIAL PAPER 0.2% 1,451,000 CIT Group Holdings Inc., 1/3/95 (Cost $1,450,512) . . . . . . 1,450,512 ------------- - ----------------------------------------------------------------------------------------------------------------------------------- CONVERTIBLE BONDS 6.8% CONSUMER DISCRETIONARY 0.9% Apparel & Shoes 2,000,000,000 Shinwon, 6%, 12/31/96 (Major apparel manufacturer) (c) . . . 5,461,626 ------------- CONSUMER STAPLES 0.8% Food & Beverage 0.7% 800,000,000 Crown Confectionery Co., 3%, 12/31/97 (Major producer of snacks) (c) . . . . . . . . . . . . . 1,417,530 2,000,000,000 Haitai Confectionery Co., 1%, 6/30/98 (Major producer of snacks) (c) . . . . . . . . . . . . . . . . . . . . 2,643,055 ------------- 4,060,585 ------------- Textiles 0.1% US$ 2,000,000 Kolon Industries, Inc., 0.25%, 12/31/04 (Leading manufacturer of nylon, polyester yarn and fabrics) . . . 890,000 ------------- HEALTH 1.3% Pharmaceuticals 1.3% 3,000,000,000 Korean Green Cross Corp., 1%, 12/31/97 (Pharmaceutical company) (c) . . . . . . . . . . . . . 4,569,081 2,400,000,000 Kukje Corp. #40, 12%, 12/31/97 (Pharmaceutical company) (c) . . . . . . . . . . . . . . . . . . . . . . 2,541,216 400,000,000 Yuhan Corporation, 5.5%, 12/31/97 (Pharmaceutical company) (c) . . . . . . . . . . . . . . 532,395 ------------- 7,642,692 ------------- DURABLES 0.4% Tires 2,000,000,000 Kumho Co., 4%, 12/31/97 (Korea's largest tire manufacturer) (c) . . . . . . . . . . . . . . . . . . . 2,317,361 ------------ MANUFACTURING 1.8% Containers & Paper 4,000,000,000 Hansol Paper Manufacturing Co., Ltd., 3%, 12/31/99 (Paper manufacturer) (c) . . . . . . . . . . . . . . . . 4,584,681 2,500,000,000 Hansol Paper Manufacturing Co., Ltd., 1%, 12/31/99 (c) . . . 2,865,426 1,000,000,000 Sepong, 7%, 12/31/96 (Paper manufacturer) (c) . . . . . . . . 3,783,756 ------------ 11,233,863 TECHNOLOGY 0.2% ------------ Electronic Components/ Distributors 500,000,000 Anam Electronics, 5.5%, 12/31/96 (Major consumer electronics company) (c) . . . . . . . . . . . . . . . . 668,412
The accompanying notes are an integral part of the financial statements. [LOGO] The Korea Fund, Inc. Investment Portfolio (continued) ================================================================================
Principal Market Amount (e) Value ($) - ------------------------------------------------------------------------------------------------------------------------------------ 250,000,000 Anam Electronics, 6%, 12/31/96 (c) . . . . . . . 210,409 CHF 500,000 Samsung Electromechanics Co., Ltd., 0.25%, 12/31/00 (Major electronics parts company) . . 270,992 ---------- 1,149,813 ---------- ENERGY 0.8% Oil & Gas Production 3,000,000,000 Yukong, Ltd., 1%, 12/31/98 (Korea's largest oil refiner) (c) . . . . . . . . . . . . . . . 3,839,016 2,000,000,000 Yukong, Ltd., 2%, 12/31/97 (c) . . . . . . . . . 1,016,720 ---------- 4,855,736 ---------- METALS AND MINERALS 0.3% Steel & Metals 1,000,000,000 Kangwon Industry, 6%, 6/30/97 (Steel company) (c). . . . . . . . . . . . . . 724,120 500,000,000 Sammi Steel, 4%, 12/31/97 (Specialty steel company) (c) . . . . . . . . . . . . . . 963,614 ---------- 1,687,734 ---------- CONSTRUCTION 0.3% Miscellaneous 1,000,000,000 Sungwon Construction, 5%, 12/31/97 (Construction company) (c) . . . . . . . . . . 1,747,057 ---------- TOTAL CONVERTIBLE BONDS (Cost $38,948,910) . . . 41,046,467 ---------- - ----------------------------------------------------------------------------------------------------------------------------- PREFERRED STOCKS 2.7% Shares ------ CONSUMER STAPLES 0.3% Alcohol & Tobacco 1,110 Oriental Brewery Co., Ltd. (Korea's largest brewery) . . . . . . . . . . . . . . . 14,339 ---------- Food & Beverage 38,690 Cheil Food and Chemical Co., Ltd. (Korea's largest sugar refiner and major integrated food processor) . . . . . 1,161,288 52,280 Haitai Confectionery Co. . . . . . . . . . . . . 536,307 ---------- 1,697,595 ---------- FINANCIAL 0.7% Insurance 0.2% 6,175 Samsung Fire and Marine Insurance (Insurance company) (d) . . . . . . . . . . . . . . . . . 998,511 ---------- Other Financial Companies 0.5% 100,000 Boo Kook Securities (Securities company) . . . . . 1,342,452 100,000 Boram Securities (Securities company). . . . . . . 1,228,470 50,000 Dongsuh Securities (Securities company). . . . . . 633,232 3,200 Lucky Securities (Securities company). . . . . . . 53,090 ---------- 3,257,244 ----------
The accompanying notes are an integral part of the financial statements.
============================================================================================================================ Market Shares Value ($) - ---------------------------------------------------------------------------------------------------------------------------- DURABLES 1.1% Automobiles 96,779 Hyundai Motor Services Co., Ltd. (Auto parts and services) . . . . . . . . . . . . . . . . . . . 2,978,381 9,677 Hyundai Motor Services Co., Ltd. (New) (b) . . . . . 297,810 388,000 Kumho Co. . . . . . . . . . . . . . . . . . . . . . 3,194,022 ----------- 6,470,213 ----------- MANUFACTURING 0.0% Chemicals 19,375 Oriental Chemical Industries Co., Ltd. (Manufacturer of specialty chemicals) . . . . . . . . . . . . 368,066 ----------- TECHNOLOGY 0.5% Electronic Components/ Distributors 8,198 Samsung Electron Devices (Korea's largest manufacturer of CRT and picture tubes) . . . . 358,195 30,920 Samsung Electronics Co., Ltd. (Major electronics company) (d) . . . . . . . . . . . . . . . . . 2,543,930 ----------- 2,902,125 ----------- ENERGY 0.0% Oil Companies 1,174 Ssangyong Oil Refining Co. (Major oil refiner) . . . . . . . . . . . . . . 35,089 ----------- CONSTRUCTION 0.1% Homebuilding 45,540 Kumho Construction and Engineering (Engineering and construction company) . . . . . . . . . . . 392,188 ----------- TOTAL PREFERRED STOCKS (Cost $16,756,797). . . . . . 16,135,370 ----------- - ---------------------------------------------------------------------------------------------------------------------------- COMMON STOCKS 90.3% CONSUMER DISCRETIONARY 5.2% Apparel & Shoes 0.8% 93,345 Ssang Bang Wool Co. (Leading underwear manufacturer) . . . . . . . . . . . . . . . . . 4,716,902 Department & ----------- Chain Stores 4.4% 165,730 Hwa Sung Industries (Department store) . . . . . . . 10,494,554 114,577 Shinsegae (Major department store chain) . . . . . . 11,826,273 110,343 Taegu Department Store (Department store). . . . . . 4,388,007 ----------- 26,708,834 ----------- CONSUMER STAPLES 6.2% Alcohol & Tobacco 0.5% 114,991 Oriental Brewery Co., Ltd. 2,898,076 ----------- Food & Beverage 4.7% 282,098 Cheil Food and Chemical Co., Ltd. . . . . . . . . . 18,685,063 9,000 Haitai Confectionery Co. . . . . . . . . . . . . . . 182,371
The accompanying notes are an integral part of the financial statements. [LOGO]The Korea Fund, Inc. Investment Portfolio (continued) ================================================================================
Market Shares Value ($) - ----------------------------------------------------------------------------------------------------------------------------- 25,000 Lotte Chilsung Beverage Co. (Korea's largest producer of non-alcoholic beverages) . . . . . . . . 4,527,609 32,271 Nhong Shim Co. (Manufacturer of instant noodles and snacks) . . . . . . . . . . . . . . . . . . . . 1,438,626 70,531 Tongyang Confectionery (Major producer of snacks) 2,974,522 16,927 Tongyang Confectionery (New) (b) . . . . . . . . . . . . . 718,154 ------------ 28,526,345 ------------ Textiles 1.0% 70,000 Cheil Industries (Korea's largest woolen yarn and fabric manufacturer) . . . . . . . . . . . . . . . . 2,189,716 9,739 Cheil Industries (New) (b) . . . . . . . . . . . . . . . . 303,419 30,000 Sam Yang Co., Ltd. (Korea's largest manufacturer of polyester staple fiber) . . . . . . . . . . . . . . 1,253,799 3,040 Taekwang Industrial Co., Ltd. (Major producer of acrylic fiber) . . . . . . . . . . . . . . . . . . . 1,828,774 16,500 Tongyang Nylon (Korea's largest producer of nylon filament yarn) . . . . . . . . . . . . . . . . . . . 585,106 ------------ 6,160,814 ------------ HEALTH 3.0% Pharmaceuticals 69,173 Chong Kun Dang Co., Ltd. (Pharmaceutical company). . . . . 3,898,428 20,000 Daewoong Pharmaceutical Co. (Pharmaceutical company) . . . . . . . . . . . . . . . . . . . . . . 1,415,907 137,548 Yuhan Corporation . . . . . . . . . . . . . . . . . . . . 12,716,570 ------------- 18,030,905 ------------- COMMUNICATIONS 11.9% Cellular Telephone 100,702 Korea Mobile Telecom (Mobile telecommunication company) (d) . . . . . . . . . . . . . . . . . . . . 71,776,957 ------------- FINANCIAL 12.4% Banks 5.6% 140,180 Cheju Bank (Regional bank) 2,378,941 99,848 Cheju Bank (New) (b)(c) . . . . . . . . . . . . . . . . . 1,694,482 200,000 Hanil Bank (Major commercial bank) . . . . . . . . . . . 2,608,916 42,929 Hanil Bank (New) (b) . . . . . . . . . . . . . . . . . . 538,244 60,000 Korea Exchange Bank (Major commercial bank) . . . . . . . 813,070 36,000 Korea First Bank (Major commercial bank) . . . . . . . . 501,520 524,725 Korea Long Term Credit Bank (Major commercial bank) 16,281,361 112,696 Korea Long Term Credit Bank (New) (b) . . . . . . . . . . 3,411,138 242,000 Shin Han Bank (Major commercial bank) . . . . . . . . . . 5,976,444 ------------- 34,204,116 -------------
The accompanying notes are an integral part of the financial statements.
================================================================================================================================== Market Shares Value ($) - --------------------------------------------------------------------------------------------------------------------------------- Insurance 4.9% 63,380 Daehan Fire and Marine Insurance (Insurance company) . . . . . . . . . . . . . . . . . . . 2,030,793 21,996 Daehan Fire and Marine Insurance (New) (b)(c) . . . 704,786 68,000 Hyundai Fire and Marine Insurance (Insurance company) . . . . . . . . . . . . . . . . . . 3,522,290 26,656 Hyundai Fire and Marine Insurance (New) (b)(c) . . 1,380,738 49,912 Lucky Insurance (Insurance company). . . . . . . . 2,654,894 67,867 Samsung Fire and Marine Insurance (d). . . . . . . 19,081,147 ----------- 29,374,648 ----------- Other Financial Companies 1.9% 2,000 Boo Kook Securities . . . . . . . . . . . . . . . 39,007 14,834 Boo Kook Securities (New) (b)(c) . . . . . . . . . 289,316 188,752 Dong Ah Securities (Securities company). . . . . . 3,179,333 120,000 Hanyang Securities (Securities company). . . . . . 1,854,103 17,191 Hanyang Securities (New) (b)(c). . . . . . . . . . 265,616 40,800 Hyundai Securities (Securities company). . . . . . 1,085,106 8,510 Samsung Securities (Securities company). . . . . . 366,439 40,000 Shinyoung Securities (Securities company). . . . . 1,200,608 123,600 Ssangyong Investments and Securities (Securities company) . . . . . . . . . . . . . . . . . . 3,240,274 12,373 Ssangyong Investments and Securities (New) (b) . . 296,162 ----------- 11,815,964 ----------- SERVICE INDUSTRIES 2.3% Miscellaneous Commercial Services 227,863 Samsung Co., Ltd. (Trading company) . . . . . . . 9,032,563 22,179 Samsung Co., Ltd. (New) (b). . . . . . . . . . . . 862,329 153,000 Sunkyong Ltd. (Trading company). . . . . . . . . . 3,875,380 ----------- 13,770,272 ----------- DURABLES 10.3% Automobiles 9.7% 169,216 Hankook Tire Manufacturer Co., Ltd. (Major tire manufacturer) . . . . . . . . . . . . . . . . . 16,180,101 116,209 Hyundai Motor Co., Ltd. (Korea's largest auto manufacturer) . . . . . . . . . . . . . . . . 5,931,133 332,545 Hyundai Motor Services Co., Ltd. . . . . . . . . . 16,762,020 91,228 Hyundai Motor Services Co., Ltd. (New) (b)(c). . . 4,598,372 113,341 Mando Machinery Co. (Major auto parts manufacturer). . . . . . . . . . . . . . . . . 7,535,971 35,000 Samlip Industries (Auto parts manufacturer). . . . 1,945,922 90,000 Yoosung Enterprise (Leading manufacturer of engine parts) . . . . . . . . . . . . . . . . 5,596,505 ----------- 58,550,024 -----------
The accompanying notes are an integral part of the financial statements. [LOGO] The Korea Fund, Inc. Investment Portfolio (continued)
================================================================================================================================== Market Shares Value ($) - ---------------------------------------------------------------------------------------------------------------------------------- Leasing Companies 0.6% 93,000 Korea Development Leasing Co. (Largest leasing company in Korea) . . . . . . . . . . . . . . . 4,004,559 ----------- MANUFACTURING 6.5% Chemicals 2.1% 37,540 Korea Chemical Co. (Paint company) . . . . . . . . 4,659,220 217,056 Lucky, Ltd. (Korea's largest integrated chemical company) . . . . . . . . . . . . . . . . . . . 6,322,553 12,797 Lucky, Ltd. (New) (b) . . . . . . . . . . . . . . 363,035 44,322 Oriental Chemical Industries Co., Ltd. . . . . . . 1,599,768 3,078 Oriental Chemical Industries Co., Ltd. (New) (b) . 109,149 ----------- 13,053,725 ----------- Containers & Paper 1.9% 177,438 Hansol Paper Manufacturing Co., Ltd. . . . . . . 9,550,551 33,274 Hansol Paper Manufacturing Co., Ltd. (New) (b) . . 1,744,504 ----------- 11,295,055 ----------- Diversified Manufacturing 1.7% 22,579 Hyundai Precision Industry Co. (Leading transport container manufacturer and machinery producer) . . . . . . . . . . 689,151 194,890 Samsung Heavy Industries Co., Ltd. (Machinery manufacturer) . . . . . . . . . . . . . . . 8,095,735 35,349 Samsung Heavy Industries Co., Ltd. (New) (b). . 1,432,584 ----------- 10,217,470 ----------- Electrical Products 0.8% 77,000 Kyungwon Century Co., Ltd. (Major manufacturer of heating and cooling equipment). . . . . . 3,257,092 37,086 Kyungwon Century Co., Ltd. (New) (b). . . . . . 1,362,074 ----------- 4,619,166 ----------- Miscellaneous 0.0% 1,030 Goldstar Industrial Systems Co. (New) (b) . . . 43,699 ----------- TECHNOLOGY 16.4% Electronic Components/ Distributors 15.9% 109,643 Goldstar Co. (GDR) (Major electronics manufacturer) . . . . . . . . . . . . . . . 1,672,056 149,751 Samsung Electromechanics Co., Ltd. . . . . . . . 7,491,343 65,346 Samsung Electromechanics Co., Ltd. (New) (b)(c) . 3,268,955 17,322 Samsung Electromechanics Co., Ltd. (New) (b). . . 844,601 78,471 Samsung Electron Devices. . . . . . . . . . . . . 6,260,984 9,896 Samsung Electron Devices Co., Ltd. (New) (b) . . 751,976 491,655 Samsung Electronics Co., Ltd. (d) . . . . . . . 72,621,229 21,652 Samsung Electronics Co., Ltd. (New) (b)(d) . . . 3,154,156 ----------- 96,065,300 -----------
The accompanying notes are an integral part of the financial statements.
============================================================================================================================ Market Shares Value ($) - ---------------------------------------------------------------------------------------------------------------------------- Electronic Data Processing 0.3% 50,000 Trigem Computer Inc. (Major personal computer manufacturer) . . . . . . . . . . . . . . . . . . . . 1,899,696 ----------- Miscellaneous 0.2% 19,840 Youngchang Akki Co., Ltd. (Korea's largest and the world's second largest manufacturer of pianos) . . 1,206,079 ----------- ENERGY 2.3% Oil & Gas Production 24,940 Samchully (Producer and distributor of anthracite and gas) . . . . . . . . . . . . . . . . . 1,936,198 131,757 Ssangyong Oil Refining Co. . . . . . . . . . . . . . . . . 4,522,055 151,389 Yukong, Ltd. . . . . . . . . . . . . . . . . . . . . . . . 7,017,271 9,110 Yukong, Ltd. (New) (b) . . . . . . . . . . . . . . . . . 415,350 ----------- 13,890,874 ----------- METALS AND MINERALS 3.3% Steel & Metals 32,000 Dongkuk Steel Mill Co. (Steel company) . . . . . . . . . . 952,381 22,940 Dongkuk Steel Mill Co. (New) (b) . . . . . . . . . . . . . 656,591 54,732 Hankook Core Co. (Steel company) . . . . . . . . . . . . 1,524,954 165,000 Inchon Iron & Steel (Steel company). . . . . . . . . . . . 7,209,347 249,440 Kia Steel Co, Ltd. (Specialty steel company) . . . . . . . 3,348,612 61,000 Pohang Iron & Steel Co. (Korea's largest steel producer) (d) . . . . . . . . . . . . . . . . . . . . 6,200,585 ----------- 19,892,470 ----------- CONSTRUCTION 8.5% Building Materials 6.1% 24,000 Hanil Cement Manufacturer (Cement manufacturing company) . . . . . . . . . . . . . . . . . . . . . . . 1,793,313 244,337 Keum Kang Co., Ltd. (Construction company and manufacturer of building materials) . . . . . . . . . 21,970,526 58,010 Keum Kang Co., Ltd. (New) (b) . . . . . . . . . . . . . . 1,395,884 197,307 Ssangyong Cement Industrial Co., Ltd. (Major cement company) . . . . . . . . . . . . . . . . . . . 7,546,443 63,000 Sung Shin Cement Co., Ltd. (Major cement company). . . . . 2,872,340 34,000 Tong Yang Cement Co., Ltd. (Major cement company). . . . . 1,248,734 200 Tong Yang Cement Co., Ltd. Warrants (expire 8/18/96) (f) . 145,000 ----------- 36,972,240 ----------- Miscellaneous 2.4% 91,913 Daeho Construction (Construction company) . . . . . . . . 3,724,944 121,660 Han Shin Construction (Construction company) . . . . . . . 1,648,635 16,850 Han Shin Construction (New) (b) . . . . . . . . . . . . . 230,471 103,435 Kumho Construction and Engineering . . . . . . . . . . . 1,716,057
The accompanying notes are an integral part of the financial statements. [LOGO] The Korea Fund, Inc. Investment Portfolio (continued)
============================================================================================================================== Market Shares Value ($) - ------------------------------------------------------------------------------------------------------------------------------ 5,958 Lucky Development (New) (b) . . . . . . . . . . . 141,857 21,388 Samsung Construction Co. (Engineering and construction company) . . . . . . . . . . . 820,740 8,228 Samsung Construction Co. (New) (b) . . . . . . . 299,067 132,450 Sungwon Construction . . . . . . . . . . . . . . 5,720,042 ----------- 14,301,813 ----------- TRANSPORTATION 0.8% Airlines 0.3% 51,827 Korean Airlines Co., Ltd. (Airline) . . . . . . . 1,647,489 6,565 Korean Airlines Co., Ltd. (New) (b) . . . . . . . 199,544 ----------- 1,847,033 ----------- Marine Transportation 0.4% 80,000 Korea Line Corp. (New) (Maritime transportation company) (b) . . . . . . . . . . . . . . . . . 2,360,689 ----------- Trucking 0.1% 13,670 Korea Express Co., Ltd. (General freight transport company) . . . . . . . . . . . . . . . . . . . 657,877 3,555 Korea Express Co., Ltd. (New) (b) . . . . . . . . 167,035 ----------- 824,912 ----------- UTILITIES 1.2% Electric Utilities 0.8% 130,900 Korea Electric Power Co. (Electric Utility) . . . 4,509,220 ----------- Natural Gas Distribution 0.4% 37,600 Daesung Industrial (Natural gas distributor). . . 2,523,810 ----------- TOTAL COMMON STOCKS (Cost $231,010,062) . . . . . 546,061,667 ----------- - ------------------------------------------------------------------------------------------------------------------------------ TOTAL INVESTMENT PORTFOLIO -- 100.0% (Cost $288,166,281) (a) . . . . . . . . . . . 604,694,016 =========== (a) The cost for federal income tax purposes was $288,166,281. At December 31, 1994, net unrealized appreciation for all securities based on tax cost was $316,527,735. This consisted of aggregated gross unrealized appreciation for all securities in which there was an excess of market value over tax cost of $335,318,466 and aggregate gross unrelized depreciation for all securities in which there was an excess of tax cost over market value of $18,790,731. (b) New shares issued during 1994, eligible for a pro rata share of 1994 dividends (Note A). (c) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost of these securities at December 31, 1994 was $44,526,040 (Note A). (d) Equity securities that have met the foreign-ownership limitation valued at a premium in good faith by the Valuation Committee of the Board of Directors. The cost of these securities at December 31, 1994 was $20,962,878 (Note A). (e) Principal amount stated in Korean won unless otherwise noted. CHF Swiss Francs. (f) Non-income producing
The accompanying notes are an integral part of the financial statements. [LOGO] The Korea Fund, Inc. Financial Statements ================================================================================
- -------------------------------------------------------------------------------------------------------------------------- STATEMENT OF ASSETS AND LIABILITIES DECEMBER 31, 1994 - -------------------------------------------------------------------------------------------------------------------------- ASSETS Investments, at market (identified cost $288,166,281) (Note A) . . . . . . . $ 604,694,016 Cash: U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582 Won at market (identified cost $9,695,806) (Note A) . . . . . . . . . . . 9,734,575 Dividend and interest receivable . . . . . . . . . . . . . . . . . . . . . . 1,248,654 Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,747 ------------- Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,681,574 LIABILITIES Payables: Subscription rights purchased (Note A) . . . . . . . . . . . . . . . . . . $ 4,331,159 Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,404 Accrued management fee (Note C) . . . . . . . . . . . . . . . . . . . . . 507,852 Other accrued expenses (Note C) . . . . . . . . . . . . . . . . . . . . . 554,360 ----------- Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,688,775 ------------- Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . . . . $ 609,992,799 ============= NET ASSETS Net assets consist of: Accumulated net investment loss . . . . . . . . . . . . . . . . . . . . . $ (3,082,635) Accumulated net realized gain . . . . . . . . . . . . . . . . . . . . . . 5,059,579 Net unrealized appreciation on: Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,527,735 Won . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,769 Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 3,122 Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,404 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 291,150,825 ------------- Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . . . . $ 609,992,799 ============= NET ASSET VALUE per share ($609,992,799 -:- 29,540,356 shares of common stock issued and outstanding, 50,000,000 shares authorized, $.01 par value) . . $20.65 =====
The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- [LOGO] The Korea Fund, Inc. Financial Statements (continued) ================================================================================ - ------------------------------------------------------------------------------------------------------------------------------- STATEMENT OF OPERATIONS SIX MONTHS ENDED DECEMBER 31, 1994 - ------------------------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME Income: Dividends (net of withholding taxes of $7,004) (Note A) . . . . . . . . $ 52,086 Interest (net of withholding taxes of $84,808) (Note A) . . . . . . . . 970,644 ----------- 1,022,730 Expenses: Management fee (Note C) . . . . . . . . . . . . . . . . . . . . . . . . $ 3,196,290 Directors' fees and expenses (Note C) . . . . . . . . . . . . . . . . . 82,451 Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587,538 Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,168 Services to shareholders . . . . . . . . . . . . . . . . . . . . . . . 29,312 Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . 57,136 Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,925 Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,545 4,105,365 ----------- ----------- Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,082,635) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS Net realized gain during the period on: Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,413,557 Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 117,992 5,531,549 Net unrealized appreciation during the period on: ----------- Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,234,906 Won . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,042 Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 2,574 60,246,522 ----------- ----------- Net gain on investment transactions. . . . . . . . . . . . . . . . . . . . 65,778,071 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . $ 62,695,436 ===========
The accompanying notes are an integral part of the financial statements. - -------------------------------------------------------------------------------- ================================================================================
- --------------------------------------------------------------------------------------------------------------------------- STATEMENTS OF CHANGES IN NET ASSETS - --------------------------------------------------------------------------------------------------------------------------- SIX MONTHS YEAR ENDED ENDED DECEMBER 31, JUNE 30, INCREASE (DECREASE) IN NET ASSETS 1994 1994 - --------------------------------------------------------------------------------------------------------------------------- Operations: Net investment loss . . . . . . . . . . . . . . . . . . . . . . . $ (3,082,635) $ (749,702) Net realized gain from investment transactions . . . . . . . . . . 5,531,549 5,972,730 Net unrealized appreciation on investment transactions during the period . . . . . . . . . . . . . . . . . . . . . . . 60,246,522 179,703,180 -------------- ------------- Net increase in net assets resulting from operations . . . . . . . . 62,695,436 184,926,208 -------------- ------------- Distributions to shareholders from: Net investment income ($.01 per share) . . . . . . . . . . . . . . -- (325,166) -------------- ------------- Net realized gains from investment transactions ($.15 per share) . . . . . . . . . . . . . . . . . . . . . . . (4,359,655) -- -------------- ------------- Fund share transactions: Net proceeds of shares issued in connection with the Fund's fourth tranche offering, net of underwriting commissions of $5,750,000 and expenditures and offering costs of $1,618,000 -- 107,631,989 -------------- ------------- Reinvestment of distributions . . . . . . . . . . . . . . . . . . 1,718,388 106,509 -------------- ------------- INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 60,054,169 292,339,540 Net assets at beginning of period . . . . . . . . . . . . . . . . . . 549,938,630 257,599,090 -------------- ------------- NET ASSETS AT END OF PERIOD (including accumulated net investment loss of ($3,082,635) at December 31, 1994) . . . . . . . . . . . . $ 609,992,799 $ 549,938,630 ============== ============= OTHER INFORMATION INCREASE IN FUND SHARES Shares outstanding at beginning of period . . . . . . . . . . . . . . 29,474,985 22,604,432 Shares issued in connection with the Fund's fourth tranche offering . . . . . . . . . . . . . . . . . . . . . . . -- 6,865,671 Shares issued to shareholders in reinvestment of distributions . . 65,371 4,882 -------------- ------------- Shares outstanding at end of period . . . . . . . . . . . . . . . . . 29,540,356 29,474,985 ============== =============
The accompanying notes are an integral part of the financial statements. - ------------------------------------------------------------------------ [LOGO] The Korea Fund, Inc. Financial Highlights ================================================================================ - -------------------------------------------------------------------------------- THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL STATEMENTS AND MARKET PRICE DATA. - --------------------------------------------------------------------------------
Six Months Ended Years Ended June 30, December 31, ------------------------------------------------------ 1994 1994 1993 1992 1991 1990 - -------------------------------------------------------------------------------------------------------------------------- Net asset value, beginning of period . $18.66 $11.40 $10.75 $10.27 $14.45 $16.84 ----- ----- ----- ----- ----- ----- Income from investment operations (a): Net investment income (loss) . . . . . (.10) (.03) .02 .08 .09 .04 Net realized and unrealized gain (loss) on investment transactions . . . . . . 2.24 7.13 .86 .78 (2.13) (1.99) ----- ----- ----- ----- ----- ----- Total from investment operations . . . 2.14 7.10 .88 .86 (2.04) (1.95) ----- ----- ----- ----- ----- ----- Less distributions from: Net investment income . . . . . . . . -- (.01) (.04) (.06) -- (.08) Net realized gains on investment transactions . . . . . . . . . . . . (.15) -- (.20) (.34) (2.20) (1.88) ----- ----- ----- ----- ----- ----- Total distributions . . . . . . . . . . (.15) (.01) (.24) (.40) (2.20) (1.96) ----- ----- ----- ----- ----- ----- Antidilution resulting from offering of fourth tranche (1994), third tranche (1990), and reinvestment of distributions for shares at market value . . . . . . . . . . . . . -- .22 .01 .02 .06 1.55 ----- ----- ----- ----- ----- ----- Underwriting expenditures and offering costs . . . . . . . . . . . . . . . . -- (.05) -- -- -- (.03) ----- ----- ----- ----- ----- ----- Net asset value, end of period . . . . $20.65 $18.66 $11.40 $10.75 $10.27 $14.45 ===== ===== ===== ===== ===== ===== Market value, end of period . . . . . . $22.75 $22.00 $15.00 $11.38 $14.13 $22.13 ===== ===== ===== ===== ===== ===== TOTAL RETURN Per share market value (%) . . . . . . 4.03** 46.74 34.54 (17.01) (23.57) (26.23) Per share net asset value (%) (b) . . . 11.32** 63.77 8.20 7.87 (14.91) (9.52) RATIOS AND SUPPLEMENTAL DATA Net assets, end of period ($ millions) . 610 550 258 241 228 303 Ratio of operating expenses to average net assets (%) . . . . . . . . . . . . 1.31* 1.37 1.52 1.52 1.47 1.44 Ratio of net investment income (loss) to average net assets (%) (c) . . . . . . (.50)** (.18) .15 .70 .83 .21 Portfolio turnover rate (%) . . . . . . 11.0* 14.3 14.3 18.2 19.2 17.9 * Annualized ** Not annualized (a) Based on monthly average of shares outstanding during each period. (b) Total return based on per share net asset value reflects the effects of changes in net asset value on the performance of the Fund during each period, and assumes dividends and capital gains distributions, if any, were reinvested. These percentages are not an indication of the performance of a shareholder's investment in the Fund based on market value due to differences between the market price of the stock and the net asset value of the Fund during each period. (c) The ratio for the six months ended December 31, 1994 has not been annualized since the Fund believes it would not be appropriate because the Fund's dividend income is not earned ratably throughout the fiscal year (Note A).
- -------------------------------------------------------------------------------- [LOGO] The Korea Fund, Inc. Notes to Financial Statements ================================================================================ A. SIGNIFICANT ACCOUNTING POLICIES ------------------------------- The Korea Fund, Inc. (the "Fund") is registered under the Investment Company Act of 1940, as amended, as a non-diversified, closed-end management investment company. The policies described below are followed consistently by the Fund in the preparation of its financial statements in conformity with generally accepted accounting principles. SECURITY VALUATION. Portfolio securities which are traded on the Korean, U.S., or foreign stock exchanges are valued at the most recent sale price reported on the exchange on which the security is traded most extensively. If no sale occurred, the security is then valued at the calculated mean between the most recent bid and asked quotations. If there are no such bid and asked quotations, the most recent bid quotation is used. Short-term investments having a maturity of sixty days or less are valued at amortized cost. All other securities are valued at fair value as determined in good faith by the Valuation Committee of the Board of Directors including certain investments in Korean equity securities that have met the limit for aggregate foreign ownership and for which premiums to the local stock exchange prices are offered by prospective foreign investors. The aggregate premium ($26,656,775) over the local share price ($149,719,740) for these securities valued by the Valuation Committee was approximately 4.4% of the Fund's net assets at December 31, 1994. Securities valued in good faith by the Valuation Committee amounted to $52,087,740 or 8.5% of the Fund's net assets at December 31, 1994. DIVIDEND INCOME. Korean-based corporations have generally adopted calendar year-ends, and their corporate actions are normally approved by their Boards of Directors and shareholders in the first quarter of each calendar year. Accordingly, dividend income from Korean equity investments is earned and received by the Fund primarily in the first calendar quarter of each year. As a result, the Fund, which has a June 30 year end, receives substantially less dividend income in the first half of its year than in the second half of such year. INCOME TAXES. The Fund's policy is to comply with the requirements of the Internal Revenue Code which are applicable to regulated investment companies and to distribute all of its taxable income to its shareholders. The Fund, accordingly, paid no federal income taxes and no federal income tax provision was required. Under the United States-Korea income tax treaty, as presently in effect, the government of Korea imposes a nonrecoverable withholding tax and resident tax aggregating 16.125% on dividends and 12.9% on interest paid to the Fund by Korean issuers. Under the United States-Korea income tax treaty, there is no Korean withholding tax on realized capital gains. DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is made annually. It is expected that net realized gains from investment transactions during any particular year in excess of available capital loss carryforwards which, if not distributed, would be taxable to the Fund, will be distributed to shareholders. An additional distribution may be made to the extent necessary to avoid the payment of a four percent federal excise tax. The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from generally accepted accounting principles. These differences relate primarily to foreign denominated investments. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund. The Fund uses the identified cost method for determining realized gain or loss on investments for both financial and federal income tax reporting purposes. [LOGO] The Korea Fund, Inc. Notes to Financial Statements (continued) ================================================================================ FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained in U.S. dollars. Foreign currency transactions are translated into U.S. dollars on the following basis: (i) market value of investment securities, other assets and liabilities at the daily rates of exchange, and (ii) purchases and sales of investment securities, dividend and interest income and certain expenses at the rates of exchange prevailing on the respective dates of such transactions. The Fund does not isolate that portion of gains and losses on investments which is due to changes in foreign exchange rates from that which is due to changes in market prices of the investments. Such fluctuations are included with the net realized and unrealized gains and losses from investments. Net realized gain (loss) from won related transactions includes net currency gains and losses between trade and settlement dates on securities transactions, gains and losses arising from the sales of won and gains and losses between the ex and payment dates on dividends, interest, and foreign withholding taxes. At December 31, 1994 the exchange rate for Korean won was U.S. $.001266 to W 1. SUBSCRIPTIONS FOR NEW SHARES. As part of their annual corporate action matters, certain Korean companies offer rights to their shareholders to subscribe to new shares which are eligible for a portion of the dividends paid on existing shares in the year of subscription. The Fund follows a policy of subscribing to new share offerings by Korean companies. OTHER. Investment security transactions are accounted for on a trade-date basis. Dividend income and distributions to shareholders are recorded on the ex-dividend date. Interest income is recorded on the accrual basis. All original issue discounts are accreted for both tax and financial reporting purposes. B. PURCHASES AND SALES OF SECURITIES --------------------------------- For the six months ended December 31, 1994, purchases and sales of investment securities (excluding short-term investments) aggregated $37,361,128 and $33,589,971, respectively. C. RELATED PARTIES --------------- On October 14, 1994, the Fund's shareholders approved a new Investment Advisory and Management Agreement (the "Management Agreement") with Scudder, Stevens & Clark, Inc. (the "Manager"). Under the Management Agreement the Fund agrees to pay the Manager a monthly fee at an annual rate equal to 1.15% of the Fund's month-end net assets up to and including $50,000,000, 1.10% of such net assets on the next $50,000,000, 1% of such assets on the next $250,000,000, 0.95% of such net assets on the next $400,000,000, and 0.90% of such net assets in excess of $750,000,000. Under the Investment Advisory and Management Agreement (the "Agreement") between the Fund and the Manager which was in effect prior to October 14, 1994, the Fund agreed to pay the Manager a monthly fee equal to an annual rate of 1.15% of the first $50,000,000 of month-end net assets of the Fund, 1.10% of such net assets in excess of $50,000,000 up to and including $100,000,000, and 1.00% of the excess over $100,000,000. For the six months ended December 31, 1994, the fee pursuant to such agreements amounted to $3,196,290 which was equivalent to an annual effective rate of 1.02% of the Fund's average month-end net assets. On October 14, 1994, the Fund's shareholders approved a new Research and Advisory Agreement (the "Advisory Agreement") with Daewoo Capital Management Co., Ltd (the "Korean Adviser"), whereby the Korean Adviser provides such investment advice, research and assistance as the Manager may from time to time reasonably request. ================================================================================ Under the Advisory Agreement, the Manager pays the Korean Adviser a monthly fee, equal to an annual rate of 0.2875% of the first $50,000,000 of the Fund's month-end net assets, 0.275% of such net assets on the next $50,000,000, and 0.25% of such net assets on the next $250,000,000, 0.2375% of such net assets on the next $400,000,000, and 0.225% of such net assets in excess of $750,000,000. Under the Research and Advisory Agreement (the "Research Agreement") which was in effect prior to October 14, 1994, the Manager agreed to pay the Korean Adviser a monthly fee equal to an annual rate of 0.2875% of the first $50,000,000 of the Fund's month-end net assets, 0.275% of such net assets in excess of $50,000,000 up to and including $100,000,000, and 0.25% of the excess over $100,000,000. For the six months ended December 31, 1994, brokerage commissions on investment transactions amounting to $51,198 were paid by the Fund to Daewoo Securities Co., Ltd., the parent company of the Korean Adviser. The Fund pays each Director not affiliated with the Manager or the Korean Adviser $4,500 annually plus specified amounts for attended board and committee meetings. Effective October 1, 1994, the Fund pays each Director not affiliated with the Manager or the Korean Adviser $6,000 annually plus specified amounts for attended board and committee meetings. For the six months ended December 31, 1994, Directors' fees and expenses amounted to $82,451. D. FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN KOREA ------------------------------------------------- The Foreign Exchange Management Act, the Presidential Decree relating to such Act and the regulations of the Minister of Finance issued thereunder impose certain limitations and controls which generally affect foreign investors in Korea. The Fund has obtained from the Minister of Finance a license to invest in Korean securities and to repatriate income received from dividends and interest earned on, and net realized capital gain from, its investments in Korean securities and, upon termination of the Fund or for payment of expenses in excess of income, to repatriate investment principal. The Minister of Finance may, when it deems it to be in the public interest, modify the Fund's license to invest in Korean securities or, according to the terms of the license, revoke it in the event of the Fund's noncompliance with conditions of the license or a material violation of Korean law. The Minister of Finance or the Securities and Exchange Commission of Korea ("KSEC") may issue orders imposing additional restrictions, when deemed in the public interest, for the protection of investors or in the interest of maintaining an orderly securities market. Under the Foreign Exchange Management Act, the Minister of Finance has the power, with prior public notice of scope and duration, to suspend all or a part of foreign exchange transactions when emergency measures are deemed necessary in case of radical change in the international or domestic economic situation. The Fund could be adversely affected by delays in, or the refusal to grant, any required governmental approval for such transactions. Under current regulations of the Minister of Finance and the KSEC, foreigners are subject to certain restrictions with respect to investing in equity securities of Korean companies listed on the Korea Stock Exchange. Until December 1, 1994, total foreign investment was limited generally to 10% of each class of a company's outstanding shares. Effective December 1, 1994, the general limit was increased from 10% to 12%. A single foreign investor may only invest up to 3% of each class of outstanding shares. Pursuant to its license, however, the Fund may invest in shares representing 5% of each class in general. [LOGO]The Korea Fund, Inc. Notes to Financial Statements (continued) ================================================================================ F. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (000 OMITTED) ---------------------------------------------------------
NET INCREASE (DECREASE) NET GAIN (LOSS) IN NET ASSETS INVESTMENT NET INVESTMENT ON INVESTMENT RESULTING QUARTER ENDED INCOME * INCOME (LOSS) TRANSACTIONS FROM OPERATIONS - -------------------- ---------------------- --------------------------- --------------------- ---------------------- PER PER PER PER FISCAL 1995 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE ----------- ----- ----- ----- ----- ----- ----- ----- ----- September 30, 1994 $ 625 $.02 $(1,311) $(.04) $87,443 $2.97 $86,131 $2.93 December 31, 1994 398 .01 (1,772) (.06) (21,665) (.73) (23,436) (.79) ------ ---- -------- ------ -------- ------ -------- ------ Totals $1,023 $.03 $(3,083) $(.10) $65,778 $2.24 $62,695 $2.14 ====== ==== ======== ====== ======== ====== ======== ======
PER PER PER PER FISCAL 1994 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE ----------- ----- ----- ----- ----- ----- ----- ----- ----- September 30, 1993 $ 52 $ -- $ (878) $(.04) $ 2,205 $ .09 $ 1,327 $ .05 December 31, 1993 341 .02 (995) (.04) 124,881 4.82 123,886 4.78 March 31, 1994 4,432 .17 2,556 .10 10,248 .40 12,804 .50 June 30, 1994 231 -- (1,433) (.05) 48,342 1.82 46,909 1.77 ------ ---- ------- ------ -------- ----- -------- ----- Totals $5,056 $.19 $ (750) $(.03) $185,676 $7.13 $184,926 $7.10 ====== ==== ======= ====== ======== ===== ======== ===== *Net of Korean taxes withheld.
[LOGO] The Korea Fund, Inc. Report of Independent Accountants ================================================================================ TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF THE KOREA FUND, INC.: We have audited the accompanying statement of assets and liabilities of The Korea Fund, Inc. including the investment portfolio, as of December 31, 1994, and the related statement of operations for the six months then ended, the statements of changes in net assets for the six months then ended and for the year ended June 30, 1994, and the financial highlights for the six months ended December 31, 1994 and for each of the five years in the period ended June 30, 1994. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 1994 by correspondence with the custodian. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of The Korea Fund, Inc. as of December 31, 1994, the results of its operations for the six months then ended, the changes in its net assets for the six months then ended and for the year ended June 30, 1994, and the financial highlights for the six months ended December 31, 1994 and for each of the five years in the period ended June 30, 1994 in conformity with generally accepted accounting principles. As explained in Note A, the financial statements include securities valued at $52,087,740 (8.5% of net assets) and equity securities valued at a premium of $26,656,775 (4.4% of net assets) over local stock exchange prices, whose values have been estimated by the Board of Directors in the absence of readily ascertainable market values or other market factors, respectively. We have reviewed the procedures used by the Board of Directors in arriving at their estimate of value of such securities and have inspected underlying documentation, and, in the circumstances, we believe the procedures are reasonable and the documentation appropriate. However, because of the inherent uncertainty of valuation, those estimated values may differ significantly from the values that would have been used had a ready market for the securities existed, and the difference could be material. Boston, Massachusetts COOPERS & LYBRAND L.L.P. February 14, 1995 [LOGO] The Korea Fund, Inc. Tax Information ================================================================================ By now shareholders for whom year-end tax reporting is required by the IRS should have received their Form 1099-DIV and tax information letter from the Fund. Due to the nature of its investments, the Fund pays foreign taxes to the Republic of Korea throughout the year. As in prior years, the Fund intends to make an election under section 853 of the Internal Revenue Code. This election will allow shareholders to treat their proportionate share of foreign taxes paid by the Fund as having been paid directly by them. Additionally, shareholders will be required to report their proportionate share of such taxes paid as gross income (in addition to other amounts of reportable distributions paid by the Fund). With respect to the Fund's dividend paid September 30, 1994, taxes paid to the Republic of Korea were $.0292 per share and gross income from sources within the Republic of Korea was $.0292 per share. With respect to shareholders of record on December 31, 1994, taxes paid to the Republic of Korea were $.0029 per share and gross income from sources within the Republic of Korea was $.0029 per share. Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your Korea Fund account, please call 800-426-5523. Dividend Reinvestment and Cash Purchase Plan The Korea Fund invests with a long-term view and thus does not enter portfolio transactions for the specific purpose of realizing capital gains. Capital gains distributions will vary from year to year, depending on investment conditions and portfolio considerations. They become part of your capital and amount to a withdrawal of capital if they are not reinvested. The Fund's Dividend Reinvestment and Cash Purchase Plan (the "Plan") offers you an automatic way to reinvest your dividends and capital gains distributions in shares of the Fund. The Plan also allows participants to make optional cash investments in Fund shares of $100 to $3,000 semiannually through State Street Bank and Trust Company, the Plan Agent. Of particular interest is the ability of Plan participants to reinvest their dividends and capital gains distributions at up to a 5% discount to the Fund's share price on the New York Stock Exchange (but not less than the net asset value) when the Fund's shares are selling at a premium to net asset value. In the case of nominee shareholders such as banks, brokers or other nominees, which hold shares for others who are the beneficial owners, the Plan Agent will administer the Plan on the basis of the number of shares certified from time to time by the nominee shareholders as representing the total amount registered in the shareholder's name and held for the account of beneficial owners who are to participate in the Plan. A beneficial owner of shares registered in the name of a bank, broker or other nominee should consult with such nominee as to whether participation in the Plan may be arranged through such nominee. Pursuant to the Plan each shareholder is deemed to have elected to be a participant in the Plan unless State Street Bank and Trust, the Plan Agent, has been otherwise instructed in writing. You may obtain more detailed information regarding the Plan by requesting a copy of the Plan from the Plan Agent. All correspondence (including notifications) regarding the Plan should be directed to: Plan Agent (Korea Fund) c/o State Street Bank and Trust Company P.O. Box 8200, Boston, MA 02266-8200 Telephone: (617) 328-5000 x6406. Investment Manager The investment manager and administrator of The Korea Fund, Inc. (the "Fund") is Scudder, Stevens & Clark, Inc., one of the most experienced investment management and investment counsel firms in the United States. Established in 1919, the firm provides investment counsel for individuals, investment companies and institutions. Scudder has offices throughout the United States and subsidiaries in London and Tokyo. Scudder has been a leader in international investment management for over 40 years. It manages Scudder International Fund, which was initially incorporated in Canada in 1953 as the first foreign investment company registered with the U.S. Securities and Exchange Commission. Scudder's investment company clients include eight other open-end investment companies which invest worldwide. In addition to the Fund, Scudder also manages the assets of seven other closed-end investment companies which invest in foreign securities. The Argentina Fund, Inc. (investing primarily in securities of Argentine issuers), The Brazil Fund, Inc. (investing in securities, primarily equity securities, of Brazilian issuers), The Latin America Dollar Income Fund, Inc. (investing principally in Latin American debt instruments), Scudder New Asia Fund, Inc. (investing in a broad spectrum of Asian companies), Scudder World Income Opportunities Fund, Inc. (investing primarily in global income and, to a limited extent, equity securities) and Scudder New Europe Fund, Inc. (investing in equity securities traded in smaller or emerging European securities markets) are traded on the New York Stock Exchange. The First Iberian Fund, Inc. (investing primarily in Spanish and Portuguese securities) is traded on the American Stock Exchange. Korean Adviser Daewoo Capital Management Co., Ltd., registered under the U.S. Investment Advisers Act of 1940, acts as Korean adviser to Scudder, Stevens & Clark, Inc., the Fund's investment manager. Daewoo Capital Management Co., Ltd. is a subsidiary of Daewoo Securities Co., Ltd., the largest Korean securities firm, and an affiliate of Daewoo Research Institute. Daewoo Capital Management Co., Ltd. provides investment advice, research, and assistance to Scudder. The Daewoo staff makes specific investment recommendations, which are then evaluated by Scudder's research department and portfolio managers in light of their own expertise and information from other sources in making investment decisions for the Fund. Officers and Directors JURIS PADEGS* Chairman of the Board and Director CHANG HEE KIM Vice Chairman of the Board and Director NICHOLAS BRATT* President and Director WILLIAM H. GLEYSTEEN, JR. Director ROBERT W. LEAR Director SANG C. LEE Director TAI HO LEE Director WILSON NOLEN Director SIDNEY M. ROBBINS Director JERARD K. HARTMAN* Vice President KUN-HO HWANG Vice President H. JIN KIM Vice President JOHN J. LEE* Vice President DAVID S. LEE* Vice President DONG WOOK PARK Vice President THOMAS F. MCDONOUGH* Secretary and Assistant Treasurer PAMELA A. McGRATH* Treasurer EDWARD J. O'CONNELL* Vice President and Assistant Treasurer KATHRYN L. QUIRK* Vice President and Assistant Secretary COLEEN DOWNS DINNEEN* Assistant Secretary * Scudder, Stevens & Clark, Inc. -----END PRIVACY-ENHANCED MESSAGE-----