SCHEDULE 14A
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THE KOREA FUND, INC.
----------
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-------------------
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2
The following is the text of slides that may be shown to shareholders of the
Korea Fund, Inc:
SCUDDER
INVESTMENTS
The Korea Fund, Inc.
Deutsche Asset Management [LOGO]
A Member of the Deutsche Bank Group
Overview
1. Commitment to Corporate Governance
2. Deutsche Asset Management's Approach to Investing
3. Performance Characteristics and Portfolio Performance
1
Commitment to Corporate Governance
2
The Fund
o Investment Objective: The Korea Fund, Inc. seeks long-term capital
appreciation through investment in Korean securities
o Total Net Assets: $963,644,984 (as of June 30, 2004)
o Shares Outstanding: 44,701,493
o NYSE Symbol: KF
o Expense Ratio: 1.25%
o Cusip: 50063410
o Inception Date: 8/29/84
Foreign security markets generally exhibit greater price volatility and are less
liquid than the US market. Additionally, this fund focuses its investments in
certain geographical regions, thereby increasing its vulnerability to
developments in that region and potentially subjecting the fund's shares to
greater price volatility.
3
Corporate Governance - Independence of Board
o The Fund has always had a majority of outside directors
> currently 6 out of 7 directors are independent
o Only one director is affiliated with the investment manager
> Vincent Esposito is managing director and head of product development
in the Americas for Deutsche Asset Management
o Fund's investment advisory contract continues only if specifically approved
annually by the independent directors
o Wholly independent audit committee and nominating committee
o Independent directors meet in executive session at every board meeting
4
Corporate Governance - New Initiatives
o Independent directors have engaged independent consultant to advise them on
a wide range of issues
o On May 10, the Board appointed the Chairman of the Committee on Independent
Directors to be Chairman of the Board
o The Fund's Board believes its appointment of an independent director as
Chairman reaffirms the Board's long-standing commitment to:
> Strong, independent oversight of the Fund's operations
> Progressive governance practices that seek to protect and serve the
interests of the Fund and its stockholders
5
Korea Fund - Addressing the discount
o In 2001, the Board implemented a large special in-kind dividend. The Fund's
shareholders received portfolio securities with a market value equal to 10%
of the Fund's total net assets at the time.
o Purchases of fund shares pursuant to Dividend Reinvestment Plan.
- 2003: $436,037 USD worth of repurchased shares
- 2004: $155,571 USD worth of repurchased shares
o Buybacks
- 2003 & 2004(YTD): $4,170,792 USD repurchased and retired
o In January and February 2004, the Fund successfully conducted a tender
offer for 10% of its outstanding shares at a price of 95% of net asset
value.
6
Korea Fund - Addressing the discount
The Fund conducted a tender offer as a result of the Board's special review,
initiated in April 2003, of alternatives to enable shareholders to receive value
near NAV for at least a portion of their shares.
o The tender offer was for up to 10% of the Fund's outstanding shares at a
price equal to 95% of NAV.
o The Fund accepted 4.97 million shares at a price of $21.91 per share. On a
pro rata basis, tendering round lot shareholders sold 16% of shares
tendered.
o The Board approved a program of making additional repurchase offers, one in
the first quarter of 2005 and one in the first quarter of 2006, if the
Fund's shares trade at a 15% discount over a measuring period.
7
The Board Considers the Interests
of All Stockholders
o The Board seeks to treat all stockholders fairly and equally
o Harvard seeks to terminate the Fund's investment advisory contract
o City of London is asking shareholders to vote for its director nominees
o Harvard and City of London may have different interests from those seeking
long-term capital appreciation through investment in Korean securities
8
Harvard's Arbitrage and Hedging Activities
o "We look for mispricings among similar securities, arbitrage-type
situations." - President of Harvard's investment manager, 2003
o Harvard essentially told the Fund's Board in December 2003 that, to the
extent that the Fund invested in smaller cap stocks rather than index
stocks, such investments would cause "tracking errors" in Harvard's hedging
strategies
o Harvard has suggested that the Fund approve a tender offer for 50% or more
of the Fund's shares or become an interval fund. These strategies might help
Harvard's arbitrage and hedging strategies - but could hurt the Fund and its
stockholders by causing:
> Downward pressure on Fund NAV from sales of portfolio securities
> Likely material increase in the Fund's expense ratio
> Possible increased capital gains distributions
> Smaller public float and liquidity of Fund shares
9
Harvard: Risk of Terminating Fund's Manager
o Fund's independent directors believe few investment managers can compare
with DeAM in Korean stock research and selection capabilities
o No assurance that a new manager could provide the strong performance DeAM
has achieved
o Terminating advisory agreement:
> won't eliminate the discount
> far more likely to harm Fund and stockholders by :
> disrupting investment process, which would likely harm
investment performance
> causing significant additional expenses to Fund
10
City of London: Interest in Arbitrage Opportunities
o 2002: City of London helped pressure Asia Tigers Fund to adopt an
interval-fund structure
o 2003: City of London helped pressure India Growth Fund to liquidate
11
City of London's Nominees
Julian Reid
-----------
o CEO of 3a Asset Management Ltd., a Mauritius company
o Chairman, President and director of Saffron Fund, which is being liquidated
o Director of JF China Region Fund, which has shrunk in size through large
repurchases of shares. Expense ratio for 2003: 2.54%
Christopher Russell
-------------------
o No indication in City of London materials on nominees that Mr. Russell or
Mr. Reid has managed or been a director of a fund investing primarily in
Korea
12
Corporate Governance:
The Fund's Experienced Directors
o Each of the Fund's candidates has the experience needed to represent the
best interests of all of the Fund's shareholders
o Susan Kaufman Purcell. Vice President of the Council of the
Americas and the Americas Society. Formerly Senior Fellow at the
Council on Foreign Relations, member of the U. S. Department of
State Policy Planning Staff and professor at UCLA and at
Columbia. Independent director since 2001
o Vincent J. Esposito. Managing Director of Deutsche Asset
Management. Only Fund director affiliated with Fund's manager.
Over 20 years of professional experience developing and building
investment products and establishing global joint ventures and
new business opportunities in asset management
13
Deutsche Asset Management's Approach to Investing
14
Korea Fund
o Scudder Investments has managed Fund since inception in August 1984
o John Lee has been Portfolio Manager for over 14 years
o Licensed by Korean Government - transaction tax savings
o Strong DeAM aftermarket support from closed-end fund department
> Shareholder Communications
- Institutional shareholder visits
- Website providing monthly updates
- Dedicated shareholder service line
> Public Relations
- Press Articles
- Industry Forums
15
Investment Philosophy & Process
Korea Equity Team(1) - Market Knowledge and Strong Teamwork
---------------------------------
| John J. Lee - |
| Lead Portfolio Manager, |
| Korea PST(2) |
--------------------------------- -------------------------------
| | Andrew K. Dong, Ph.D. - |
|------------------------ | Director of Private Investment|
| -------------------------------
---------------------------------
| Chang-Geun Nam - PM |
| Economics, Strategy | ------------------------------
|Portfolio Construction, Korea PST| | Chong-Hak Park - |
--------------------------------- | Investment Specialist |
| ------------------------------
|------------------------ | - Quantitative Analysis |
| | - Investment Communications|
| ------------------------------
|
--------------------------------------------------------------------------------------------------
| |
----------------------------- ---------------------------- ------------------------------- -----------------------------
| O-Jin Kwon - PM/Analyst | | Hong-Suk Kim - | | Gia Hwang - | | Joo-Yon Hong - |
| Korea PST | | Analyst | | Analyst | | Analyst |
|----------------------------- ---------------------------- ------------------------------- -----------------------------
| - Small & Medium Cap stocks | | - Sector Coverage | | - Sector Coverage | | - Small & Medium Cap stocks |
| | | o Automobiles & Components| | o Consumer goods / Retail | | |
| | | o Capital goods | | o Media/Software | | |
| | | o Materials | | o Telecom service | | |
| | | o Technology Hardware | | o Financials | | |
----------------------------- ---------------------------- ------------------------------ -----------------------------
(1) See slide 27
(2) PST is portfolio sector team
16
DeAM: a focused approach to investing
We believe that an approach targeting long-term strong performance incorporates:
Consistency of people, process Leads to expectation
and performance ----------------> of long-term strong
performance potential
o Investment team with disciplined process
o Proprietary fundamental research
o Deep quantitative resources
o Rigorous risk management
17
Investment philosophy and goal
Philosophy
o We believe that long-term market outperformance can be achieved by
investing in a growth portfolio focused on:
> High quality companies
> Undiscovered opportunities
> Risk management
> Solid financials
Goal
o Provide stockholders competitive returns that outperform the benchmark
(KOSPI) over a
1, 3, 5 and 10-year period
The fund's manager seeks to achieve this goal, but there can be no assurance
that it will be achieved.
18
--------------------------------------------------------------------------------
Investment Philosophy & Process
--------------------------------------------------------------------------------
Disciplined Investment Process - Overview
|
|
1600 ------| ----------------------
| | Identify potential |
| | investment universe |
| | |
| | Utilize global | ----------------
150 -------| | network | | |
| | | | |
| | Quantitative | | Company visits |
| |screening for relative| | |
| | valuation | | Earnings model | --------------------
100 -------| | | | | | |
| | Liquidity screening | |Internal ratings| | Security Selection | -----------------
| | | | | | Risk analysis | | Portfolio |
| | | | | | | | construction |
| | | | | | | | |
| ---------------------- ---------------- -------------------- -----------------
--------------------------------------------------------------------------------------------
^
|
|
---------------------------------------------------------------------------------------------------------------
Utilizing research information of Global Network (New York, London, Frankfurt, Tokyo, Singapore, Sydney etc.)
---------------------------------------------------------------------------------------------------------------
19
Investment Philosophy & Process
Disciplined Investment Process - Overview 2
BROAD Stage I
UNIVERSE
---------------->
| (KSE,
| KOSDAQ) Stage II
1600 ------| ----------------------
| | Identify potential | Research
| | investment universe | Universe ---------------->
| | |subject to rigorous research
| | Utilize global | ----------------
150 -------| | network | | | Stage III
| | | | |
| | Quantitative | | Company visits | Narrow Universe ------------>
| |screening for relative| | | Fair Value > Current Price
| | valuation | | Earnings model | --------------------
100 -------| | | | | | | Fund Portfolio
| | Liquidity screening | |Internal ratings| | Security Selection | -----------------
| | | | | | Risk analysis | | Portfolio |
| | | | | | | | construction |
| | | | | | | | |
App. No. of| ---------------------- ---------------- -------------------- -----------------
stocks --------------------------------------------------------------------------------------------
^
|
|
---------------------------------------------------------------------------------------------------------------
Utilizing research information of Global Network (New York, London, Frankfurt, Tokyo, Singapore, Sydney etc.)
---------------------------------------------------------------------------------------------------------------
20
Portfolio Characteristics and Investment Performance
21
Investment Performance - 6/30/04
-------------------------------------------------------------------
KF Market KF(a) KOSPI(b)
Price NAV Index
-------------------------------------------------------------------
YTD 2.72% 2.52% .48%
(Cumulative)
-------------------------------------------------------------------
1 Year 27.66% 24.15% 21.67%
-------------------------------------------------------------------
3 Year 24.18% 21.18% 15.88%
-------------------------------------------------------------------
5 Year 9.47% 8.58% -1.29%
-------------------------------------------------------------------
10 Year 1.97% 5.07% -5.22%
-------------------------------------------------------------------
Inception 12.79% 13.98% N/A
(8/29/84)
-------------------------------------------------------------------
Past results are not necessarily indicative of future performance of the fund.
Investment return and principal value will fluctuate, therefore current
performance may be lower or higher than the figures shown.
22
Investment Performance - 6/30/04
-------------------------------------------------------------------
KF Market KF MSCI Korea(c)
Price NAV Index
-------------------------------------------------------------------
YTD 2.72% 2.52% 1.03%
(Cumulative)
-------------------------------------------------------------------
1 Year 27.66% 24.15% 26.78%
-------------------------------------------------------------------
3 Year 24.18% 21.18% 22.81%
-------------------------------------------------------------------
5 Year 9.47% 8.58% 3.47%
-------------------------------------------------------------------
10 Year 1.97% 5.07% N/A
-------------------------------------------------------------------
Past results are not necessarily indicative of future performance of the fund.
Investment return and principal value will fluctuate, therefore current
performance may be lower or higher than the figures shown.
23
KF Relative to MSCI - 6/30/04
--------------------------------------------------------------------------------
3 Years Kore Fund
Relative to Benchmark MSCI Korea (Annualized)
--------------------------------------------------------------------------------
Alpha^1 (.17)%
--------------------------------------------------------------------------------
Standard Deviation^2 of KF 28.35%
--------------------------------------------------------------------------------
Standard Deviation^2 of Benchmark 31.61%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
10 Years Kore Fund
Relative to Benchmark MSCI Korea (Annualized)
--------------------------------------------------------------------------------
Alpha 3.84%
--------------------------------------------------------------------------------
Standard Deviation^2 of KF 41.23%
--------------------------------------------------------------------------------
Standard Deviation^2 of Benchmark 47.52%
--------------------------------------------------------------------------------
1) A measure of selection risk (also known as residual risk) of a fund in
relation to the market. A positive alpha is the extra return awarded to the
investor for taking a risk, instead of accepting the market return
2) Standard Deviation. A measure of the degree to which an individual
probability value varies from the distribution mean.
The higher the number, the greater the risk.
Past performance is no guarantee of future results.
Source: Deutsche Investment Management Americas Inc.
24
Peer Group Comparison - 6/30/04
--------------------------------------------------------------------------------
1 Year 3 Year 5 Year 10 Year Expense
NAV NAV NAV NAV Ratio %
--------------------------------------------------------------------------------
KF 24.15% 21.18% 8.58% 5.07% 1.256
--------------------------------------------------------------------------------
KEF 26.44% 17.59% -2.14% -5.79% 2.310
--------------------------------------------------------------------------------
Matthews 24.10% 24.87% 6.01% N/A 1.640
Korea
(MAKOX)
--------------------------------------------------------------------------------
Fidelity 18.57% 15.90% -1.64% N/A 2.750
Korea
(FAKAX)
--------------------------------------------------------------------------------
Past results are not necessarily indicative of future performance of the fund.
Investment return and principal value will fluctuate, therefore current
performance may be lower or higher than the figures shown. Important information
about comparisons on next slide.
Source: Bloomberg, Statestreet, Matthews International Capital Management, LLC &
Fidelity Advisors
25
Important Notes:
(a) Total investment returns reflect changes in net asset value per share
during each period and assume that dividend 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 price. Index assume reinvestment of distributions and are
not available for direct investment.
(b) KOSPI is a capitalization-weighted index of all common shares on the Korea
Stock Exchanges. Index returns assume reinvestment of all dividends and
unlike Fund returns, do not reflect any fees or expenses. It is not
possible to invest directly in an index.
(c) The MSCI Korea Index is a capitalization weighted index that monitors the
performance of stocks from the country of Korea. Index assumes reinvestment
of distributions and are not available for direct investment.
Past results are not necessarily indicative of future performance of the fund.
Investment return and principal value will fluctuate, therefore current
performance may be lower or higher than the figures shown. Net Asset Value (NAV)
is total assets less total liabilities divided by the number of shares
outstanding.
Notes on Slide 20:
KF and KEF [The Korea Fund and The Korean Equity Fund] are closed-end funds.
Fidelity Korea and Matthews Korea Funds are open- end funds sold by prospectus
only. Fidelity Korea is distributed by Fidelity Management & Research Company.
Matthews Korea Fund is distributed by Matthews International Capital Management,
LLC.
The Funds were included in the comparison because they are like investment
vehicles. The sampling of competitor funds is limited therefore open-end funds
within the industry were added. Presently, these funds are the most comparable
funds to The Korea Fund. Please be advised that certain differences between the
funds do exist such as investment objective, investment strategy, management,
and expense ratios. An investor should take these factors into consideration
before making an investment decision. Closed-end funds, unlike open-end funds,
are not continuously offered. There is a one time public offering and once
issued, shares of closed-end funds are sold in the open market through a stock
exchange. The number of shares will change only at the direction of management.
Shares can be increased through the issuance of new shares in conjunction with
an offering or through shareholder reinvestment of dividends into the fund.
Shares can be reduced when they are repurchased in conjunction with a stock
repurchase program or tender offer. Further, open-end funds need to maintain a
cash position for redemptions, therefore, portfolio managers must manage
redemptions and inflows.
26
Portfolio Composition by Market Cap - 6/30/04
--------------------------------------------------------------------------------
Market Cap Breakdown KF MSCI Korea
(%MV)
--------------------------------------------------------------------------------
Greater than $25.0B 15.68% 34.03%
--------------------------------------------------------------------------------
$10.B - $25.0B 15.68% 18.02%
--------------------------------------------------------------------------------
$5.0B - $10.0B 9.81% 14.88%
--------------------------------------------------------------------------------
$1.0B - $5.0B 30.18% 26.13%
--------------------------------------------------------------------------------
$500M - $1.0B 8.46% 5.41%
--------------------------------------------------------------------------------
$250M - $500M 6.44% 1.54%
--------------------------------------------------------------------------------
Less than $250M 12.80% 0.00%
--------------------------------------------------------------------------------
Not Available 1.05% 0.00%
--------------------------------------------------------------------------------
Total 100.0% 100.0%
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Size Factors KF MSCI Korea
--------------------------------------------------------------------------------
Wtd Avg Mkt Cap ($MM) 14,862 28,310
--------------------------------------------------------------------------------
Median Mkt Cap ($MM) 377 1,159
--------------------------------------------------------------------------------
Portfolio composition is subject to change Source: Deutsche Investment Management Americas Inc.
27
--------------------------------------------------------------------------------
Return on Small Cap Stocks as of 12/03
--------------------------------------------------------------------------------
Small Cap Stocks purchased by The Korea Fund significantly outperformed in 2003
In 2003 10 small cap stocks held by the Fund overwhelmingly outperformed the
Fund's overall return
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
91.79% 24.00% 25.20%
Ten small caps x-Ten small caps Total Fund
Wgt=2% Wgt=98% Wgt=100%
** Note that the return attribution here excluded the cash flows from cash and
cash-equivalents and other relevant expenses which may have resulted in
higher returns.
This example is for illustrative purposes only and is intended to illustrate how
the performance of the small cap holdings contributed to the Fund's overall
performance. It is management's goal to transition the portfolio more heavily
into the small cap sector. Given the volatility and higher risks associated with
small cap stocks, there is no guarantee that such results will be repeated.
10 stocks having a market cap of less than 8 bn when purchased by The Korea
Fund.
X-10 stocks are the remaining holdings except for small cap stocks purchased by
the Fund in 2003
Past results are not necessarily indicative of future performance of the fund.
Investment return and principal value will fluctuate, therefore current
performance may be lower or higher than the figures show
Source: Deutsche Investment Management Trust Company Limited.
28
STOCK SELECTION
Internet Auction - Market Capitalization $ 1,049,312,714
--------------------------------------------------------------------------------
Investment Rationale
--------------------
o Korea's leading online marketplace with dominant market share in Korea
o Continuous growth : revenue growth for the past 5 years was about 80%.
o High entry barrier : economies of scale and its strong customer base keep
its potential competitors from entering the market
Valuation Indicators
--------------------
04E P/E: 30.9x
04E EV/EBITDA: 19.7x
Estimates made as of Dec. 2003 by Deutsche Asset Management analyst and may not
come to fruition. Holding equals 0.8% of total portfolio.
--------------------------------------------------------------------------------
Revenue
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
9.0 23.9 36.6 62.4 100.4
2000 2001 2002 2003 2004E
--------------------------------------------------------------------------------
Net Income
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
-12.7 -7.6 5.9 18.8 24.4
2000 2001 2002 2003 2004E
Source: Deutsche Investment Management Trust Company Limited. Past performance is no guarantee of future results
29
STOCK SELECTION
Dong Kuk Steel Mill - Market Capitalization $ 489,755,414
--------------------------------------------------------------------------------
Investment Rationale
--------------------
o One of the largest electric-arc- furnace steel manufacturers in Korea with
domestic M/S of over 40%.
o Improving profitablity due to global supply shortage caused by China's
excessive demand.
o Suprior fundamentals : Both ASP and production volume should boost the
profit margin in 2004, increasing net profits by 30%.
Valuation Indicators
--------------------
Y04E P/E: 4.1x (36% discount to our
universe material sector P/E)
--------------------------------------------------------------------------------
Net Profit on Investment
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA:
ROE ROA ROC
1994 7.3% 3.0% 6.2%
1995 4.9% 1.9% 7.0%
1996 18.2% 6.2% 11.4%
1997 10.4% 2.7% 2.7%
1998 7.6% 2.6% 7.6%
1999 4.6% 2.0% 9.2%
2000 -12.5% -5.0% -2.0%
2001 1.3% 0.5% 4.9%
2002 7.6% 3.1% 8.9%
2003 11.3% 4.5% 11.3%
Estimates made as of Dec. 2003 by Deutsche Asset Management analyst and may not
come to fruition. Holding equals 0.8% of total portfolio.
Source: Deutsche Investment Management Trust Company Limited. Past performance is no guarantee of future results
30
--------------------------------------------------------------------------------
STOCK SELECTION
--------------------------------------------------------------------------------
Korean Re - Market Capitalization $ 386,542,420
Investment Rationale
--------------------
o The sole dominant reinsurance company in Korea (M/S of about 70%) and also
one of the biggest reinsurance companies in Asia.
o Top line growth has remained steady and stronger than other Korean non-life
insurance companies
o Underwriting profitability has continued to improve : The accumulated net
profit for the past 5 years was KRW185 billion while the total for the past
35 years was KRW 79 billion.
o Valuation Indicators
--------------------
04E Adjusted ROE: 17%
04E Adjusted BV: 0.8x
--------------------------------------------------------------------------------
Small globally, but largest reinsurer in Asian ex-Japan market
--------------------------------------------------------------
--------------------------------------------------------------------
Global reinsurance ranking Net Premiums written Expense Ratio (%) Loss Ratio (%) Pretax op inc
(USD mn.) 2002 2002 2002 2002
-------------------------------------------------------------------------------------------------
1 Munich Re Group 24,924 26.6 95.8 (4,001)
2 Swiss Re Group 21,600 27.0 77.0 397
3 Berkshire Hathaway Re 13,083 25.0 82.0 na
4 Hannover Re Group 8,526 16.9 77.9 328
5 Employers Re Group 7,892 33.0 119.0 (2,907)
6 Lloyd's 6,809 36.3 62.3 1,338
7 SCOR Re Group 4,693 26.0 91.0 (350)
8 Allianz Re Group 4,585 28.2 79.0 (627)
9 Gerling Global Re 4,463 29.8 90.4 (587)
10 XL Re Group 3,544 16.1 84.8 na
11 Converium Re Group 3,322 25.3 77.8 68
12 Partner Re Group5 2,655 28.6 69.3 200
13 Everest Re Group 2,638 27.3 71.7 312
14 AXA Re Group 2,572 27.2 88.1 (247)
15 Transatlantic Re Group 2,500 26.5 75.8 194
16 London Re Group 2,487 37.4 74.0 1
17 Millea Insurance Group 2,455 na na na
18 Reinsurance Group of America 1,981 19.8 77.7 209
19 Sompo Japan Insurance Group 1,525 33.9 55.0 315
20 Odyssey Re Group 1,477 30.2 69.1 119
21 Mitsui Sumitomo Insurance 1,399 33.4 54.2 398
22 ACE Tempest 1,307 30.3 47.8 398
23 Aioi Insurance Group 1,219 35.3 60.1 (134)
24 Toa Re Group 1,161 na 59.3 (8)
-------------------------------------------------------------------------------------------------
25 Korean Re 1,161 29.8 65.2 66
-------------------------------------------------------------------------------------------------
26 Caisse Centrale de Reassurance 1,030 8.7 64.5 118
27 RenaissancRe Holdings 924 19.0 38.1 365
28 OBE Re Group 862 30.1 67.6 261
29 Endurance Specialty Holdings 765 30.9 55.3 406
30 St. Paul Re Group2 751 30.7 72.1 na
Source: Standard & Poor's, Global Reinsurance Highlights, 2003 edition
Estimates made as of Dec. 2003 by Deutsche Asset Management analyst and may not
come to fruition. Holding equals 0.3% of total portfolio
Past performance is no guarantee of future results
31
--------------------------------------------------------------------------------
STOCK SELECTION
--------------------------------------------------------------------------------
Hotel Shilla - Market Capitalization $ 175,687,285
--------------------------------------------------------------------------------
Investment Rationale
--------------------
o Well-recognized hotel brand in Korea : No.2 market share of about 23%
following Lotte (unlisted)
o Favorable business environment : Beneficiary of Japan's economic recovery,
introduction of 5 day work week and the "Well-being" trend.
o Deep discount to NAV despite comparable dividend and ROE profiles to
regional peers.
o Valuation Indicators
--------------------
04E P/B: 0.5x
Operating Income by Division
THE ORIGINAL DOCUMENT CONTAINS A BAR CHART HERE
BAR CHART DATA
Hotel
Duty Free
Others Total Net Income
------ ----------------
'99 48.2 14.7
'00 57.9 15.3
'01 44.5 10.0
'02 16.9 6.5
'03 21.4 10.1
Large discount to NAV
Premium 2003 2003 2004
to 2004 NAV Dividend Yield ROE ROE ^E
--------------------------------------------------------------------------------
Hotel Shilla -50% 3.7% 2.4% 3.3%
--------------------------------------------------------------------------------
New World Dev (HK) -53.1% 2.0% -4.2% 2.5%
Great Eagle (HK) -27.2% 1.1% 3.1% 3.0%
HK Land (HK) 28.0% 3.2% 3.7% 3.8%
--------------------------------------------------------------------------------
HK Sample Average -17.4% 2.1% 0.9% 3.1%
--------------------------------------------------------------------------------
Estimates made as of Dec. 2003 by Deutsche Asset Management analyst and may not
come to fruition. Holding equals 0.3% of total portfolio
Source: Deutsche Investment Management Trust Company Limited. Past performance is no guarantee of future results
32
--------------------------------------------------------------------------------
Team Profile
--------------------------------------------------------------------------------
o John J. Lee, a Managing Director of Deutsche Investment Management Americas
Inc., is a member of the Global Equity Group, focusing on investment in
Korea. Mr. Lee is the Lead Portfolio Manager for The Korea Fund, - Korea
Equity Fund, Korea Investment Fund and the Hangkang Restructuring Fund. Mr.
Lee, a Certified Public Accountant, joined the firm in 1991 from KPMG Peat
Marwick. He studied Economics at Yonsei University in Seoul, Korea from
1978 to 1980 and received a B.S. degree in Accounting from New York
University in 1985. He is a member of the American Institute of Certified
Public Accountants.
o Chang-Geun Nam, CFA, graduated from Seoul National University with B.A. of
Economics and did his master's work at New York University. He completed
Ph.D. program in economics in Princeton University. Chang-Geun joined
Zurich Scudder Investments Korea (ZSIK) in December 2000. ZSIK was
subsequently acquired by Deutsche Asset Management in April 2002. He heads
up the domestic Korean equity team and supervises research for Korean
equities. He is a member of the Korea Portfolio Selection Team. Prior to
joining Zurich Scudder, he served as Senior Economist and Head of Research
for Daewoo Securities for over 2 years. Before that, he worked for
structured products division of Daewoo Securities for 3 years.
o O-Jin Kwon, graduated from Sungkyunkwan University with B.A. of Business
Administration. O-Jin joined Zurich Scudder Investments Korea (ZSIK) in
September 2001 as equity portfolio manager. ZSIK was subsequently acquired
by Deutsche Asset Management in April 2002. He is currently covering listed
Korean Equity stocks, focusing on small and mid-small cap stocks. He is a
member of the Korea Portfolio Selection Team. Prior to joining Zurich
Scudder, he worked for Daewoo Capital Management as an Equity Research
Analyst to support the Korea Fund and the Hankang Restructuring Fund for 7
years.
o Chong-Hak Park, graduated from Sogang University with B.A. in Economics and
received MBA and MS in Statistics with specialization in computational
finance from Purdue University. He spent about seven years working at Korea
Investment Trust Company as a research analyst of International Business
Division and about three years at SEI Investments/SEI Asset Korea as
investment strategist & quantitative investment analyst. Chong-Hak joined
Deutsche Asset Management in 2003 as an investment specialist and Risk &
Quantitative Analyst. Chong-Hak is a Chartered Financial Analyst.
o Hong-Suk Kim, graduated from Michigan State University with B.A. in
Accounting and received MBA of International Business in Helsinki School of
Economics. Hong-Suk joined Zurich Scudder Investments Korea (ZSIK) in
December 2000 as equity research analyst. ZSIK was subsequently acquired by
Deutsche Asset Management in April 2002. He is currently covering Korean
equities. Before joining Scudder, Hong-Suk worked in Deloitte Touche
Thomatsu as an assistant manager for one year. He also has 3 years
experience in management consulting.
o Gia Hwang, holds a bachelor's degree in Business Administration and an MBA
with concentration on international finance both from Seoul National
University. She is currently covering Korean equities. Prior to joining
Deutsche Asset Management in Aug 2002, she worked for Franklin Templeton
Investments, Korea for 3 years as equity/credit analyst. She is a CFA and
Financial Risk Manager certified by the Global Association of Risk
Professionals.
o Joo-Yon Hong, holds a bachelor's degree in Business Administration from
Hankuk University of Foreign Studies. Prior to joining Deutsche Asset
Management in Oct. 2002, she worked for Asian Strategic Partners Investment
Management. She also has experience at Aurthur Andersen (currently Anjin
Deloitte LLC) in the auditing department.
33
Closed-end funds, unlike open-end funds, are not continuously offered. There is
a one time public offering and once issued, shares of closed end funds are sold
in the open market through a stock exchange. Shares of closed-end funds
frequently trade at a discount to net asset value. The price of the fund's
shares is determined by a number of factors, several of which are beyond the
control of the fund. Therefore, the fund cannot predict whether its shares will
trade at, below or above net asset value.
Fund shares are not FDIC-insured and are not deposits or other obligations of,
or guaranteed by, any bank. Fund shares involve investment risk, including
possible loss of principal.
Deutsche Asset Management is the marketing name in the US for the asset
management activities of Deutsche Bank AG, Deutsche Investment Management
Americas Inc.,Deutsche Asset Management Inc., Deutsche Asset Management
Investment Services Trust Americas and Scudder Trust Company.
The opinions and forecasts expressed are those of the investment team as of
6/18/2004, and may not actually come to pass. This information is subject to
change at any time, based on market and other conditions and should not be
construed as a recommendation of any specific security.
Performance assumes reinvestment of dividends and capital gain.
For More Information Please call:
800-349-4281
Or
Visit us on the web at http;//cef.scudder.com
This presentation is provided for informational purposes only and is not
intended for trading purposes. (32132)
34
Additional Information
For information on the identity of potential participants (as defined in
Instruction 3 to Item 4 of Section 240.14a-101 of the Securities Exchange Act of
1934) who may be soliciting proxies in connection with the Fund's annual meeting
on October 6, 2004 and a description of their interests, by security holdings or
otherwise, please see Exhibit A of the Schedule 14A filed by the Korea Fund,
Inc. with the Securities and Exchange Commission on July 20, 2004.
The Company intends to mail a proxy statement to its shareholders on or about
August 20, 2004 in connection with its 2004 annual meeting. Investors of the
Company are urged to read the proxy statement when it becomes available because
it will contain important information about the Company. Investors and security
holders may obtain a free copy of the proxy statement (when it is available) at
the SEC's web site at www.sec.gov. A free copy of the proxy statement may also
be obtained from the Company. In addition to the proxy statement, the Company
files annual and quarterly reports, proxy and information statements, and other
information with the SEC. Investors may read and copy any of these reports,
statements, and other information at the SEC's public reference room located at
450 5th Street, N.W., Washington, D.C., 20549, or any of the SEC's other public
reference rooms located in New York. Investors should call the SEC at
1-800-SEC-0330 for further information on these public reference rooms. These
SEC filings are also available for free at the SEC's web site at www.sec.gov. A
free copy of these filings may also be obtained from the Company.
35