The Korea Fund, Inc.
345 Park Avenue (at 51st Street)
New York, New York 10154
(800) 349-4281
August 25, 1995
To the Stockholders:
The Annual Meeting of Stockholders of The Korea Fund, Inc. (the "Fund") is
to be held at 2:15 p.m., eastern time, on Wednesday, October 11, 1995, at the
offices of Scudder, Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st
Street), New York, New York 10154. Stockholders who are unable to attend this
meeting are strongly encouraged to vote by proxy, which is customary in
corporate meetings of this kind. A Proxy Statement regarding the meeting, a
proxy card for your vote at the meeting and an envelope--postage prepaid--in
which to return your proxy are enclosed.
At the Annual Meeting, the stockholders will elect three Directors,
consider the ratification of the selection of Coopers & Lybrand L.L.P. as the
Fund's independent accountants, consider the approval of the continuance of the
Investment Advisory, Management and Administration Agreement between the Fund
and its investment manager, Scudder, Stevens & Clark, Inc., and consider the
approval of the continuance of the Research and Advisory Agreement between
Scudder, Stevens & Clark, Inc. and its Korean adviser, Daewoo Capital Management
Co., Ltd. In addition, the stockholders present will hear a report on the Fund.
There will be an opportunity to discuss matters of interest to you as a
stockholder.
Your Fund's Directors recommend that you vote in favor of each of the
foregoing matters.
Respectfully,
/s/Nicholas Bratt /s/Juris Padegs
Nicholas Bratt Juris Padegs
President Chairman of the Board
STOCKHOLDERS ARE URGED TO SIGN THE PROXY CARD AND MAIL IT IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE SO AS TO ENSURE A QUORUM AT THE MEETING. THIS IS
IMPORTANT WHETHER YOU OWN FEW OR MANY SHARES.
<PAGE>
THE KOREA FUND, INC.
Notice of Annual Meeting of Stockholders
To the Stockholders of
The Korea Fund, Inc.:
Please take notice that the Annual Meeting of Stockholders of The Korea
Fund, Inc. (the "Fund") has been called to be held at the offices of Scudder,
Stevens & Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York,
New York 10154, on Wednesday, October 11, 1995 at 2:15 p.m., eastern time, for
the following purposes:
(1) To elect three Directors of the Fund to hold office for a term of three
years or until their respective successors shall have been duly elected and
qualified.
(2) To ratify or reject the action taken by the Board of Directors in
selecting Coopers & Lybrand L.L.P. as independent accountants for the fiscal
year ending June 30, 1996.
(3) To approve or disapprove the continuance of the Investment Advisory,
Management and Administration Agreement between the Fund and Scudder, Stevens &
Clark, Inc.
(4) To approve or disapprove the continuance of the Research and Advisory
Agreement between Scudder, Stevens & Clark, Inc. and Daewoo Capital Management
Co., Ltd.
The appointed proxies will vote on any other business as may properly come
before the meeting or any adjournments thereof.
Holders of record of the shares of common stock of the Fund at the close of
business on August 4, 1995 are entitled to vote at the meeting or any
adjournments thereof.
By order of the Board of
Directors,
Thomas F. McDonough,
Secretary
August 25, 1995
IMPORTANT--We urge you to sign and date the enclosed proxy card and return it in
the enclosed addressed envelope which requires no postage and is intended for
your convenience. Your prompt return of the enclosed proxy card may save the
Fund the necessity and expense of further solicitations to ensure a quorum at
the Annual Meeting. If you can attend the meeting and wish to vote your shares
in person at that time, you will be able to do so.
<PAGE>
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Korea Fund, Inc. (the "Fund") for use
at the Annual Meeting of Stockholders, to be held at the offices of Scudder,
Stevens & Clark, Inc. ("Scudder"), 25th Floor, 345 Park Avenue (at 51st Street),
New York, New York 10154, on Wednesday, October 11, 1995 at 2:15 p.m., eastern
time, and at any adjournments thereof (collectively, the "Meeting").
This Proxy Statement, the Notice of Annual Meeting and the proxy card are
first being mailed to stockholders on or about August 25, 1995 or as soon as
practicable thereafter. Any stockholder giving a proxy has the power to revoke
it by mail (addressed to the Secretary at the principal executive office of the
Fund, 345 Park Avenue, New York, New York 10154) or in person at the Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, for each
proposal referred to in the Proxy Statement.
The presence at any stockholders' meeting, in person or by proxy, of
stockholders entitled to cast a majority of the votes entitled to be cast shall
be necessary and sufficient to constitute a quorum for the transaction of
business. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, stockholders are urged to forward their voting instructions
promptly.
Abstentions and broker non-votes will not be counted in favor of, but will
have no other effect on, the vote for proposals (1) and (2), which require the
approval of a majority of shares voting at the Meeting. Abstentions and broker
non-votes will have the effect of a "no" vote for proposals (3) and (4), which
require the approval of a specified percentage of the outstanding shares of the
Fund or of such shares present at the Meeting.
Holders of record of the common stock of the Fund at the close of business
on August 4, 1995 (the "Record Date") will be entitled to one vote per share on
all business of the Meeting and any adjournments. There were 36,930,508 shares
of common stock outstanding on the Record Date.
(1) ELECTION OF DIRECTORS
Persons named in the accompanying proxy card intend, in the absence of
contrary instructions, to vote all proxies in favor of the election of the three
nominees listed below as Directors of the Fund (Class I) to serve for a term of
three years, or until their successors are duly elected and qualified. All
nominees have consented to stand for election and to serve if elected. If any
such nominee should be unable to serve, an event not now anticipated, the
proxies will be voted for such person, if any, as shall be designated by the
Board of Directors to replace any such nominee.
1
<PAGE>
Information Concerning Nominees
The following table sets forth certain information concerning each of the
three nominees as a Director of the Fund. Except for Mr. Patrick, each of the
nominees is now a Director of the Fund. Unless otherwise noted, each of the
nominees has engaged in the principal occupation listed in the following table
for more than five years, but not necessarily in the same capacity.
Class I
<TABLE>
<CAPTION>
Nominees to serve until 1998 Annual Meeting of Stockholders:
<S> <C> <C> <C> <C>
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director June 30, 1995 (1) Class
- --------------------- -------------------------------------- ---------- ----------------- --------
Juris Padegs (63)*+ Chairman of the Board; Managing 1991 1,456 Less than
Director of Scudder, Stevens & Clark, 1/4 of 1%
Inc. Mr. Padegs serves on the boards
of an additional 27 funds managed by
Scudder.
Chang-Hee Kim (58)* Vice Chairman of the Board; President 1990 ___ ___
and Chief Executive Officer, Daewoo
Securities Co., Ltd. (1984-present).
Hugh T. Patrick (65) R.D. Calkins Professor of ___ 12,575 Less than
International Business, Graduate 1/4 of 1%
School of Business, Columbia
University; Co-Director, Pacific
Basin Studies Program, Columbia
University; Member, Center for Korean
Research, East Asian Institute,
Columbia University; Director, Japan
Society; Professor of Far Eastern
Economics, Yale University (1968-84).
Mr. Patrick currently serves on the
board of one fund managed by Scudder.
</TABLE>
2
<PAGE>
Information Concerning Continuing Directors
The Board of Directors is divided into three classes with each Director
serving for a term of three years. The terms of Classes II and III do not expire
this year. The following table sets forth certain information regarding the
Directors in such classes.
Class II
<TABLE>
<CAPTION>
Directors to serve until 1996 Annual Meeting of Stockholders:
<S> <C> <C> <C> <C>
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director June 30, 1995 (1) Class
- --------------------- -------------------------------------- ---------- ----------------- --------
William H. Gleysteen, President, The Japan Society, Inc.; 1984 572 Less than
Jr. (69) Vice President of Studies, Council on 1/4 of 1%
Foreign Relations (1987-1989); and
United States Ambassador to Korea
(1978-1981). Mr. Gleysteen serves on
the boards of an additional 11 funds
managed by Scudder.
Robert W. Lear (78) Executive-in-Residence, Visiting 1984 1,095 Less than
Professor, Columbia University 1/4 of 1%
Graduate School of Business;
Director, Equitable Capital Partners
Enhancement Yield Funds, Welsh,
Carson, Anderson & Stowe (venture
capital company). Mr. Lear serves on
the boards of an additional nine
funds managed by Scudder.
Tai Ho Lee (72) Chairman, Imjung Research Institute 1984 ___ ___
(1992-present); President and Chief
Executive Officer, Hanjin Investment
& Securities Co., Ltd. (1990-1991);
Chairman, Daewoo Capital Management
Co., Ltd. (1988-1990); Chairman,
Daewoo Securities Co., Ltd.
(1983-1988); Chairman and President,
Daewoo Research Institute (1984-1988).
</TABLE>
3
<PAGE>
Class III
<TABLE>
<CAPTION>
Directors to serve until 1997 Annual Meeting of Stockholders:
<S> <C> <C> <C> <C>
Present Office with the Fund, if any; Shares
Principal Occupation or Year First Beneficially Percent
Employment and Directorships Became a Owned of
Name (Age) in Publicly Held Companies Director June 30, 1995 (1) Class
- --------------------- -------------------------------------- ---------- ----------------- --------
Nicholas Bratt (47)*+ President; Managing Director of 1984 2,296 (2) Less than
Scudder, Stevens & Clark, Inc. Mr. 1/4 of 1%
Bratt serves on the boards of an additional
13 funds managed by Scudder.
Dr. Sang C. Lee (54) President and Chief Executive Officer, 1988 ___ ___
Spectron Corporation of America, LLC,
(technology company) (1994-present);
Chairman, International Cooperative
Ventures, Inc., (consulting company)
(1992-present); Chairman of the Boards,
Markwood, Inc., Hub City, Inc., Brocker
Manufacturing, Inc., (portfolio
companies of PITCAIRN GROUP L.P.) (1989-1992).
Dr. Wilson Nolen (68) Consultant; Director, Ecohealth, Inc. 1984 18,455 (3) Less than
(biotechnology company). Dr. Nolen 1/4 of 1%
serves on the boards of an additional
14 funds managed by Scudder.
All Directors and Officers as a group 37,057 (4)(5) Less than
1/4 of 1%
- --------------------------
</TABLE>
* Directors considered by the Fund and its counsel to be "interested persons"
(which as used in this proxy statement is as defined in the Investment
Company Act of 1940, as amended) of the Fund or of the Fund's investment
manager or Korean adviser. Messrs. Bratt and Padegs are deemed to be
interested persons because of their affiliation with the Fund's investment
manager, Scudder, Stevens & Clark, Inc., or because they are Officers of the
Fund or both. Mr. Kim is deemed to be an interested person because of his
affiliation with the Fund's Korean adviser, Daewoo Capital Management Co.,
Ltd., which is a wholly owned subsidiary of Daewoo Securities Co., Ltd., or
because he is an Officer of the Fund or both.
4
<PAGE>
+ Messrs. Bratt and Padegs are members of the Executive Committee of the Fund.
(1) The information as to beneficial ownership is based on statements
furnished to the Fund by the Directors. Unless otherwise noted,
beneficial ownership is based on sole voting and investment power.
(2) Mr. Bratt's total includes 1,268 shares held by members of his family
as to which he shares voting and investment power.
(3) Dr. Nolen's total includes 6,375 shares held in trust for his benefit.
(4) Of which 29,414 shares are held with sole investment and voting power
and 7,643 shares are held with shared investment or voting power.
(5) The total for the group includes 608 shares held by Mr. Robbins.
Section 30(f) of the Investment Company Act of 1940, as amended (the "1940
Act"), as applied to a fund, requires the fund's officers, directors, investment
manager or adviser, affiliates of the investment manager or adviser, and persons
who beneficially own more than ten percent of a registered class of the fund's
outstanding securities ("Reporting Persons"), to file reports of ownership of
the fund's securities and changes in such ownership with the Securities and
Exchange Commission (the "SEC") and the New York Stock Exchange. Such persons
are required by SEC regulations to furnish the fund with copies of all such
filings.
Based solely upon its review of the copies of such forms received by it,
and written representations from certain Reporting Persons that no year-end
reports were required for those persons, the Fund believes that during the
fiscal year ended June 30, 1995, all filing requirements applicable to its
Reporting Persons were complied with except that filings for the 1994 and 1995
fiscal year-end were not received on behalf of the Fund's Korean adviser, Daewoo
Capital Management Co., Ltd. or its affiliate Daewoo Securities Co., Inc.
(Korea).
Certain accounts for which the Adviser acts as investment adviser owned
2,423,331 shares, in the aggregate, or 6.56% of the outstanding shares on June
30, 1995. The Adviser may be deemed to be a beneficial owner of such shares but
disclaims any beneficial ownership in such shares.
According to a filing with the SEC on Schedule 13G on March 28, 1995, BEA
Associates, 153 East 53rd Street, New York, New York, reported (and disclaimed)
beneficial ownership of 3,431,303 shares (11.6% of the Fund's outstanding stock)
held in discretionary accounts managed by BEA Associates.
Except as noted above, to the best of the Fund's knowledge, as of June 30,
1995, no other person owned beneficially more than 5% of the Fund's outstanding
shares.
Emeritus Founding Director
Sidney M. Robbins has chosen not to stand for re-election as a director of
the Fund. The Board of Directors expects to elect him at the Meeting as Emeritus
Founding Director. Emeritus directors are invited to attend all Board meetings
and to participate in Board discussions, but are not entitled to vote on any
matter presented to the Board.
5
<PAGE>
Committees of the Board--Board Meetings
The Board of Directors of the Fund met five times during the fiscal year
ended June 30, 1995. Each Director attended at least 75% of the total number of
meetings of the Board of Directors and of all committees of the Board on which
they served as regular members, except Mr. Tai Ho Lee who attended 71% of the
meetings of the Board of Directors and related committees on which he serves.
The Board of Directors, in addition to an Executive Committee, has an Audit
Committee, a Valuation Committee and a Special Nominating Committee. The
Executive and Valuation Committees consist of regular members, allowing
alternates.
Audit Committee
The Board has an Audit Committee consisting of those Directors who are not
interested persons of the Fund, of Scudder, or of Daewoo Capital Management Co.,
Ltd. ("Noninterested Directors"), as defined in the 1940 Act, which met once
during the Fund's last fiscal year. The Audit Committee reviews with management
and the independent accountants for the Fund, among other things, the scope of
the audit and the controls of the Fund and its agents, reviews and approves in
advance the type of services to be rendered by independent accountants,
recommends the selection of independent accountants for the Fund to the Board
and in general, considers and reports to the Board on matters regarding the
Fund's accounting and bookkeeping practices.
Nominating Committee
The Board has a Special Nominating Committee consisting of Noninterested
Directors. The Committee is charged with the duty of making all nominations for
Noninterested Directors. Stockholders' recommendations as to nominees received
by management are referred to the Committee for its consideration and action.
The Committee most recently met on July 28, 1995 to consider and to nominate the
nominees set forth above.
Executive Officers
In addition to Messrs. Bratt, Padegs and Kim, who are Directors and
Officers of the Fund, the following persons are Executive Officers of the Fund:
<TABLE>
<CAPTION>
<S> <C> <C>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment (1) an Officer (2)
--------------------- -------------------------------------- --------------
Jerard K. Hartman (62) Vice President; Managing Director of 1986
Scudder, Stevens & Clark, Inc.
Kun-Ho Hwang (44) Vice President; Director, Planning Department of Daewoo 1984
Securities Co., Ltd.
H. Jin Kim (45) Vice President; President of Daewoo Securities 1989
(America) Inc.
David S. Lee (61) Vice President; Managing Director of 1984
Scudder, Stevens & Clark, Inc.
John J. Lee (37) Vice President; Vice President of 1994
Scudder, Stevens & Clark, Inc.
Thomas F. McDonough (48) Secretary and Assistant Treasurer; Principal of 1984
Scudder, Stevens & Clark, Inc.
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Present Office with the Fund; Year First Became
Name (Age) Principal Occupation or Employment (1) an Officer (2)
--------------------- -------------------------------------- --------------
Pamela A. McGrath (41) Treasurer; Principal of Scudder, Stevens & Clark, Inc. 1990
Edward J. O'Connell (50) Vice President and Assistant Treasurer; Principal of 1984
Scudder, Stevens & Clark, Inc.
Dong Wook Park (48) Vice President; General Manager, International 1986
Department of Daewoo Capital Management Co., Ltd.
Kathryn L. Quirk (42) Vice President and Assistant Secretary; Managing 1991
Director of Scudder, Stevens & Clark, Inc.
Coleen Downs Dinneen (34) Assistant Secretary; Vice President of Scudder, Stevens 1992
& Clark, Inc.
</TABLE>
(1) Unless otherwise stated, all the Executive Officers have been associated
with their respective companies for more than five years, although not
necessarily in the same capacity.
(2) The President, Treasurer and Secretary each hold office until his or her
successor has been duly elected and qualified, and all other Officers hold
offices at the pleasure of the Directors.
Transactions with and Remuneration of Directors and Officers
The aggregate direct remuneration by the Fund of Directors not affiliated
with Scudder or Daewoo Capital Management Co., Ltd. ("Daewoo") was $174,331,
including expenses, during the fiscal year ended June 30, 1995. Each such
unaffiliated Director currently receives fees, paid by the Fund, of $750 per
Directors' meeting attended and an annual Director's fee of $6,000. Each
Director also receives $250 per committee meeting attended (other than Audit
Committee meetings, for which such Director receives a fee of $750). Scudder
supervises the Fund's investments, pays the compensation and certain expenses of
its personnel who serve as Directors and Officers of the Fund and receives a
management fee for its services. Several of the Fund's Officers and Directors
are also officers, directors, employees or stockholders of Scudder and
participate in the fees paid to that firm (see "Investment Advisory, Management
and Administration Agreement," page 10), although the Fund makes no direct
payments to them other than for reimbursement of travel expenses in connection
with the attendance of Board of Directors and committee meetings.
Daewoo, which acts as Korean Adviser, pays the compensation and certain
expenses of the personnel of Daewoo who serve as Directors or Officers of the
Fund. (See "Research and Advisory Agreement," page 13.) The Fund will make no
direct payments other than for reimbursement of travel expenses for one
director, officer or employee of Daewoo or any of its affiliates who is not a
resident in the United States and travel expenses of any other director, officer
or employee of Daewoo or any of its affiliates who is a resident in the United
States, in connection with the attendance of Board of Directors and committee
meetings.
The following Compensation Table provides, in tabular form, the following
data:
Column (1): All Directors who receive compensation from the Fund.
Column (2): Aggregate compensation received by a Director from the Fund.
Columns (3) and (4): Pension or retirement benefits accrued or proposed to be
paid by the Fund Complex. The Fund does not pay its Directors such benefits.
Column (5): Total compensation received by a Director from the Fund, plus
compensation received from all funds for which a Director serves. The total
number of funds from which a Director receives such compensation is also
7
<PAGE>
provided. Generally, compensation received by a Director for serving on the
Board of a closed-end fund is greater than the compensation received by a
Director for serving on an open-end fund.
<TABLE>
<CAPTION>
Compensation Table
for the year ended December 31, 1994
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------------------------
(1) (2) (3) (4) (5)
Name Aggregate Pension or Retirement Estimated Total Compensation
of Compensation Benefits Accrued As Annual Benefits From the Fund and
Person, from the Part of Fund Upon Fund Complex
Position Fund Complex Expenses Retirement Paid to Director
---------------------------------------------------------------------------------------------------------
William H. Gleysteen, Jr., $11,125 $3,804~ $3,000~ $110,213
Director (12 funds)
Robert W. Lear, $11,125 N/A N/A $62,875
Director (10 funds)
Dr. Sang C. Lee, $11,125 N/A N/A $11,125
Director (1 fund)
Tai Ho Lee, $10,375 N/A N/A $10,375
Director (1 fund)
Dr. Wilson Nolen, $11,125 N/A N/A $132,023
Director (15 funds)
Sidney M. Robbins, $11,125 N/A N/A $11,125
Director (1 fund)
Hugh T. Patrick, N/A* N/A N/A $12,841
Director nominee (1 fund)
---------------------------------------------------------------------------------------------------------
</TABLE>
+ Retirement benefits accrued and proposed to be paid as additional
compensation for serving on the Board of The Japan Fund, Inc.
* Mr. Patrick did not serve as a Director of the Fund during the calendar
year ended December 31, 1994, and therefore received no compensation from
the Fund.
Required Vote
Election of each of the listed nominees for Director requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders vote in favor of each
of the nominees.
(2) RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT ACCOUNTANTS
At a meeting held July 11, 1995, the Board of Directors of the Fund,
including a majority of the Noninterested Directors, selected Coopers & Lybrand
L.L.P. to act as independent accountants for the Fund for the fiscal year ending
June 30, 1996. Coopers & Lybrand L.L.P. are independent accountants and have
advised the Fund that they have no direct financial interest or material
indirect financial interest in the Fund. One or more representatives of Coopers
& Lybrand L.L.P. are expected to be present at the Meeting and will have an
opportunity to make a statement if they so desire. Such representatives are
expected to be available to respond to appropriate questions posed by
stockholders or management.
8
<PAGE>
The Fund's financial statements for the fiscal year ended June 30, 1995
were audited by Coopers & Lybrand L.L.P. In connection with its audit services,
Coopers & Lybrand L.L.P. reviewed the financial statements included in the
Fund's annual and semiannual reports and its filings with the SEC.
Required Vote
Ratification of the selection of independent accountants requires the
affirmative vote of a majority of the votes cast at the Meeting in person or by
proxy. Your Fund's Directors recommend that stockholders ratify the selection of
Coopers & Lybrand L.L.P. as independent accountants.
(3) AND (4) APPROVAL OR DISAPPROVAL OF THE CONTINUANCE OF THE
INVESTMENT ADVISORY, MANAGEMENT AND ADMINISTRATION AGREEMENT
AND THE RESEARCH AND ADVISORY AGREEMENT
Scudder, Stevens & Clark, Inc., 345 Park Avenue, New York, New York, acts
as investment adviser to and manager and administrator for the Fund pursuant to
an Investment Advisory, Management and Administration Agreement with the Fund
dated as of October 14, 1994 (the "Management Agreement"). Daewoo Capital
Management Co., Ltd. (the "Korean Adviser") acts as a Korean adviser to Scudder
pursuant to the Research and Advisory Agreement (the "Research Agreement") with
Scudder dated October 14, 1994. The Management and Research Agreements are
collectively referred to as the "Agreements." At a meeting held on July 19,
1994, the Directors, including the Noninterested Directors, approved the terms
of the current Agreements and their adoption subject to the approval by
stockholders. The Agreements were subsequently approved by a vote of
stockholders on October 13, 1994. At a meeting held on July 11, 1995, the
Directors, including a majority of the Noninterested Directors, recommended that
the stockholders approve the continuance of the Agreements.
In considering the Agreements and recommending the approval by the
stockholders, the Directors of the Fund, including the Noninterested Directors,
considered the best interests of the stockholders of the Fund and, in light of
their business judgment, took into account all such factors they deemed
relevant.
Such factors include the nature, quality and extent of the services
furnished by Scudder to the Fund; the necessity of Scudder's maintaining and
enhancing its ability to attract and retain capable personnel to serve the Fund;
the experience of Scudder in the field of international investing; Scudder's
profitability from advising the Fund; the investment record of Scudder in
managing the Fund; comparative data as to investment performance, advisory and
other fees, and expense ratios, particularly fees and expense ratios of funds
with foreign investments, including single country funds, advised by Scudder and
other investment advisers; the risks assumed by Scudder; the advantages and
possible disadvantages to the Fund of having an adviser which also serves other
investment companies as well as other accounts; possible benefits to Scudder
from serving as adviser to the Fund; current and developing conditions in the
financial services industry, including the entry into the industry of large and
well-capitalized companies which are spending and appear to be prepared to
continue to spend substantial sums to engage personnel and to provide services
to competing investment companies; the financial resources of Scudder and the
continuance of appropriate incentives to assure that Scudder will continue to
furnish high quality services to the Fund; similar factors regarding the Korean
Adviser to the extent applicable; the requirement of the Fund's license to
invest in Korean securities that there be a Korean adviser for the Fund approved
by the Korean Minister of Finance and Economy; the Korean Adviser's position as
9
<PAGE>
a leading firm in Korea in developing investment research capabilities;
information submitted by the Korean Adviser as to revenues and expenses;
information relating to the execution of portfolio transactions for the Fund by
an affiliate of the Korean Adviser; and various other factors.
In reviewing the terms of the Agreements and in discussions with Scudder
and the Korean Adviser concerning such Agreements, the Noninterested Directors
of the Fund have been advised and represented, at the Fund's expense, by their
independent counsel, Ropes & Gray. Counsel for the Fund is Debevoise & Plimpton.
Required Vote
Approval of the continuance of the Agreements requires the affirmative vote
of a majority of the Fund's outstanding voting securities which, as used in this
proposal, means (1) the holders of more than 50% of the outstanding shares of
the Fund or (2) the holders of 67% or more of the shares present if more than
50% of the shares are present at the Meeting in person or by proxy, whichever is
less. Because the Agreements were approved for the initial two years by the
Directors, including the Noninterested Directors, and the stockholders, it is
not required that the continuance of the Agreements be submitted to
stockholders. Accordingly, if an affirmative vote of stockholders is not
obtained, the Agreements will not terminate and will continue in effect pending
consideration by the Directors of such further action as they may deem to be in
the best interests of the stockholders of the Fund. Your Fund's Directors
recommend that stockholders vote to approve the continuance of the Agreements.
Investment Advisory, Management and Administration Agreement
The Management Agreement by its terms will remain in effect for a period of
two years from October 14, 1994 and will continue in effect from year to year
thereafter if such continuance is specifically approved at least annually by the
affirmative vote of a majority of the Noninterested Directors cast in person at
a meeting called for the purpose of voting on such approval and by either the
vote of a majority of all the Directors or a majority of the Fund's outstanding
voting securities, as defined above. The Management Agreement may be terminated
on 60 days' written notice, without penalty, by the Directors, by the vote of
the holders of a majority of the Fund's outstanding voting securities, or by
Scudder, and automatically terminates in the event of its assignment, as defined
in the 1940 Act.
Under the Management Agreement, Scudder regularly makes investment
decisions, makes available research and statistical data and supervises the
acquisition and disposition of securities by the Fund, all in accordance with
the Fund's investment objective and policies and in accordance with guidelines
and directions from the Fund's Board of Directors. Scudder assists the Fund as
it may reasonably request in the conduct of the Fund's business, subject to the
direction and control of the Fund's Board of Directors. Scudder maintains or
causes to be maintained for the Fund all books and records required to be
maintained under the 1940 Act and furnishes or causes to be furnished all
required reports or other information under Korean securities laws, to the
extent such books, records and reports and other information are not maintained
or furnished by the Fund's custodian or other agents. Scudder also supplies
office space in New York and furnishes clerical services in the United States
related to research, statistical and investment work. Scudder renders to the
Fund administrative services such as preparing reports to and meeting materials
for the Fund's Board of Directors and reports and notices to stockholders;
preparing and making filings with the SEC and other regulatory and
self-regulatory organizations, including preliminary and definitive proxy
materials and post-effective amendments to the Fund's Registration Statement;
providing assistance in certain accounting and tax matters and investor and
public relations; monitoring the valuation of portfolio securities, calculation
10
<PAGE>
of net asset value and calculation and payment of distributions to stockholders;
and overseeing arrangements with the Fund's custodian, including the maintenance
of books and records of the Fund. In addition, Scudder pays the reasonable
salaries, fees and expenses of the Fund's Officers and employees, and any fees
and expenses of the Fund's Directors, who are directors, officers or employees
of Scudder, except that the Fund bears travel expenses (or an appropriate
portion thereof) of Directors and Officers of the Fund who are directors,
officers or employees of Scudder, to the extent that such expenses relate to
attendance at meetings of the Fund's Board of Directors or any committees
thereof.
The Fund pays or causes to be paid all of its other expenses, including
among other things: organization and certain offering expenses of the Fund
(including out-of-pocket expenses, but not including overhead or employee costs
of Scudder or of any one or more organizations retained by the Fund or by
Scudder as a Korean adviser of the Fund); legal expenses; auditing and
accounting expenses; taxes and governmental fees; stock exchange listing fees;
fees, dues and expenses incurred in connection with membership in investment
company trade organizations; fees and expenses of the Fund's custodians,
subcustodians, transfer agents, and registrars; payment for portfolio pricing or
valuation services to a pricing agent, if any; expenses of preparing share
certificates and other expenses in connection with the issuance, offering,
distribution, sale or underwriting of securities issued by the Fund; expenses
relating to investor and public relations; expenses of registering or qualifying
securities of the Fund for sale; freight, insurance and other charges in
connection with the shipment of Fund's portfolio securities; brokerage
commissions or other costs of acquiring of disposing of any portfolio securities
of the Fund; expenses of preparing and distributing reports, notices and
dividends to stockholders; expenses relating to the Dividend Reinvestment and
Cash Purchase Plan; costs of stationery; litigation expenses; and costs of
stockholders' and other meetings.
For its services, Scudder receives a monthly fee, payable in United States
dollars, at the annual rate of 1.15% of the Fund's month end net assets up to
and including $50 million; 1.10% of such assets on the next $50 million; 1.00%
of such assets on the next $250 million; 0.95% of such net assets on the next
$400 million; and 0.90% of such assets in excess of $750 million. For the fiscal
year ended June 30, 1995, the aggregate fee incurred by the Fund for the
services of Scudder was $6,260,081, which includes a fee payable to the Korean
Adviser as described in the section entitled "Research and Advisory Agreement."
Under the Management Agreement, Scudder is permitted to provide investment
advisory services to other clients, including clients which may invest in
securities of Korean issuers. In providing such services, Scudder may use
information furnished by the Korean Adviser or others. Conversely, information
furnished by others to Scudder in providing services to other clients may be
useful to Scudder in providing services to the Fund.
The Management Agreement provides that Scudder shall not be liable for any
act or omission, error of judgment or mistake of law or for any loss suffered by
the Fund in connection with matters to which the Management Agreement relates,
except a loss resulting from willful misfeasance, bad faith or gross negligence
on the part of Scudder in the performance of its duties or from reckless
disregard by Scudder of its obligations and duties under the Management
Agreement.
11
<PAGE>
The Fund's license to invest in Korean securities provides that, should
Scudder's services be terminated for any reason, the Fund must appoint a
subsequent investment manager, subject to approval by the Minister of Finance
and Economy, within 120 days following such termination. The license provides
that such approval will not be unreasonably withheld, but that the Minister of
Finance and Economy will revoke the license if the Minister determines that the
Fund has not sought in good faith to appoint a successor investment manager
reasonably acceptable to the Minister. In the event such license is terminated,
the Board of Directors will consider appropriate actions, including termination
of the Fund and liquidation of its assets.
Investment Manager
Scudder is a Delaware corporation. Daniel Pierce* is the Chairman of the
Board of Scudder. Edmond D. Villani# is the President of Scudder. Stephen R.
Beckwith#, Lynn S. Birdsong#, Nicholas Bratt#, Linda C. Coughlin#, Margaret D.
Hadzima*, Jerard K. Hartman#, Richard A. Holt@, Dudley H. Ladd*, Douglas M.
Loudon#, John T. Packard~, Juris Padegs# and Cornelia M. Small# are the other
members of the Board of Directors of Scudder. The principal occupation of each
of the above named individuals is serving as a Managing Director of Scudder.
All of the outstanding voting and nonvoting securities of Scudder are held
of record by Stephen R. Beckwith, Juris Padegs, Daniel Pierce and Edmond D.
Villani in their capacity as the representatives (the "Representatives") of the
beneficial owners of such securities, pursuant to a Security Holders' Agreement
among Scudder, the beneficial owners of securities of Scudder and such
Representatives. Pursuant to the Security Holders' Agreement, the
Representatives have the right to reallocate shares among the beneficial owners
from time to time. Such reallocations will be at net book value in cash
transactions. All Managing Directors of Scudder own voting and nonvoting stock
and all Principals own nonvoting stock.
Messrs. Padegs and Bratt, who are Officers and Directors of the Fund, are
Managing Directors of Scudder. In addition, the following directors and officers
of Scudder or the Korean Adviser or its affiliate are Officers of the Fund in
the following capacities: Jerard K. Hartman, Kun-Ho Hwang, H. Jin Kim, David S.
Lee, John J. Lee and Dong Wook Park, Vice Presidents; Kathryn L. Quirk, Vice
President and Assistant Secretary; Pamela A. McGrath, Treasurer; Edward J.
O'Connell, Vice President and Assistant Treasurer; Thomas F. McDonough,
Secretary and Assistant Treasurer; and Coleen Downs Dinneen, Assistant
Secretary. Messrs. Hartman and David S. Lee, and Ms. Quirk are Managing
Directors and Messrs. McDonough and O'Connell and Ms. McGrath are Principals of
Scudder. Ms. Dinneen and Mr. John J. Lee are Vice Presidents of Scudder.
- ---------------------------
* Two International Place, Boston, Massachusetts
# 345 Park Avenue, New York, New York
+ 101 California Street, San Francisco, California
@ Two Prudential Plaza, 180 North Stetson, Suite 5400, Chicago, Illinois
12
<PAGE>
Scudder or an affiliate manages in excess of $90 billion in assets for
individuals, mutual funds and other organizations. The following are other open-
or closed-end mutual funds with investment objectives similar to the Fund, for
which Scudder provides investment management:
<TABLE>
<CAPTION>
<S> <C> <C>
Total Net Assets as of Management Compensation
July 31, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Daily Net Assets
---------------- ---------------------- ---------------------------------
Scudder Pacific Opportunities Fund, $434,400 1.10%.
Inc.
The Japan Fund, Inc. $533,900 0.85 of 1% of the first $100 million of
average daily net assets; 0.75 of 1% on
assets in excess of $100 million up to and
including $300 million; 0.70 of 1% on assets
in excess of $300 million up to and
including $600 million; 0.65 of 1% on assets
in excess of $600 million. Scudder pays The
Nikko International Capital Management Co.,
Ltd. for investment and research services
0.10 of 1% on average daily net assets,
payable during fiscal year 1995.
<S> <C> <C>
Total Net Assets as of Management Compensation
July 31, 1995 on an Annual Basis Based on the
Name (000 omitted) Value of Average Weekly Net Assets
---------------- ---------------------- ----------------------------------
Scudder New Asia Fund, Inc.* $145,600 1.25%; 1.15% on net assets in excess of $75
million; 1.10% on net assets in excess of
$200 million.
* This fund is not subject to state imposed expense limitations.
</TABLE>
Directors, officers and employees of Scudder from time to time may have
transactions with various banks, including the Fund's custodian bank. It is
Scudder's opinion that the terms and conditions of those transactions that have
occurred were not influenced by existing or potential custodial or other Fund
relationships.
Research and Advisory Agreement
The Research Agreement by its terms will remain in effect for a period of
two years from October 14, 1994 and will continue in effect from year to year
thereafter if such continuance is specifically approved at least annually by the
affirmative vote of a majority of the Noninterested Directors and by either a
majority of all of the Directors, or by a majority of the outstanding voting
securities of the Fund, as defined on page 9 of this Proxy Statement. The
Research Agreement may be terminated on 60 days' written notice, without
penalty, by the Board of Directors, the vote of holders of a majority of the
outstanding voting securities of the Fund or by the Korean Adviser, and
automatically terminates in the event of its assignment, as defined in the 1940
Act.
Under the Research Agreement, the Korean Adviser has agreed to furnish
Scudder such information, investment recommendations, advice and assistance as
Scudder shall from time to time reasonably request. The Korean Adviser has
13
<PAGE>
agreed to maintain within its organization a separate staff to furnish such
services exclusively to Scudder. The Korean Adviser has agreed to pay the fees
and expenses of any Directors or Officers of the Fund who are directors,
officers, of employees of the Korean Adviser or any of its affiliates, except
that the Fund bears the travel expenses of one director, officer or employee of
the Korean Adviser or any of its affiliates who is not a resident in the United
States to the extent that such expenses relate to attendance as a Fund Director
at meetings of the Board of Directors held in the United States and also bears
the travel expenses of any director, officer or employee of the Korean Adviser
or any of its affiliates who is resident in the United States to the extent such
expenses relate to attendance as a Fund Director at meetings of the Board of
Directors held outside the United States.
For its services, the Korean Adviser receives from Scudder a monthly fee in
United States dollars at the annual rate of 0.2875% of the Fund's month end net
assets up to and including $50 million; 0.2750% of such net assets on the next
$50 million; 0.2500% of such net assets on the next $250 million; 0.2375% of
such net assets on the next $400 million; and 0.2250% of such net assets in
excess of $750 million. For the fiscal year ended June 30, 1995, the aggregate
fee paid by Scudder to the Korean Adviser amounted to $248,364.
Information from the Korean Adviser is 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.
The Research Agreement provides that the Korean Adviser shall not be liable
for any act or omission in the course of, connected with or arising out of any
services rendered under the Research Agreement except by reason of willful
misfeasance, bad faith or gross negligence on the part of the Korean Adviser or
by reason of reckless disregard by the Korean Adviser of its obligations and
duties under the Research Agreement.
The Fund's license to invest in Korean securities provides that, should the
Korean Adviser's services be terminated for any reason, Scudder must appoint a
subsequent Korean adviser, subject to approval by the Minister of Finance and
Economy, within 120 days following such termination. The license provides that
such approval will not be unreasonably withheld, but that the Minister of
Finance and Economy will revoke the license if the Minister determines that
Scudder has not sought in good faith to appoint a successor Korean adviser
reasonably acceptable to the Minister. In the event such license is terminated,
the Board of Directors will consider appropriate actions, including termination
of the Fund and liquidation of its assets.
Korean Adviser
The Korean Adviser, an investment adviser registered under the United
States Investment Advisers Act of 1940, was organized in February 1988 under the
laws of the Republic of Korea. The Korean Adviser is wholly owned by Daewoo
Securities Co., Ltd., Daewoo Securities Building, 34-3 Youido-dong, Yongdung
po-gu, Seoul, Korea, the largest Korean securities firm in terms of paid-in
capital and revenues in 1994 and an underwriter in the Fund's first four public
offerings. Daewoo Securities Co., Ltd. is affiliated with Daewoo Corporation, a
conglomerate headquartered in Seoul, Korea. Daewoo Corporation and certain
affiliates of Daewoo Corporation own approximately 13.17% of Daewoo Securities
Co., Ltd.
14
<PAGE>
The Korean Adviser has the following Board of Directors:
<TABLE>
<CAPTION>
<C> <C> <C>
Name and Position
with the Korean Adviser Principal Occupation Address
----------------------- -------------------- --------------------------
Jay-Hee Chun President, Kangsun Apt. 604-101
President Daewoo Capital Juyup-dong 50, Koyang City
Management Co., Ltd. Kujungki-do
Chungnam Myoung Managing Director, Kalhyun-dong
Executive Director Daewoo Capital 521-30 Eunpyung-gu
Management Co., Ltd. Seoul
Sung-Kyu Kim Auditor, Chungkok 4-dong
Auditor Daewoo Capital 73-75 3/4
Management Co., Ltd. Sungdong-gu, Kwangjin-gu
Seoul
</TABLE>
Brokerage Commissions on Portfolio Transactions
To the maximum extent feasible, Scudder places orders for portfolio
transactions through Scudder Investor Services, Inc. (the "Distributor") (a
corporation registered as a broker/dealer and a wholly-owned subsidiary of
Scudder), which in turn places orders on behalf of the Fund with issuers,
underwriters or other brokers and dealers. The Distributor receives no
commissions, fees or other remuneration from the Fund for this service.
Allocation of portfolio transactions will be supervised by Scudder.
During the fiscal year ended June 30, 1995, Daewoo Securities Co., Ltd.
("Daewoo Securities"), with respect to portfolio transactions for the Fund, was
paid $74,082, which amounted to 16.06% of total brokerage commissions paid. The
Fund's Korean Adviser is a subsidiary of Daewoo Securities.
Other Matters
The Board of Directors does not know of any matters to be brought before
the Meeting other than those mentioned in this Proxy Statement. The appointed
proxies will vote on any other business that properly comes before the Meeting
or any adjournments thereof in accordance with their best judgment.
Miscellaneous
Proxies will be solicited by mail and may be solicited in person or by
telephone or telegraph by Officers of the Fund or personnel of Scudder. The Fund
has retained Corporate Investor Communications, Inc., 111 Commerce Road,
Carlstadt, New Jersey, 07072-2586 to assist in the proxy solicitation. The cost
of their services is estimated at $5,000. The expenses connected with the
solicitation of the proxies and with any further proxies which may be solicited
by the Fund's Officers or Corporate Investor Communications, Inc., in person, by
telephone or by telegraph will be borne by the Fund. The Fund will reimburse
banks, brokers and other persons holding the Fund's shares registered in their
names or in the names of their nominees, for their expenses incurred in sending
proxy material to and obtaining proxies from the beneficial owners of such
shares.
15
<PAGE>
In the event that sufficient votes in favor of any proposal set forth in
the Notice of Meeting are not received by October 11, 1995, the persons named as
appointed proxies on the enclosed proxy card may propose one or more
adjournments of the Meeting to permit further solicitation of proxies. Any such
adjournment will require the affirmative vote of the holders of a majority of
the shares present in person or by proxy at the session of the Meeting to be
adjourned. The persons named as appointed proxies on the enclosed proxy card
will vote in favor of such adjournment those proxies which they are entitled to
vote in favor of the proposal for which further solicitation of proxies is to be
made. They will vote against any such adjournment those proxies required to be
voted against such proposal. The costs of any such additional solicitation and
of any adjourned session will be borne by the Fund.
Stockholder Proposals
Any proposal by a stockholder of the Fund intended to be presented at the
1996 meeting of stockholders of the Fund must be received by Thomas F.
McDonough, Secretary of the Fund, c/o Scudder, Stevens & Clark, Inc., at 345
Park Avenue, New York, New York 10154, not later than April 26, 1996.
By order of the Board of Directors,
Thomas F. McDonough
Secretary
345 Park Avenue
New York, New York 10154
August 25, 1995
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
PROXY THE KOREA FUND, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Annual Meeting of Stockholders--October 11, 1995
The undersigned hereby appoints Juris Padegs, Chang-Hee Kim and Sidney M. Robbins and each of them, the proxies for the
undersigned, with the power of substitution to each of them, to vote all shares of The Korea Fund, Inc. which the undersigned is
entitled to vote at the Annual Meeting of Stockholders of The Korea Fund, Inc. to be held at the offices of Scudder, Stevens &
Clark, Inc., 25th Floor, 345 Park Avenue (at 51st Street), New York, New York 10154, on October 11, 1995 at 2:15 p.m., eastern
time, and at any adjournments thereof.
Unless otherwise specified in the squares provided, the undersigned's vote will be cast "FOR" each numbered item listed below.
1. The election of Directors;
FOR all nominees listed below WITHHOLD AUTHORITY
(except as marked to the contrary below) [] to vote for all nominees listed below []
Nominees: Juris Padegs, Chang-Hee Kim, Hugh T. Patrick
(INSTRUCTION To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.)
2. Ratification of the selection of Coopers & Lybrand L.L.P. as independent
accountants; FOR [] AGAINST [] ABSTAIN []
3. Approval of the continuance of the Investment Advisory, Management and Administration
Agreement between the Fund and Scudder, Stevens & Clark, Inc. FOR [] AGAINST [] ABSTAIN []
<PAGE>
4. Approval of the continuance of the Research and Advisory Agreement between Daewoo
Capital Management Co., Ltd., and Scudder Stevens & Clark, Inc.; FOR [] AGAINST [] ABSTAIN []
In their discretion on any other business which may properly come before the
Meeting or any adjournments thereof.
Please sign exactly as your name or names appear. When signing as
your attorney, executor, administrator, trustee or guardian, please
give full title as such.
___________________________________________________________________
(Signature of Stockholder)
___________________________________________________________________
(Signature of joint owner, if any)
Date_________________________________________________________, 1995
PLEASE SIGN AND RETURN PROMPTLY IN ENCLOSED ENVELOPE
NO POSTAGE IS REQUIRED
</TABLE>
