THE KOREAN INVESTMENT FUND
SEMI-ANNUAL REPORT
OCTOBER 31, 1995
LETTER TO SHAREHOLDERS THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
December 15, 1995
Dear Shareholder:
With higher-than-expected corporate earnings growth and falling interest
rates-from a peak of 15.7% in March to 12.2% in October-the Seoul stock market
showed positive movement during the last three months. Local institutional
investors' active market participation amid improving liquidity conditions was
a major force behind this rebound. Buying was focused on non-life insurance
companies with improved loss ratios resulting from a decline in auto accidents.
Semiconductor, electronic parts and construction sectors attracted investors,
while the chemical and short-term finance sectors suffered due to domestic
investors' perception of hitting the peak of the business cycle.
While the Korean Composite Stock Price Index (KOSPI) posted a 1995 high of
1,016.8 points on October 14, sentiment turned bearish suddenly on the news of
a slush fund scandal involving former president Roh Tae Woo. While he was in
office Roh was reportedly amassing funds illegally for personal use, and it
appears that nearly every business group in Korea was involved as well. The
market ended October at 990.3 points.
STRONG GDP GROWTH IN THIRD QUARTER
Due to the decline in the value of the Japanese yen (by approximately 20% from
its peak in June) and increasing industrial production capacity, export growth
continued to accelerate despite the yen's weakness. According to data supplied
by the Bank of Korea, commodity exports in the third quarter grew 31.3%
year-on-year compared with gains of 25% and 24.3% the second and first
quarters, respectively. Though overall facility growth slowed quite a bit, it
remained an active 21.1%. With exports and facility investments both robust,
heavy industrial production led the growth. Additionally, unexpectedly strong
construction spending also fueled gross domestic product growth of 9.9% during
the third quarter. As a result, GDP grew 9.8% for the first three quarters of
1995.
Household consumption growth has been lagging GDP growth in the last few years,
largely because wealth created from Korea's recent economic expansion has gone
mainly toward facility investment rather than individuals' disposable income.
Facility investment is now slowing down and interest rates are declining. Thus
there should be more liquidity in the market and saving will be less attractive
due to lower interest rates. These positive factors have already affected
household spending-durable and semi-durable goods consumption grew 11.6% and
10.9% year-on-year in the third quarter, compared with less than 10% growth for
the previous quarter. Substantial cuts in income taxes starting in 1996 will be
another factor spurring household consumption next year.
We expect the nation's consolidated budget for 1996 to rise by 14.9%
year-on-year to $81.9 billion in U.S. dollar terms, lower than this year's
15.1% gain over 1994. The government plans to reduce the consolidated budget
deficit to $927.8 billion, or 0.2% of gross national product next year, from
this year's deficit of about 0.3% of GNP. The higher growth rate of the budget
bill for next year seems to reflect the slowdown in overall economic activity.
The government's main objective is to implement a soft landing for the economy.
LOWER RATES SHOULD BOOST MARKET
We anticipate corporate bond yields, currently at the 12% level, will remain
stable in the fourth quarter given sufficient liquidity in the money market.
Liquidity conditions should be good given decreased demand for credit by
corporations and the flexible monetary stance of the Bank of Korea. The
implementation of a global income tax on January 1, 1996, will favor bonds with
maturities beyond five years as interest payments on such obligations will be
exempt from taxes. The shift of assets into bond investments should lower
interest rates in 1996. Faced with low interest rates, local institutional
investors such as insurance companies, banks, and investment and trust
companies should seek to raise equity allocations as a percentage of their
assets. This should be a major factor supporting the market.
The value of Korea's currency, the won, against the U.S. dollar has fluctuated
within a very limited range. At the end of this quarter, the rate was 765.15
won to the dollar, a 2.9% appreciation year-to-date. Our forecast is that the
won will appreciate modestly against the dollar in 1995, backed by the
improving current account balance and strong desire of the government to subdue
inflation.
Relative to the KOSPI, The Korean Investment Fund's (KIF) portfolio is
overweight bank stocks, which appear
1
THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
to be some of the most undervalued stocks in the market. We continue to add to
companies that are trading at a discount to our estimate of intrinsic value.
During the reporting period, we added to holdings in POSCO ADR, Korea Exchange
Bank and Shinhan Bank. We reduced positions in Kunsul Chemical, Yukong GDS,
Doosan Glass, Kumho Electric and Han Wha Chemical. As of October 31, the Fund's
cash position was about 25% of total net assets. The higher cash position is
mainly due to the recent rights offering; we expect to be fully invested soon.
INVESTMENT RESULTS
For the quarter ended October 31, 1995, The Korean Investment Fund had a total
return of -3.32% on a net asset value basis, which compares with the Korean
Composite Stock Price Index return of +6.07% for the period. On October 31,
your Fund's net asset value was $12.24 and the market price closed at $10.75
per share, representing a 12.17% discount to net asset value.
The Fund's recent performance versus the Index was held back by the 6.1%
dilution of the Fund's net asset value as a result of the rights offering in
October; taking the dilution into consideration would bring the Fund's return
into positive territory. The proceeds of the rights offering, which was
substantially oversubscribed, will allow greater participation at this time by
your Fund in the Korean equity market, which we believe will prove to be very
much to the advantage of KIF shareholders.
Thank you for your continued interest in The Korean Investment Fund. We look
forward to reporting to you again in the coming period.
Sincerely,
John D. Carifa
Chairman and Chief Executive Officer
A. Rama Krishna
Vice President
Inkee Oh
Vice President
2
TEN LARGEST HOLDINGS
OCTOBER 31, 1995 (UNAUDITED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
COMPANY U.S. $VALUE PERCENT OF NET ASSETS
- -------------------------------------------------------------------------------
Korea Electric Power Corp. $ 6,504,607 6.3%
Pohang Iron & Steel Co. (ADR) 4,017,000 3.9
Korea Mobile Telecom Corp. (GDS) 3,278,100 3.2
Samsung Electronics (common & new shares) 2,879,900 2.8
Samsung Securities 2,583,493 2.5
Korea Exchange Bank (common & new shares) 2,525,675 2.4
Cho Hung Bank 2,513,153 2.4
Dongkuk Steel Mill 2,500,928 2.4
Kookmin Bank (common & new shares) 2,449,385 2.4
Seoul Bank 2,404,757 2.3
$31,656,998 30.6%
3
PORTFOLIO OF INVESTMENTS
OCTOBER 31, 1995 (UNAUDITED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ----------------------------------------------------------------------
COMMON & PREFERRED STOCKS-79.6%
FINANCIAL SERVICES-22.8%
BANKING-13.5%
Cho Hung Bank 190,390 $ 2,513,153
Daegu Bank, Ltd. 16,000 257,204
new # 1 3,490 51,998
Hana Bank 102,800 2,149,644
Kookmin Bank 100,000 1,921,192
new # 1 27,493 528,193
Korea Exchange Bank 100,000 1,135,725
new # 1 125,120 1,389,950
Seoul Bank 250,000 2,404,757
Shinhan Bank 70,430 1,454,348
new # 1 7,344 147,811
13,953,975
BROKERAGE & MONEY MANAGEMENT-4.5%
Daewoo Securities 63,258 2,050,315
Samsung Securities 61,200 2,583,493
4,633,808
INSURANCE-2.9%
Korea Reinsurance Co. 24,789 1,211,669
Samsung Fire & Marine Insurance Co. 3,700 1,760,178
2,971,847
OTHER-1.9%
Hyundai International Merchant Bank 20,000 747,566
Korea Industrial Leasing Co., Ltd. 20,000 470,496
Shinhan Investment & Finance 32,027 661,343
Pfd 10,553 119,991
1,999,396
23,559,026
CONSUMER MANUFACTURING-14.2%
AUTO & RELATED-6.7%
Hanil E Wha Corp., Ltd. 27,770 896,450
Hyundai Motor Co., Ltd. 20,000 1,116,121
Sam Lip Industrial Co. 39,310 2,019,059
Sam Sung Radiator Industries 24,000 2,101,549
Yoosung Enterprise 15,000 842,972
6,976,151
BUILDING & RELATED-3.9%
Hanil Cement Manufacturing 30,132 1,752,433
Keum Kang, Ltd. 29,000 2,236,163
3,988,596
TEXTILE PRODUCTS-3.6%
Baikyang Co. 2,880 406,509
Cheil Industries 50,000 1,404,953
Korea Moolsan Co., Ltd. 30,000 548,912
new # 1 7,721 130,171
Sunkyong Industrial 38,254 1,214,889
3,705,434
14,670,181
CAPITAL GOODS-12.9%
ELECTRICAL EQUIPMENT-9.3%
Kumho Electric 25,404 1,593,664
new # 1 3,658 229,477
Orion Electric 70,000 1,665,033
Saehan Precision 26,750 1,143,207
new # 1 14,951 566,659
Samsung Electro-Mechanics15,765 871,541
new # 1 2,895 158,153
Samsung Electronics 10,561 2,318,824
new # 3 2,594 561,076
Sunny-Emi Co., Ltd. 16,346 523,397
9,631,031
4
THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
COMPANY SHARES U.S. $VALUE
- ----------------------------------------------------------------------
ENGINEERING & CONSTRUCTION-2.4%
Dong-Ah Construction 25,000 $ 1,003,071
new # 1 3,425 137,421
Hanshin Construction Co. 52,473 465,649
Sungwon Construction Co. 32,100 809,684
new # 1 4,892 116,363
2,532,188
MACHINERY-1.2%
Daewoo Heavy Industries 65,586 852,879
Tong Yang Mool San 20,005 334,659
1,187,538
13,350,757
BASIC INDUSTRIES-11.9%
CHEMICALS-1.6%
Hannong 13,000 815,526
Korea Chemical 6,000 588,120
Korea Kumho Petrochemical 20,000 257,466
1,661,112
CONTAINERS-0.8%
Hyundai Precision 36,050 852,781
MINING & METALS-7.5%
Dongkuk Steel Mill 85,811 2,500,928
Inchon Iron & Steel 10,400 452,617
Moon Bae Steel Co. Ltd. 13,700 716,199
Pohang Iron & Steel Co. (ADR) 156,000 4,017,000
Pohang Iron & Steel Mill 510 44,391
7,731,135
PAPER & FOREST PRODUCT-2.0%
Donghae Pulp Co. 11,300 292,413
Hansol Paper
Manufacturing Co. 41,408 1,839,995
2,132,408
12,377,436
UTILITY-6.3%
Korea Electric Power Corp. 158,000 6,504,607
TRANSPORTATION-4.5%
SHIPPING-3.0%
Hanjin Shipping 40,000 2,132,915
Korea Line Co. 33,330 1,001,882
3,134,797
OTHER-1.5%
Global Enterprise 10,000 810,299
Korean Air Lines 20,000 703,130
1,513,429
4,648,226
MULTI-INDUSTRY-3.2%
Korea Mobile Telecom Corp. (GDS) 89,200 3,278,100
CONSUMER SEVICES - 2.1%
RETAIL-1.0%
Hwasung Industries 18,415 774,963
new # 1 5,889 226,278
1,001,241
OTHER-1.1%
Hyundai Motor Service Co. 22,626 1,188,741
2,189,982
CONSUMER STAPLES-0.9%
FOOD-0.9%
Dongwon Industries, Co. 25,000 640,397
Woo Sung Feedmill 8,950 287,748
928,145
HEALTHCARE-0.6%
DRUGS-0.6%
Dong Sung Pharmaceuticals 10,602 277,122
Shin Poong Pharmaceuticals 7,000 322,943
600,065
5
PORTFOLIO OF INVESTMENTS (CONTINUED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
SHARES OR
PRINCIPAL
AMOUNT
COMPANY (000) U.S. $VALUE
- ----------------------------------------------------------------------
ENERGY-0.2%
OIL SERVICE-0.2%
Yukong Ltd. (GDR) (a) 10,238 $ 185,987
Total Common & Preferred Stocks
(cost $71,411,851) 82,292,512
TIME DEPOSIT-25.2%
WestDeutsche Landesbank
5.94%, 11/01/95
(cost $26,100,000) US$ 26,100 26,100,000
TOTAL INVESTMENTS-104.8%
(cost $97,511,851) $108,392,512
Other assets less liabilities-(4.8%) (4,961,389)
NET ASSETS-100% $103,431,123
a) Securities are exempt from registration under Rule 144A of the Securities
Act of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At October 31, 1995,
these securities were valued at $185,987 representing 0.2% of net assets.
Glossary of Terms:
ADR - American Depository Receipt.
GDR - Global Depository Receipt.
GDS - Global Depository Share
See notes to financial statements.
6
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995 (UNAUDITED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
ASSETS
Investments in securities, at value (cost $97,511,851) $108,392,512
Cash, at value (cost $185,834) 186,458
Receivable for investment securities sold 26,104,169
Dividends and interest receivable 21,943
Deferred organization expense and other assets 36,779
Total assets 134,741,861
LIABILITIES
Payable for investment securities purchased 30,500,334
Rights offering payable 499,135
Management fee payable 61,017
Sub-advisory fee payable 28,785
Accrued expenses and other liabilities 221,467
Total liabilities 31,310,738
NET ASSETS
(equivalent to $12.24 per share, based on 8,447,458
shares outstanding) $103,431,123
COMPOSITION OF NET ASSETS
Capital stock, at par $ 84,475
Additional paid-in capital 91,211,855
Accumulated net investment loss (812,193)
Accumulated net realized gain on investments and foreign
currency transactions 2,066,408
Net unrealized appreciation of investments and foreign
currency denominated assets and liabilities 10,880,578
$103,431,123
NET ASSET VALUE PER SHARE $12.24
See notes to financial statements.
7
STATEMENT OF OPERATIONS
SIX MONTHS ENDED OCTOBER 31, 1995 (UNAUDITED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
INVESTMENT INCOME
Interest $57,895
Dividends(net of foreign taxes withheld of $9,363) 12,202 $ 70,097
EXPENSES
Management fee 330,080
Sub-advisory fee 155,400
Custodian 160,084
Directors' fees and expenses 95,502
Audit and legal 34,481
Transfer agency 29,983
Printing 22,717
Registration 12,164
Amortization of organization expenses 11,655
Miscellaneous 30,224
Total expenses 882,290
Net investment loss (812,193)
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
AND FOREIGN CURRENCY
Net realized loss on investment transactions (439,186)
Net realized gain on foreign currency transactions 52,153
Net change in unrealized appreciation(depreciation) of:
Investments 3,888,985
Foreign currency denominated assets and liabilities (72,131)
Net gain on investments and foreign currency denominated
assets and liabilities 3,429,821
NET INCREASE IN NET ASSETS FROM OPERATIONS $2,617,628
See notes to financial statements.
8
STATEMENT OF CHANGES IN NET ASSETS THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
SIX MONTHS ENDED
OCTOBER 31, YEAR ENDED
1995 APRIL 30,
(UNAUDITED) 1995
------------- ------------
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS
Net investment loss $ (812,193) $ (640,830)
Net realized gain (loss) on investments and
foreign currency transactions (387,033) 4,656,429
Net change in unrealized appreciation
(depreciation) of investments and foreign
currency denominated assets and liabilities 3,816,854 (4,826,816)
Net increase (decrease) in net assets from
operations 2,617,628 (811,217)
CAPITAL STOCK TRANSACTIONS
Proceeds from sale of shares of common stock
in rights offering 25,898,597 21,809,342
Offering costs charged to additional
paid-in-capital (546,000) (615,279)
Total increase 27,970,225 20,382,846
NET ASSETS
Beginning of period 75,460,898 55,078,052
End of period $103,431,123 $75,460,898
See notes to financial statements.
9
NOTES TO FINANCIAL STATEMENTS
OCTOBER 31, 1995 (UNAUDITED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
NOTE A: SIGNIFICANT ACCOUNTING POLICIES
The Korean Investment Fund, Inc. (the "Fund") was incorporated in the State of
Maryland on November 1, 1991 as a non-diversified, closed-end management
investment company. The following is a summary of significant accounting
policies followed by the Fund.
1. SECURITY VALUATION
Investments are stated at value. Investments for which market quotations are
readily available are valued at the closing price on the Korea Stock Exchange
on the day of valuation or if no such closing price is available, at the last
bid price quoted on such day. Securities for which market quotations are not
readily available and restricted securities are valued in good faith at fair
value using methods determined by the Board of Directors. In determining fair
value, consideration is given to cost, operating and other financial data.
Securities that mature in 60 days or less are valued at amortized cost, which
approximates market value, unless this method does not represent fair value.
2. CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies are translated into
U.S. dollars at the mean of the quoted bid and asked price of the respective
currency against the U.S. dollar on the valuation date. Purchases and sales of
portfolio securities are translated at the rates of exchange prevailing when
such securities were acquired or sold. Income and expenses are translated at
rates of exchange prevailing when earned or accrued.
Net realized gain on foreign currency transactions of $52,153 represents net
foreign exchange gains and losses from holding of foreign currencies, currency
gains or losses realized between the trade and settlement dates on security
transactions, and the difference between the amounts of dividends and foreign
taxes recorded on the Fund's books and the U.S. dollar equivalent amounts
actually received or paid. Net unrealized currency gains and losses from
valuing foreign currency denominated assets and liabilities at period end
exchange rates are reflected as a component of net unrealized appreciation of
investments and foreign currency denominated assets and liabilities. The Fund
does not isolate that portion of the results of operations arising as a result
of changes in the foreign exchange rates from the fluctuations arising from
changes in the market prices of securities during the period.
The exchange rate for the Korean Won at October 31, 1995 was Won 765.15 to U.S.
$1.00.
3. ORGANIZATION EXPENSES
Organization expenses of approximately $115,000 have been deferred and are
being amortized on a straight-line basis through February, 1997.
4. TAXES
It is the Fund's policy to meet the requirements of the U.S. Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
investment company taxable income and net realized gains, if any, to its
shareholders. Therefore, no provision for U.S. income or excise taxes is
required. Withholding taxes on foreign interest and dividends have been
provided for in accordance with the applicable tax requirements.
5. INVESTMENT INCOME AND INVESTMENT TRANSACTIONS
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the date securities are
purchased or sold. Realized and unrealized gains and losses from investment and
currency transactions are calculated on the identified cost basis.
6. DIVIDENDS AND DISTRIBUTIONS
Dividends and distributions to shareholders are recorded on the ex-dividend
date and are determined in accordance with income tax regulations.
10
THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
NOTE B: MANAGEMENT FEE, SUB-ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Management and Administration Agreement, the Fund paid
Alliance Capital Management L.P. ("Alliance") a fee at an annualized rate of
.85 of 1% of the Fund's average weekly net assets. Such fee is calculated
weekly and paid monthly.
Under the terms of the Management Agreement, the Fund pays Orion Asset
Management Co., Ltd. (the "Co-Manager") a fee at an annualized rate of .40 of
1% of the Funds average weekly net assets. Such fee is calculated weekly and
paid monthly.
Brokerage commissions paid on securities transactions for the period ended
October 31, 1995 amounted to $162,555, of which $21,573 was paid to Tong Yang
Securities Co., Ltd., an affiliate of the Co-Manager and $14,959 was paid to
Baring Securities, a broker utilizing the services of the Pershing Division of
Donaldson, Lufkin & Jenrette Securities Corp., an affiliate of the Alliance.
NOTE C: INVESTMENT TRANSACTIONS
Purchases and sales of investment securities (excluding short-term investments)
aggregated $23,363,667 and $19,251,215, respectively, for the period ending
October 31, 1995. At October 31, 1995, the cost of securities for federal
income tax purposes was $97,511,851. Accordingly, gross unrealized appreciation
of investments was $14,624,439 and gross unrealized depreciation of investments
was $3,743,778 resulting in net unrealized appreciation of $10,880,661
(excluding foreign currency translations).
NOTE D: CAPITAL STOCK
There are 100,000,000 shares of $.01 par value common stock authorized. Of the
8,447,458 shares outstanding at October 31, 1995, the Investment Manager owned
9,000 shares.
NOTE E: RIGHTS OFFERING
During the period ended October 31, 1995, the Fund issued 2,484,546 shares in
connection with a rights offering of the Fund's shares. Shareholders of record
on June 10, 1995, were issued one non-transferable right foreach share of
common stock owned, entitling shareholders the opportunity to acquire one newly
issued share of common stock for every three rights held at a subscription
price of $10.83 per share. Offering costs of $546,000 attributed to the rights
offering were charged to additional paid-in-capital. Dealer management and
soliciting fees of $1,009,036 were netted against the proceeds of the
subscription.
11
NOTES TO FINANCIAL STATEMENTS (CONTINUED) THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
NOTE F: QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
NET REALIZED AND NET INCREASE
UNREALIZED GAIN (LOSS) (DECREASE)
ON INVESTMENTS AND IN NET ASSETS
NET INVESTMENT FOREIGN CURRENCY RESULTING FROM MARKET PRICE
INCOME (LOSS) TRANSACTIONS OPERATIONS ON NYSE
---------------- ------------------ ------------------ -----------------
TOTAL PER TOTAL PER TOTAL PER
QUARTER ENDED (000) SHARE (000) SHARE (000) SHARE HIGH LOW
- ------------------ ------ ------ -------- ------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
October 31, 1995 $(325) $(.06) $ 2,338 $ .39 $ 2,013 $ .33 $12.875 $11.25
July 31, 1995 (487) (.08) 1,092 .22 605 .14 12.75 10.75
$(812) $(.14) $ 3,430 $ .61 $ 2,618 $ .47
April 30, 1995 $(341) $(.06) $(4,179) $ (.69) $(4,520) $ (.75) $13.500 $11.750
January 31, 1995 258 .04 (7,838) (1.31) (7,580) (1.27) 14.375 11.625
October 31, 1994 (272) (.05) 7,915 1.33 7,643 1.28 15.125 13.500
July 31, 1994 (286) (.06) 3,931 .95 3,645 .89 16.375 13.125
$(641) $(.13) $ (171) $ .28 $ (812) $ .15
</TABLE>
12
FINANCIAL HIGHLIGHTS THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
SELECTED DATA FOR A SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT EACH PERIOD
<TABLE>
<CAPTION>
SIX MONTHS
ENDED FEBRUARY 24,
OCTOBER 31, YEAR ENDED APRIL 30, 1992 (A)
1995 ------------------------------- THROUGH
(UNAUDITED) 1995 1994 1993 APRIL 30,1992
----------- --------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.66 $13.09 $10.37 $11.00 $10.90(b)
INCOME FROM INVESTMENT OPERATIONS
Net investment loss (.14)* (.13)* (.09) (.03) (.01)
Net realized and unrealized gain (loss) on
investment and foreign currency transactions .61 .28 2.81 (.59) .11
Net increase (decrease) in net asset value .47 .15 2.72 (.62) .10
LESS: DISTRIBUTIONS
Distributions from net realized gains on
investments and foreign currency transactions -0- -0- -0- (.01) -0-
CAPITAL SHARE TRANSACTIONS
Dilutive effect of rights offering (.48) -0- -0- -0-
Offering costs charged to additional paid-in-capital (.09) (.10) -0- -0- -0-
Total capital share transactions (.58) -0- -0- -0-
Net asset value, end of period $12.24 $12.66 $13.09 $10.37 $11.00
Market value, end of period $10.75 $12.375 $13.375** $12.125 $10.00
TOTAL RETURN
Total investment return based on:(c)
Market value (11.74)% (5.88)% 10.31%** 21.39% (10.39)%
Net asset value (3.32)% (3.28)% 26.23% (5.62)% (1.43)%
Net assets, end of period (000's omitted) $103,431 $75,461 $55,078 $43,663 $46,278
RATIOS/SUPPLEMENTAL DATA
Ratio of expenses to average net assets 2.26% 2.00% 2.26% 2.55% 2.37%(d)
Ratio of net investment loss to average net assets (2.08)% (.83)% (.82)% (.27)% (.49)%(d)
Portfolio turnover rate 26% 34% 14% 43% 8%
</TABLE>
* Based on average shares outstanding.
** Restated.
(a) Commencement of operations.
(b) Net of offering costs of $.26.
(c) Total investment return is calculated assuming a purchase of common stock
on the opening of the first day and a sale on the closing of the last day of
each period reported. Dividends and distributions, if any, are assumed for
purposes of this calculation, to be reinvested at prices obtained under the
Fund's dividend reinvestment plan. Rights offerings, if any, are assumed for
purposes of this calculation, to be fully subscribed under the terms of the
rights offering. Generally, total investment return based on net asset value
will be higher than total investment return based on market value in periods
where there is an increase in the discount or a decrease in the premium of the
market value to the net asset value from the beginning to the end of such
periods. Conversely, total investment return based on the net asset value will
be lower than total investment return based on market value in periods where
there is a decrease in the discount or an increase in the premium of the market
value to the net asset value from the beginning to the end of such periods.
Total investment return for a period of less than one year is not annualized.
(d) Annualized.
The per share amounts reported herein are not necessarily consistent with
the corresponding amounts reported on the Statement of Operations due to the
change in capital stock caused by the rights offering.
13
THE KOREAN INVESTMENT FUND
_______________________________________________________________________________
BOARD OF DIRECTORS
JOHN D. CARIFA, CHAIRMAN AND CHIEF EXECUTIVE OFFICER
WANG-HA CHO, PRESIDENT (1)
SUNG JIN KIM, SENIOR VICE PRESIDENT (1)
DAVID H. DIEVLER (1)
WILLIAM H. FOULK, JR. (1)
DR. JAMES M. HESTER (1)
THE HON. JAMES D. HODGSON (1)
CHOONG (JOHN) H. KOH (1)
OFFICERS
ROBERT HEISTERBERG, EXECUTIVE VICE PRESIDENT-INVESTMENTS
YUNG CHUL PARK, EXECUTIVE VICE PRESIDENT-INVESTMENTS
A. RAMA KRISHNA, VICE PRESIDENT
INKEE OH, VICE PRESIDENT
THOMAS BARDONG, VICE PRESIDENT
EDMUND P. BERGAN, JR., SECRETARY
MARK D. GERSTEN, TREASURER & CHIEF FINANCIAL OFFICER
JOSEPH J. MANTINEO, CONTROLLER
INVESTMENT MANAGER AND
ADMINISTRATOR
ALLIANCE CAPITAL MANAGEMENT L.P.
1345 Avenue of the Americas
New York, NY 10105
CUSTODIAN
BROWN BROTHERS HARRIMAN & CO.
40 Water Street
Boston, MA 02109-3661
LEGAL COUNSEL
SEWARD & KISSEL
One Battery Park Plaza
New York, NY 10004
CO-MANAGER
ORION ASSET MANAGEMENT CO., LTD.
767 Fifth Avenue
New York, NY 10153
INDEPENDENT ACCOUNTANTS
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, NY 10036-2798
TRANSFER AGENT, DIVIDEND PAYING
AGENT, AND REGISTRAR
STATE STREET BANK AND TRUST COMPANY
225 Franklin Street
Boston, MA 02110-1520
(1) Member of the Audit Committee.
Notice is hereby given in accordance with Section 23(c) of the Investment
Company Act of 1940 that the Fund may purchase at market prices from time to
time shares of its common stock in the open market.
This report, including the financial statement herein is transmitted to the
shareholders of The Korean Investment Fund, Inc. for their information. This is
not a prospectus, circular or representation intended for use in the purchase
of shares of the Fund or any securities mentioned in this report.
The financial information included herein is taken from the records of the
Fund without audit by independent accountants who do not express an opinion
thereon.
14
THE KOREAN INVESTMENT FUND, INC.
Summary of General Information
SHAREHOLDER INFORMATION
Daily market prices for the Fund's shares are published in the New York Stock
Exchange Composite Transaction section of newspapers under the designation
KoreanInvFd. The Fund's NYSE trading symbol is "KIF". Weekly comparative net
asset value (NAV) and market price information about the Fund is published each
Monday in THE WALL STREET JOURNAL and each Saturday in THE NEW YORKTIMES and
BARRON'S, and other newspapers in a table called "Closed-End Funds". Additional
information about the Fund is available by calling 1-800-221-5672.
DIVIDEND REINVESTMENT PLAN
Under the Fund's Dividend Reinvestment Plan, all shareholders will
automatically have their dividends and other distributions from the Fund
invested in additional shares of the Fund unless a shareholder elects to
receive cash. A brochure describing the Plan is available from the Plan Agent,
State Street Bank and Trust Company, by calling 1-800-219-4218.
THE KOREAN INVESTMENT FUND, INC.
1345 Avenue of the Americas
New York, New York 10105
ALLIANCECAPITAL
MUTUAL FUNDS WITHOUT THE MYSTERY.
R THESE REGISTERED SERVICE MARKS USED UNDER LICENSE FROM THE OWNER, ALLIANCE
CAPITAL MANAGEMENT L.P.
KORSR
