SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Amendment No. __
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
KOREA CAPITAL TRUST
-------------------
[Name of Registrant as Specified in its Charter]
--------------------------------------------------
[Name of Person(s) Filing Proxy Statement if other
than Registrant]
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(I)(1), 14a-6(I)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(I)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(I)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
________________________________________________________________
(2) Aggregate number of securities to which transaction applies:
________________________________________________________________
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:_____________________________
(4) Proposed maximum aggregate value of transaction:________________
(5) Total fee paid:_________________________________________________
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[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount previously paid:__________________________________________
(2) Form, Schedule or Registration Statement No._____________________
(3) Filing Party:____________________________________________________
(4) Date Filed:______________________________________________________
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KOREA CAPITAL TRUST
PROXY SOLICITED BY MANAGEMENT
-----------------------------
The undersigned hereby appoints Indong Oh and Jai Young Sohn as proxies
of the undersigned, with full power of substitution, to vote at the Special
Meeting of Shareholders of Korea Capital Fund (the "Fund"), a series of Korea
Capital Trust, to be held on November 29, 1996 at 1:00 p.m. P.S.T., and any
adjournment thereof, all the shares of the Fund standing in the name of the
undersigned as follows:
(1) For [ ] Against [ ] Abstain [ ]
With respect to the retroactive approval of the new
Advisory/Administration Agreement with Daehan Securities, Inc.,
as more fully described in the proxy statement (the Board of
Trustees recommend a vote FOR);
(2) For [ ] Against [ ] Abstain [ ]
With respect to approval of the new Advisory/Administration
Agreement with Daehan Securities, Inc., as more fully described
in the proxy statement (the Board of Trustees recommend a vote
FOR);
(3) Election of Trustees
[ ] For All Nominees [ ] Withhold
Listed Below (ex- Authority To
cept as marked to Vote For All
the contrary) Nominees
Listed Below
Nominees: Indong Oh
Hyung Joo Park
Chung Soo Han
James H. Yu
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name in the space provided
below.)
____________________________
(4) For [ ] Against [ ] Abstain [ ]
With respect to ratification of the selection of Ernst & Young
LLP as auditors of the Fund for the fiscal year ending August
31, 1997 (the Board of Trustees recommends a vote FOR);
(5) For [ ] Against [ ] Abstain [ ]
In their discretion on all other business that may properly
come before the meeting and any adjournment thereof.
This proxy will be voted as specified. If no specification is
made and/or other matters, this proxy will be vote FOR the adoption of Proposals
1 and 4, and FOR the election of the four nominated trustees, and on other
matters as said proxies may determine.
Dated: November 5, 1996
_____________________________(L.S.)
_____________________________(L.S.)
Signature(s) should be exactly as name or names
appear on this proxy. If stock is held jointly, each
holder should sign. If signing as attorney, executor,
administrator, trustee or guardian, please give us
full name and capacity in which signing.
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KOREA CAPITAL TRUST
3360 W. Olympic Blvd., Suite 201
Los Angeles, California 90019
Notice of Special Meeting of Shareholders
Meeting Date: November 29, 1996
To the Shareholders:
A Special Meeting of Shareholders of Korea Capital Fund (the
"Fund"), a series of Korea Capital Trust (the "Trust"), will be held on November
29, 1996 at 1:00 P.M. at the offices of the Trust located at 3360 W. Olympic
Blvd., Suite 201, Los Angeles, California 90019, for the following purposes:
1. To retroactively approve a new Advisory/Administration
Agreement between the Trust and Daehan Securities, Inc. ("Daehan") with respect
to the Fund, effective January 3, 1994 , as more fully described in the proxy
statement;
2. To approve a new Advisory/Administration Agreement between the
Trust and Daehan to be effective on the date of special meeting of shareholders;
3. To elect Trustees of the Fund;
4. To ratify the selection of Ernst & Young LLP as auditors of
the Fund for the fiscal year ending August 31, 1996; and
5. To transact such other business as may properly come before
the meeting or any adjournment thereof.
THE TRUSTEES UNANIMOUSLY RECOMMEND APPROVAL OF ALL PROPOSALS.
<PAGE>
Shareholders of record at the close of business on August 30,
1996 are entitled to vote at the meeting or any adjournment thereof. It is
important that you return your signed proxy promptly, regardless of the size of
your holdings, so that a quorum may be assured.
By Order of the Board of Trustees
Jai Young Son
Secretary
November 5, 1996
Your vote is important! Please indicate your voting
instructions on the enclosed proxy, date and sign it, and return it in the
accompanying postage prepaid envelope. If you sign, date and return the proxy
but give no voting instructions, your shares will be voted to authorize the
election of all of the nominees named in the proxy statement and in favor of all
other proposals noticed above.
<PAGE>
KOREA CAPITAL TRUST
3360 W. Olympic Blvd., Suite 201
Los Angeles, California 90019
PROXY STATEMENT
Special Meeting of Shareholders
November 29, 1996
This proxy statement is furnished in connection with the
solicitation by the Board of Trustees of Korea Capital Fund (the "Fund"), a
series of Korea Capital Trust (the "Trust"), of proxies to be voted at a Special
Meeting of Shareholders (the "Meeting") to be held on November 29, 1996, and any
adjournment thereof. The purposes of the meeting are set forth in the
accompanying Notice of Special Meeting of Shareholders dated November 5, 1996.
This proxy solicitation will be made primarily by mailing this
proxy statement and the accompanying proxy card to shareholders on August 31,
1996. Supplementary solicitations may be made by telephone or telegram or by
personal interview. Officers and Trustees of the Trust and Daehan Securities,
Inc. ("Daehan") who participate in such solicitations will receive no
compensation for their services other than their regular salaries, if any. The
expenses of preparing and mailing this proxy statement and its enclosures and
all other solicitation expenses will be paid by Daehan. Daehan may also solicit
proxies at its own expense, and will reimburse brokerage firms, banks and other
custodians and fiduciaries for their expenses in forwarding solicitation
materials to the beneficial owners of shares.
The Trust will furnish without charge a copy of the Fund's most
recent annual report and semi-annual report to any shareholder upon request.
Such request may be made by calling the Trust during business hours at
1-213-734-5000, or by writing to the Trust at the address set forth above.
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OUTSTANDING SHARES AND VOTING REQUIREMENTS
The Board of Trustees has fixed the close of business on August
30, 1996 as the record date for the Meeting and any adjournments thereof. As of
August 30, 1996, there were 1,052,078 shares of the Fund issued and outstanding.
Only shareholders of record at the close of business on that date are entitled
to notice of and to vote at the meeting. Each such shareholder is entitled to
one vote for each full share, and a proportionate vote for each fractional
share, of the Fund held on the record date.
The holders of 40% of the outstanding shares of the Fund must
be present in person or represented by proxy at the Meeting in order to
constitute a quorum for the transaction of any business. If a quorum is present
at the Meeting but sufficient votes to approve one or more of the items on the
agenda are not received, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies with
respect to those items. In so doing, the persons named as proxies will attempt
to determine if an adjournment and additional shareholder solicitation are
reasonable and in the best interest of shareholders, and will vote for or
against adjournment accordingly. Any such adjournment will require the
affirmative vote of a majority of the shares present at the Meeting or
represented by proxy. If the adjournment is for more than 120 days from August
30, 1996, the Board of Trustees will set a new record date for the Meeting.
If the enclosed proxy card is executed properly and returned in
time to be voted at the Meeting, and is not revoked, the shares represented
thereby will be voted according to the instructions marked on the card. The
persons voted as proxies will use their best judgment in voting in connection
with the transaction of such other business as may properly come before the
Meeting or any adjournment thereof. A shareholder giving a proxy may revoke it
at any time before it is exercised by giving written notice of its revocation to
the Secretary of the Trust at the address indicated on the Notice of Special
Meeting, by executing and delivering to the Trust another proxy dated subsequent
to the proxy to be revoked, or by attending the Meeting and voting in person.
Abstentions and broker "non-votes" (proxies from brokers or
nominees indicating that such persons have not received instructions from the
beneficial owner or other persons entitled to vote shares on a particular matter
with respect to which the broker or nominee does not have discretionary power)
will not be counted for or against any proposal to which they relate, but will
be counted for purposes of determining the shares present at the Meeting.
Abstentions and broker non-votes will therefore have the effect of a "no" vote
for purposes of obtaining the requisite approvals of the proposals before the
Meeting.
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PROPOSAL 1
RETROACTIVE APPROVAL OF A NEW
ADVISORY/ADMINISTRATION AGREEMENT
At the Meeting, the shareholders will be asked to approve a new
Advisory/ Administration Agreement (the "New Advisory/Administration Agreement")
between the Trust and Daehan Securities, Inc. ("Daehan") with respect to the
Fund, effective retroactively as of January 3, 1994. A copy of the New
Advisory/Administration Agreement is set forth as Exhibit A to this Proxy
Statement. The material provisions of the New Advisory/Administration Agreement
are the same as those of the Trust's current Advisory and Administration
Agreement with respect to the Fund dated September 11, 1992 (the "Current
Advisory/Administration Agreement").
Daehan has provided investment advice and supervisory
management services to the Fund since its inception, pursuant to the Current
Advisory/Administration Agreement. The Current Advisory/Administration Agreement
was last approved by the Board of Trustees of the Fund on June 13, 1996 and was
last approved by the shareholders of the Fund on September 1, 1992.
On January 3, 1994, Indong Oh, the principal shareholder of
Daehan, sold all of the shares of Daehan's common stock held by him to Han
Huskey and Tong S. Suhr. As such shares comprised 97.9% of the outstanding
shares of Daehan, this change of control of Daehan constituted an "assignment"
of the Current Advisory/Administration Agreement, as that term is defined in the
Investment Company Act of 1940 (the "1940 Act"), and resulted in the termination
of the Current Advisory/Administration Agreement. Neither Dr. Oh nor the two
individual purchasers were aware of the impact of the sale on the Current
Advisory/Administration Agreement, and the Board of Trustees did not become
aware of the transfer of such shares and its impact on the Current Advisory
/Administration Agreement until May 1996. In order to ensure that Daehan is and
will be deemed to have been at all times providing services to the Fund under an
appropriate written agreement, shareholders are now being asked to approve the
New Advisory/Administration Agreement with Daehan, effective as of January 3,
1994.
Pursuant to the New Advisory/Administration Agreement, Daehan
will continue to provide the sames services to the Fund as it has provided under
the Current Advisory/Administration Agreement. These services consist of
reviewing investment decisions of Korea Investment Management Ltd. ("KIM"), the
Fund's investment manager, and consulting with KIM; providing investment
research regarding U.S. companies and recommending securities of U.S. issuers to
KIM for purchase by the Fund; reviewing and overseeing the operations of
Investment Company Administration Corporation, the sub-administrator of the
Fund; furnishing corporate officers and clerical staff; providing office space,
services and equipment to the Fund; and supervising all matters related to the
Fund's operation.
The Fund will continue to pay all of its other expenses,
including commissions, interest, taxes, legal and accounting fees, fees of
custodians, transfer agents, registrars and dividend disbursing agents,
registration and filing fees, the cost of stock certificates, costs in
connection with annual or special meetings of shareholders, including the
preparation and distribution of proxy soliciting materials, fees and expenses of
Fund directors who are not "interested persons" of the Fund, office space,
office furnishings, office supplies and office equipment, including telephone
service, insurance premiums, printing costs (which do include the costs of
printed material sent to persons who are not shareholders), travel expenses,
salaries and related compensation of all non-officer employees, postage,
association dues and extraordinary and non-recurring expenses.
Daehan and the Investment Manager have agreed that they will
limit the Fund's operating expenses (other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, capital
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expenditures and extraordinary expenses) to 2.40% of the Fund's average annual
net assets. In addition, Daehan and the Investment Manager will continue to be
obligated to reimburse the Fund if Fund expenses exceed those expenses set forth
in any statutory or regulatory formula prescribed by any state in which Fund
shares are registered at such time.
Like the Current Advisory/Administration Agreement, the New
Advisory/ Administration Agreement will provide that neither Daehan nor any of
its officers, directors or employees will be liable for any error of judgment or
mistake of law, or for any loss suffered by the Fund in connection with the
matters to which the New Advisory/Administration Agreement relates, except for
losses resulting from Daehan's willful misfeasance, bad faith or gross
negligence in the performance of its duties on behalf of the Fund or from its
reckless disregard of its duties under the New Advisory/Administration
Agreement.
For its services, Daehan will continue to be compensated at a
rate of 0.30% of the value of the Fund's average daily net assets, payable
monthly. The rate of compensation will continue to remain constant whether or
not there are fluctuations in the Fund's net assets. Such annual rate is the
same as the rate received under the Current Advisory/Administration Agreement
and is similar to the rate contracted for by other mutual funds with comparable
investment policies. During the period January 3, 1994 through August 31, 1996,
Daehan earned fees of $34,753 net of its share of expense reimbursements
pursuant to the contract. Of that amount, the Fund has paid $11,152 and, as of
August 31, 1996, owed Daehan $3,781 for services pursuant to the contract. No
payments have been made to Daehan since May 1996, at which time the Board of
Trustees were informed about Daehan's change of ownership. This proposal, if
approved, will permit Daehan to retain the amounts paid. If the proposal is not
approved, then Daehan has agreed to pay back to the Fund the
advisory/administration fees received from January 3, 1994 to August 31, 1996.
Considerations by the Board for Retroactive Approval of the Agreement
- ---------------------------------------------------------------------
The Board of Trustees of the Fund, including all of the
Trustees who are not "interested persons" of the Fund within the meaning of the
1940 Act, has concluded that it will be in the best interests of the Fund and
its shareholders if the New Advisory/Administration Agreement with Daehan is
approved, retriactively, as of January 3, 1994. The Board, therefore, recommends
shareholder approval of the New Advisory/Administration Agreement,
retroactively, as of January 3, 1994.
In making this recommendation, the Trustees carefully evaluated
the following factors, among others: (1) the fact that, in the judgement of the
Board of Trustees, Daehan has provided satisfactory services to the Trust since
the inception; (2) the fact that, in the judgement of the Board of Trustees,
Daehan knows the shareholders of the Fund better than any other
advisor/administrator due to their affiliation to the Trust since inception and,
therefore, they are in a better position to properly service the shareholders;
(3) the unique ability that Daehan has to research and monitor both Korean and
domestic securities markets; (4) the increased costs and administrative
inconvenenience that shareholders would experience if Daehan was replaced with a
new advisor/administrator; and (5) the fact in the judgement of the Board of
Trustees, Dr. Oh, Daehan, and the purchasers proceeded with the sales
transaction in good faith, and that termination of the Current
Advisory/Administration Agreement was the inadvertent result of the definition
of the term "assignment" in the 1940 Act, the impact of which was not
appreciated by Dr. Oh, Daehan, or the purchasers at the time of the transaction.
Recommendation and Required Vote
- --------------------------------
At the meeting, shareholders of the Fund will vote on the
proposed New Advisory/ Administration Agreement to be effective retroactively as
of January 3, 1994. The Board of Trustees of the Trust recommends that the
shareholders of the Fund approve the New Advisory/Administration Agreement. The
affirmative vote of the holders of a majority of the outstanding shares of
record of the Fund is required
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to approve the New Advisory/Administration Agreement. For this purpose, the term
"majority" means the lesser of (i) 67% of the shares represented at the Meeting
if more than 50% of such outstanding shares are represented, or (ii) more than
50% of such outstanding shares.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS OF THE
FUND APPROVE THE NEW ADVISORY/ADMINISTRATION AGREEMENT.
PROPOSAL 2
APPROVAL OF A NEW
ADVISORY/ADMINISTRATION AGREEMENT
New Advisory/Administration Agreeement
- --------------------------------------
Except for different effective and termination dates, the terms
of the New Advisory/ Administration Agreement are identical in all respects to
the terms of the Current Advisory/ Administration Agreement. A form of the New
Advisory/Administration Agreement is attached to this Proxy Statement as Exhibit
A, and the description set forth in this Proxy Statement of the New Advisory/
Adminstration Agreement is qualified in its entirety by reference to Exhibit A.
Pursuant to the New Advisory/Administration Agreement, Daehan
will continue to provide the sames services to the Fund as it has provided under
the Current Advisory/Administration Agreement. These services consist of
reviewing investment decisions of Korea Investment Management Ltd. ("KIM"), the
Fund's investment manager, and consulting with KIM; providing investment
research regarding U.S. companies and recommending securities of U.S. issuers to
KIM for purchase by the Fund; reviewing and overseeing the operations of
Investment Company Administration Corporation, the sub-administrator of the
Fund; furnishing corporate officers and clerical staff; providing office space,
services and equipment to the Fund; and supervising all matters related to the
Fund's operation.
The Fund will continue to pay all of its other expenses,
including commissions, interest, taxes, legal and accounting fees, fees of
custodians, transfer agents, registrars and dividend disbursing agents,
registration and filing fees, the cost of stock certificates, costs in
connection with annual or special meetings of shareholders, including the
preparation and distribution of proxy soliciting materials, fees and expenses of
Fund directors who are not "interested persons" of the Fund, office space,
office furnishings, office supplies and office equipment, including telephone
service, insurance premiums, printing costs (which do include the costs of
printed material sent to persons who are not shareholders), travel expenses,
salaries and related compensation of all non-officer employees, postage,
association dues and extraordinary and non-recurring expenses.
Daehan and the Investment Manager have agreed that they will
limit the Fund's operating expenses (other than interest, taxes, brokerage
commissions and other portfolio transaction expenses, capital expenditures and
extraordinary expenses) to 2.40% of the Fund's average annual net assets. In
addition, Daehan and the Investment Manager will continue to be obligated to
reimburse the Fund if Fund expenses
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exceed those expenses set forth in any statutory or regulatory formula
prescribed by any state in which Fund shares are registered at such time.
Like the Current Advisory/Administration Agreement, the New
Advisory/Administration Agreement will provide that neither Daehan nor any of
its officers, directors or employees will be liable for any error of judgment or
mistake of law, or for any loss suffered by the Fund in connection with the
matters to which the New Advisory/Administration Agreement relates, except for
losses resulting from Daehan's willful misfeasance, bad faith or gross
negligence in the performance of its duties on behalf of the Fund or from its
reckless disregard of its duties under the New Advisory/Administration
Agreement.
For its services, Daehan will continue to be compensated at a
rate of 0.30% of the value of the Fund's average daily net assets, payable
monthly. The rate of compensation will continue to remain constant whether or
not there are fluctuations in the Fund's net assets. Such annual rate is the
same as the rate received under the Current Advisory/Administration Agreement
and is similar to the rate contracted for by other mutual funds with comparable
investment policies. During the period January 3, 1994 through August 31, 1996,
Daehan earned fees of $34,753 net of its share of expense reimbursements
pursuant to the contract. Of that amount, the Fund has paid $11,152 and, as of
August 31, 1996, owed Daehan $3,781 for services pursuant to the contract.
If executed, the New Advisory/Administration Agreement will
have an initial term of one year, and will continue thereafter from year to year
subject to the annual approval of its renewal by vote of a majority of the Board
of Trustees or of a majority of the outstanding voting shares of the Fund, and
by vote of a majority of the Trustees who are not parties to the New
Advisory/Administration Agreement or "interested persons" of the Fund or Daehan
(as that term is defined in the 1940 Act). Like the Current
Advisory/Administration Agreement, the New Advisory/Administration Agreement
will be terminable at any time on sixty days' notice, without penalty, by vote
of the Board of Trustees or of the holders of the majority of the outstanding
voting shares of the Fund, and by Daehan on the same notice to the Fund. The New
Advisory/Administration Agreement will automatically terminate on assignment (as
defined in the 1994 Act).
Information Regarding Daehan
- ----------------------------
Daehan is a Colorado corporation organized in 1991 which is
registered as an investment adviser and a broker-dealer. It provides
full-service brokerage services primarily to Korean-American individual,
institutional and corporate investors.
Daehan is controlled by Messrs. Han Huskey and Tong S. Suhr,
who own 98% of its outstanding shares.
Daehan's principal executive officers are as follows:
Name Address Position
- ---- ------- --------
Kim, Yong Soo 2028 Glencore Avenue President
Venice, CA 90291
Son, Jai Young 420 Pilgrim Place Executive Vice President
San Marino, CA 91108
Lee, Young Jin 1115 Huntington Drive, #Z Vice President
South Pasadena, CA 91030
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In addition, the following other individuals are officers, directors, employees
or shareholders of both the Fund and Daehan: Indong Oh and Jai Young Son.
Consideration of New Agreement by the Board
- -------------------------------------------
The Board of Trustees of the Fund, including all of the
Trustees who are not "interested persons" of the Fund within the meaning of the
1940 Act, has concluded that it will be in the best interests of the Fund and
its shareholders if the New Advisory/Administration Agreement with Daehan is
approved. The Board, therefore, recommends shareholder approval of the New
Advisory/Administration Agreement.
In making this recommendation, the Trustees carefully evaluated
the following factors, among others: (1) the level of the advisory fees
currently paid to Daehan will be unchanged under the New Advisory/Administration
Agreement; (2) the other terms of the New Advisory/Administration Agreement will
be substantially the same as those of the Current Advisory/Administration
Agreement; (3) the fact that, in the judgment of the Board of Trustees, Daehan
has provided satisfactory services to the Trust, and the change in control of
Daehan has not had an adverse impact on such services; and (4) the fact in the
judgement of the Board of Trustees, Dr. Oh, Daehan, and the purchasers proceeded
with the sales transaction in good faith, and that termination of the Current
Advisory/Administration Agreement was the inadvertent result of the definition
of the term "assignment" in the 1940 Act, the impact of which was not
appreciated by Dr. Oh, Daehan, or the purchasers at the time of the transaction.
Required Vote
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The affirmative vote of the holders of a majority of the
outstanding shares of record of the Fund is required to approve the New
Advisory/Administration Agreement. For this purpose, the term "majority" means
the lesser of (i) 67% of the shares represented at the Meeting if more than 50%
of such outstanding shares are represented, or (ii) more than 50% of such
outstanding shares.
If for any reason the New Advisory/Administration Agreement is
not approved by the shareholders, the Board of Trustees will determine what
action to take, which may include reproposal of the Agreement to the
shareholders, retention of a new investment adviser/administrator, action to
obtain reimbursement of fees paid to Daehan since the termination of the Current
Advisory/Administration Agreement, or dissolution of the Trust.
THE BOARD OF TRUSTEES OF THE TRUST RECOMMENDS THAT SHAREHOLDERS OF THE
FUND APPROVE THE NEW ADVISORY/ADMINISTRATION AGREEMENT.
PROPOSAL 3
ELECTION OF TRUSTEES
The Board of Trustees proposes that each of the four nominees
listed below be elected to the Board of Trustees, to hold office until the next
meeting of shareholders and until his successor is elected and qualified. Each
of the nominees has indicated his willingness to serve if elected. If any of the
nominees should withdraw or otherwise become unavailable for election for
unanticipated reasons, the proxy holders will exercise their voting power in
favor of such substitute nominees, if any, as the Board of Trustees may
designate. The Trust has no reason to believe that it will be necessary to
designate substitute nominees.
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Dr. Oh, Mr. Park and Mr. Han have served on the Board of
Trustees since the inception of the Fund in 1992. Information on the business
experience during the past five years of each nominee is set forth below:
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Shares of the
Fund Owned
Principal Beneficially as
Name Occupation of August 31, 1996
- ---- ---------- ------------------
Indong Oh Director, Joint --
(56 years old) Implant Orthopedic
Surgery, since 1980
Hyung Joo Park Partner, Park & --
(49 years old) Kirwan, Law Office,
since 1980
Chung Soo Han Executive Officer, --
(55 years old) Korea Investment
Trust Corp., since 1985
James H. Yu(1) President, Cosmo Corp., --
(55 years old) a Import/Export of Textiles,
since 1987
As of August 31, 1996, the current Trustees and officers of the
Fund as a group owned none of the Fund's outstanding securities.
For the year ended August 31, 1996, the Board of Trustees held
four meetings, and each of the current Trustees, except Mr. Han, attended at
least 75% of such meetings. Mr. Han attended no meetings. Attendance fees of
$300 per meeting have been authorized for those Trustees who are not "interested
persons" (as such term is defined in the 1940 Act) of the investment advisor or
the principal underwriter of the Fund. The following table sets forth the
compensation paid by the Fund to such Trustees for the fiscal year ended August
31, 1996:
Pension or Estimated
Aggregate Retirement Annual
Compensation Benefits Accrued Total Compensation
from the as Part of Fund Benefits Upon from the
Name Trust Expenses Retirement Trust
- ---- ----- -------- ---------- -----
Indong Oh(2) $ 0 None None $ 0
Hyung Joo Park $ 1,200 None None $ 1,200
Chung Soo Han(2) $ 0 None None $ 0
__________________________
(1)No compensation has been paid because he is a newly nominated
Trustee.
(2)Deemed an interested person of the Trust, as defined under the 1940
Act, as he is an officer of Daehan.
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Name and Age of Executive Officers of the Fund Principal Occupation
- ---------------------------------------------- --------------------
Indong Oh (56 years old) Director of Joint Implant
Orthopedic Surgery
Jai Young Son (39 years old) Executive Vice President, Daehan
Required Vote
- -------------
The affirmative vote of the holders of a plurality of the
shares voting at the Meeting is required to approve the nominated Trustees.
PROPOSAL 4
RATIFICATION OF SELECTION OF AUDITORS
Ernst & Young LLP has served as independent accountants to the
Fund since 1995. A majority of the Board of Trustees of the Trust, including a
majority of Trustees who are not "interested persons" of the Trust, has selected
Ernst & Young LLP to serve as independent public accountants for the Fund for
the fiscal year ending August 31, 1997, subject to the right of the Fund, by
vote of a majority of shares at any meeting called for the purpose, to terminate
such employment immediately without penalty. Ernst & Young LLP has advised the
Trust that it has no direct or material indirect ownership interest in the Fund.
A representative of Ernst & Young LLP is expected to attend the
meeting. The representative will be given an opportunity to make a statement and
will be expected to respond to any appropriate questions from shareholders.
Required Vote
- -------------
The affirmative vote of the holders of a majority of the shares
voting at the meeting is required to approve the nominated Trustees.
OTHER MATTERS
The Board of Trustees does not intend to present for action at
the Meeting any business other than the matters described in the Notice of
Special Meeting, and at the date of this Proxy Statement is not aware of any
other matters that properly may be presented for action at the Meeting. If any
other business not described herein should properly be brought before the
Meeting, or if any procedural matters requiring a vote of shareholders should
arise at the Meeting, the persons named as proxies or their substitutes will
vote the shares represented by them in accordance with their best judgment.
NEXT MEETING OF SHAREHOLDERS
The Trust is not required, and does not intend, to hold annual
or other periodic meetings of shareholders except as required by the 1940 Act.
The next meeting of shareholders of the Fund will be held at such time as the
Board of Trustees may determine or at such time as may be legally required. A
proposal which a shareholder wishes to have included in the Trust's proxy
materials for such meeting must be received by the Trust at its principal office
within a reasonable time before the release of the Trust's proxy
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<PAGE>
soliciting materials with respect to such meeting, as determined by the Board of
Trustees. Any such proposal must comply with the requirements of applicable law
and regulations governing both the eligibility of the proponent and the form and
substance of the proposal.
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<PAGE>
EXHIBIT A
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KOREA CAPITAL TRUST
ADVISORY AND ADMINISTRATION AGREEMENT
THIS ADVISORY AND ADMINISTRATION AGREEMENT, dated as of January 3, 1994
is made between KOREA CAPITAL TRUST, a Massachusetts business trust, hereinafter
called the "Trust," on behalf of itself and KOREA CAPITAL FUND, a series of the
Trust, hereinafter called the "Fund," and DAEHAN SECURITIES, INC., a Colorado
Corporation, hereinafter called the "Adviser/Administrator."
WHEREAS, the Trust has been organized and intends to operate as an
investment company registered under the Investment Company Act of 1940, as
amended (the "Act") for the purpose of investing and reinvesting its assets in
securities, as set forth in its Agreement and Declaration of Trust, its By-Laws
and its Registration Statement under the Act and the Securities Act of 1933, all
as heretofore amended and supplemented; and the Trust desires to avail itself of
the services, information, advice, assistance and facilities of an administrator
and to have an adviser perform various advisory, statistical, research,
administrative, supervisory and other services for the Fund; and,
WHEREAS, the Adviser/Administrator is registered as an investment
adviser under the Investment Advisers Act of 1940, is engaged in the business of
rendering advisory, administrative and supervisory services to investment
companies and others, and desires to provide these services to the Trust and the
Fund.
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is mutually agreed as follows:
1. Employment of the Adviser/Administrator. The Trust hereby employs
the Adviser/Administrator to administer its affairs, subject to the direction of
the Board of Trustees and the officers of the Trust, and to administer the
affairs of the Fund for the period and on the terms hereinafter set forth. The
Adviser/Administrator hereby accepts such employment and agrees during such
period to render the services and to assume the obligations herein set forth for
the compensation herein provided. The Adviser/Administrator shall for all
purposes herein be deemed to be an independent contractor and shall, except as
expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Fund or the Trust in any way or otherwise
be deemed an agent of the Fund or the Trust.
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2. Obligations of and Services to be Provided by the
Adviser/Administrator. This Adviser/Administrator undertakes to provide the
services hereinafter set forth and to assume the following obligations:
A. Without limiting the generality of the foregoing, the
Adviser/Administrator will provide office facilities (which may be in the
Adviser/Administrator's own offices), statistical and research data, internal
executive and administrative services, stationery and office supplies, and
clerical support services to the Trust. The Adviser/Administrator also will
provide personnel to serve as Trust officers and will bear responsibility for
the scheduling and preparation of Trustees meetings. The Adviser/Administrator
will be responsible for consulting with the Trust with respect to the selection
and review of the performance of the Trust's investment manager (the "Manager")
for the Trust and the Fund, as well as consulting with the Manager with respect
to the duties of the manager under the Investment Management Agreement between
the manager and the trust on behalf of the Fund (the "Investment Management
Agreement"). The Adviser/Administrator, subject to the supervision of the
Trustees of the Trust, and, where applicable, with the assistance of the Trust's
outside auditing and legal personnel, will supervise and coordinate the
activities of the Manager as well as all other entities which deal with the
Trust or the Fund, including, without limitation, the Trust's custodian, any
sub-custodians, transfer agent (and any sub-transfer agents, if appointed),
depository, disbursing agent and underwriter or distributor.
B. The Adviser/Administrator shall be responsible with the
assistance of the Trust's outside auditing and legal personnel, for monitoring
legal and regulatory compliance, including, without limitation, preparing and
filing all forms and reports with the Securities and Exchange Commission,
including registration statements and amendments thereto, proxy materials and
marketing materials, preparing and distributing reports to the shareholders of
the Fund, including semi-annual and annual reports, and obtaining and
maintaining adequate fidelity bond coverage at the Trust's expense.
C. The Adviser/Administrator shall provide to the Board of
Trustees, on a periodic basis, but not less than quarterly, with a copy to the
Manager, a detailed summary of assets, income and expenses of the Trust
determined on the accrual basis of accounting for the preceding quarter, other
than in connection with the purchase of portfolio securities or the redemption
of shares of the Fund. Such summary and supporting schedules shall be in such
form as the Trustees or the Manager may request.
A-2
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D. The Adviser/Administrator shall make its officers and
employees available to the Board of Trustees and officers of the Trust for
consultation and discussion regarding the administration and management of the
Fund and its investment activities.
E. The Adviser/Administrator shall consult with the Manager of
the Fund from time to time regarding general investment strategies and specific
portfolio purchases on behalf of the Fund. The Adviser/Administrator shall
advise a portion of, or in its own discretion, all of the assets of the Fund and
shall have primary responsibility in advising that portion of the Fund's assets
to be invested in the securities of U.S. issuers.
F. The Adviser/Administrator under the direct supervision of
the Board of Trustees shall be responsible for review and monitoring the
activities of third party service vendors (e.g. custodians, fund accountants,
transfer agents and sub-administrators).
3. Expenses of the Fund. It is understood that the Fund will pay all of
its own expenses other than those expressly assumed by the Adviser/Administrator
herein or by the Manager under the Investment Management Agreement. Expenses
payable by the Fund shall include:
A. Fees to the Adviser/Administrator and Manager;
B. Expenses of all audits by independent public accountants;
C. Fees and expenses of transfer agent, registrar, custodian,
depository, disbursing agent, sub-administrator and shareholder record keeping
services, including the expenses of issue, repurchase or redemption of Fund
shares, and any out-of-pocket costs relating to communication between the Fund,
the Adviser/Administrator or the Manager and the transfer agent, custodian, or
Fund accounting agent;
D. Costs attributable to investor services (including without
limitation, telephone and personnel expenses);
E. Costs and expenses of calculating its net asset value, and
all accounting, bookkeeping and record keeping required under the Act;
F. Taxes, if any, levied against the Fund;
A-3
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G. Brokerage fees and commissions, if any, in connection with
the purchase and sales of securities for the Fund;
H. Costs, including the interest expense, of borrowing money;
I. Costs incident to meetings of the Board of Trustees and
shareholders of the Fund, reports to the Fund's shareholders, the filing of
reports with regulatory bodies and the maintenance of the legal existence of the
Trust and the Fund;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the shares of the Fund for sale;
K. Trustees' fees and expenses to Trustees who are not
directors, officers, employees or stockholders of the Adviser/Administrator, the
Manager, the Distributor, or any of their affiliates;
L. Costs and expenses of registering and maintaining the
registration of the Trust and shares of the Fund under Federal and any
applicable state laws, including the printing and mailing of prospectuses to its
existing shareholders;
M. Trade association dues;
N. A pro rata portion of fidelity bond, errors and omission,
and trustees and officers liability insurance premiums; and
O. Any extraordinary expenses.
4. Compensation of the Advisor/Administrator. The Fund shall pay a
quarterly management fee to the Advisor/Administrator, calculated at an annual
rate of 0.30 of 1% of the average daily net assets of the Fund, as compensation
for the services rendered and obligations assumed by the Adviser/Administrator,
payable in cash, at the request of the Adviser/ Administrator, but not later
than the fifteenth day of the month following the end of the quarter for which
the fee is due.
A. For purposes of calculating such fee, the value of the net
assets of the Fund shall be determined in the same manner as the Fund uses to
compute the value of its net assets in connection with the determination of the
net asset value of its shares, all as set forth more fully in the Fund's then
current Prospectus and Statement of Additional Information.
A-4
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B. The fee for the period from the date of the commencement of
this Agreement to the end of the quarter during which such Agreement commenced
shall be prorated according to the proportion which such period bears to the
full quarterly period, and upon any termination of this Agreement before the end
of any quarter, the fee for such part of a quarter shall be prorated according
to the proportion which such period bears to the full quarterly period and shall
be payable upon the date of termination of this Agreement. In addition to the
reductions set forth in Subparagraph 4C, the Adviser/Administrator may, from
time to time, voluntarily reduce or waive any management fee due to it
hereunder, provided such waiver or reduction does not jeopardize the ability of
the Fund to meet any requirements of Subchapter M of the Internal Revenue Code
of 1986, as amended.
C. If the aggregate annual expenses of the Fund for any fiscal
year of the Fund (including fees pursuant to this Agreement and the Fund's
Investment Management Agreement, but excluding interest on any borrowings,
taxes, brokerage commissions and transaction costs, and any extraordinary
expenses, such as litigation) exceed 2.40% of the average net assets of the Fund
for such year, the Adviser/Administrator will reduce the fees to be paid to it
hereunder to the extent of such excess. The Adviser/Administrator will reimburse
excess fees to the Fund along with the Investment Manager in proportion to the
amount of fees received by each such party. The obligation of the
Adviser/Administrator is limited to the amount of its fees hereunder. Such fee
reduction, if any, will be estimated daily, and reconciled and effected, as the
case may be, on a monthly basis.
5. Activities of the Adviser/Administrator. The services of the
Adviser/ Administrator to the Fund hereunder are not to be deemed exclusive, and
the Adviser/ Administrator and any of its affiliates shall be free to render
similar services to others. Subject to and in accordance with the Agreement and
Declaration of Trust and By-Laws of the Trust and Section 10 (a) of the Act, it
is understood that Trustees, officers, agents and shareholders of the Trust are
or may be interested in the Adviser/Administrator or its affiliates as
directors, officers, agents or stockholders of the Adviser/Administrator or its
affiliates or otherwise; that the Adviser/Administrator or its affiliates may be
interested in the Fund as shareholders or otherwise; and that the effect of any
such interests shall be governed by said Agreement and Declaration of Trust,
By-Laws and the Act.
6. Liabilities of the Adviser/Administrator.
A. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations
A-5
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or duties hereunder on the part of the Adviser/Administrator, the
Adviser/Administrator shall not be subject to liability to the Trust of the Fund
or to any shareholder of the Fund for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security by the Fund.
B. Notwithstanding the foregoing, the Adviser/Administrator
agrees to reimburse the Trust and the Fund for any and all costs, expenses, and
counsel and Trustees fees reasonably incurred by the Trust and the Fund in the
preparation, printing and distribution of proxy statements, amendments to its
Registration Statement, holdings of meetings of its shareholders or trustees,
the conduct of factual investigations, and any legal or administrative
proceedings (including any applications for exemptions or determinations by the
Securities and Exchange Commission) which the Trust or the Fund incurs as the
result of action or inaction of the Adviser/Administrator or any of its
affiliates or any of their officers, directors, employees or stockholders where
the action or inaction necessitating such expenditures (I) is directly or
indirectly related to any transactions or proposed transaction in the stock or
control of the Adviser/Administrator or its affiliates (or litigation related to
any pending or proposed or future transaction in such shares or control) which
shall have been undertaken on behalf of the Fund or the Trust without the prior
express approval of the Trust's Board of Trustees; or, (ii) is within the
control of the Adviser/Administrator or any of its affiliates or any of their
officers, directors, employees or stockholders on behalf of the Fund or the
Trust. So long as this Agreement is in effect, the Adviser/Administrator shall
pay to the Trust or the Fund the amount due for expenses subject to this
Subparagraph 6B within 30 days after a bill or statement has been received by
the Adviser/Administrator therefor. This provision shall not be deemed to be a
waiver of any claim the Trust or the Fund may have or may assert against the
Adviser/ Administrator or others for costs, expenses or damages heretofore
incurred by the Trust or that the Fund may hereafter incur which are not
reimbursable to it hereunder.
C. No provision of this Agreement shall be construed to protect
any Trustee or officer of the Trust, or director or officer of the
Adviser/Administrator, from liability in violation of Sections 17(h) and (I) of
the Act.
7. Effective Date, Renewal and Termination.
-------------------------------------------
A. This Agreement shall become effective as of the date written
above and shall continue in effect for a period of one year after approved by
the shareholders of the Trust.
A-6
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This Agreement is renewable annually thereafter for successive periods not to
exceed one (1) year (I) by a vote of a majority of the Trustees of the Trust who
are not parties to the Agreement (other than as Trustees of the Trust), cast in
person at a meeting for the purpose of voting on the Agreement.
B. This Agreement:
(I) may at any time be terminated without the payment
of any penalty either by vote of the Board of Trustees of the Trust or by vote
of a majority of the outstanding voting securities of the Fund on 60 days'
written notice to the Adviser/Administrator;
(ii) shall immediately terminate in the event of its
assignment; and
(iii) may be terminated by the Adviser/Administrator
on 60 days' written notice to the Trust.
C. As used in this Paragraph and other Paragraphs of this
Agreement the terms "assignment", "interested person" and "vote of a majority of
the outstanding voting securities" shall have the meanings set forth for any
such terms in the Act.
D. Any notice under this Agreement shall be given in writing
addressed and delivered, or mailed post-paid, to the other party at any office
of such party.
8. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby.
9. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California, without regard to
principles of conflicts of laws.
10. Limitation of Liability. The Adviser/Administrator acknowledges
that it has received notice of and accepts the limitations of the Trust's
liability as set forth in its Agreement and Declaration of Trust. The
Adviser/Administrator agrees that the Trust's obligations hereunder shall be
limited to the assets of the Fund, and that the Adviser/Administrator shall not
seek satisfaction of any such obligation from any shareholders of the Fund or
the Trust nor from any such Trustee, officer, employee or agent of the Trust.
A-7
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IN WITNESS WHEREOF, each of the parties hereto has caused this
instrument to be executed on its behalf as of the day and year first above
written.
KOREA CAPITAL TRUST
By:____________________________
(President)
DAEHAN SECURITIES, INC.
By:____________________________
(Executive Vice President)
A-8
