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<PAGE> PAGE 2
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 7
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SIGNATURE ERIC M. BANHAZL
TITLE ASSISTANT TREASURER
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<NAME> KOREA CAPITAL TRUST
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<NAME> KOREA CAPITAL FUND
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</TABLE>
October 30, 1997
Securities and Exchange Commission
Attn.: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Korea Capital Fund
File No. 811-06573
Dear Sir or Madam:
We have read the statements made by the Korea Capital Trust (copy attached),
which we understand will be filed with the Commission, pursuant to Item 77K of
Form N-SAR, as part of the Funds filing on Form N-Sar for the period ended
August 31, 1997. We agree with the statements concerning our Firm in such
Form N-SAR.
Very truly yours,
/s/ Ernst&Young, L.L.P
Ernst & Young, L.L.P.
October 30, 1997
Securities and Exchange Commission
Attn.: Filing Desk, Stop 1-4
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Korea Capital Fund
File No. 811-06573
Dear Sir or Madam:
At a meeting held on August 14, 1997, the Board of Trustees of Korea
Capital Trust ("the Company"), approved the engagement of George S. Bay &
Co. as the independent auditors for the following series of the Company, to
replace the firm of Ernst & Young L.L.P. ("E&Y") effective August 14, 1997:
Korea Capital Fund
The reports of E&Y on the Company's financial statements and financial
highlights for the year ended August 31, 1996 did not contain an adverse
opinion or disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope, or accounting principles.
In connection with the audits of the Company's financial statements and
financial highlights for the year ended August 31, 1996, there were no
disagreements with E&Y on any matters of accounting principles or practices,
financial statements disclosure, or auditing scope and procedures which, if
not resolved to the satisfaction of E&Y, would have caused E&Y to make
reference to the matter in their reports.
The Company has requested E&Y to furnish a letter addressed to the
Commission stating its agreement with the above statements. A copy of that
letter, dated October 30, 1997, is attached hereto.
Very truly yours,
/s/ Eric M. Banhazl
Eric M. Banhazl
Assistant Treasurer
Korea Capital Trust
Attachment
REPORT OF INDEPENDENT AUDITORS
To the Board of Trustees of
Korea Capital Trust
In planning and performing our audit of the financial statements of Korea
Capital Fund (the "Fund"), a series of Korea Capital Trust, for the year
ended August 31, 1997, we considered the Fund's internal control structure,
including procedures for safeguarding securities, in order to determine our
auditing procedures for the purpose of expressing our opinion on the
financial statements and financial highlights and to comply with the
requirements of Form N-SAR, not to provide assurance on the internal
control structure.
The management of the Fund is responsible for establishing and maintaining an
internal control structure. In fulfilling this responsibility, estimates and
judgments by management are required to assess the expected benefits and
related costs of internal control structure policies and procedures. Two of
the objectives of an internal control structure are to provide management with
reasonable, but not absolute, assurance that assets are safeguarded against
loss from unauthorized use or disposition and that d in accordance with
management's authorization and recorded properly to permit preparation of
financial statements in conformity with generally accepted accounting
principles.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and not be detected. Also, projection of any
evaluation of the structure to future periods is subject to the risk that
it may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a condition in
which the design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the financi
ial highlights being audited may occur and not be detected within a timely
period by employees in the normal course of performing their assigned
functions. However, we noted no matters involving the internal control
structure, including procedures for safeguarding securities, that we
consider to be material weaknesses as defined above as of August 31, 1997.
This report is in intended solely for the information and use of management
and the Securities and Exchange Commission.
/s/ GEORGE S. BAY & CO.
Los Angeles, California
October 30, 1997
