UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
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KOREA EQUITY FUND, INC.
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(Name of Registrant as Specified In Its Charter)
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Korea Equity Fund, Inc.
August 2, 2005
Dear Shareholder:
We, the Independent Directors of Korea Equity Fund, Inc., your Fund, ask
for just a moment of your time to protect your investment in the Fund. As you
know by now, there is a battle underway for the survival of the Fund.
A dissident shareholder, Harvard, is advocating the liquidation of the
Fund. We have carefully considered this request and other options for Harvard.
We respect the rights of all of our shareholders to make their views known. We
listen to them seriously. But we unanimously believe that liquidation is not
in the best interests of all shareholders or of the Fund.
PROTECT YOUR INVESTMENT. PLEASE VOTE AGAINST HARVARD. YOU SIMPLY NEED TO
SIGN AND RETURN THE ENCLOSED GREEN PROXY CARD. EVEN IF YOU HAVE VOTED BEFORE,
ONLY YOUR LAST PROXY CARD COUNTS. VOTE AGAINST PROPOSALS 2 AND 3 ON THE GREEN
PROXY CARD.
We are concerned that the recent blizzard of communications you have
received about the Fund have caused confusion and clouded the main issues.
Here they are.
o The Fund has performed well.
o Over the last year alone, the Fund's stock price and net
asset value increased 76.7% and 60.3%, respectively.
o The market price for your Fund, under the management of NAM,
has increased by 95.6% for the period December 31, 2002
through June 30, 2005, outperforming by 18.9% the iShares
MSCI South Korea Index Fund for the same period.
o The discount at which the Fund trades to its net asset value
has declined very significantly over the past five years and
is now just 4.1%.
o Harvard is seeking to liquidate your Fund for its own purposes. If
Harvard achieves its goal, all shareholders will be liquidated. You will
also lose a substantial tax benefit, which Harvard cannot take advantage
of anyway.
o Harvard's overall investment objective is NOT to remain in closed-end
funds like yours. Apparently, the only idea it has is to exit your Fund
through liquidating it.
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WE BELIEVE THAT HARVARD'S INTERESTS ARE HEAVILY CONFLICTED WITH THOSE OF
OTHER SHAREHOLDERS AND WE URGE YOU TO DISCARD ANY WHITE PROXY CARD YOU
RECEIVE. PLEASE VOTE ONLY THE ENCLOSED GREEN PROXY CARD.
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o Harvard tells you that you can more effectively invest in Korea by
buying the iShares MSCI South Korea Index Fund or purchasing ADRs
(American Depository Receipts) in Korean companies. But Harvard fails to
mention some interesting points.
o Your Fund's shares, as shown above, have significantly
outperformed the iShares over the last two and 1/2 years in
terms of market value.
o There are only a limited number of Korean ADRs available.
Creating a portfolio of Korean ADRs would be expensive and
fail to provide investors with broad exposure to the Korean
market.
o The expenses borne by the Fund appear high. The Independent Directors
are concerned about this. Here are actions we have taken. While we
believe that the Fund's expenses and the fees paid to its investment
adviser are in line with those for similar managed closed-end funds, at
our request, Nomura Asset Management USA Inc. ("NAM"), your Fund's
adviser, voluntarily waived .15% of its fee beginning in 2001. At the
Fund's current size, this reduction saves the Fund over $100,000 each
year. We have just requested that NAM, and NAM has agreed, to waive an
additional .10% of its fee - for a total voluntary fee waiver of .25%.
At this rate and the Fund's present size, annual savings to the
shareholders from these two reductions will exceed $162,500. These fee
reductions, coupled with our commitment to growing the Fund, should
result in a lower overall expense ratio for shareholders.
The annual meeting is on August 10 - only days away. You can still
protect the Fund and your investment in it if you act today by sending back a
GREEN PROXY CARD voting against Harvard's proposals. EVEN IF YOU HAVE ALREADY
VOTED, ONLY YOUR LAST PROXY COUNTS.
Thank you,
The Independent Directors of
Korea Equity Fund, Inc.
William G. Barker, Jr. Arthur R. Taylor
William K. Grollman John F. Wallace
Chor Weng Tan
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Internet and Telephone Voting
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Because of the short time until the meeting, we encourage voting by
Internet or by toll-free telephone. See the enclosed instructions for Internet
and telephone voting. If you need any assistance in proxy voting, please call
1-800-317-8025 to speak to one of the Fund's proxy specialists at the Altman
Group.
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