As filed with the Securities and Exchange
Commission on March 5, 2002
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
|X| Definitive Proxy Statement as Commission Only
permitted by Rule 14a-6(e)(2))
|_| Soliciting Material Pursuant to |_| Definitive Additional Materials
Rule 14a-11(c) or Rule 14a-12
KOREA EQUITY FUND, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of filing fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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 (Set forth the amount on which the filing fee is
calculated and state how it was determined.):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
|_| 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:
2
KOREA EQUITY FUND, INC.
180 Maiden Lane
New York, New York 10038-4936
---------------
NOTICE OF 2002 ANNUAL MEETING OF SHAREHOLDERS
May 16, 2002
---------------
TO THE SHAREHOLDERS OF
KOREA EQUITY FUND, INC.:
Notice is hereby given that the 2002 Annual Meeting of Shareholders (the
"Meeting") of Korea Equity Fund, Inc. (the "Fund") will be held at the offices
of Nomura Asset Management U.S.A. Inc., 180 Maiden Lane, 26th Floor, New York,
New York, on Thursday, May 16, 2002, at 10:30 A.M. for the following purposes:
(1) To elect five Directors to serve for the ensuing year; and
(2) To transact such other business as may properly come before the
Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 1, 2002 as
the record date for the determination of shareholders entitled to notice of and
to vote at the Meeting or any adjournment thereof.
A complete list of the shareholders of the Fund entitled to vote at the
Meeting will be available and open to the examination of any shareholder of the
Fund for any purpose germane to the Meeting during ordinary business hours from
and after May 1, 2002, at the offices of the Fund, 180 Maiden Lane, 26th Floor,
New York, New York.
You are cordially invited to attend the Meeting. Shareholders who do not
expect to attend the Meeting in person are requested to complete, date and sign
the enclosed form of proxy and return it promptly in the envelope provided for
that purpose. The enclosed proxy is being solicited on behalf of the Board of
Directors of the Fund.
By Order of the Board of Directors
JOHN J. BORETTI
Secretary
New York, New York
Dated: March 5, 2002
[This Page intentionally left blank]
PROXY STATEMENT
KOREA EQUITY FUND, INC.
180 Maiden Lane
New York, New York 10038-4936
---------------
2002 ANNUAL MEETING OF SHAREHOLDERS
May 16, 2002
---------------
INTRODUCTION
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Korea Equity Fund, Inc., a
Maryland corporation (the "Fund"), to be voted at the 2002 Annual Meeting of
Shareholders of the Fund (the "Meeting") to be held at the offices of Nomura
Asset Management U.S.A. Inc., 180 Maiden Lane, 26th Floor, New York, New York,
on Thursday, May 16, 2002, at 10:30 A.M. The approximate mailing date of this
Proxy Statement is March 7, 2002.
All properly executed proxies received prior to the Meeting will be voted
at the Meeting in accordance with the instructions marked thereon or otherwise
as provided therein. Unless instructions to the contrary are marked, proxies
will be voted FOR the election of five Directors.
Any proxy may be revoked at any time prior to the exercise thereof by
giving written notice to the Secretary of the Fund at the Fund's address
indicated above or by voting in person at the Meeting.
The Board of Directors has fixed the close of business on March 1, 2002,
as the record date for the determination of shareholders entitled to notice of
and to vote at the Meeting and at any adjournment thereof. Shareholders on the
record date will be entitled to one vote for each share held, with no shares
having cumulative voting rights. As of March 1, 2002, the Fund had outstanding
8,409,000 shares of Common Stock, par value $0.10 per share.
The Board of Directors of the Fund knows of no business other than the
election of five Directors which will be presented for consideration at the
Meeting. If any other matter is properly presented, it is the intention of the
persons named in the enclosed proxy to vote in accordance with their best
judgment.
PROPOSAL 1. ELECTION OF DIRECTORS
At the Meeting the five Board of Directors nominees will be elected to
serve until the next Annual Meeting of Shareholders and until their successors
are elected and qualified or until their earlier resignation or removal. It is
the intention of the persons named in the enclosed proxy to nominate and vote
(unless such authority has been withheld in the proxy or properly revoked) in
favor of the election of the following Board of Directors nominees: William G.
Barker, Jr., Kazuhiko Hama, Chor Weng Tan, Arthur R. Taylor and John F. Wallace.
The Board of Directors has one vacant seat owing to the death of George H.
Chittenden in September 2000. Shareholders cannot vote for a greater number of
persons for Director than the five nominees named. Certain biographical and
other information pertaining to the Board of Directors nominees is set forth in
Exhibit I to this Proxy Statement.
The Board of Directors knows of no reason why any of the nominees will be
unable to serve, but in the event of any such unavailability, the proxies
received will be voted for such substitute nominees as the Board of Directors
may recommend. It is currently expected that any substitute nominee for Director
who is not an "interested person" of the Fund (within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act")) also
will be a non-interested person.
Committees and Directors' Meetings. The Board of Directors has a standing
Audit Committee and a standing Nominating Committee, each of which consists of
the Directors who are not "interested persons" of the Fund within the meaning of
the Investment Company Act. Currently, Messrs. Barker, Tan and Taylor are
members of these Committees. The principal purpose of the Audit Committee is
described below. The principal purpose of the Nominating Committee is to select
and nominate the Directors of the Fund. The Nominating Committee will consider
nominees recommended by shareholders of the Fund. Shareholders should submit
nominees to the Secretary of the Fund. The Fund has no standing Compensation
Committee. The non-interested Directors have retained independent legal counsel
to assist them in connection with their duties.
During the fiscal year ended October 31, 2001, the Board of Directors held
seven meetings, and the Audit Committee held two meetings and the Nominating
Committee held one meeting. Each Director then in office attended at least 75%
of the meetings of the Board of Directors held during the fiscal year and, if a
member, of the total number of meetings of the Audit and Nominating Committees
held during the period for which he served.
Audit Committee Report. Pursuant to the Audit Committee Charter adopted by
the Fund's Board of Directors on May 18, 2000, the Audit Committee's principal
responsibilities are to: (i) recommend to the Board the selection, retention or
termination of the Fund's independent accountants; (ii) review with the
independent accountants the scope, performance and anticipated cost of their
audit; (iii) discuss with the independent accountants certain matters relating
to the Fund's financial statements, including any adjustment to such financial
statements recommended by such independent accountants, or any other results of
any audit; (iv) ensure that the independent accountants submit on a periodic
basis a formal written statement as to their independence, discuss with the
independent accountants any relationships or services disclosed in the statement
that may impact the objectivity and independence of the Fund's independent
accountants and recommend that the Board take appropriate action in response to
this statement to satisfy itself of the independent accountants' independence;
and (v) consider the comments of the independent accountants and management's
responses thereto with respect to the quality and adequacy of the Fund's
accounting and financial reporting policies and practices and internal controls.
A copy of the Fund's Audit Committee Charter is set forth in Exhibit IV to this
Proxy Statement.
The Audit Committee has received written disclosures and the letter
required by Independence Standards Board Standard No. 1 from
PricewaterhouseCoopers LLP ("PWC"), the Fund's independent auditors and
discussed certain matters required to be discussed by Statements on Auditing
Standards No. 61 with PWC. The Audit Committee has considered whether the
provision of non-audit services by the PWC is compatible with maintaining the
independence of those auditors. At its meeting held December 18, 2001, the Audit
Committee reviewed and discussed the audit of the Fund's financial statements
with Fund management and PWC. The Audit Committee discussed with PWC their
independence and considered whether the provision of services by PWC to the Fund
and to Nomura Asset Management U.S.A. Inc. ("NAM-U.S.A.") and its affiliates was
compatible with maintaining PWC's independence. Based upon these reviews and
discussions, the Audit Committee recommended to the Board of Directors that the
Fund's audited financial statements be included in the Fund's 2001 Annual Report
to shareholders for the fiscal year ended October 31, 2001.
2
Interested Persons. The Fund considers two nominees, Messrs. Hama and
Wallace, to be "interested persons" of the Fund within the meaning of Section
2(a) (19) of the Investment Company Act because of the positions they hold or
have held with the Fund, NAM-U.S.A. and Nomura Asset Management Co., Ltd.
("NAM"), as applicable. Mr. Hama is President of the Fund, President and a
Director of NAM-U.S.A. and a former Management Executive, Senior Officer and
Director of NAM. Mr. Wallace is a former Vice President, Treasurer and Secretary
of the Fund and a former Senior Vice President, Secretary, Treasurer and
Director of NAM-U.S.A.
Compensation of Directors. NAM-U.S.A. pays all compensation of all
Directors of the Fund who are affiliated with NAM-U.S.A. or any of its
affiliates. The Fund pays to each Director not affiliated with NAM-U.S.A. or any
of its affiliates an annual fee of $5,000 plus $500 per meeting attended,
together with such Director's actual out-of-pocket expenses relating to
attendance at meetings. Such fees and expenses aggregated $41,675 for the fiscal
year ended October 31, 2001.
The following table sets forth for the periods indicated compensation paid
by the Fund to its Directors and the aggregate compensation paid to the
Directors by all U.S. registered investment companies managed by NAM-U.S.A. or
advised by NAM:
Aggregate Pension or Retirement Aggregate Compensation from
Compensation Benefit Accrued as Part of Fund Complex Paid to
from Fund For Fund Expenses for its Directors During the
its Fiscal Year Ended Fiscal Year Ended Calendar Year Ended
Name of Director October 31, 2001 October 31, 2001 December 31, 2001*
---------------- ---------------- ---------------- ------------------
William G. Barker......................... $9,000 None $28,000
Kazuhiko Hama............................. -- None --
Chor Weng Tan............................. $9,000 None $28,000
Arthur R. Taylor.......................... $9,000 None $28,000
John F. Wallace........................... $8,500 None $27,500
- ----------
* In addition to the Fund, the "Fund Complex" includes Jakarta Growth Fund,
Inc., Japan Smaller Capitalization Fund, Inc. (formerly Japan OTC Equity
Fund, Inc.) and Nomura Pacific Basin Fund, Inc. Because the funds in the
Fund Complex do not share a common fiscal year, the information relating
to compensation from the Fund Complex paid to the Directors is provided as
of December 31, 2001. On June 11, 2001, Jakarta Growth Fund, Inc. merged
into The Indonesia Fund, Inc. In January 2002, Nomura Pacific Basin Fund,
Inc. was liquidated.
Officers of the Fund. Information pertaining to the officers of the Fund
is set forth in Exhibit II to this Proxy Statement. Officers of the Fund are
elected and appointed by the Directors and hold office until they resign, are
removed or are otherwise disqualified to serve.
Stock Ownership. Set forth in Exhibit III to this Proxy Statement is the
following information for each Board of Director nominee: (i) the number of
shares of common stock of the Fund owned; (ii) the aggregate dollar range of
equity securities in the Fund; and (iii) the aggregate dollar range of
securities in all registered funds in the Fund Complex overseen by the Board of
Directors nominee. Also set forth in Exhibit III is information for each Board
of Director nominee and immediate family members relating to securities owned
beneficially or of record in NAM-U.S.A., NAM, Nomura Asset Management Hong Kong
Limited and Nomura Asset Management Singapore Limited. At March 1, 2002, the
Directors and officers of the Fund as a group (nine persons) owned an aggregate
of 3,700 shares of the Fund, representing less than 1% of the outstanding shares
of the Fund. Mr. Hama, President of the Fund, and Mr. Haruguchi, a Vice
President of the Fund, together own less
3
than 1% of the shares of Nomura Holdings, Inc., the parents company of each of
NAM-U.S.A., NAM, NAM-Singapore and NAM-Hong Kong.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Harvard Management Company, Inc. ("HMC") has reported a 16.25% beneficial
ownership of the Fund's Common Stock as of December 10, 2001. HMC is located at
600 Atlantic Avenue, Boston, Massachusetts 02210. To the knowledge of the
management of the Fund, HMC is the only beneficial owner of more than 5% of the
Fund's outstanding shares.
Shares of Common Stock Percentage of the Fund's
the Fund Beneficially Common Stock Owned at
Name of Beneficial Owner Owned at March 1, 2002 March 1, 2002
- ------------------------ ---------------------- -------------
Harvard Management Company, Inc.................... 1,366,101 16.25%
ADDITIONAL INFORMATION
Expenses and Methods of Proxy Solicitation
The expense of preparation, printing and mailing of the enclosed form of
proxy, this Proxy Statement and the accompanying Notice of Meeting will be borne
by the Fund. The Fund will reimburse banks, brokers and others for their
reasonable expenses in forwarding proxy solicitation material to the beneficial
owners of the shares of the Fund. In addition to the solicitation of proxies by
mail, proxies may be solicited in person or by telephone. The Fund has retained
Georgeson Shareholder ("Georgeson"), a firm that specializes in proxy
solicitation services, to assist in the solicitation of proxies for the Meeting
for a fee of approximately $4,000, together with reimbursement of such firm's
expenses. Georgeson is obligated to provide proxy solicitation services
including, but not limited to, distribution of proxies to broker-dealers,
telephonic communication with shareholders and broker dealers and monitoring of
voting results.
Independent Accountant's Fees
The following table sets forth the aggregate fees paid to PWC, independent
accountants for the Fund, for the Fund's fiscal year ended October 31, 2001 for
professional services rendered for: (i) the audit of the Fund's annual financial
statements; (ii) financial information systems design and implementation
services provided to the Fund, NAM-U.S.A. and entities controlling, controlled
by or under common control with NAM-U.S.A. that provide services to the Fund;
and (iii) all other non-audit services provided to the Fund, NAM-U.S.A. and
entities controlling, controlled by or under common control with NAM-U.S.A. that
provide services to the Fund. The Fund's Audit Committee has considered whether
the provision of non-audit services under clause (iii) is compatible with
maintaining the independence of the PWCfrom the Fund.
Audit Fees Financial Information
Charged to Systems Design and All
Fund the Fund Implementation Fees Other Fees* Fiscal Year End
---- -------- ------------------- ----------- ---------------
Korea Equity Fund, Inc..................... $36,000 None $63,462 October 31, 2001
- ----------
* $15,500 of these other non-audit services relate to the Fund.
4
Voting Requirements
The holders of a majority of the shares of stock of the Fund entitled to
vote at the Meeting, present in person or by proxy, shall constitute a quorum
for the transaction of business at the Meeting. If, by the time scheduled for
the Meeting, a quorum of the Fund's shareholders is not present, or if a quorum
is present but sufficient votes to act upon the proposals are not received from
the shareholders, the persons named as proxies may propose one or more
adjournments of the Meeting to permit further solicitation of proxies from
shareholders. Any such adjournment will require the affirmative vote of a
majority of the shares of the Fund present in person or by proxy and entitled to
vote at the session of the Meeting to be adjourned. The persons named as proxies
will vote in favor of any such adjournment if they determine that adjournment
and additional solicitation are reasonable and in the best interests of the
Fund's shareholders. No additional notice will be provided to you in the event
the Meeting is adjourned unless otherwise required by Maryland law.
All shares represented by properly executed proxies, unless such proxies
have previously been revoked, will be voted at the Meeting in accordance with
the directions on the proxies; if no direction is indicated, the shares will be
voted FOR the election of the five Board of Directors nominees. The election of
Directors (Item 1) requires a plurality of the votes cast, in person or by
proxy, at a meeting at which a quorum is duly constituted.
Broker Non-Votes and Abstentions
The Fund expects that broker-dealer firms holding shares of the Fund in
"street name" for the benefit of their customers and clients, as well as the
Japan Securities Clearing Corporation ("JSCC") holding shares of the Fund on
behalf of its beneficial shareholders, will request the instructions of such
customers, clients and beneficial shareholders, on how to vote their shares on
the election of Directors. Under the rules of the New York Stock Exchange, the
Boston Stock Exchange and the Osaka Securities Exchange, broker-dealers and the
JSCC may, without instructions from such customers, clients and beneficial
shareholders, grant authority to the proxies designated by the Fund to vote on
the election of Directors (Item 1) if no instructions have been received prior
to the date specified in the broker-dealer firm's or the JSCC's request for
voting instructions.
The shares as to which the proxies so designated are granted authority by
broker-dealer firms and the JSCC to vote on the election of Directors, the
shares as to which broker-dealer firms have declined to vote ("broker
non-votes"), as well as the shares as to which proxies are returned by record
shareholders but which are marked "abstain" will be included in the Fund's
tabulation of the total number of votes present for purposes of determining
whether the necessary quorum of shareholders exists. However, abstentions and
broker non-votes will not be counted as votes cast. Therefore, abstentions and
broker non-votes will not have an effect on the election of Directors (Item 1).
Address of Manager, Investment Adviser and Investment Sub-Advisers
The address of NAM-U.S.A. is 180 Maiden Lane, New York, New York
10038-4936. The address of NAM is 1-14, 2-chome, Nihonbashi, Chuo-ku, Tokyo
103-8260, Japan. The address of Nomura Asset Management Hong Kong Limited is
32nd Floor, Citibank Tower, Citibank Plaza, Hong Kong. The address of Nomura
Asset Management Singapore Limited is 6 Battery Road, #40-02 Singapore 049909.
5
Annual Report Delivery
The Fund sends annual and semi-annual reports to shareholders. The Fund
will furnish, without charge, a copy of its most recent annual and semi-annual
reports succeeding such annual report, if any, to shareholders upon request to
the Fund at 180 Maiden Lane, New York, New York 10038-4936 (or call
1-800-833-0018).
Proposals of Shareholders
Proposals of shareholders intended to be presented at the next annual
meeting of shareholders of the Fund must be received by the Fund for inclusion
in its proxy statement and form of proxy relating to that meeting by February
10, 2003. The persons named as proxies in future proxy materials of the Fund may
exercise discretionary authority with respect to any shareholder proposal
presented at any subsequent shareholder meeting if written notice of such
proposal has not been received by the Fund by February 10, 2003. Written
proposals with regard to the Fund should be sent to the Secreatry of the Fund,
180 Maiden Lane, New York, New York 10038-4936.
By Order of the Board of Directors
John J. Boretti
Secretary
New York, New York
Dated: March 5, 2002
6
Exhibit I
INFORMATION PERTAINING TO BOARD OF DIRECTORS NOMINEES
Certain biographical and other information relating to each Director nominee who
is an "interested person," as defined in the Investment Company Act, of the Fund
is set forth below:
Term of Number of Other
Office and Funds in the Directorships
Name, Address and Age of Position(s) Held Length of Principal Occupation(s) Fund Complex Held by the
Director Nomine* with the Fund Time Served* During Past Five Years Overseen** Director
- ------------------------ ----------------- ------------ -------------------------------- ------------ -------------
Kazuhiko Hama (56)*** President President and President of the Fund since June 2 registered None
180 Maiden Lane and Director Director since 2001; President and Director of investment
New York, New York 10038 June 2001 NAM-U.S.A. since June 2001; companies
Management Executive of NAM from consisting
2000 to June 2001; Senior of 2 portfolios
Officer of NAM from 1999 to
2000; Director of NAM (formerly
The Nomura Securities Investment
Trust Management Co., Ltd.) from
1996 to 1998.
John F. Wallace (73)**** Director Director Vice President of the Fund from 2 registered None
17 Rhoda Street since 1993 1997 to 2000 and Secretary and investment
West Hempstead, New York Treasurer of the Fund from 1993 companies
11552 to 1997; Senior Vice President consisting
of NAM-U.S.A. from 1981 to 2000, of 2 portfolios
Secretary from 1976 to 2000,
Treasurer from 1984 to 2000 and
Director from 1986 to 2000.
- ----------
* Each nominee, if elected, will serve as a Director until the next Annual
Meeting of Shareholders and until his successors is elected and qualified
or until their earlier resignation or removal.
** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc. (formerly Japan OTC Equity Fund, Inc.) at March
1, 2002.
*** Mr. Hama is a director and President of Japan Smaller Capitalization Fund,
(formerly Japan OTC Equity Fund, Inc.) Inc. for which NAM-U.S.A. acts as
manager and for which NAM acts as investment adviser. Mr. Hama is an
"interested person," as defined in the Investment Company Act, of the
Fund, based on his positions as President of the Fund, and as President
and Director of NAM-U.S.A. and former Management Executive, Senior Officer
and Director of NAM.
**** Mr. Wallace is a director of Japan Smaller Capitalization Fund, Inc. for
which NAM-U.S.A. acts as manager and for which NAM acts as investment
adviser. Mr. Wallace is an "interested person," as defined in the
Investment Company Act, of the Fund based on the positions he has
previously held with the Fund and NAM-U.S.A.
I-1
Certain biographical and other information relating to the nominees for Director
who are not "interested persons," as defined in the Investment Company Act, of
the Fund is set forth below:
Other
Term of Number of Public
Office and Funds in the Directorships
Name, Address and Age of Position(s) Held Length of Principal Occupation(s) Fund Complex Held by the
Director Nomine* with the Fund Time Served* During Past Five Years Overseen** Director
- ------------------------ ----------------- ------------ -------------------------------- ------------ -------------
William G. Barker, Jr. Director Director Consultant to the television 2 registered None
(69) since 1993 industry since 1991. investment
111 Parsonage Road companies
Greenwich, Connecticut consisting
06830 of 2 portfolios
Chor Weng Tan (65) Director Director Managing Director for Education, 2 registered None
3 Park Avenue since 1993 The American Society of investment
New York, New York 10016 Mechanical Engineering since companies
1991; Director of Tround consisting
International, Inc. from 1984 to of 2 portfolios
1997.
Arthur R. Taylor (66) Director Director President of Muhlenberg College 2 registered None
2400 Chew Street since 1993 since 1992; Dean of the Faculty investment
Allentown, Pennsylvania of Business of Fordham companies
18104 University from 1985 to 1992; consisting
Chairman of Arthur R. Taylor & of 2 portfolios
Co. (investment firm); and
Director of Louisiana Land &
Exploration Company and Pitney
Bowes, Inc. from 1982 to 1997.
- ----------
* Each nominee is a director of Japan Smaller Capitalization Fund, Inc.
(formerly Japan OTC Equity Fund, Inc.) for which NAM-U.S.A. acts as
manager and NAM acts as investment adviser, and each is a member of the
Audit and Nominating Committee of Japan Smaller capitalization Fund, Inc.
and a member of the Audit and Nominating Committee of the Fund.
** Each nominee, if elected must serve as Director until the next Annual
Meeting of Shareholders and until his successor is eleceted and qualified
or until his earlier resignation or removal.
*** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc. at March 1, 2002.
I-2
Exhibit II
INFORMATION PERTAINING TO THE OFFICERS OF THE FUND
Certain biographical and other information relating to the officers of the Fund
is set forth below:
Shares of
Common
Stock of the
Term of Number of Fund
Office** and Funds in the Beneficially
Name, Address* and Position(s) Held Length of Principal Occupation(s) Fund Complex*** Public Owned at
Age of Officers with the Fund Time Served During Past Five Years Overseen Directorships Record Date
- ------------------- ---------------- ----------- -------------------------------- --------------- ------------- ------------
Kazuhiko Hama (56) President and President President of the Fund since June 2 registered None -0-
Director since 2001 2001; President and Director of investment
NAM-U.S.A. since June 2001; companies
Management Executive of NAM from consisting
2000 to June 2001; Senior of 2 portfolios
Officer of NAM from 1999 to
2000; Director of NAM (formerly
The Nomura Securities Investment
Trust Management Co., Ltd.) from
1996 to 1998.
Keisuke Haruguchi (51) Vice President Vice President Senior Vice President and 2 registered None -0-
since 1999 Director of NAM-U.S.A. since investment
1999; Senior Manager of NAM from companies
1997 to 1998; Manager of The consisting
Nomura Securities Co., Ltd. from of 2 portfolios
1994 to 1996.
Kenneth L. Munt (55) Vice President Vice President Senior Vice President and 2 registered None -0-
since 2001 Secretary of NAM-U.S.A. since investment
1999; Senior Vice President of companies
Human Resources for Middlesex consisting
Mutual Assurance Company from of 2 portfolios
1996 to 1999; Vice President of
Human Resources for Mutual of
Omaha from 1995 to 1996.
David G. Stoeffel (43) Vice President Vice President Senior Vice President of 2 registered None 200
since 1999 NAM-U.S.A. since 1999, Vice investment
President since 1998; Eastern companies
Division Manager of Brinson consisting
Funds from 1997 to 1998; of 2 portfolios
Northeast Region Funds
Coordinator of Prudential
Investments from 1994 to 1997.
John J. Boretti (50) Secretary and Secretary and Senior Vice President of 2 registered None -0-
Treasurer Treasurer NAM-U.S.A. since 1996; investment
since 1997 Compliance Officer of NAM-U.S.A. companies
since 1997. consisting
of 2 portfolios
- -------------
* The address of each officer listed above is 180 Maiden Lane, New York, New
York 10038.
** Elected by and serves at the pleasure of the Board of Directors.
*** In addition to the Fund, the "Fund Complex" includes Japan Smaller
Capitalization Fund, Inc. (formerly Japan OTC Equity Fund, Inc.) at March
1, 2002.
II-1
Exhibit III
INFORMATION PERTAINING TO STOCK OWNERSHIP
BY BOARD OF DIRECTORS NOMINEES
Information relating to the share ownership by each Director nominee at
March 1, 2002 is set forth below:
Aggregate Dollar Range of
Shares of Common Aggregate Dollar Range Securities in All Registered
Stock of the Fund of Equity Securities Funds in the Fund Complex
Name of Director Nominee Beneficially Owned in the Fund Overseen by Director Nominee
- ------------------------ ------------------ ----------- ----------------------------
William G. Barker............... -0- None None
Kazuhiko Hama................... -0- None None
Chor Weng Tan................... 2,500 $10,001-$50,000 $10,001-$50,000
Arthur R. Taylor................ -0- None None
John F. Wallace................. 1,000 $1-$10,000 $1-$10,000
None of the nominees for Director or his immediate family members owned
beneficially or of record any class of securities of any of NAM-U.S.A., NAM,
Nomura Asset Management Hong Kong Limited or Nomura Asset Management Singapore
Limited at March 1, 2002.
III-1
Exhibit IV
JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
I. Composition of the Audit Committee
The Audit Committee shall be composed of all of the Directors who satisfy
the following criteria:
(a) each of whom shall not be an "interested person" of the Fund, as
defined in Section 2(a)(19) of the Investment Company Act of 1940,
as amended;
(b) each of whom shall not have any relationship to the Fund or Nomura
Asset Management U.S.A. Inc. or its affiliates that may interfere
with the exercise of their independence from Fund management and the
Fund;
(c) each of whom shall otherwise satisfy the applicable independence
requirements for any stock exchange on which Fund shares are listed;
(d) each of whom shall be financially literate, as such qualification is
interpreted by the Board of Directors in its business judgment, or
shall become financially literate within a reasonable period of time
after his or her appointment to the Audit Committee; and
(e) at least one of whom shall have accounting or related financial
management expertise, as the Board of Directors interprets such
qualification in its business judgment.
II. Purposes of the Audit Committee
The purposes of the Audit Committee are to assist the Board of Directors:
(a) in its oversight of the Fund's accounting and financial reporting
policies and practices, its internal audit controls and procedures
and, as appropriate, the internal audit controls and procedures of
certain of its service providers;
(b) in its oversight of the Fund's financial statements and the
independent audit thereof; and
(c) in acting as a liaison between the Fund's independent public
accountants and the Board of Directors.
The function of the Audit Committee is oversight. Fund management is
responsible for maintaining appropriate systems for accounting and internal
controls. The independent public accountants of the Fund are responsible for
conducting a proper audit of the Fund's financial statements.
III. Responsibilities and Duties of the Audit Committee
The policies and procedures of the Audit Committee shall remain flexible
to facilitate its ability to react to changing conditions and to generally
discharge its functions. The following listed responsibilities describe areas of
attention in broad terms.
IV-1
To carry out its purposes, the Audit Committee shall have the following
responsibilities and duties:
(a) to recommend the selection, retention or termination of the Fund's
independent public accountants based on an evaluation of their
independence and the nature and performance of audit services and
other services;
(b) to receive specific written representations from the independent
public accountants with respect to their independence and to discuss
with them their independence;
(c) to review the fees charged by the independent public accountants for
audit and other services;
(d) to review with the independent public accountants arrangements for
and the scope of annual audits and special audits;
(e) to review with Fund management and the independent public
accountants the results of the annual audits of the Fund;
(f) to discuss with the independent accountants the matters required to
be discussed by SAS 61, as may be modified or supplemented;
(g) to discuss with the independent public accountants any matters of
concern relating to the Fund's financial statements, including,
without limitation, any adjustment to such financial statements
recommended by such independent public accountants, or any other
results of any audit;
(h) to consider with the independent public accountants their comments
with respect to the Fund's accounting and financial reporting
policies, practices and internal controls and management's responses
thereto, including, without limitation, the effect on the Fund of
any recommendation of changes in accounting principles or practices
by management or the independent public accountants;
(i) to review with the independent public accountants the form of
opinion proposed to be rendered to the Board of Directors and the
stockholders;
(j) to investigate, when the Audit Committee deems it necessary or
appropriate, any improprieties or suspected improprieties in Fund
financial and accounting operations;
(k) to report to the Board of Directors regularly with respect to the
Audit Committee's activities and to make any necessary or
appropriate recommendations with respect to the Fund's accounting
and financial reporting policies, practices and the Fund's internal
controls;
(l) to review and reassess the adequacy of this Charter on an annual
basis and recommend any changes to the Board of Directors;
(m) to review with counsel and the independent public accountants for
the Fund legal and regulatory matters that may have a material
impact on the Fund's financial statements;
(n) to prepare any report, including any recommendation of the Audit
Committee, required to be included in the Fund's annual proxy
statement by the rules of the Securities and Exchange Commission;
(o) to assist the Fund, if necessary, in preparing any written
affirmation or written certification required to be filed with any
stock exchange on which Fund shares are listed; and
(p) to perform such other functions consistent with this Charter, the
Fund's By-laws and governing law, as the Audit Committee or the
Board of Directors deems necessary or appropriate.
IV-2
In fulfilling their responsibilities hereunder, it is recognized that
members of the Audit Committee are not full-time employees of the Fund and are
not, and do not represent themselves to be, accountants or auditors by
profession or experts in the field of accounting or auditing. As such, it is not
the duty or responsibility of the Audit Committee or its members to conduct
"field work" or other types of auditing or accounting reviews or procedures, and
each member of the Audit Committee shall be entitled to rely on (i) the
integrity of those persons and organizations within and outside the Fund from
which the Audit Committee receives information and (ii) the accuracy of the
financial and other information provided to the Audit Committee by such persons
or organizations absent actual knowledge to the contrary (which actual knowledge
shall be promptly reported to the Board of Directors).
The independent public accountants for the Fund are ultimately accountable
to the Board of Directors and the Audit Committee. The Board of Directors and
the Audit Committee have the ultimate authority and responsibility to select,
evaluate and, where appropriate, replace the independent public accountants for
the Fund (or to nominate the independent public accountants to be proposed for
shareholder approval in the proxy statement).
The Audit Committee is responsible for ensuring that the independent
public accountants for the Fund submit on a periodic basis to the Audit
Committee a formal written statement delineating all relationships between such
independent public accountants and the Fund, consistent with Independence
Standards Board Standard 1. The Audit Committee is responsible for actively
engaging in a dialogue with the independent public accountants for the Fund with
respect to any disclosed relationships or services that may impact the
objectivity and independence of such independent public accountants and for
recommending that the Board of Directors take appropriate action in response to
the report of such independent public accountants to satisfy itself of the
independence of such independent public accountants.
IV. Meetings
The Audit Committee shall meet at least once annually with the independent
public accountants (outside the presence of Fund management) and at least once
annually with the representatives of Fund management responsible for the
financial and accounting operations of the Fund. The Audit Committee shall hold
special meetings when and if circumstances require. Members of the Audit
Committee may participate in a meeting of the Audit Committee by means of
conference call or similar communications equipment by means of which all
persons participating in such meeting can hear each other.
V. Outside Resources and Assistance from Fund Management
The appropriate officers of the Fund shall provide or arrange to provide
such information, data and services as the Audit Committee may request. The
Audit Committee shall have the authority to discharge its responsibility,
including the authority to retain at the expense of the Fund their own counsel
and other experts and consultants, whose expertise would be considered helpful
to the Audit Committee.
Dated May 18, 2000
IV-3
KOREA EQUITY FUND, INC.
180 Maiden Lane
New York, New York 10038-4936
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Kazuhiko Hama and John J. Boretti as proxies,
each with the power to appoint his substitute, and hereby authorizes them to
represent and to vote, as designated on the reverse hereof, all the common stock
of Korea Equity Fund, Inc. (the "Fund") held of record by the undersigned on
March 1, 2002 at the Annual Meeting of the Shareholders of the Fund to be held
on May 16, 2002 or any adjournment thereof.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY USING THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Please sign exactly as name(s) appear(s) hereon. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give title as such. If a corporation, please sign in
full corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized persons.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
- ----------------------------------- -----------------------------------
|X| PLEASE MARK VOTES
AS IN THIS EXAMPLE
- ------------------------------------------- Please be sure to sign and date this Proxy
KOREA EQUITY FUND, INC.
- ------------------------------------------- THE BOARD OF DIRECTORS For For All
RECOMMENDS A VOTE All With- Nominees
This proxy, when properly executed, will be "FOR" ALL NOMINEES Nominees hold Except
voted in the manner directed herein by the |_| |_| |_|
undersigned shareholder. If no direction is 1. Election of Directors.
made, this proxy will be voted FOR Proposal
1. William G. Barker, Jr. Arthur R. Taylor
Kazuhiko Hama John F. Wallace
Mark box at right if an address change or Chor Weng Tan
comment has been noted on the reverse side |_|
of this card. NOTE: If you do not wish your shares voted
"For" a particular nominee, mark the "For
CONTROL NUMBER: All Nominees Except"box and strike a line
through the nominee(s)' name(s). Your shares
will be voted for the remaining nominee(s).
2. In the discretion of such proxies, upon such
other business as may properly come before
the meeting or any adjournments thereof.
------------------
Date
- --------------------------------------------
- --------------------------------------------
Shareholder sign here Co-owner sign here