Korea Fund announces changes in share repurchase program, benchmark

By Toni Weeks

San Diego, Oct. 31 - The Korea Fund, Inc. announced it has adopted a new share repurchase program, under which the fund will repurchase up to 10% of its common shares in each 12-month period that begins Nov. 1 and ends Oct. 31.

According to a press release, beginning Tuesday, the fund will repurchase its common shares in the open market on any day that the fund's shares are trading at a discount of 8% or more from net asset value the prior day and there is a daily average discount of 8% or more from net asset value over the five-day period ending the prior day. On each repurchase day, the fund will repurchase its shares to the maximum extent permitted by law, unless its investment manager determines that a repurchase would be detrimental to the fund and its shareholders.

The repurchase program replaces the fund's existing share repurchase program, under which the fund was authorized to repurchase up to 5% of its common shares outstanding as of Feb. 22, 2010 from time to time in the open market. As of Sept. 30, the fund has repurchased 458,964 shares, or 4.39% of the shares outstanding at the onset of the repurchase program.

The purpose of the new repurchase program is to enhance shareholder value, as repurchases made at a discount increase the net asset value per share of the fund's remaining shares.

The board of directors of the fund also announced it intends to change the fund's primary benchmark on Jan. 1 to the Morgan Stanley Capital International (MSCI) Korea Index (Total Return) from the Korea Composite Stock Price Index. The change is subject to finalizing licensing arrangements with MSCI.

In addition, the fund announced it has about $60 million of capital gains available for distribution, subject to any additional realized gains or losses incurred through Oct. 31.

The Korea Fund is a non-diversified, closed-end investment company that seeks long-term capital appreciation through investments in securities of Korean companies. San Francisco-based RCM Capital Management LLC is the fund's investment manager.

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