The Korea Fund underperformed the MSCI Korea benchmark in the second quarter of 2012, with the MSCI Korea dropping sharply by 8.6% in USD terms. Foreign investors sold a net $5 trillion worth of Korean equities, though the Korean won depreciated only moderately against the USD. During the quarter, the Fund outperformed its benchmark by 42 basis points due to strong stock picks in consumer discretionary, while IT and materials detracted. Quality stocks outperformed in the volatile market conditions, with low debt, low volatility stocks performing well.

1. The Korea Fund, Inc. Kim Sang Won
Supplementary Portfolio Management Presentation Portfolio Manager
RCM Asia Pacific Limited
Second Quarter 2012

2. Portfolio review
 In the second quarter of 2012, the MSCI Korea Index dropped sharply by 7.7% in KRW terms and 8.6% in USD terms after a rally in the
first quarter. The MSCI Korea surged 15% in the first quarter of 2012 on the news of subsidizing the eurozone risk and prospects for a
global economic recovery. However, market sentiment sharply turned sour as the risk of Greece’s exit from the eurozone emerged and
the risk of contagion into Spanish banks and Italian sovereign debt was aggravated in May. Amid the heightened European debt crisis
risk, the MSCI Korea fell 11% in USD terms in May.
 The Korean won depreciated in the second quarter in conjunction with foreign investor’s equity market selling. Foreign investors sold a
net KRW5 trillion in equity market flipping KRW11 trillion worth of purchase from the first quarter. However, the Korean won
depreciation was moderate due to weak commodity prices, which kept current accounts at a surplus. The Korean won depreciated to
1,145 against the USD at the end of the second quarter compared to 1,133 at the end of the first quarter.
 During the quarter, the Fund outperformed the MSCI Korea benchmark by 42 basis point. During the quarter, our stock picks in the
consumer discretionary sector contributed significantly to the Fund’s relative performance, while stock picks in the IT and materials
sectors detracted from the Fund’s relative performance.
 Style performance in the Korean market was very different in the second quarter of 2012 compared to the first quarter of 2012, with
several of the worst performing styles in the first quarter of 2012 rising to be among the top performing styles in the second quarter of
2012. For example, High Volatility went from a top performing style in the first quarter of 2012 to the worst performing style in the
second quarter of 2012. This is not surprising considering the significant change in market conditions in the second quarter of 2012 from
the previous quarter. In general, quality performed well with low volatility, low debt and high ROE stocks outperforming. Value and
momentum generally did not perform well. The top performing investment style in the second quarter of 2012 was Low Debt/EV. Low
growth styles such as Low Historical EPS Growth and Low Forecast Earnings Growth also performed well, which did not have a positive
impact for the portfolio. Volatility was also highly effective in differentiating between subsequent outperformers and underperformers in
the second quarter of 2012, with low volatility stocks outperforming high volatility stocks by over 9%, due in large part to the significant
underperformance of high volatility stocks. All in all, the outperformance by quality style benefited the portfolio, but the other
outperforming styles did not significantly aid the Fund’s performance during the period.
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3. Sector breakdown with attribution analysis
(Q2 2012)
GICS Sector Attribution
End Weight Total Return Attribution
Port BM Active Port BM Alloc Se le c Total
Consumer Discretionary 27.3% 17.9% 9.3% -2.56% -4.39% .26% .46% .72%
Consumer Staples 4.9% 5.2% -.3% .06% -.24% -.04% .02% -.01%
Energy .9% 2.6% -1.7% -20.74% -18.73% .19% -.02% .17%
Financials 10.5% 13.8% -3.2% -9.98% -10.56% .06% .06% .12%
Health Care 1.0% .7% .3% 2.46% 18.98% .05% -.11% -.06%
Industrials 12.5% 13.4% -.9% -17.07% -15.00% .10% -.28% -.19%
Information Technology 27.0% 33.2% -6.3% -8.92% -7.36% -.02% -.44% -.46%
Materials 13.3% 11.3% 2.0% -13.92% -12.60% -.19% -.24% -.43%
Telecom Services — .6% -.6% — -12.26% .04% .00% .04%
Utilities — 1.3% -1.3% — 10.25% -.20% .00% -.20%
Total Equity 97.3% 100.0% -2.7% -9.23% -8.74% .25% -.54% -.29%
Cash (Other Assets) 2.7% — 2.7% -.61% — .32% -.04% .28%
Total 100.0% 100.0% — .57% -.58% -.01%
Source : Wilshire
Attribution figures are based on Wilshire’s Atlas position-based performance attribution. All performance figures shown on this report are approximates only and may not
reflect the official fund’s performance figures.
* Rounding may cause figures to vary from 100%
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4. Relative performance by market cap
Return % Weight %
10 20
5 10
0 0
‐5 ‐10
‐10 ‐20
Q3 2011 Q4 2011 Q1 2012 Q2 2012
Large Cap ‐ Relative Performance Mid Cap ‐ Relative Performance
Small Cap ‐ Relative Performance Fund's Weighting in Mid‐Small Cap (non‐BM included)
Source : Datastream
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5. Relative returns by portfolio styles
Q2 2012 (MSCI Korea)
MSCI KOREA Q2 2012 return -8.5% in USD
Relative Relative
Style outperformers Type Style underperformers Type
return return
Low Debt / EV Quality - High 5.3% High Volatility 12M Risk - High -7.6%
Low Historical EPS Growth Growth - Low 4.1% High Capex / Depreciation Quality - Low -5.9%
Low Free Cash Flow Yield Not Value 3.6% High ROIC Quality - High -5.3%
Low Short Term Price
Low Forecast EPS Growth Growth - Low 3.3% Momentum - Low -4.3%
Momentum
Low Sales Yield Not Value 3.0% High Sales Yield Value -4.0%
Source : UBS Quantitative Research, Based on MSCI Korea universe, as at 30 June 2012
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6. Style analysis (KF)
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Source : Style Research

7. Some of the information contained herein including any expression of opinion or forecast has been obtained from or is based on sources believed by us to be
reliable, but is not guaranteed and we do not warrant nor do we accept liability as to adequacy, accuracy, reliability or completeness of such information obtained
from or based on external sources. The information is given on the understanding that any person who acts upon it or otherwise changes his or her position in
reliance thereon does so entirely at his or her own risk without liability on our part. This is not an offer to buy or sell or a solicitation or incitement of offer to buy or
sell any securities referred to herein. It should also be appreciated that under certain circumstances the redemption of units/shares may be suspended. Investment
involves risks, including but not limited to the risks associated with investment in emerging and less developed markets, investments in small or medium market
capitalization companies as well as currency and exchange rate fluctuations. This Fund may not be registered or authorized for public distribution in the country of
residence of investors. Therefore this document is meant to provide a broad overview for discussion and/or information purposes only and is not for public
distribution. This document was not prepared with the intention of providing legal or tax advice. The views and opinions expressed in this document, which are
subject to change, are those of RCM and its affiliated companies at the time of publication. The duplication, publication, or transmission of the contents of this
document to unauthorized persons, irrespective of the form, is not permitted.
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