KoreaKorea Equity Fund, Inc.

as of 03/31/12

Fund Objective Korea Equity Fund, Inc. (“KEF” or the “Fund”) seeks Exchange. Nomura U.S.A. Inc. has long-term capital appreciation through investments pri- served as the Fund’s Manager since the Fund’s inception marily in equity securities of Korean companies. Under in 1993. Nomura Asset Management Co., Ltd. has served as normal circumstances, the Fund will invest at least 80% of the Fund’s Investment Adviser since the Fund’s inception. its total assets in such securities. KEF is a non-diversified, The Manager and Investment Adviser are subsidiaries of closed-end management investment company listed on , Inc. and affiliates of the New York Stock Exchange and the Securities Co., Ltd., Tokyo, .

Net Asset Value Since Inception (December 3, 1993) vs. NYSE Closing Price

$20 NAV NYSE price Fund Facts $15

• Net Assets: $10 $103,949,361

$5 • Net Asset Value: $10.67 $0 12/93 10/94 10/95 10/96 10/97 10/98 10/99 10/00 10/01 10/02 10/03 10/04 10/05 10/06 10/07 10/08 10/09 10/10 10/11 3/12

• NYSE Close: $9.74 Sector Weightings Top Ten Holdings As of 03/31/12. Sector weightings may vary over time. As of 03/31/12. Holdings may vary over time.

• Premium/ Percentage of Net Assets Discount: 4.6% Transportation Consumer Electronics 20.6% -8.70% 5.3% Banking & Samsung Electronics Co., Ltd. 19.3% Automotive 5.6% Wholesale Equipment Hyundai Mobis 12.7% • NYSE Ticker & Parts 16.1% 6.2% Chemicals & Samsung Engineering Co., Ltd. 6.4% Symbol: Pharmaceuticals Korea Zinc Co., Ltd. 4.4% KEF 7.1% Insurance LG Chem Ltd. 4.0% 9.7% Other • Equity Ncsoft Corporation 3.8% Portfolio 9.8% Miscellaneous Fila Korea Ltd. 3.5% Holdings: Manufacturing Services 15.0% 37 Dongbu Insurance Co., Ltd. 3.3% Performance Overview Hanjin Shipping Co., Ltd. 2.9% • CUSIP: Period ending 03/31/12. Hyundai Motor Company 2.8% 50063B104 Calendar Since YTD 1 Yr 3 Yr 5 Yr 10 Yr Inception1

• Inception KEF NAV2 7.7% -10.3% 29.3% 3.7% 10.3% 1.3% Date: KEF NYSE Price3 7.3% -9.1% 30.0% 3.6% 11.2% 0.5% 12/3/93 KOSPI 4 13.0% -7.2% 26.5% 2.9% 10.2% 3.0%

• Automatic Past performance is not indicative of future results. Reinvestment 1Inception date: December 3, 1993. 2Based on NAV price, adjusted for reinvestment of income dividends and capital gain distributions. 3Based Option on New York Stock Exchange’s closing market price, adjusted for reinvest- ment of income dividends and capital gain distributions. KEF’s perfor- mance does not represent sales commissions. 4Korea Composite Stock Price Index (“KOSPI”) in U.S. dollars. Performance in excess of one year is annualized. 24 Hour Information: 1-800-833-0018 Sources: Nomura Asset Management U.S.A. Inc. and Bloomberg L.P. Web Site: www.nomura.com Korea Equity Fund, Inc.

Manager’s Commentary Korea’s KOSPI climbed 10.3% to close the first quarter of 2012 at activity has stopped slowing, with growth in consumption and capi- 2014.04 points despite weaker than expected quarterly results tal expenditure and steady expansion in exports”. Exports in the first amid expectations of a soft landing for the global economy. Over quarter of 2012 registered +3.0% year-over-year (yoy) growth from the same period, the KOSDAQ underperformed the large caps, +9.0% (yoy) in the fourth quarter of 2011, weakening largely as a gaining just 3.9%. Sectors that underperformed in 2011 led the result of lower export demand in Europe. On the other hand, gains in the first quarter. Shipbuilding stocks surged due to their exports to the U.S. were strong and can be attributed to the Korea- attractive valuations and high oil prices, which should translate US FTA, which took effect on March 15. Meanwhile, exports to into more offshore contracts. Shipping stocks also performed well China moderated to +0.7% (yoy) from +9.9% in February. as the trend towards the idling of excess capacity continues and freight rates start to rise. Banks and brokerages rebounded due to We have a balanced portfolio with exposure to high quality indus- a trough in valuations and improving liquidity conditions. Automo- trial stocks. Given the upcoming elections, sectors such as Con- bile component manufacturers underperformed the automobile sumer Staples and Financials will face regulatory pressure vis-à-vis producers amid concerns over a margin squeeze from the latter. other sectors. We remain positive on the outlook for sectors such as Consumer Staples lagged behind the market given its outperfor- Technology, which have stronger brand equity and pricing power. mance in 2011 and slower growth prospects. Technology stocks Among the financial related stocks, we still prefer insurers to banks were mixed. Larger caps outperformed along with stronger brand given their stronger earnings visibility. We are maintaining our over- equity and market share gains. weight position in the Automobile sector as it is attractively valued at this stage. During the quarter, the Bank of Korea held its policy rate at 3.25%; and noted in its latest statement that “the momentum in domestic

Fund Information by Calendar Year* KEF KOSPI NAV NYSE Closing Price Income Capital Gain Net Assets Performance** Performance*** At Period End At Period End Dividend Distributions ($ millions) 1994† -39.1% 21.4% $9.81 $8.75 — $0.28 $87.7 1995 -4.3% -12.4% $9.06 $8.38 $0.02 — $76.3 1996 -26.9% -32.3% $6.07 $6.13 — — $51.0 1997 -52.1% -71.2% $2.05 $2.94 — — $17.3 1998 17.0% 110.7% $3.86 $3.44 — — $32.5 1999 41.8% 94.0% $6.88 $4.88 — — $57.9 2000 -50.0% -56.1% $3.13 $2.44 — — $26.3 2001 37.4% 32.9% $4.12 $3.35 — — $34.6 2002 8.1% -0.2% $4.20 $3.62 — — $35.4 2003 37.6% 28.5% $5.72 $4.98 — — $48.1 2004 23.5% 27.3% $6.56 $6.15 — — $55.2 2005 50.9% 57.6% $10.28 $9.28 — — $86.5 2006 23.3% 13.1% $11.91 $11.44 — — $100.2 2007 14.5% 31.4% $14.57 $13.10 — — $163.3 2008 -55.1% -56.1% $6.52 $5.69 $0.03 — $73.2 2009 62.6% 62.1% $10.56 $9.25 — — $118.4 2010 32.2% 26.7% $13.45 $12.23 — — $119.0 2011 -6.4% -13.9% $9.91 $9.08 $0.46 $2.605 $103.5 03/12 7.7% 13.0% $10.67 $9.74 $103.9 *Sources: Nomura Asset Management U.S.A. Inc. and Bloomberg L.P. formance does not reflect sales commissions. ***Korea Com posite Stock † **Based on New York Stock Exchange’s closing market price, ad justed for Price Index in U.S. dollars. The Fund’s inception date was December 3, reinvestment of income dividends and capital gain distributions. KEF’s per- 1993. Additional Information Comparisons between changes in the Fund’s net asset value per share and higher than the performance presented. Investment products offered are not changes in the Korea Composite Stock Price Index should be considered in FDIC insured, may lose value, and are not bank guaranteed. The Korea Com- light of the Fund’s investment policy and objective, the characteristics and qual- posite Stock Price Index is a market capitalization-weighted index. The index ity of the Fund’s investments, the size of the Fund, and variations in the Korean was developed with a base value of 100 as of January 4, 1980. One cannot invest won/U.S. dollar exchange rate. directly in an index. This report is for informational purposes only. The financial infor mation is taken This material contains the current opinions of the Fund’s manager, which are from the records of the Fund without examination by independent accountants subject to change without notice. It should not be considered investment who do not express an opinion thereon. advice. Statements concerning financial market trends are based on current market conditions, which will fluctuate. There is no guarantee that these invest- It is not a prospectus, circular or representation intended for use in the sale of ment strategies will work under all market conditions, and each investor shares of the Fund or of any securities mentioned in this report. Past perfor- should evaluate their ability to invest for the long-term. mance is not indicative of future results. Current performance may be lower or

24 Hour Information: 1-800-833-0018 Web Site: www.nomura.com