THE KOREA FUND, INC.
Semiannual Report
December 31, 1994
A closed-end investment company seeking long-term appreciation of capital
through investment in Korean securities.
Investment objective and policies
* long-term capital appreciation through investment in Korean securities
Investment characteristics
* investments in a broad spectrum of Korean industries
* closed-end investment company
* first United States investment company authorized to invest in Korean
securities
* a vehicle for international diversification through participation in the
Korean economy
GENERAL INFORMATION
Executive offices
The Korea Fund, Inc.
345 Park Avenue
New York, NY 10154
Telephone:
Daily net asset value: 212-326-6444
For Fund Information: 1-800-349-4281
Transfer agent, registrar and dividend reinvestment plan agent
For account information: 617-328-5000 x6406
State Street Bank and Trust Company
P.O. Box 8200
Boston, MA 02266-8200
Custodian
Brown Brothers Harriman & Co.
Subcustodian-Citibank, N.A.--Seoul office
Legal counsel
Debevoise & Plimpton
Independent Accountants
Coopers & Lybrand L.L.P.
New York Stock Exchange Symbol -- KF
Contents
Letter to Shareholders 3
Investment Summary 7
Portfolio Summary 8
Investment Performance 9
Investment Portfolio 11
Financial Statements 19
Financial Highlights 22
Notes to Financials 23
Report of Independent Accountants 27
Tax Information 28
Dividend Reinvestment and Cash Purchase Plan 29
Investment Manager 30
Korean Adviser 30
Officers and Directors 31
Comparisons between changes in the Fund's net asset value per share and
changes in the Korea Stock Exchange Index should be considered in light of
the Fund's investment policy and objective, the characteristics and quality
of the Fund's investments, the size of the Fund, and variations in the
won/dollar exchange rate.
This report is sent to the shareholders of The Korea Fund, Inc. for their
information. It is not a prospectus, circular, or representation intended
for use in the purchase or sale of shares of the Fund or of any securities
mentioned in the report.
Letter to Shareholders
Dear Shareholders:
During the six months ended December 31, 1994, the net asset value
(NAV) per share of your Fund rose 10.7% from $18.66 to $20.65 after
distributions of $0.15 per share. These distributions were from long-term
capital gains. The Fund's closing share price on the New York Stock
Exchange on December 31, 1994, was $22.75, a 10.17% premium over net asset
value.
Over the same period the index of the Korea Stock Exchange rose from
933.36 to 1027.39, an increase of 10.1%, and the Korean won rose 2.0% in
value relative to the U.S. dollar from 0.001241 to 0.001266.
The Portfolio
The Fund is broadly diversified by industry sector. As of December 31,
1994, 16.9% of the Fund's portfolio was invested in electronics; 11.9% in
telecommunications; 2.1% in chemicals; 8.9% in the construction and
building material sector and 11.2% in the automotive sector.
Since the September 1994 report, we have made a number of adjustments
to the portfolio. We liquidated holdings of Sunkyong Industrial, Il Dong
Pharmaceuticals and Dae Ryung Industries. We have also reduced a number of
holdings in the portfolio. With the proceeds from these sales we have taken
a position in Kumho Preferred, Dongsuh Securities Preferred, Kumho
Construction Preferred and Daewoong Pharmaceuticals.
The Fund's five largest equity investments in order of market value
are as follows: Samsung Electronics Co., Korea Mobile Telecom, Hyundai
Motor Services, Keum Kang Ltd. and Samsung Fire and Marine Insurance Co.
As a group, these holdings account for 36% of the equity portfolio.
All of these companies have been described in previous reports, so we have
selected five others to continue our practice of providing you with
descriptions of your Fund's holdings:
Korea Green Cross
Korea Green Cross is Korea's second largest drug manufacturer and has
the world's largest market share for hepatitis vaccines. It offers a wide
line of ethical products, especially vaccines. Prescription drugs account
for 80% of total sales. Sales grew as a result of steady overseas demand
for hepatitis vaccines and domestic sales of new products such as
anti-cancer and anti-viral agents. The company plans to introduce eight new
products, including a vaccine for chicken pox.
Sammi Steel
Sammi Steel is Korea's largest and the world's third largest specialty
steel maker. It commenced operations as Korea's first specialty steel maker
in 1969 and now controls about 41% of the production of domestic stainless
steel sheets and 36% of the production of specialty steel. The company has
the capacity to produce 1.5 million tons of 1,800 kinds of steel products
annually. Sales rose due to strong demand from the domestic automotive,
shipbuilding and machinery industries. In June 1989, Sammi Steel purchased
the special steel production and distribution division of Rio Algom, Atlas
Specialty Steels and Atlas Stainless Steels, and Al Tech Specialty Steel in
New York.
Shinwon
Shinwon is the largest exporter of sweaters in Korea. It is expanding
domestic sales by increasing retail outlets and brand promotion activities.
Shinwon has added to its product line and now sells sweaters, knitwear,
jackets, carpet and handbags. By setting up operations in low-cost
countries such as China, Shinwon has substantially improved its export
competitiveness. The Hong Kong subsidiary has taken over the ownership of
its Chinese and Indonesian plants. In the future, the company plans to set
up apparel plants in Russia and Southeast Asia, as well as a sweater plant
in South America.
Haitai Confectionery
Haitai Confectionery is Korea's oldest and second largest
confectionery company. It is the industry leader in a variety of
confectionery products such as biscuits, sweets, chocolates, ice creams and
chewing gum. The company introduced cavity preventing gum in the first half
of 1994. As the parent company of the Haitai group, it has eight affiliates
in industries ranging from food and beverage manufacturing to service,
retail and trading. Haitai Confectionery entered the European and U.S.
markets with the shipment of gum to the UK and a contract to export candy
for Sunkist.
Tongyang Nylon
Tongyang Nylon is Korea's largest manufacturer of nylon and tire
cords. The company has expanded into a wide range of businesses, including
electronics, synthetic resins, PET bottles and engineering plastics. It has
added production facilities for propylene and polypropylene, which have
commenced full commercial operations. Tong Yang Nylon is also planning
production of parts for airbags used in automobiles. It has started
construction of caprolactam and staple fiber plants in Anyang. The company
plans to sell its Taejon plant and transfer some Anyang production
facilities to Sri Lanka.
Stock Market, Economy and Politics
During the six-month period ended December 31, 1994, the Korea
composite Stock Price Index reached a historical high of 1138.75 on
November 8, 1994 but since then the market began to decline sharply
recording 1027.39 on December 31, 1994. Among the most significant causes
for the decline of stock prices were the government's tight monetary policy
to control inflation and investors' concerns over high interest rates.
The Bank of Korea announced that the Korean economy is estimated to
have grown 8.3% in 1994. This higher than expected growth was mainly from
strong industrial production activities, increased facilities investments
and strong exports as the world economy has improved. In 1994, exports and
facilities investments are estimated to have increased by around 17% and
20%, respectively. The level of inflation, as measured by the Consumer
Price Index, is around 5.7%.
Looking forward, the Korean economy is expected to grow approximately
7% to 7.5% in real terms in 1995. The major factors for this strong growth
will be increasing exports, government infrastructure spending and a pick
up in domestic consumer spending. Inflation will be around 6%. Inflationary
pressures center around rising consumer spending, increases in public
utility rates and the level of wage rate increases.
With the Korean economy growing faster than originally expected,
inflation became a major government concern. The strength of the Korean
economy with heavy facilities investments and large foreign capital inflow
has led to concerns of overheating and particularly high inflation. As a
result, fears of tighter liquidity by the government have driven the
interest rate on three-year corporate bonds (the benchmark Korean interest
rate) up by approximately 2% in 1994 and have negatively affected the stock
market. The interest rate on three-year corporate bonds was around 14.25%
on December 31, 1994.
While concerns over inflation and higher interest rates have been
recent negative factors, there are some major positives as well. These
include Korea's strong economic fundamentals: high GDP growth and strong
corporate earnings outlook. Furthermore, the introduction of the real name
system on real estate transactions on July 1, 1995, the expected increase
in the foreign ownership limitation of Korean shares and the favorable tax
treatment of Korean shares for securities transactions will make the stock
market more attractive relative to other forms of investment.
The average net profit of Korean listed manufacturing companies has
risen approximately 60-70% in 1994 and will rise by more than 25 to 30% in
1995. The reduced financing costs during the past two years and strong
demand from overseas markets for Korean products have helped Korean
companies achieve higher profits.
On December 1, 1994, the government increased the foreign ownership
limit by two percent to 12%, except for POSCO and KEPCO, for which the
limit remains 8%. It is expected that the limit will be increased to 15%
during 1995. As the market opens up further to foreign investors, more
overseas capital inflow is expected, adding to liquidity.
The successful implementation of the real name system for financial
transactions in 1993 has prompted the government to announce that the same
real name system will be implemented for real estate transactions, starting
July 1, 1995. The main purpose of the law is to discourage real estate
speculation and prevent property prices from rising out of control. The new
law bans the current practice of borrowing names for property registration,
thereby avoiding taxes. Before the law is implemented, many property
holdings are expected to be sold and the proceeds may flow into the stock
market.
The government's tax reform plan will be another positive factor for
the market. The government plans to impose a tax on individual aggregate
financial income exceeding 40 million won (approximately $50,000) beginning
in 1996. However, capital gains on stock investments will not be taxed
until after 1998. Since the imposition of a capital gains tax on stock
transactions will be deferred, a significant portion of assets invested in
other financial instruments is expected to flow into the stock market.
Developments on the political front also look favorable. Recently, the
United States and North Korea announced that they would lift restrictions
on the entry of merchant ships and commodities between the two countries.
This recent development clearly indicates that North Korea is ready to open
its economy to the West in order to improve domestic conditions. Economic
cooperation between North Korea and the outside world would facilitate
economic development of the North. It will also reduce the possibility of a
sudden collapse of the North Korean economy and hence the burden to South
Korea once re-unification takes place. In order to take advantage of this
new opportunity, many South Korean business leaders went to North Korea to
establish joint ventures in the special free trade economic zone of
Rajin-Sonbong, designated by the North Korean government for foreign
investments.
Our stock market outlook remains positive. Many Korean companies have
very attractive valuations because of strong future earnings expectations.
In addition, a significantly improved political and social environment will
also have a positive impact. Ongoing government reforms, industrial
structural adjustments, and accelerated financial liberalization will
improve investors' confidence and continue to provide substantial and
attractive investment opportunities.
Dividend Reinvestment Plan
The Korea Fund invests with a long-term view. Capital gains
distributions will vary from year to year, depending on investment
conditions and portfolio considerations.
The Fund's Dividend Reinvestment and Cash Purchase Plan offer you a
convenient way to have your dividends and capital gains distributions
reinvested in shares of the Fund. Your participation is automatic unless
you or the bank broker or other nominee holding shares beneficially owned
by you specifies otherwise. We believe this Plan is attractive for
shareholders. Its features are more fully described on page 29. Of
particular interest is the ability of Plan participants to reinvest their
dividends and capital gains distributions at up to 5% discount to the
Fund's share price on the New York Exchange (but not less than the net
asset value) when the Fund's shares are selling at a premium to net asset
value.
A Team Approach to Investing
The Korea Fund, Inc. is managed by a team of Scudder investment
professionals who each play an important role in the Portfolio's management
process. Team members work together to develop investment strategies and
select securities for the Portfolio. They are supported by Scudder's large
staff of economists, research analysts, traders, and other investment
specialists who work in our offices across the United States and abroad. We
believe Scudder's team approach benefits Korea Fund investors by bringing
together many disciplines and leveraging Scudder's extensive resources.
Lead Portfolio Manager John J. Lee has set Fund investment strategy
and overseen its daily operation since 1991. Mr. Lee joined Scudder's
global equity area in 1991. Nicholas Bratt, Portfolio Manager, has been a
member of the Portfolio team since 1984 and has over 20 years of experience
in worldwide investing. Mr. Bratt, who has been at Scudder since 1976, is
the head of Scudder's Global Equity Department.
Other Information
The Fund's NAV is published every Monday in The Wall Street Journal
under the heading "Closed End Funds." The Fund's NAV is also published in
The New York Times and Barron's.
As a service to overseas shareholders, the Fund's NAV is listed daily
in The Financial Times ("FT"). For your information the NAV of the Fund and
other Scudder managed closed-end funds can be found in the "FT Managed
Funds Service" section under the heading "other offshore funds" below the
Scudder, Stevens & Clark banner.
We are pleased that you have chosen to invest in The Korea Fund, Inc.
and we welcome any questions or comments you may have.
Respectfully,
/s/Nicholas Bratt /s/Juris Padegs
Nicholas Bratt Juris Padegs
President Chairman of the Board
<PAGE>
The Korea Fund, Inc.
Investment Summary as of December 31, 1994
- -----------------------------------------------------------------------------
Historical
Information
Life of Fund
<TABLE>
<CAPTION>
Total Return (%)
---------------------------------------------------------------
Market Value Net Asset Value(a) Index(b)
------------------- ------------------- -------------------
Average Average Average
Cumulative Annual Cumulative Annual Cumulative Annual
------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Current Quarter -12.87 -- -3.68 -- -2.20 --
Fiscal Year to Date 4.03 -- 11.32 -- 10.07 --
One Year -4.64 -4.64 24.84 24.84 18.61 18.61
Three Year 85.05 22.77 101.00 26.20 68.17 18.92
Five Year -16.15 -3.46 41.05 7.12 13.08 2.49
Ten Year 685.07 22.88 786.09 24.38 621.18 21.84
</TABLE>
- -----------------------------------------------------------------------------
Per Share Information and Returns (a)
Yearly periods ended December 31
A chart in the form of a bar graph appears here,
illustrating the Fund Total Return (%) and Index Total
Return (%) with the exact data points listed in the table
below.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
-------------------------------------------------------------------------------------
Net Asset Value (b). $ 4.46 $ 8.16 $11.28 $15.93 $18.55 $11.10 $10.55 $10.62 $16.64 $20.65
Income Dividends.... $ .18 $ .11 $ .29 $ .11 $ .08 $ -- $ .06 .04 .01 --
Capital Gain
Distributions....... $ -- $ .03 .68 1.74 1.88 2.20 .34 .20 -- .15
Total Return (%).... 22.69 85.05 44.48 55.97 22.79 -28.36 -2.05 2.71 56.77 24.84
</TABLE>
(a) Total investment return based on per share net asset value reflects the
effects of changes in net asset value on the performance of the Fund
during each period, and assumes dividends and capital gains distributions,
if any, were reinvested. These percentages are not an indication of the
performance of a shareholder's investment in the Fund based on market
value due to differences between the market price of the stock and the
net asset value of the Fund during each period.
(b) Net asset value per share through 1988 has been adjusted for a 200%
stock dividend paid in October 1988.
(c) Korea Stock Price ("KOSPI")
Past results are not necessarily indicative of future performance
of the Fund.
The Korea Fund, Inc.
Portfolio Summary as of December 31, 1994
- -----------------------------------------------------------------------------
Diversification
- -----------------------------------------------------------------------------
Common Stocks 90%
Convertible Bonds 7%
Preferred Stocks 3%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- -----------------------------------------------------------------------------
Sectors
- -----------------------------------------------------------------------------
Sector breakdown of the Fund's equity securities
Technology 17%
Financial 13%
Communications 12%
Durables 12%
Construction 9%
Manufacturing 8%
Consumer Staples 7%
Consumer Discretionary 6%
Health 4%
Other 12%
----
100%
====
A graph in the form of a pie chart appears here,
illustrating the exact data points in the above table.
- --------------------------------------------------------------------------
Ten Largest Equity Holdings
- --------------------------------------------------------------------------
1. Samsung Electronics Co., Ltd.
Major electronics company
2. Korea Mobile Telecom
Mobile telecommunication company
3. Hyundai Motor Services Co., Ltd.
Auto parts and services
4. Keum Kang Co., Ltd.
Construction company and manufacturer of building materials
5. Samsung Fire and Marine Insurance
Insurance company
6. Cheil Food and Chemical Co., Ltd.
Korea's largest sugar refiner and major integrated food processor
7. Korea Long Term Credit Bank
Major commercial bank
8. Hansol Paper Manufacturing Co., Ltd.
Paper manufacturer
9. Hankook Tire Manufacturing Co., Ltd.
Major tire manufacturer
10. Yuhan Corporation
Pharmaceutical corporation
<PAGE>
The Korea Fund, Inc.
Investment Performance
(MOUNTAIN CHART TITLE) KOREA FUND INVESTMENT PERFORMANCE
History (in terms of N.Y.S.E. Value) of a $10,000 Investment in Fund Shares
Assuming Reinvestment of Capital Gains and Income Distributions Through the
Fund's Dividend Reinvestment Plan vs. the S&P 500*
<TABLE>
<CAPTION>
(CHART DATA)
CAPITAL GAINS SHARE VALUE OF
TOTAL SHARE DISTRIBUTION INITIAL S&P TOTAL
VALUE REINVESTED INVESTMENT RETURN
<C> <C> <C> <C>
$10000 $10000 $10000 $10000
11983 11983 11983 9972
11875 11875 11875 10159
11458 11458 11458 11095
12292 12292 12292 11906
11787 11250 11250 11422
15393 14692 14692 13395
20632 19692 19692 15286
29440 27817 27817 16186
32537 30709 30625 15054
30103 28411 28333 15905
56221 53061 52917 19304
62087 58597 58438 20265
67523 63039 62396 21689
51016 47628 45938 16801
73921 69011 66563 17755
65476 61127 58958 18925
59075 54750 50000 18993
80516 74621 65625 19608
108121 100205 88125 21000
97003 89900 79063 22837
133542 123540 105000 25283
109297 101112 85938 25801
73983 68442 57188 25017
71567 66198 55313 26571
44506 41173 30625 22930
48402 44777 31250 24976
56630 52389 36563 28611
54694 50598 35313 28520
57251 52736 36250 30052
50380 46407 31563 32576
47388 43651 29688 31761
46392 41813 28438 32345
49876 45787 30625 33368
57001 52328 35000 35054
52421 48123 32188 36585
61073 56068 37500 36763
59037 54197 36250 37711
97766 89706 60000 38587
78417 71952 48125 37122
89619 82230 55000 37277
107003 98181 65313 39097
93227 85541 56875 39091
(Data plotted quarterly from 8/84 to 12/31/94.)
</TABLE>
(MOUNTAIN CHART TITLE) KOREA FUND INVESTMENT PERFORMANCE
History (in terms of Net Asset Value) of a $10,000 Investment in Fund
Shares Assuming Reinvestment of Capital Gains and Income Distributions
Through the Fund's Dividend Reinvestment Plan*
(CHART DATA)
<TABLE>
<CAPTION>
CAPITAL GAINS
TOTAL NET DISTRIBUTIONS NET ASSET VALUE OF
ASSET VALUE REINVESTED INITIAL INVESTMENT
<C> <C> <C>
10000 10000 10000
10072 10072 10072
10268 10269 10268
10197 10197 10197
10287 10287 10287
10083 9624 9624
12598 12025 12025
16796 16030 16030
21224 20054 20054
23020 21726 21667
23315 22004 21944
31873 30082 30000
31788 30001 29918
31515 29422 29122
33685 31447 30332
38620 36055 34776
41695 38926 37545
40580 37609 34346
52539 46693 42823
62236 57679 50726
55541 51474 45269
65403 60505 51425
64510 59679 49866
60372 55851 46667
50252 46489 38844
42972 39754 29570
46216 42755 29839
45050 41676 29086
42750 39558 27608
45385 41806 28737
45269 41699 28360
54322 50039 34032
46127 42489 28898
42982 39467 26398
46494 42683 28549
46844 43004 28764
49908 45818 30645
50128 46018 30780
72886 66877 44731
74814 68646 46914
81734 74896 50162
94467 86679 57662
90990 83489 55511
(Data plotted quarterly from 8/84 to 12/31/94.)
<FN>
The data set forth above should not be construed as an indication of the
record of a shareholder's investment in the Fund based on market prices;
nor should it be construed as a representation of the future performance of
the Fund's net asset value.
* The Korea Fund, Inc. performance charts make the following key
assumptions:
1. The data have been adjusted to reflect a stock dividend paid in
October 1988.
2. Investment income reinvested at the greater of the following on
the valuation date:
(a) Net asset value per share or
(b) 95% of the mean market price per share.
3. No adjustments have been made for U.S. income taxes. Korean taxes
are reflected.
4. Initial $10,000 investment was made at initial public offering
price and at initial net asset value price.
The Standard & Poor's 500 Stock Index is a widely followed, unmanaged index
of 500 industrial, transportation, utility and financial companies widely
regarded as representative of the equity market in general.
</FN>
</TABLE>
<PAGE>
[LOGO]The Korea Fund, Inc.
Investment Portfolio as of December 31, 1994
================================================================================
<TABLE>
<CAPTION>
Principal Market
Amount (e) Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMERCIAL PAPER 0.2% 1,451,000 CIT Group Holdings Inc., 1/3/95 (Cost $1,450,512) . . . . . . 1,450,512
-------------
- -----------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS 6.8%
CONSUMER DISCRETIONARY 0.9%
Apparel & Shoes 2,000,000,000 Shinwon, 6%, 12/31/96 (Major apparel manufacturer) (c) . . . 5,461,626
-------------
CONSUMER STAPLES 0.8%
Food & Beverage 0.7% 800,000,000 Crown Confectionery Co., 3%, 12/31/97
(Major producer of snacks) (c) . . . . . . . . . . . . . 1,417,530
2,000,000,000 Haitai Confectionery Co., 1%, 6/30/98 (Major producer
of snacks) (c) . . . . . . . . . . . . . . . . . . . . 2,643,055
-------------
4,060,585
-------------
Textiles 0.1% US$ 2,000,000 Kolon Industries, Inc., 0.25%, 12/31/04 (Leading
manufacturer of nylon, polyester yarn and fabrics) . . . 890,000
-------------
HEALTH 1.3%
Pharmaceuticals 1.3% 3,000,000,000 Korean Green Cross Corp., 1%, 12/31/97
(Pharmaceutical company) (c) . . . . . . . . . . . . . 4,569,081
2,400,000,000 Kukje Corp. #40, 12%, 12/31/97 (Pharmaceutical
company) (c) . . . . . . . . . . . . . . . . . . . . . . 2,541,216
400,000,000 Yuhan Corporation, 5.5%, 12/31/97
(Pharmaceutical company) (c) . . . . . . . . . . . . . . 532,395
-------------
7,642,692
-------------
DURABLES 0.4%
Tires 2,000,000,000 Kumho Co., 4%, 12/31/97 (Korea's largest tire
manufacturer) (c) . . . . . . . . . . . . . . . . . . . 2,317,361
------------
MANUFACTURING 1.8%
Containers & Paper 4,000,000,000 Hansol Paper Manufacturing Co., Ltd., 3%, 12/31/99
(Paper manufacturer) (c) . . . . . . . . . . . . . . . . 4,584,681
2,500,000,000 Hansol Paper Manufacturing Co., Ltd., 1%, 12/31/99 (c) . . . 2,865,426
1,000,000,000 Sepong, 7%, 12/31/96 (Paper manufacturer) (c) . . . . . . . . 3,783,756
------------
11,233,863
TECHNOLOGY 0.2% ------------
Electronic Components/
Distributors 500,000,000 Anam Electronics, 5.5%, 12/31/96 (Major consumer
electronics company) (c) . . . . . . . . . . . . . . . . 668,412
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
[LOGO] The Korea Fund, Inc.
Investment Portfolio (continued)
================================================================================
<TABLE>
<CAPTION>
Principal Market
Amount (e) Value ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
250,000,000 Anam Electronics, 6%, 12/31/96 (c) . . . . . . . 210,409
CHF 500,000 Samsung Electromechanics Co., Ltd., 0.25%,
12/31/00 (Major electronics parts company) . . 270,992
----------
1,149,813
----------
ENERGY 0.8%
Oil & Gas Production 3,000,000,000 Yukong, Ltd., 1%, 12/31/98 (Korea's largest
oil refiner) (c) . . . . . . . . . . . . . . . 3,839,016
2,000,000,000 Yukong, Ltd., 2%, 12/31/97 (c) . . . . . . . . . 1,016,720
----------
4,855,736
----------
METALS AND MINERALS 0.3%
Steel & Metals 1,000,000,000 Kangwon Industry, 6%, 6/30/97
(Steel company) (c). . . . . . . . . . . . . . 724,120
500,000,000 Sammi Steel, 4%, 12/31/97 (Specialty
steel company) (c) . . . . . . . . . . . . . . 963,614
----------
1,687,734
----------
CONSTRUCTION 0.3%
Miscellaneous 1,000,000,000 Sungwon Construction, 5%, 12/31/97
(Construction company) (c) . . . . . . . . . . 1,747,057
----------
TOTAL CONVERTIBLE BONDS (Cost $38,948,910) . . . 41,046,467
----------
- -----------------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS 2.7% Shares
------
CONSUMER STAPLES 0.3%
Alcohol & Tobacco 1,110 Oriental Brewery Co., Ltd. (Korea's
largest brewery) . . . . . . . . . . . . . . . 14,339
----------
Food & Beverage 38,690 Cheil Food and Chemical Co., Ltd.
(Korea's largest sugar refiner
and major integrated food processor) . . . . . 1,161,288
52,280 Haitai Confectionery Co. . . . . . . . . . . . . 536,307
----------
1,697,595
----------
FINANCIAL 0.7%
Insurance 0.2% 6,175 Samsung Fire and Marine Insurance (Insurance
company) (d) . . . . . . . . . . . . . . . . . 998,511
----------
Other Financial
Companies 0.5% 100,000 Boo Kook Securities (Securities company) . . . . . 1,342,452
100,000 Boram Securities (Securities company). . . . . . . 1,228,470
50,000 Dongsuh Securities (Securities company). . . . . . 633,232
3,200 Lucky Securities (Securities company). . . . . . . 53,090
----------
3,257,244
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
Market
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DURABLES 1.1%
Automobiles 96,779 Hyundai Motor Services Co., Ltd. (Auto parts and
services) . . . . . . . . . . . . . . . . . . . 2,978,381
9,677 Hyundai Motor Services Co., Ltd. (New) (b) . . . . . 297,810
388,000 Kumho Co. . . . . . . . . . . . . . . . . . . . . . 3,194,022
-----------
6,470,213
-----------
MANUFACTURING 0.0%
Chemicals 19,375 Oriental Chemical Industries Co., Ltd. (Manufacturer
of specialty chemicals) . . . . . . . . . . . . 368,066
-----------
TECHNOLOGY 0.5%
Electronic Components/
Distributors 8,198 Samsung Electron Devices (Korea's largest
manufacturer of CRT and picture tubes) . . . . 358,195
30,920 Samsung Electronics Co., Ltd. (Major electronics
company) (d) . . . . . . . . . . . . . . . . . 2,543,930
-----------
2,902,125
-----------
ENERGY 0.0%
Oil Companies 1,174 Ssangyong Oil Refining Co.
(Major oil refiner) . . . . . . . . . . . . . . 35,089
-----------
CONSTRUCTION 0.1%
Homebuilding 45,540 Kumho Construction and Engineering (Engineering
and construction company) . . . . . . . . . . . 392,188
-----------
TOTAL PREFERRED STOCKS (Cost $16,756,797). . . . . . 16,135,370
-----------
- ----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 90.3%
CONSUMER DISCRETIONARY 5.2%
Apparel & Shoes 0.8% 93,345 Ssang Bang Wool Co. (Leading underwear
manufacturer) . . . . . . . . . . . . . . . . . 4,716,902
Department & -----------
Chain Stores 4.4% 165,730 Hwa Sung Industries (Department store) . . . . . . . 10,494,554
114,577 Shinsegae (Major department store chain) . . . . . . 11,826,273
110,343 Taegu Department Store (Department store). . . . . . 4,388,007
-----------
26,708,834
-----------
CONSUMER STAPLES 6.2%
Alcohol & Tobacco 0.5% 114,991 Oriental Brewery Co., Ltd. 2,898,076
-----------
Food & Beverage 4.7% 282,098 Cheil Food and Chemical Co., Ltd. . . . . . . . . . 18,685,063
9,000 Haitai Confectionery Co. . . . . . . . . . . . . . . 182,371
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
[LOGO]The Korea Fund, Inc.
Investment Portfolio (continued)
================================================================================
<TABLE>
<CAPTION>
Market
Shares Value ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
25,000 Lotte Chilsung Beverage Co. (Korea's largest
producer of non-alcoholic beverages) . . . . . . . . 4,527,609
32,271 Nhong Shim Co. (Manufacturer of instant noodles
and snacks) . . . . . . . . . . . . . . . . . . . . 1,438,626
70,531 Tongyang Confectionery (Major producer of snacks) 2,974,522
16,927 Tongyang Confectionery (New) (b) . . . . . . . . . . . . . 718,154
------------
28,526,345
------------
Textiles 1.0% 70,000 Cheil Industries (Korea's largest woolen yarn and
fabric manufacturer) . . . . . . . . . . . . . . . . 2,189,716
9,739 Cheil Industries (New) (b) . . . . . . . . . . . . . . . . 303,419
30,000 Sam Yang Co., Ltd. (Korea's largest manufacturer of
polyester staple fiber) . . . . . . . . . . . . . . 1,253,799
3,040 Taekwang Industrial Co., Ltd. (Major producer of
acrylic fiber) . . . . . . . . . . . . . . . . . . . 1,828,774
16,500 Tongyang Nylon (Korea's largest producer of nylon
filament yarn) . . . . . . . . . . . . . . . . . . . 585,106
------------
6,160,814
------------
HEALTH 3.0%
Pharmaceuticals 69,173 Chong Kun Dang Co., Ltd. (Pharmaceutical company). . . . . 3,898,428
20,000 Daewoong Pharmaceutical Co. (Pharmaceutical
company) . . . . . . . . . . . . . . . . . . . . . . 1,415,907
137,548 Yuhan Corporation . . . . . . . . . . . . . . . . . . . . 12,716,570
-------------
18,030,905
-------------
COMMUNICATIONS 11.9%
Cellular Telephone 100,702 Korea Mobile Telecom (Mobile telecommunication
company) (d) . . . . . . . . . . . . . . . . . . . . 71,776,957
-------------
FINANCIAL 12.4%
Banks 5.6% 140,180 Cheju Bank (Regional bank) 2,378,941
99,848 Cheju Bank (New) (b)(c) . . . . . . . . . . . . . . . . . 1,694,482
200,000 Hanil Bank (Major commercial bank) . . . . . . . . . . . 2,608,916
42,929 Hanil Bank (New) (b) . . . . . . . . . . . . . . . . . . 538,244
60,000 Korea Exchange Bank (Major commercial bank) . . . . . . . 813,070
36,000 Korea First Bank (Major commercial bank) . . . . . . . . 501,520
524,725 Korea Long Term Credit Bank (Major commercial bank) 16,281,361
112,696 Korea Long Term Credit Bank (New) (b) . . . . . . . . . . 3,411,138
242,000 Shin Han Bank (Major commercial bank) . . . . . . . . . . 5,976,444
-------------
34,204,116
-------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Market
Shares Value ($)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Insurance 4.9% 63,380 Daehan Fire and Marine Insurance (Insurance
company) . . . . . . . . . . . . . . . . . . . 2,030,793
21,996 Daehan Fire and Marine Insurance (New) (b)(c) . . . 704,786
68,000 Hyundai Fire and Marine Insurance (Insurance
company) . . . . . . . . . . . . . . . . . . 3,522,290
26,656 Hyundai Fire and Marine Insurance (New) (b)(c) . . 1,380,738
49,912 Lucky Insurance (Insurance company). . . . . . . . 2,654,894
67,867 Samsung Fire and Marine Insurance (d). . . . . . . 19,081,147
-----------
29,374,648
-----------
Other Financial
Companies 1.9% 2,000 Boo Kook Securities . . . . . . . . . . . . . . . 39,007
14,834 Boo Kook Securities (New) (b)(c) . . . . . . . . . 289,316
188,752 Dong Ah Securities (Securities company). . . . . . 3,179,333
120,000 Hanyang Securities (Securities company). . . . . . 1,854,103
17,191 Hanyang Securities (New) (b)(c). . . . . . . . . . 265,616
40,800 Hyundai Securities (Securities company). . . . . . 1,085,106
8,510 Samsung Securities (Securities company). . . . . . 366,439
40,000 Shinyoung Securities (Securities company). . . . . 1,200,608
123,600 Ssangyong Investments and Securities (Securities
company) . . . . . . . . . . . . . . . . . . 3,240,274
12,373 Ssangyong Investments and Securities (New) (b) . . 296,162
-----------
11,815,964
-----------
SERVICE INDUSTRIES 2.3%
Miscellaneous Commercial
Services 227,863 Samsung Co., Ltd. (Trading company) . . . . . . . 9,032,563
22,179 Samsung Co., Ltd. (New) (b). . . . . . . . . . . . 862,329
153,000 Sunkyong Ltd. (Trading company). . . . . . . . . . 3,875,380
-----------
13,770,272
-----------
DURABLES 10.3%
Automobiles 9.7% 169,216 Hankook Tire Manufacturer Co., Ltd. (Major tire
manufacturer) . . . . . . . . . . . . . . . . . 16,180,101
116,209 Hyundai Motor Co., Ltd. (Korea's largest auto
manufacturer) . . . . . . . . . . . . . . . . 5,931,133
332,545 Hyundai Motor Services Co., Ltd. . . . . . . . . . 16,762,020
91,228 Hyundai Motor Services Co., Ltd. (New) (b)(c). . . 4,598,372
113,341 Mando Machinery Co. (Major auto parts
manufacturer). . . . . . . . . . . . . . . . . 7,535,971
35,000 Samlip Industries (Auto parts manufacturer). . . . 1,945,922
90,000 Yoosung Enterprise (Leading manufacturer of
engine parts) . . . . . . . . . . . . . . . . 5,596,505
-----------
58,550,024
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
[LOGO] The Korea Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
==================================================================================================================================
Market
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Leasing Companies 0.6% 93,000 Korea Development Leasing Co. (Largest leasing
company in Korea) . . . . . . . . . . . . . . . 4,004,559
-----------
MANUFACTURING 6.5%
Chemicals 2.1% 37,540 Korea Chemical Co. (Paint company) . . . . . . . . 4,659,220
217,056 Lucky, Ltd. (Korea's largest integrated chemical
company) . . . . . . . . . . . . . . . . . . . 6,322,553
12,797 Lucky, Ltd. (New) (b) . . . . . . . . . . . . . . 363,035
44,322 Oriental Chemical Industries Co., Ltd. . . . . . . 1,599,768
3,078 Oriental Chemical Industries Co., Ltd. (New) (b) . 109,149
-----------
13,053,725
-----------
Containers & Paper 1.9% 177,438 Hansol Paper Manufacturing Co., Ltd. . . . . . . 9,550,551
33,274 Hansol Paper Manufacturing Co., Ltd. (New) (b) . . 1,744,504
-----------
11,295,055
-----------
Diversified
Manufacturing 1.7% 22,579 Hyundai Precision Industry Co. (Leading transport
container manufacturer
and machinery producer) . . . . . . . . . . 689,151
194,890 Samsung Heavy Industries Co., Ltd. (Machinery
manufacturer) . . . . . . . . . . . . . . . 8,095,735
35,349 Samsung Heavy Industries Co., Ltd. (New) (b). . 1,432,584
-----------
10,217,470
-----------
Electrical Products 0.8% 77,000 Kyungwon Century Co., Ltd. (Major manufacturer
of heating and cooling equipment). . . . . . 3,257,092
37,086 Kyungwon Century Co., Ltd. (New) (b). . . . . . 1,362,074
-----------
4,619,166
-----------
Miscellaneous 0.0% 1,030 Goldstar Industrial Systems Co. (New) (b) . . . 43,699
-----------
TECHNOLOGY 16.4%
Electronic Components/
Distributors 15.9% 109,643 Goldstar Co. (GDR) (Major electronics
manufacturer) . . . . . . . . . . . . . . . 1,672,056
149,751 Samsung Electromechanics Co., Ltd. . . . . . . . 7,491,343
65,346 Samsung Electromechanics Co., Ltd. (New) (b)(c) . 3,268,955
17,322 Samsung Electromechanics Co., Ltd. (New) (b). . . 844,601
78,471 Samsung Electron Devices. . . . . . . . . . . . . 6,260,984
9,896 Samsung Electron Devices Co., Ltd. (New) (b) . . 751,976
491,655 Samsung Electronics Co., Ltd. (d) . . . . . . . 72,621,229
21,652 Samsung Electronics Co., Ltd. (New) (b)(d) . . . 3,154,156
-----------
96,065,300
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
<TABLE>
<CAPTION>
============================================================================================================================
Market
Shares Value ($)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Electronic Data
Processing 0.3% 50,000 Trigem Computer Inc. (Major personal computer
manufacturer) . . . . . . . . . . . . . . . . . . . . 1,899,696
-----------
Miscellaneous 0.2% 19,840 Youngchang Akki Co., Ltd. (Korea's largest and
the world's second largest manufacturer of pianos) . . 1,206,079
-----------
ENERGY 2.3%
Oil & Gas Production 24,940 Samchully (Producer and distributor of
anthracite and gas) . . . . . . . . . . . . . . . . . 1,936,198
131,757 Ssangyong Oil Refining Co. . . . . . . . . . . . . . . . . 4,522,055
151,389 Yukong, Ltd. . . . . . . . . . . . . . . . . . . . . . . . 7,017,271
9,110 Yukong, Ltd. (New) (b) . . . . . . . . . . . . . . . . . 415,350
-----------
13,890,874
-----------
METALS AND MINERALS 3.3%
Steel & Metals 32,000 Dongkuk Steel Mill Co. (Steel company) . . . . . . . . . . 952,381
22,940 Dongkuk Steel Mill Co. (New) (b) . . . . . . . . . . . . . 656,591
54,732 Hankook Core Co. (Steel company) . . . . . . . . . . . . 1,524,954
165,000 Inchon Iron & Steel (Steel company). . . . . . . . . . . . 7,209,347
249,440 Kia Steel Co, Ltd. (Specialty steel company) . . . . . . . 3,348,612
61,000 Pohang Iron & Steel Co. (Korea's largest steel
producer) (d) . . . . . . . . . . . . . . . . . . . . 6,200,585
-----------
19,892,470
-----------
CONSTRUCTION 8.5%
Building Materials 6.1% 24,000 Hanil Cement Manufacturer (Cement manufacturing
company) . . . . . . . . . . . . . . . . . . . . . . . 1,793,313
244,337 Keum Kang Co., Ltd. (Construction company and
manufacturer of building materials) . . . . . . . . . 21,970,526
58,010 Keum Kang Co., Ltd. (New) (b) . . . . . . . . . . . . . . 1,395,884
197,307 Ssangyong Cement Industrial Co., Ltd. (Major
cement company) . . . . . . . . . . . . . . . . . . . 7,546,443
63,000 Sung Shin Cement Co., Ltd. (Major cement company). . . . . 2,872,340
34,000 Tong Yang Cement Co., Ltd. (Major cement company). . . . . 1,248,734
200 Tong Yang Cement Co., Ltd. Warrants (expire 8/18/96) (f) . 145,000
-----------
36,972,240
-----------
Miscellaneous 2.4% 91,913 Daeho Construction (Construction company) . . . . . . . . 3,724,944
121,660 Han Shin Construction (Construction company) . . . . . . . 1,648,635
16,850 Han Shin Construction (New) (b) . . . . . . . . . . . . . 230,471
103,435 Kumho Construction and Engineering . . . . . . . . . . . 1,716,057
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
[LOGO] The Korea Fund, Inc.
Investment Portfolio (continued)
<TABLE>
<CAPTION>
==============================================================================================================================
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
5,958 Lucky Development (New) (b) . . . . . . . . . . . 141,857
21,388 Samsung Construction Co. (Engineering and
construction company) . . . . . . . . . . . 820,740
8,228 Samsung Construction Co. (New) (b) . . . . . . . 299,067
132,450 Sungwon Construction . . . . . . . . . . . . . . 5,720,042
-----------
14,301,813
-----------
TRANSPORTATION 0.8%
Airlines 0.3% 51,827 Korean Airlines Co., Ltd. (Airline) . . . . . . . 1,647,489
6,565 Korean Airlines Co., Ltd. (New) (b) . . . . . . . 199,544
-----------
1,847,033
-----------
Marine Transportation 0.4% 80,000 Korea Line Corp. (New) (Maritime transportation
company) (b) . . . . . . . . . . . . . . . . . 2,360,689
-----------
Trucking 0.1% 13,670 Korea Express Co., Ltd. (General freight transport
company) . . . . . . . . . . . . . . . . . . . 657,877
3,555 Korea Express Co., Ltd. (New) (b) . . . . . . . . 167,035
-----------
824,912
-----------
UTILITIES 1.2%
Electric Utilities 0.8% 130,900 Korea Electric Power Co. (Electric Utility) . . . 4,509,220
-----------
Natural Gas Distribution 0.4% 37,600 Daesung Industrial (Natural gas distributor). . . 2,523,810
-----------
TOTAL COMMON STOCKS (Cost $231,010,062) . . . . . 546,061,667
-----------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO -- 100.0%
(Cost $288,166,281) (a) . . . . . . . . . . . 604,694,016
===========
<FN>
(a) The cost for federal income tax purposes was $288,166,281. At December 31,
1994, net unrealized appreciation for all securities based on tax cost was
$316,527,735. This consisted of aggregated gross unrealized appreciation
for all securities in which there was an excess of market value over tax
cost of $335,318,466 and aggregate gross unrelized depreciation for all
securities in which there was an excess of tax cost over market value
of $18,790,731.
(b) New shares issued during 1994, eligible for a pro rata share of
1994 dividends (Note A).
(c) Securities valued in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at December 31, 1994 was
$44,526,040 (Note A).
(d) Equity securities that have met the foreign-ownership limitation valued at
a premium in good faith by the Valuation Committee of the Board of
Directors. The cost of these securities at December 31, 1994 was
$20,962,878 (Note A).
(e) Principal amount stated in Korean won unless otherwise noted. CHF Swiss
Francs.
(f) Non-income producing
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
[LOGO] The Korea Fund, Inc.
Financial Statements
================================================================================
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1994
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $288,166,281) (Note A) . . . . . . . $ 604,694,016
Cash:
U.S. dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582
Won at market (identified cost $9,695,806) (Note A) . . . . . . . . . . . 9,734,575
Dividend and interest receivable . . . . . . . . . . . . . . . . . . . . . . 1,248,654
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,747
-------------
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 615,681,574
LIABILITIES
Payables:
Subscription rights purchased (Note A) . . . . . . . . . . . . . . . . . . $ 4,331,159
Dividend payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,404
Accrued management fee (Note C) . . . . . . . . . . . . . . . . . . . . . 507,852
Other accrued expenses (Note C) . . . . . . . . . . . . . . . . . . . . . 554,360
-----------
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,688,775
-------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . . . . $ 609,992,799
=============
NET ASSETS
Net assets consist of:
Accumulated net investment loss . . . . . . . . . . . . . . . . . . . . . $ (3,082,635)
Accumulated net realized gain . . . . . . . . . . . . . . . . . . . . . . 5,059,579
Net unrealized appreciation on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 316,527,735
Won . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38,769
Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 3,122
Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 295,404
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . 291,150,825
-------------
Net assets, at market value . . . . . . . . . . . . . . . . . . . . . . . . . $ 609,992,799
=============
NET ASSET VALUE per share ($609,992,799 -:- 29,540,356 shares of common stock
issued and outstanding, 50,000,000 shares authorized, $.01 par value) . . $20.65
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
[LOGO] The Korea Fund, Inc.
Financial Statements (continued)
================================================================================
<TABLE>
- -------------------------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
SIX MONTHS ENDED DECEMBER 31, 1994
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of withholding taxes of $7,004) (Note A) . . . . . . . . $ 52,086
Interest (net of withholding taxes of $84,808) (Note A) . . . . . . . . 970,644
-----------
1,022,730
Expenses:
Management fee (Note C) . . . . . . . . . . . . . . . . . . . . . . . . $ 3,196,290
Directors' fees and expenses (Note C) . . . . . . . . . . . . . . . . . 82,451
Custodian fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 587,538
Legal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67,168
Services to shareholders . . . . . . . . . . . . . . . . . . . . . . . 29,312
Reports to shareholders . . . . . . . . . . . . . . . . . . . . . . . . 57,136
Auditing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,925
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,545 4,105,365
----------- -----------
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . . . . . (3,082,635)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain during the period on:
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,413,557
Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 117,992 5,531,549
Net unrealized appreciation during the period on: -----------
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60,234,906
Won . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,042
Won related transactions . . . . . . . . . . . . . . . . . . . . . . . 2,574 60,246,522
----------- -----------
Net gain on investment transactions. . . . . . . . . . . . . . . . . . . . 65,778,071
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS . . . . . . . . . . . . $ 62,695,436
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
- --------------------------------------------------------------------------------
<PAGE>
================================================================================
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
SIX MONTHS YEAR
ENDED ENDED
DECEMBER 31, JUNE 30,
INCREASE (DECREASE) IN NET ASSETS 1994 1994
- ---------------------------------------------------------------------------------------------------------------------------
Operations:
Net investment loss . . . . . . . . . . . . . . . . . . . . . . . $ (3,082,635) $ (749,702)
Net realized gain from investment transactions . . . . . . . . . . 5,531,549 5,972,730
Net unrealized appreciation on investment transactions
during the period . . . . . . . . . . . . . . . . . . . . . . . 60,246,522 179,703,180
-------------- -------------
Net increase in net assets resulting from operations . . . . . . . . 62,695,436 184,926,208
-------------- -------------
Distributions to shareholders from:
Net investment income ($.01 per share) . . . . . . . . . . . . . . -- (325,166)
-------------- -------------
Net realized gains from investment transactions
($.15 per share) . . . . . . . . . . . . . . . . . . . . . . . (4,359,655) --
-------------- -------------
Fund share transactions:
Net proceeds of shares issued in connection with the Fund's
fourth tranche offering, net of underwriting commissions
of $5,750,000 and expenditures and offering costs of $1,618,000 -- 107,631,989
-------------- -------------
Reinvestment of distributions . . . . . . . . . . . . . . . . . . 1,718,388 106,509
-------------- -------------
INCREASE IN NET ASSETS . . . . . . . . . . . . . . . . . . . . . . . 60,054,169 292,339,540
Net assets at beginning of period . . . . . . . . . . . . . . . . . . 549,938,630 257,599,090
-------------- -------------
NET ASSETS AT END OF PERIOD (including accumulated net investment
loss of ($3,082,635) at December 31, 1994) . . . . . . . . . . . . $ 609,992,799 $ 549,938,630
============== =============
OTHER INFORMATION
INCREASE IN FUND SHARES
Shares outstanding at beginning of period . . . . . . . . . . . . . . 29,474,985 22,604,432
Shares issued in connection with the Fund's fourth
tranche offering . . . . . . . . . . . . . . . . . . . . . . . -- 6,865,671
Shares issued to shareholders in reinvestment of distributions . . 65,371 4,882
-------------- -------------
Shares outstanding at end of period . . . . . . . . . . . . . . . . . 29,540,356 29,474,985
============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
- ------------------------------------------------------------------------
<PAGE>
[LOGO] The Korea Fund, Inc.
Financial Highlights
================================================================================
- --------------------------------------------------------------------------------
THE FOLLOWING TABLE INCLUDES SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT
EACH PERIOD AND OTHER PERFORMANCE INFORMATION DERIVED FROM THE FINANCIAL
STATEMENTS AND MARKET PRICE DATA.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months
Ended Years Ended June 30,
December 31, ------------------------------------------------------
1994 1994 1993 1992 1991 1990
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period . $18.66 $11.40 $10.75 $10.27 $14.45 $16.84
----- ----- ----- ----- ----- -----
Income from investment operations (a):
Net investment income (loss) . . . . . (.10) (.03) .02 .08 .09 .04
Net realized and unrealized gain (loss) on
investment transactions . . . . . . 2.24 7.13 .86 .78 (2.13) (1.99)
----- ----- ----- ----- ----- -----
Total from investment operations . . . 2.14 7.10 .88 .86 (2.04) (1.95)
----- ----- ----- ----- ----- -----
Less distributions from:
Net investment income . . . . . . . . -- (.01) (.04) (.06) -- (.08)
Net realized gains on investment
transactions . . . . . . . . . . . . (.15) -- (.20) (.34) (2.20) (1.88)
----- ----- ----- ----- ----- -----
Total distributions . . . . . . . . . . (.15) (.01) (.24) (.40) (2.20) (1.96)
----- ----- ----- ----- ----- -----
Antidilution resulting from offering of fourth
tranche (1994), third tranche (1990), and
reinvestment of distributions for shares at
market value . . . . . . . . . . . . . -- .22 .01 .02 .06 1.55
----- ----- ----- ----- ----- -----
Underwriting expenditures and offering
costs . . . . . . . . . . . . . . . . -- (.05) -- -- -- (.03)
----- ----- ----- ----- ----- -----
Net asset value, end of period . . . . $20.65 $18.66 $11.40 $10.75 $10.27 $14.45
===== ===== ===== ===== ===== =====
Market value, end of period . . . . . . $22.75 $22.00 $15.00 $11.38 $14.13 $22.13
===== ===== ===== ===== ===== =====
TOTAL RETURN
Per share market value (%) . . . . . . 4.03** 46.74 34.54 (17.01) (23.57) (26.23)
Per share net asset value (%) (b) . . . 11.32** 63.77 8.20 7.87 (14.91) (9.52)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions) . 610 550 258 241 228 303
Ratio of operating expenses to average
net assets (%) . . . . . . . . . . . . 1.31* 1.37 1.52 1.52 1.47 1.44
Ratio of net investment income (loss) to
average net assets (%) (c) . . . . . . (.50)** (.18) .15 .70 .83 .21
Portfolio turnover rate (%) . . . . . . 11.0* 14.3 14.3 18.2 19.2 17.9
<FN>
* Annualized ** Not annualized
(a) Based on monthly average of shares outstanding during each period.
(b) Total return based on per share net asset value reflects the effects of
changes in net asset value on the performance of the Fund during each
period, and assumes dividends and capital gains distributions, if any, were
reinvested. These percentages are not an indication of the performance of a
shareholder's investment in the Fund based on market value due to
differences between the market price of the stock and the net asset value of
the Fund during each period.
(c) The ratio for the six months ended December 31, 1994 has not been
annualized since the Fund believes it would not be appropriate because the
Fund's dividend income is not earned ratably throughout the fiscal year
(Note A).
</TABLE>
- --------------------------------------------------------------------------------
<PAGE>
[LOGO] The Korea Fund, Inc.
Notes to Financial Statements
================================================================================
A. SIGNIFICANT ACCOUNTING POLICIES
-------------------------------
The Korea Fund, Inc. (the "Fund") is registered under the Investment Company
Act of 1940, as amended, as a non-diversified, closed-end management investment
company. The policies described below are followed consistently by the Fund in
the preparation of its financial statements in conformity with generally
accepted accounting principles.
SECURITY VALUATION. Portfolio securities which are traded on the Korean, U.S.,
or foreign stock exchanges are valued at the most recent sale price reported on
the exchange on which the security is traded most extensively. If no sale
occurred, the security is then valued at the calculated mean between the most
recent bid and asked quotations. If there are no such bid and asked quotations,
the most recent bid quotation is used.
Short-term investments having a maturity of sixty days or less are valued at
amortized cost.
All other securities are valued at fair value as determined in good faith by
the Valuation Committee of the Board of Directors including certain investments
in Korean equity securities that have met the limit for aggregate foreign
ownership and for which premiums to the local stock exchange prices are offered
by prospective foreign investors. The aggregate premium ($26,656,775) over the
local share price ($149,719,740) for these securities valued by the Valuation
Committee was approximately 4.4% of the Fund's net assets at December 31, 1994.
Securities valued in good faith by the Valuation Committee amounted to
$52,087,740 or 8.5% of the Fund's net assets at December 31, 1994.
DIVIDEND INCOME. Korean-based corporations have generally adopted calendar
year-ends, and their corporate actions are normally approved by their Boards of
Directors and shareholders in the first quarter of each calendar year.
Accordingly, dividend income from Korean equity investments is earned and
received by the Fund primarily in the first calendar quarter of each year. As a
result, the Fund, which has a June 30 year end, receives substantially less
dividend income in the first half of its year than in the second half of such
year.
INCOME TAXES. The Fund's policy is to comply with the requirements of the
Internal Revenue Code which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. The Fund,
accordingly, paid no federal income taxes and no federal income tax provision
was required. Under the United States-Korea income tax treaty, as presently in
effect, the government of Korea imposes a nonrecoverable withholding tax and
resident tax aggregating 16.125% on dividends and 12.9% on interest paid to the
Fund by Korean issuers. Under the United States-Korea income tax treaty, there
is no Korean withholding tax on realized capital gains.
DISTRIBUTION OF INCOME AND GAINS. Distribution of net investment income is made
annually. It is expected that net realized gains from investment transactions
during any particular year in excess of available capital loss carryforwards
which, if not distributed, would be taxable to the Fund, will be distributed to
shareholders. An additional distribution may be made to the extent necessary to
avoid the payment of a four percent federal excise tax.
The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
These differences relate primarily to foreign denominated investments. As a
result, net investment income (loss) and net realized gain (loss) on investment
transactions for a reporting period may differ significantly from distributions
during such period. Accordingly, the Fund may periodically make
reclassifications among certain of its capital accounts without impacting the
net asset value of the Fund.
The Fund uses the identified cost method for determining realized gain or loss
on investments for both financial and federal income tax reporting purposes.
<PAGE>
[LOGO] The Korea Fund, Inc.
Notes to Financial Statements (continued)
================================================================================
FOREIGN CURRENCY TRANSLATIONS. The books and records of the Fund are maintained
in U.S. dollars. Foreign currency transactions are translated into U.S. dollars
on the following basis:
(i) market value of investment securities, other
assets and liabilities at the daily rates of exchange, and
(ii) purchases and sales of investment securities,
dividend and interest income and certain expenses at the rates of exchange
prevailing on the respective dates of such transactions.
The Fund does not isolate that portion of gains and losses on investments which
is due to changes in foreign exchange rates from that which is due to changes
in market prices of the investments. Such fluctuations are included with the
net realized and unrealized gains and losses from investments.
Net realized gain (loss) from won related transactions includes net currency
gains and losses between trade and settlement dates on securities transactions,
gains and losses arising from the sales of won and gains and losses between the
ex and payment dates on dividends, interest, and foreign withholding taxes. At
December 31, 1994 the exchange rate for Korean won was U.S. $.001266 to W 1.
SUBSCRIPTIONS FOR NEW SHARES. As part of their annual corporate action matters,
certain Korean companies offer rights to their shareholders to subscribe to new
shares which are eligible for a portion of the dividends paid on existing
shares in the year of subscription. The Fund follows a policy of subscribing to
new share offerings by Korean companies.
OTHER. Investment security transactions are accounted for on a trade-date
basis. Dividend income and distributions to shareholders are recorded on the
ex-dividend date. Interest income is recorded on the accrual basis. All
original issue discounts are accreted for both tax and financial reporting
purposes.
B. PURCHASES AND SALES OF SECURITIES
---------------------------------
For the six months ended December 31, 1994, purchases and sales of investment
securities (excluding short-term investments) aggregated $37,361,128 and
$33,589,971, respectively.
C. RELATED PARTIES
---------------
On October 14, 1994, the Fund's shareholders approved a new Investment Advisory
and Management Agreement (the "Management Agreement") with Scudder, Stevens &
Clark, Inc. (the "Manager"). Under the Management Agreement the Fund agrees to
pay the Manager a monthly fee at an annual rate equal to 1.15% of the Fund's
month-end net assets up to and including $50,000,000, 1.10% of such net assets
on the next $50,000,000, 1% of such assets on the next $250,000,000, 0.95% of
such net assets on the next $400,000,000, and 0.90% of such net assets in
excess of $750,000,000.
Under the Investment Advisory and Management Agreement (the "Agreement")
between the Fund and the Manager which was in effect prior to October 14, 1994,
the Fund agreed to pay the Manager a monthly fee equal to an annual rate of
1.15% of the first $50,000,000 of month-end net assets of the Fund, 1.10% of
such net assets in excess of $50,000,000 up to and including $100,000,000, and
1.00% of the excess over $100,000,000.
For the six months ended December 31, 1994, the fee pursuant to such agreements
amounted to $3,196,290 which was equivalent to an annual effective rate of
1.02% of the Fund's average month-end net assets.
On October 14, 1994, the Fund's shareholders approved a new Research and
Advisory Agreement (the "Advisory Agreement") with Daewoo Capital Management
Co., Ltd (the "Korean Adviser"), whereby the Korean Adviser provides such
investment advice, research and assistance as the Manager may from time to time
reasonably request.
<PAGE>
================================================================================
Under the Advisory Agreement, the Manager pays the Korean Adviser a monthly
fee, equal to an annual rate of 0.2875% of the first $50,000,000 of the Fund's
month-end net assets, 0.275% of such net assets on the next $50,000,000, and
0.25% of such net assets on the next $250,000,000, 0.2375% of such net assets
on the next $400,000,000, and 0.225% of such net assets in excess of
$750,000,000.
Under the Research and Advisory Agreement (the "Research Agreement") which was
in effect prior to October 14, 1994, the Manager agreed to pay the Korean
Adviser a monthly fee equal to an annual rate of 0.2875% of the first
$50,000,000 of the Fund's month-end net assets, 0.275% of such net assets in
excess of $50,000,000 up to and including $100,000,000, and 0.25% of the excess
over $100,000,000.
For the six months ended December 31, 1994, brokerage commissions on investment
transactions amounting to $51,198 were paid by the Fund to Daewoo Securities
Co., Ltd., the parent company of the Korean Adviser.
The Fund pays each Director not affiliated with the Manager or the Korean
Adviser $4,500 annually plus specified amounts for attended board and committee
meetings. Effective October 1, 1994, the Fund pays each Director not affiliated
with the Manager or the Korean Adviser $6,000 annually plus specified amounts
for attended board and committee meetings. For the six months ended December
31, 1994, Directors' fees and expenses amounted to $82,451.
D. FOREIGN INVESTMENT AND EXCHANGE CONTROLS IN KOREA
-------------------------------------------------
The Foreign Exchange Management Act, the Presidential Decree relating to such
Act and the regulations of the Minister of Finance issued thereunder impose
certain limitations and controls which generally affect foreign investors in
Korea. The Fund has obtained from the Minister of Finance a license to invest
in Korean securities and to repatriate income received from dividends and
interest earned on, and net realized capital gain from, its investments in
Korean securities and, upon termination of the Fund or for payment of expenses
in excess of income, to repatriate investment principal. The Minister of
Finance may, when it deems it to be in the public interest, modify the Fund's
license to invest in Korean securities or, according to the terms of the
license, revoke it in the event of the Fund's noncompliance with conditions of
the license or a material violation of Korean law. The Minister of Finance or
the Securities and Exchange Commission of Korea ("KSEC") may issue orders
imposing additional restrictions, when deemed in the public interest, for the
protection of investors or in the interest of maintaining an orderly securities
market. Under the Foreign Exchange Management Act, the Minister of Finance has
the power, with prior public notice of scope and duration, to suspend all or a
part of foreign exchange transactions when emergency measures are deemed
necessary in case of radical change in the international or domestic economic
situation. The Fund could be adversely affected by delays in, or the refusal to
grant, any required governmental approval for such transactions.
Under current regulations of the Minister of Finance and the KSEC, foreigners
are subject to certain restrictions with respect to investing in equity
securities of Korean companies listed on the Korea Stock Exchange. Until
December 1, 1994, total foreign investment was limited generally to 10% of each
class of a company's outstanding shares. Effective December 1, 1994, the
general limit was increased from 10% to 12%. A single foreign investor may only
invest up to 3% of each class of outstanding shares. Pursuant to its license,
however, the Fund may invest in shares representing 5% of each class in
general.
<PAGE>
[LOGO]The Korea Fund, Inc.
Notes to Financial Statements (continued)
================================================================================
F. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (000 OMITTED)
---------------------------------------------------------
<TABLE>
<CAPTION>
NET INCREASE
(DECREASE)
NET GAIN (LOSS) IN NET ASSETS
INVESTMENT NET INVESTMENT ON INVESTMENT RESULTING
QUARTER ENDED INCOME * INCOME (LOSS) TRANSACTIONS FROM OPERATIONS
- -------------------- ---------------------- --------------------------- --------------------- ----------------------
PER PER PER PER
FISCAL 1995 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
----------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
September 30,
1994 $ 625 $.02 $(1,311) $(.04) $87,443 $2.97 $86,131 $2.93
December 31,
1994 398 .01 (1,772) (.06) (21,665) (.73) (23,436) (.79)
------ ---- -------- ------ -------- ------ -------- ------
Totals $1,023 $.03 $(3,083) $(.10) $65,778 $2.24 $62,695 $2.14
====== ==== ======== ====== ======== ====== ======== ======
</TABLE>
<TABLE>
<CAPTION>
PER PER PER PER
FISCAL 1994 TOTAL SHARE TOTAL SHARE TOTAL SHARE TOTAL SHARE
----------- ----- ----- ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
September 30,
1993 $ 52 $ -- $ (878) $(.04) $ 2,205 $ .09 $ 1,327 $ .05
December 31,
1993 341 .02 (995) (.04) 124,881 4.82 123,886 4.78
March 31, 1994 4,432 .17 2,556 .10 10,248 .40 12,804 .50
June 30, 1994 231 -- (1,433) (.05) 48,342 1.82 46,909 1.77
------ ---- ------- ------ -------- ----- -------- -----
Totals $5,056 $.19 $ (750) $(.03) $185,676 $7.13 $184,926 $7.10
====== ==== ======= ====== ======== ===== ======== =====
<FN>
*Net of Korean taxes withheld.
</TABLE>
<PAGE>
[LOGO] The Korea Fund, Inc.
Report of Independent Accountants
================================================================================
TO THE BOARD OF DIRECTORS AND THE SHAREHOLDERS OF THE KOREA FUND, INC.:
We have audited the accompanying statement of assets and liabilities of The
Korea Fund, Inc. including the investment portfolio, as of December 31, 1994,
and the related statement of operations for the six months then ended, the
statements of changes in net assets for the six months then ended and for the
year ended June 30, 1994, and the financial highlights for the six months ended
December 31, 1994 and for each of the five years in the period ended June 30,
1994. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of The
Korea Fund, Inc. as of December 31, 1994, the results of its operations for the
six months then ended, the changes in its net assets for the six months then
ended and for the year ended June 30, 1994, and the financial highlights for
the six months ended December 31, 1994 and for each of the five years in the
period ended June 30, 1994 in conformity with generally accepted accounting
principles.
As explained in Note A, the financial statements include securities valued at
$52,087,740 (8.5% of net assets) and equity securities valued at a premium of
$26,656,775 (4.4% of net assets) over local stock exchange prices, whose values
have been estimated by the Board of Directors in the absence of readily
ascertainable market values or other market factors, respectively. We have
reviewed the procedures used by the Board of Directors in arriving at their
estimate of value of such securities and have inspected underlying
documentation, and, in the circumstances, we believe the procedures are
reasonable and the documentation appropriate. However, because of the inherent
uncertainty of valuation, those estimated values may differ significantly from
the values that would have been used had a ready market for the securities
existed, and the difference could be material.
Boston, Massachusetts COOPERS & LYBRAND L.L.P.
February 14, 1995
<PAGE>
[LOGO] The Korea Fund, Inc.
Tax Information
================================================================================
By now shareholders for whom year-end tax reporting is required by the IRS
should have received their Form 1099-DIV and tax information letter from the
Fund.
Due to the nature of its investments, the Fund pays foreign taxes to the
Republic of Korea throughout the year. As in prior years, the Fund intends to
make an election under section 853 of the Internal Revenue Code. This election
will allow shareholders to treat their proportionate share of foreign taxes
paid by the Fund as having been paid directly by them. Additionally,
shareholders will be required to report their proportionate share of such taxes
paid as gross income (in addition to other amounts of reportable distributions
paid by the Fund). With respect to the Fund's dividend paid September 30, 1994,
taxes paid to the Republic of Korea were $.0292 per share and gross income from
sources within the Republic of Korea was $.0292 per share. With respect to
shareholders of record on December 31, 1994, taxes paid to the Republic of
Korea were $.0029 per share and gross income from sources within the Republic
of Korea was $.0029 per share.
Please consult a tax advisor if you have questions about federal or state
income tax laws, or on how to prepare your tax returns. If you have specific
questions about your Korea Fund account, please call 800-426-5523.
<PAGE>
Dividend Reinvestment and Cash Purchase Plan
The Korea Fund invests with a long-term view and thus does not enter
portfolio transactions for the specific purpose of realizing capital gains.
Capital gains distributions will vary from year to year, depending on
investment conditions and portfolio considerations. They become part of
your capital and amount to a withdrawal of capital if they are not
reinvested. The Fund's Dividend Reinvestment and Cash Purchase Plan (the
"Plan") offers you an automatic way to reinvest your dividends and capital
gains distributions in shares of the Fund. The Plan also allows
participants to make optional cash investments in Fund shares of $100 to
$3,000 semiannually through State Street Bank and Trust Company, the Plan
Agent. Of particular interest is the ability of Plan participants to
reinvest their dividends and capital gains distributions at up to a 5%
discount to the Fund's share price on the New York Stock Exchange (but not
less than the net asset value) when the Fund's shares are selling at a
premium to net asset value.
In the case of nominee shareholders such as banks, brokers or other
nominees, which hold shares for others who are the beneficial owners, the
Plan Agent will administer the Plan on the basis of the number of shares
certified from time to time by the nominee shareholders as representing the
total amount registered in the shareholder's name and held for the account
of beneficial owners who are to participate in the Plan. A beneficial owner
of shares registered in the name of a bank, broker or other nominee should
consult with such nominee as to whether participation in the Plan may be
arranged through such nominee.
Pursuant to the Plan each shareholder is deemed to have elected to be
a participant in the Plan unless State Street Bank and Trust, the Plan
Agent, has been otherwise instructed in writing.
You may obtain more detailed information regarding the Plan by
requesting a copy of the Plan from the Plan Agent. All correspondence
(including notifications) regarding the Plan should be directed to:
Plan Agent (Korea Fund)
c/o State Street Bank and Trust Company
P.O. Box 8200, Boston, MA 02266-8200
Telephone: (617) 328-5000 x6406.
Investment Manager
The investment manager and administrator of The Korea Fund, Inc. (the
"Fund") is Scudder, Stevens & Clark, Inc., one of the most experienced
investment management and investment counsel firms in the United States.
Established in 1919, the firm provides investment counsel for individuals,
investment companies and institutions. Scudder has offices throughout the
United States and subsidiaries in London and Tokyo.
Scudder has been a leader in international investment management for
over 40 years. It manages Scudder International Fund, which was initially
incorporated in Canada in 1953 as the first foreign investment company
registered with the U.S. Securities and Exchange Commission. Scudder's
investment company clients include eight other open-end investment
companies which invest worldwide.
In addition to the Fund, Scudder also manages the assets of seven
other closed-end investment companies which invest in foreign securities.
The Argentina Fund, Inc. (investing primarily in securities of Argentine
issuers), The Brazil Fund, Inc. (investing in securities, primarily equity
securities, of Brazilian issuers), The Latin America Dollar Income Fund,
Inc. (investing principally in Latin American debt instruments), Scudder
New Asia Fund, Inc. (investing in a broad spectrum of Asian companies),
Scudder World Income Opportunities Fund, Inc. (investing primarily in
global income and, to a limited extent, equity securities) and Scudder New
Europe Fund, Inc. (investing in equity securities traded in smaller or
emerging European securities markets) are traded on the New York Stock
Exchange. The First Iberian Fund, Inc. (investing primarily in Spanish and
Portuguese securities) is traded on the American Stock Exchange.
Korean Adviser
Daewoo Capital Management Co., Ltd., registered under the U.S.
Investment Advisers Act of 1940, acts as Korean adviser to Scudder, Stevens
& Clark, Inc., the Fund's investment manager. Daewoo Capital Management
Co., Ltd. is a subsidiary of Daewoo Securities Co., Ltd., the largest
Korean securities firm, and an affiliate of Daewoo Research Institute.
Daewoo Capital Management Co., Ltd. provides investment advice,
research, and assistance to Scudder. The Daewoo staff makes specific
investment recommendations, which are then evaluated by Scudder's research
department and portfolio managers in light of their own expertise and
information from other sources in making investment decisions for the Fund.
Officers and Directors
JURIS PADEGS*
Chairman of the Board and Director
CHANG HEE KIM
Vice Chairman of the Board and Director
NICHOLAS BRATT*
President and Director
WILLIAM H. GLEYSTEEN, JR.
Director
ROBERT W. LEAR
Director
SANG C. LEE
Director
TAI HO LEE
Director
WILSON NOLEN
Director
SIDNEY M. ROBBINS
Director
JERARD K. HARTMAN*
Vice President
KUN-HO HWANG
Vice President
H. JIN KIM
Vice President
JOHN J. LEE*
Vice President
DAVID S. LEE*
Vice President
DONG WOOK PARK
Vice President
THOMAS F. MCDONOUGH*
Secretary and Assistant Treasurer
PAMELA A. McGRATH*
Treasurer
EDWARD J. O'CONNELL*
Vice President and Assistant Treasurer
KATHRYN L. QUIRK*
Vice President and Assistant Secretary
COLEEN DOWNS DINNEEN*
Assistant Secretary
* Scudder, Stevens & Clark, Inc.
