KOREA FUND INC, N-30D, 1995-09-05

KOREA FUND INC
N-30D, 1995-09-05

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THE KOREA FUND, INC.

Annual Report
June 30, 1995

A closed-end investment company
seeking long-term appreciation of capital
through investment in Korean securities.

<PAGE>

The Korea Fund, Inc.

Investment objective and policies

o long-term capital appreciation through investment in Korean securities

Investment characteristics

o investments in a broad spectrum of Korean industries

o closed-end investment company

o first United States investment company authorized to invest in Korean
securities

o 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:

For Fund Information: 1-800-349-4281

Transfer agent, registrar and dividend
reinvestment plan agent

For account information: 1-800-426-5523

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 Financial Statements 23
Report of Independent Accountants 27
Tax Information 28
Dividend Reinvestment and
Cash Purchase Plan 29
Investment Manager 31
Korean Adviser 31
Officers and Directors Back Cover

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.

2
<PAGE>

Letter to Shareholders
- --------------------------------------------------------------------------------

Dear Shareholders:

During the fiscal year ended June 30, 1995, the net asset value ("NAV") per
share of your Fund rose 6.6% from $18.66 to $19.89. The rights offering, which
commenced on June 5, 1995 and expired on June 21, 1995, was significantly
over-subscribed and resulted in net proceeds to the Fund of approximately $110
million.

Pursuant to the offering, the Fund issued one right for each share held on
June 5, 1995, the record date. In the primary subscription, four rights were
required to purchase one new share of the Fund's common stock at the
subscription price of $15.50. Of the 7,386,102 shares available in the offering,
approximately 7.28 million shares or 98.6% were subscribed through the primary
subscription. In addition, there were 4,836,283 shares requested in the over
subscription allotment. However, there were only approximately 100,000 shares
available after the primary subscription. These shares were issued at the same
subscription price and on a pro rata basis to record date shareholders who
elected to subscribe to additional new shares pursuant to the over subscription
privilege.

The Fund's share price on the New York Exchange on June 30, 1995 was
19.625, a 1.3% discount to the NAV.

Over the same one year period the index of the Korea Stock Exchange
declined from 933.36 to 894.41, a decrease of 4.2%, and the Korean won rose 6.3%
in value relative to the U.S. dollar from 0.001241 to 0.001319.

The Portfolio

The Fund is broadly diversified by industry sector. As of June 30, 1995,
21.4% of the Fund's portfolio was invested in electronics; 2% in chemicals; and
5.7% in construction and building materials.

With the proceeds from the rights offering, the Fund is now able to
subscribe to the rights offerings of the portfolio companies and to add new
names to the portfolio. Until the proceeds are fully invested in the Korean
equities, we have started to take advantage of the Fund's privilege to buy
Korean bonds with high yields. Under the license from the Korean government, the
Fund is able to buy Korean bonds up to 10% of total assets. The three-year
corporate bond yield, the benchmark Korean interest rate, is around 14%.

Since the March 31, 1995 third quarter report, we have made a number of
adjustments to the portfolio. We liquidated the holdings of Dae Ho Construction,
Dong-Ah Securities, Dongsuh Securities and Shin Young Securities. We have
reduced a number of holdings in the portfolio and added to our positions in Dong
Ah Construction, Hwa Sung Industries, Kia Steel, Samsung Engineering and
Construction, and Samsung Securities.

The Fund's five largest equity investments in order of market value are as
follows: Samsung Electronics, Korea Mobile Telecom, Hyundai Motor Services,
Samsung Fire and Marine Insurance, and Keumkang Co. Ltd. As a group, these
holdings account for 43% of the portfolio. However, all of these companies have
been described in previous reports, so we have selected five others to continue
our practice of providing descriptions of your Fund's holdings.

Dong Ah Construction is one of the largest construction companies in the
world. It has been selected by the Libyan government for the construction of the
Great Man-Made River Project Phase 1, Phase 2 and expects to win the $5 billion
contract for Phase 3 as well. The company plans to build a 3.2 trillion won,
multi-purpose, tourism, distribution and high-tech industrial park on tidal land
near Kimpo. Dong-Ah Construction also plans to undertake private sector social
infrastructure development projects including the expressway leading from Seoul

3
<PAGE>

to the Youngeongdo Airport, the Kyunggi-Inchon canal and a liquid natural gas
terminal. It also plans to establish branches in the U.S., Australia, Malaysia
and Vietnam in order to expand the company's overseas bidding activities.

Hwa Sung is one of the leading department store chains in Korea, managing
five department stores and 28 supermarkets. These include Dong-A Department
Store, Dong-A Shopping Center and Pretemps Department Store in Seoul. The
company plans to open a shopping center in Daegu. Hwa Sung is also involved in
the construction business and has recently expanded substantially. The company
has also taken over a mutual savings and finance company with assets of 36
billion won to diversify into the financial business.

Samsung Securities has been growing rapidly since being acquired by the
Samsung Group in 1992. It is one of the top securities houses in the categories
of institutional sales and underwriting. The company has completed the first
stage of its upgrading program by extending its branch network, introducing new
services and improving operational procedures. Samsung Securities has
dramatically improved the return on investments by customers and deposits in
customer accounts have risen sharply. In preparation for internationalization
and liberalization it has created a new computerized information processing
system. The company seeks complete job satisfaction of all its workers, thus
raising their productivity.

Sungwon Construction is a medium-sized general contractor that focuses on
civil engineering projects. Its main business is apartment distribution and
construction. The company grew rapidly since 1989 by aggressively participating
in housing development projects. Improved cost control helped the company post
an increase in net income despite an increase in financial expenses. It has
distributed 160 housing units in the Los Angeles, California area. The company
also plans to expand into Chinese housing development.

Korea Electric Power Co. is Korea's only electric utility company. It also
has the largest market capitalization among Korean companies and plans to
diversify by entering the telecommunications business (cable TV and mobile
telecommunications). The company has recently entered into agreements with the
governments of China and the Philippines to provide those countries with power
equipment and to develop power stations. It is also expected to win a $1 billion
project in Indonesia.

As of June 30, 1995, most of the Fund's holdings are companies that have
reached the 12% foreign ownership limitation. Some of these shares are traded
among foreign investors at a premium. The Fund's NAV is calculated using local
prices except for Samsung Electronics, Korea Mobile Telecom, Samsung Fire and
Marine, and Pohang Iron and Steel, which are valued at fair value as determined
in good faith by the valuation committee of the Fund's Board of Directors.

Stock Market and Economics

Following a historical high of 1,145 on November 9, 1994, the Korean stock
market has experienced a consolidation phase, declining to 894.41 on June 30,
1995. Major reasons for the decline were higher interest rates and deteriorating
trade figures.

High interest rates are attributable largely to Korean companies'
aggressive facilities investments to cope with a rapid increase in demand for
Korean products from overseas and domestically. Given the managed money supply
by the central bank and Korea's semi-closed capital and money markets, the
increased cash demand from corporations for facilities investments became a
major cause for high interest rates. The three-year corporate bond yield, a
benchmark Korean interest rate, increased from the 1994 average of 13% to more
than 15% in early 1995 and then stabilized at around 14% as of June 30, 1995.

Despite strong gains in exports, trade deficits are widening as imports
grow even faster than exports. For the first half of this year, imports have

4
<PAGE>

risen by around 38% year-on-year which outpaced export growth rates of around
34% for the same period. As a result, the trade deficit for the first five
months was $3.6 billion. Exports were led by heavy industrial products such as
semiconductors, petrochemical products and motor vehicles. Capital goods and raw
materials led the sharp growth in imports. Imports of capital goods accounted
for about 50%. However, the trade deficit is expected to decline as facilities
investments slow down, production capacity improves and exports continue to
expand.

Supported by strong exports and facilities investments, Korea's Gross
Domestic Product ("GDP") growth posted 9.9% during the first quarter of this
year, the highest rate since the second quarter of 1991 when the GDP grew by
10.6%. Despite concerns about the overheating economy, Korea is expected to
maintain an expansionary trend with a high GDP growth in 1995 (8.5-9.0%).

Inflation, measured by the Consumer Price Index, has been relatively
stable. For the first six months, consumer prices increased by 4.8% over the
same period last year (a substantial decline from 6.2%). Inflationary pressures
may increase in the second half of this year because of increasing domestic
spending. However, stable international prices of raw materials, won
appreciation and slower wage increases should have a positive effect on
inflation.

The six-month results of Korean companies, excluding banks and securities
companies, with fiscal years ending in December showed a substantial increase in
net income by more than 40-50% mainly because of the expanding economy and fast
growing exports.

On July 1, 1995, the ceiling on the foreign ownership in each listed
company was raised from 12% to 15%. Since the July 1 increase in the foreign
ownership limit, overseas investors have been actively purchasing Korean stocks
amounting to $1.4 billion.

Based on the fundamental strength of the nation's economy and the positive
outlook in interest rates, we are optimistic about the future of the market.
Recent corrections made the Korean stock market more attractive. With new
proceeds from the rights offering, we will use periods of market weakness as
buying opportunities. In the short term, the Korean market may be volatile, but
the medium and long term prospects for the Korean economy and stock market are
strong.

Politics

On June 27, 1995, Koreans had an election for local and provincial officers
for the first time since 1960. This election has been perceived as a significant
progress towards Korea's becoming a genuine democratic country. The currently
ruling Democratic Liberal Party failed to secure a majority in the local
government elections. Among the fifteen electorate big cities and districts,
only five were claimed by the ruling party. However, the results of the election
is expected to have little impact on the stock market.

With Kim Il-Sung's death in mid-1994, North Korea has been more active in
opening its economy. To facilitate foreign investment, the North has made moves
to improve the transportation network and is also opening up some financial
services. Even though there are obstacles to overcome, it seems inevitable that
economic cooperation between South and North Korea will expand. Assuming the
transition of power in the North proceeds smoothly and South and North Korea
dialogues improve, many South Korean companies will benefit. Utilizing the
North's inexpensive and well educated labor force and abundant natural
resources, South Korean companies will be more competitive especially in the
labor intensive industries. Recently, more people are traveling to North Korea
and North Korean delegates have visited the United States more frequently.

5
<PAGE>

Dividend Reinvestment Plan

The Korea Fund, Inc. invests with a long-term view. Capital gains
distributions will vary from year to year depending on investment conditions and
portfolio considerations. They are part of your capital and therefore represent
a withdrawal of capital if they are not reinvested.

The Fund's Dividend Reinvestment and Cash Purchase Plan offers you a
convenient way to have your dividends and capital gain 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 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.

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 Fund's management process.
Team members work together to develop investment strategies and select
securities for the Fund. They are supported by Scudder's large staff of
economists, research analysts, traders, and other investment specialists who
work in Scudder's offices across the United States and abroad. We believe our
team approach benefits 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, the year he joined Scudder's global
equity area. 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 Director 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 Korea Fund's NAV is listed daily
in The Financial Times ("FT") newspaper. For your information the NAV of the
Fund and other Scudder closed-end funds can be found in the "FT Managed Funds
Service" section under the heading "Other Offshore Funds" below the Scudder,
Stevens & Clark, Inc. 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

6
<PAGE>

The Korea Fund, Inc.
Investment Summary as of June 30, 1995
- -----------------------------------------------------------------------------
Historical
Information
Life of Fund

<TABLE>
<CAPTION>
Total Return (%)
---------------------------------------------------------------
Market Value Net Asset Value(a) Index(c)
------------------- ------------------- -------------------
Average Average Average
Cumulative Annual Cumulative Annual Cumulative Annual
------------------- ------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
Current Quarter -3.24 -- 1.36 -- -4.01 --
One Year -5.43 -5.43 13.00 13.00 -4.17 -4.17
Three Year 86.72 23.14 100.24 26.04 62.02 17.45
Five Year 18.44 3.44 83.80 12.95 26.55 4.82
Ten Year 589.53 21.30 796.33 24.52 551.90 20.62
</TABLE>

- -----------------------------------------------------------------------------
Per Share Information and Returns (a)
Yearly periods ended June 30

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>
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
-------------------------------------------------------------------------------------
Net Asset Value (b). $ 7.46 $11.13 $13.97 $16.84 $14.45 $10.27 $10.75 $11.40 $18.66 $19.89
Income Dividends.... $ .28 $ .01 $ .29 $ .11 $ .08 $ -- $ .06 $ .04 $ .01 $ --
Capital Gain
Distributions....... $ -- $ .03 $ .68 $ 1.74 $ 1.88 $ 2.20 $ .34 $ .20 $ -- $ .15
Total Return (%).... 106.32 49.77 31.17 33.21 -9.52 -14.91 7.87 8.20 63.77 13.00
</TABLE>

(a) 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.

(b) Net asset value per share through 1988 has been adjusted for a 200%
stock dividend paid in October 1988.

Past results are not necessarily indicative of future performance
of the Fund.

7
<PAGE>

The Korea Fund, Inc.
Portfolio Summary as of June 30, 1995
- -----------------------------------------------------------------------------
Diversification
- -----------------------------------------------------------------------------

Common Stocks 86%
Notes 6%
Convertible Bonds 5%
Preferred Stocks 2%
Cash Equivalents 1%
----
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 23%
Communications 16%
Financial 13%
Durables 12%
Manufacturing 6%
Construction 6%
Consumer Staples 6%
Consumer Discretionary 5%
Health 3%
Other 10%
----
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 manufacturer
2. Korea Mobile Telecom
Mobile telecommunication company
3. Hyundai Motor Services Co., Ltd.
Auto parts and services
4. Samsung Fire and Marine Insurance
Insurance company
5. Keumkang Co., Ltd.
Construction company and manufacturer of building materials
6. Korea Long Term Credit Bank
Major commercial bank
7. Cheil Food and Chemical Co., Ltd.
Korea's largest sugar refiner and major integrated food processor
8. Hansol Paper Manufacturing Co., Ltd.
Korea's largest paper manufacturer
9. Hankook Tire Manufacturing Co., Ltd.
Major tire manufacturer
10. Yukong, Ltd.
Korea's largest oil refiner

8
<PAGE>

The Korea Fund, Inc.
Investment Performance
- --------------------------------------------------------------------------------

LINE CHART OMITTED

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 and Cash Purchase Plan vs. the S&P 500*

CHART PERIOD: (8/84 - 6/95)

CHART DATA:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------
TOTAL SHARE CAPITAL GAINS DISTRIBUTION SHARE VALUE OF INITIAL S&P TOTAL
VALUE ($84,756) REINVESTED ($73,791) INVESTMENT ($49,063) RETURN ($46,995)
-----------------------------------------------------------------------------------------------------------------------
<S> <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
87592 80371 53438 42897
84756 73791 49063 46995

</TABLE>

<PAGE>

9
<PAGE>

The Korea Fund, Inc.
Investment Performance
- --------------------------------------------------------------------------------

LINE CHART OMITTED

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 and Cash Purchase Plan*

CHART PERIOD: (8/84 - 6/95)

CHART DATA:
-------------------------------------------------------------------------------
TOTAL NET ASSET CAPITAL GAINS DISTRIBUTIONS NET ASSET VALUE OF INITIAL
VALUE ($92,365) REINVESTED ($80,416) INVESTMENT ($53,468)
-------------------------------------------------------------------------------

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
91123 83610 55592
92365 80416 53468

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 200% 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.

10
<PAGE>

<TABLE>
[LOGO]The Korea Fund, Inc.
Investment Portfolio as of June 30, 1995
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Principal Market
Amount (e) Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT 0.9%
U.S.$ 5,712,000 Repurchase Agreement with Salomon Brothers Inc.
dated 6/30/95 at 6.125%, to be repurchased
at $5,714,916 on 7/3/95, collaterized by a
$6,040,000 U.S. Treasury Note, 6.25%, 8/15/23
(Cost $5,712,000).............................. 5,712,000
----------
- ------------------------------------------------------------------------------------------------------------------
NOTES 5.4%
1,100,000,000 Korea Development Bank, 13.1%, 7/26/95........... 1,453,726
25,500,000,000 Korea Development Bank, 10.69%, 7/26/95.......... 33,428,625
----------
TOTAL NOTES (Cost $34,092,409)................... 34,882,351
----------
- ------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS 5.3%

CONSUMER DISCRETIONARY 0.4%

APPAREL & SHOES 1,000,000,000 Shinwon, 6%, 12/31/96 (Major apparel
manufacturer) (c).............................. 2,452,199
----------
CONSUMER STAPLES 1.2%

Food & Beverage 0.5% 800,000,000 Crown Confectionery Co., 3%, 12/31/97 (Major
producer of snacks) (c)........................ 946,727
2,000,000,000 Haitai Confectionery Co., 1%, 6/30/98 (Major
producer of snacks) (c)........................ 2,484,748
----------
3,431,475
----------
Textiles 0.7% U.S.$ 2,000,000 Kolon Industries, Inc., 0.25%, 12/31/04 (Leading
manufacturer of nylon, polyester yarn and
fabrics)....................................... 995,000
2,400,000,000 Kukje Corp., 12%, 12/31/97 (Shoe manufacturer) (c) 3,277,262
----------
4,272,262
----------
HEALTH 0.6%

Pharmaceuticals 3,000,000,000 Korean Green Cross Corp., 1%, 12/31/97
(Pharmaceutical company) (c)................... 3,232,878
400,000,000 Yuhan Corporation, 5.5%, 12/31/97
(Pharmaceutical company) (c)................... 539,822
----------
3,772,700
----------
DURABLES 0.4%

Tires 2,000,000,000 Kumho Co., 4%, 12/31/97 (Korea's largest tire
manufacturer) (c).............................. 2,446,053
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

Containers & Paper 4,000,000,000 Hansol Paper Manufacturing Co., Ltd., 3%, 12/31/99
(Korea's largest paper manufacturer) (c)........ 4,216,499
2,500,000,000 Hansol Paper Manufacturing Co., Ltd., 1%,
12/31/99 (c).................................... 2,366,766
----------
6,583,265
----------
TECHNOLOGY 0.2%

Electronic Components/
Distributors 500,000,000 Anam Electronics, 5.5%, 12/31/96 (Major consumer
electronics company) (c)........................ 700,903
250,000,000 Anam Electronics, 6%, 12/31/96 (c)................ 357,636
CHF 500,000 Samsung Electromechanics Co., Ltd., 0.25%,
12/31/00 (Major electronics parts company)...... 267,159
----------
1,325,698
----------
ENERGY 0.9%

Oil & Gas Production 3,000,000,000 Yukong, Ltd., 1%, 12/31/98 (Korea's largest oil
refiner) (c).................................... 3,847,240

2,000,000,000 Yukong, Ltd., 2%, 12/31/97 (c).................... 2,150,214
----------
5,997,454
----------

METALS AND MINERALS 0.4%

Steel & Metals 1,000,000,000 Kangwon Industry, 6%, 6/30/97 (Steel
company) (c).................................... 1,466,456
500,000,000 Sammi Steel, 4%, 12/31/97 (Specialty steel
company) (c).................................... 745,420
----------
2,211,876
----------
CONSTRUCTION 0.2%

Miscellaneous 1,000,000,000 Sungwon Construction, 5%, 12/31/97 (Construction
company) (c).................................... 1,293,215
----------
TOTAL CONVERTIBLE BONDS (Cost $35,868,433)........ 33,786,197
----------
- ------------------------------------------------------------------------------------------------------------------
PREFERRED STOCKS 2.2% Shares
------
CONSUMER STAPLES 0.2%

Alcohol & Tobacco 0.0% 1,165 Oriental Brewery Co., Ltd. (Korea's largest
brewery)........................................ 10,678
----------
Food & Beverage 0.2% 38,690 Cheil Food and Chemical Co., Ltd. (Korea's
largest sugar refiner and major integrated food
processor)...................................... 1,071,533

52,280 Haitai Confectionery Co. ......................... 482,638
----------
1,554,171
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL 0.5%

Insurance 0.2% 6,175 Samsung Fire and Marine Insurance (Insurance
company) (d).................................... 928,021
----------

Other Financial
Companies 0.3% 100,000 Boo Kook Securities (Securities company).......... 890,208
100,000 Boram Securities (Securities company)............. 837,455
33,200 LG Securities Co., Ltd. (Securities company)...... 380,492
----------
2,108,155
----------
DURABLES 0.8%

Automobiles 0.5% 106,358 Hyundai Motor Services Co., Ltd. (Auto parts and
services)....................................... 2,805,355
----------
Tires 0.3% 388,000 Kumho Co. ........................................ 2,046,818
----------
MANUFACTURING 0.0%

Chemicals 19,375 Oriental Chemical Industries Co., Ltd.
(Manufacturer of specialty chemicals)........... 265,744
----------
TECHNOLOGY 0.6%

Electronic Components/
Distributors 8,198 Samsung Display Devices (Korea's largest
manufacturer of CRT and picture tubes).......... 366,518
823 Samsung Display Devices (New) (b) (c)............. 36,454
30,920 Samsung Electronics Co., Ltd. (Major electronics
manufacturer) (d)............................... 2,853,570
6,119 Samsung Electronics Co., Ltd. (New) (b) (d)....... 535,357
----------
3,791,899
----------
ENERGY 0.0%

Oil Companies 1,174 Ssangyong Oil Refining Co. (Major oil refiner) (c) 18,564
----------
CONSTRUCTION 0.1%

Miscellaneous 45,540 Kumho Construction and Engineering (Engineering
and construction company)....................... 318,315
----------
TOTAL PREFERRED STOCKS (Cost $16,284,011)......... 13,847,720
----------
- ------------------------------------------------------------------------------------------------------------------
COMMON STOCKS 86.2%

CONSUMER DISCRETIONARY 4.6%

Apparel & Shoes 0.9% 32,083 Shin Won Corp. (Major apparel manufacturer)....... 1,510,535
89,052 Ssang Bang Wool Co. (Leading underwear
manufacturer)................................... 4,415,899
----------
5,926,434
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

[LOGO]The Korea Fund, Inc.
Investment Portfolio (continued)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Department &
Chain Stores 3.7% 165,730 Hwa Sung Industries (Department store)............ 7,693,631
32,858 Hwa Sung Industries (New) (b) (c)................. 1,512,807
9,436 Keum Kang Development Industries Co, Ltd.
(Operator of department stores and hotels)
(New) (b) (c)................................... 179,251
114,577 Shinsegae (Major department store chain).......... 8,628,219
34,753 Shinsegae (New) (b)............................... 2,429,158
115,860 Taegu Department Store (Department store)......... 3,162,944
----------
23,606,010
----------
CONSUMER STAPLES 4.3%

Alcohol & Tobacco 0.4% 120,740 Oriental Brewery Co., Ltd. ....................... 2,786,614
----------

Food & Beverage 3.0% 268,413 Cheil Food and Chemical Co., Ltd. ................ 16,814,530
9,000 Haitai Confectionery Co. ......................... 154,303
32,271 Nhong Shim Co. (Manufacturer of instant noodles
and snacks)..................................... 1,119,324
37,458 Tongyang Confectionery (Major producer of snacks). 1,160,914
----------
19,249,071
----------

Textiles 0.9% 79,739 Cheil Industries (Korea's largest woolen yarn and
fabric manufacturer)............................ 1,850,849
31,895 Cheil Industries (New) (b)........................ 651,992
3,040 Taekwang Industrial Co., Ltd. (Major producer of
acrylic fiber).................................. 2,325,354
16,500 Tongyang Nylon (Korea's largest producer of nylon
filament yarn).................................. 691,988
----------
5,520,183
----------

HEALTH 2.1%

Pharmaceuticals 75,428 Chong Kun Dang Co., Ltd. (Pharmaceutical company). 2,854,973
21,000 Daewoong Pharmaceutical Co. (Pharmaceutical
company)........................................ 1,038,576
4,840 Daewoong Pharmaceutical Co. (New 1) (b) (c)....... 239,087
3,200 Daewoong Pharmaceutical Co. (New 2) (b)........... 144,332
138,121 Yuhan Corporation................................. 8,925,722
----------
13,202,690
----------

COMMUNICATIONS 14.8%

Cellular Telephone 100,702 Korea Mobile Telecom (Mobile telecommunication
company) (d).................................... 94,786,712
----------
FINANCIAL 11.2%

Banks 5.4% 240,028 Cheju Bank (Regional bank)........................ 2,883,818
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

242,929 Hanil Bank (Major commercial bank)................ 2,748,870
103,170 Kookmin Bank (Major commercial bank).............. 1,836,855
160,000 Korea Exchange Bank (Major commercial bank)....... 1,466,535
17,454 Korea Exchange Bank (New) (b)..................... 144,788
43,900 Korea First Bank (Major commercial bank).......... 413,960
667,902 Korea Long Term Credit Bank (Major commercial
bank)........................................... 19,114,373
242,000 Shin Han Bank (Major commercial bank)............. 4,978,833
44,435 Shin Han Bank (New) (b)........................... 873,170
----------
34,461,202
----------

Insurance 4.8% 85,376 Daehan Fire and Marine Insurance (Insurance
company)........................................ 3,130,172
44,656 Hyundai Fire and Marine Insurance (Insurance
company)........................................ 2,296,847
49,912 LG Insurance (Insurance company).................. 3,324,176
67,867 Samsung Fire and Marine Insurance (d)............. 21,931,356
----------
30,682,551
----------

Other Financial
Companies 1.0% 19,989 Boo Kook Securities............................... 276,801
87,191 Hanyang Securities (Securities company)........... 983,163
1,224 Hyundai Securities (Securities company)........... 23,729
763 LG Securities Co., Ltd. .......................... 13,383
68,510 Samsung Securities (Securities company)........... 2,520,843
172,384 Ssangyong Investments and Securities (Securities
company)........................................ 2,932,711
----------
6,750,630
----------
SERVICE INDUSTRIES 2.0%

Miscellaneous
Commercial Services 250,042 Samsung Co., Ltd. (Trading company)............... 7,122,858
100,195 Samsung Co., Ltd. (New) (b) ...................... 2,523,870
156,060 Sunkyong Ltd. (Trading company)................... 2,984,332
----------
12,631,060
----------
DURABLES 9.7%

Automobiles 9.2% 169,216 Hankook Tire Manufacturer Co., Ltd. (Major
tire manufacturer).............................. 13,613,157
116,209 Hyundai Motor Co., Ltd. (Korea's largest auto
manufacturer)................................... 7,172,544
423,380 Hyundai Motor Services Co., Ltd................... 22,892,951
113,341 Mando Machinery Co. (Major auto parts
manufacturer)................................... 7,563,541
35,000 Samlip Industries (Auto parts manufacturer)....... 1,998,681
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

[LOGO]The Korea Fund, Inc.
Investment Portfolio (continued)
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
90,000 Yoosung Enterprise (Leading manufacturer of engine
parts).......................................... 5,471,810
-----------
58,712,684
-----------
Leasing Companies 0.5% 93,000 Korea Development Leasing Co. (Largest leasing
company in Korea)............................... 3,250,247
-----------
MANUFACTURING 4.9%

Chemicals 1.8% 37,540 Korea Chemical Co. (Paint company)................ 4,450,836
229,853 LG Chemicals (Korea's largest integrated chemical
company)........................................ 6,002,096
47,400 Oriental Chemical Industries Co., Ltd............. 1,350,267
2,647 Oriental Chemical Industries Co., Ltd. (New) (b).. 62,837
-----------
11,866,036
-----------
Containers & Paper 1.3% 210,712 Hansol Paper Manufacturing Co., Ltd............... 8,475,722
-----------
Diversified
Manufacturing 1.1% 23,256 Hyundai Precision Industry Co. (Leading transport
container manufacturer and machinery producer).. 555,138
200,239 Samsung Heavy Industries Co., Ltd. (Machinery
manufacturer)................................... 5,598,506
30,070 Samsung Heavy Industries Co., Ltd. (New) (b)...... 753,485
-----------
6,907,129
-----------

Electrical Products 0.7% 114,086 Kyungwon Century Co., Ltd. (Major manufacturer
of heating and cooling equipment)............... 4,242,961
-----------
TECHNOLOGY 20.6%

Electronic Components/
Distributors 20.4% 109,643 LG Electronics, Inc. (GDR) (Major electronics
manufacturer)................................... 1,315,716
6,395 LG Electronics, Inc. (GDR) (c).................... 123,903
88,367 Samsung Display Devices........................... 7,178,908
53,095 Samsung Display Devices (New) (b) (c)............. 4,291,408
167,073 Samsung Electromechanics Co., Ltd. ............... 7,976,317
65,331 Samsung Electromechanics Co., Ltd. (New) (b)...... 2,981,144
523,910 Samsung Electronics Co., Ltd. (d)................. 89,353,170
103,682 Samsung Electronics Co., Ltd. (New) (b) (d)....... 17,465,614
-----------
130,686,180
-----------

Electronic Data
Processing 0.2% 50,000 Trigem Computer Inc. (Major personal computer
manufacturer)................................... 1,496,868
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
Market
Shares Value ($)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY 2.0%

Oil & Gas Production 24,940 Samchully (Producer and distributor of anthracite
and gas)........................................ 1,447,227
135,744 Ssangyong Oil Refining Co. ....................... 3,902,696
160,499 Yukong, Ltd. ..................................... 6,709,948
19,232 Yukong, Ltd. (New) (b) (c)........................ 799,327
----------
12,859,198
----------

METALS AND MINERALS 2.6%

Steel & Metals 1,641 Hankook Core Co. (Steel company).................. 31,597
165,000 Inchon Iron & Steel (Steel company)............... 6,724,036
254,428 Kia Steel Co, Ltd. (Specialty steel company)...... 2,181,051
76,481 Kia Steel Co., Ltd. (New) (b) (c)................. 655,623
61,000 Pohang Iron & Steel Co., Ltd. (Korea's largest
steel producer) (d)............................. 6,103,138
72,463 Sammi Steel (Specialty steel producer)............ 745,416
----------
16,440,861
----------

CONSTRUCTION 5.4%

Building Materials 4.7% 24,000 Hanil Cement Manufacturer (Cement manufacturing
company)........................................ 1,455,984
224,337 Keumkang Co., Ltd. (Construction company and
manufacturer of building materials)............. 19,941,067
197,307 Ssangyong Cement Industrial Co., Ltd. (Major
cement company)................................. 5,308,358
63,000 Sung Shin Cement Co., Ltd. (Major cement company). 2,492,582
34,000 Tong Yang Cement Co., Ltd. (Major cement company). 1,121,002
200 Tong Yang Cement Co., Ltd. Warrants (expire
8/18/96) (f).................................... 35,000
----------
30,353,993
----------
Miscellaneous 0.7% 30,000 Dong Ah Construction Industries Co., Ltd.
(Leading construction company).................. 993,076
38,510 Han Shin Construction (Construction company)...... 328,091
101,270 Kumho Construction and Engineering................ 1,307,528
60,320 Samsung Engineering and Construction Co.
(Engineering and construction company).......... 1,630,808
11,401 Samsung Engineering and Construction Co. (New) (b) 266,136
370 Sungwon Construction.............................. 9,027
864 Sungwon Construction (New) (b) ................... 18,459
----------
4,553,125
----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

<TABLE>

Airlines 0.3% 59,996 Korean Airlines Co., Ltd. (Airline)................ 2,160,093
-----------
Marine Transportation 0.5% 80,000 Korea Line Corp. (Maritime transportation company). 2,753,709
-----------
Trucking 0.1% 13,670 Korea Express Co., Ltd. (General freight transport
company)......................................... 526,428
11,356 Korea Express Co., Ltd (New) (b)................... 389,391
-----------
915,819
-----------
UTILITIES 1.1%

Electric Utilities 0.8% 130,900 Korea Electric Power Co. (Electric utility)........ 4,902,816
-----------
Natural Gas Distribution 0.3% 37,600 Daesung Industrial (Natural gas distributor)....... 2,043,020
-----------
TOTAL COMMON STOCKS (Cost $226,208,918)............ 552,223,618
-----------
- ------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT PORTFOLIO - 100.0%
(Cost $318,165,771) (a).......................... 640,451,886
===========
<FN>
(a) The cost for federal income tax purposes was $318,211,095. At June 30, 1995, net unrealized appreciation for
all securities based on tax cost was $322,240,791. This consisted of aggregate gross unrealized appreciation
for all securities in which there was an excess of market value over tax cost of $350,133,482 and aggregate
gross unrealized depreciation for all securities in which there was an excess of tax cost over market value
of $27,892,691.

(b) New shares issued during 1995, eligible for a pro rata share of 1995 dividends (Note A).

(c) Securities valued in good faith by the Valuation Committee of the Board of Directors. The cost of these
securities at June 30, 1995 was $39,056,517 (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 June 30, 1995 was $20,962,878
(Note A).

(e) Principal amount stated in Korean won unless otherwise noted. CHF Swiss Francs.

(f) Non-income producing.

</FN>
</TABLE>

The accompanying notes are an integral part of the financial statements.

[LOGO]The Korea Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Investments, at market (identified cost $318,165,771) (Note A)...... $640,451,886
Cash:
U.S. dollars..................................................... 566
Won at market (identified cost $118,068,657) (Note A)............ 118,110,387
Receivables:
Investments sold................................................. 188,117
Dividends and interest........................................... 1,505,189
Other assets........................................................ 3,747
------------
Total assets............................................... 760,259,892

LIABILITIES
Payables:
Investments purchased............................................ $22,373,675
Offering costs (Note A).......................................... 856,500
Withholding taxes................................................ 1,466,109
Accrued management fee (Note C).................................. 606,255
Other accrued expenses (Note C).................................. 410,618
-----------

Total liabilities.......................................... 25,713,157
------------
Net assets, at market value......................................... $734,546,735
============
NET ASSETS
Net assets consist of:
Accumulated net realized gain.................................... $ 11,053,379
Net unrealized appreciation on:
Investments.................................................. 322,286,115
Won.......................................................... 41,730
Won related transactions..................................... 21,820
Common stock..................................................... 369,305
Additional paid-in capital....................................... 400,774,386
------------
Net assets, at market value......................................... $734,546,735
============

NET ASSET VALUE per share ($734,546,735 -:- 36,930,508 shares of
common stock issued and outstanding, 50,000,000 shares authorized,
$.01 par value)................................................... $19.89
======
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
[LOGO]The Korea Fund, Inc.
Financial Statements (continued)
- --------------------------------------------------------------------------------------------------------------

- --------------------------------------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME
Income:
Dividends (net of withholding taxes of $904,810) (Note A)..... $ 4,130,508
Interest (net of withholding taxes of $276,758) (Note A)...... 1,803,719
---------------
5,934,227

Expenses:
Management fee (Note C)........................................ $ 6,260,081
Directors' fees and expenses (Note C).......................... 174,331
Custodian fees................................................. 1,173,802
Legal.......................................................... 151,170
Auditing....................................................... 103,612
Reports to shareholders........................................ 123,123
Services to shareholders....................................... 81,147
Other.......................................................... 111,554 8,178,820
--------------- ---------------
Net investment loss............................................... (2,244,593)
---------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT TRANSACTIONS
Net realized gain during the period on:
Investments.................................................... 13,172,511
Won related transactions....................................... 597,431 13,769,942
---------------
Net unrealized appreciation during the period on:
Investments.................................................... 65,993,286
Won............................................................ 12,003
Won related transactions....................................... 21,272 66,026,561
--------------- ---------------
Net gain on investment transactions............................... 79,796,503
---------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS................. $ 77,551,910
===============
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED JUNE 30,
--------------------------------
INCREASE (DECREASE) IN NET ASSETS 1995 1994
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Operations:
Net investment loss................................................... $ (2,244,593) $ (749,702)
Net realized gain from investment transactions........................ 13,769,942 5,972,730
Net unrealized appreciation on investment transactions during
the period.......................................................... 66,026,561 179,703,180
------------ ------------
Net increase in net assets resulting from operations...................... 77,551,910 184,926,208
------------ ------------
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
rights offering, net of broker and dealer manager fees of
$4,006,960 and expenditures and offering costs of $860,000......... 109,617,621 -
------------ ------------
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......................................... 1,798,229 106,509
------------ ------------
INCREASE IN NET ASSETS.................................................... 184,608,105 292,339,540
Net assets at beginning of period......................................... 549,938,630 257,599,090
------------ ------------
NET ASSETS AT END OF PERIOD............................................... $734,546,735 $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 rights offering........... 7,386,102 -
Shares issued in connection with the Fund's fourth tranche offering... - 6,865,671
Shares issued to shareholders in reinvestment of distributions........ 69,421 4,882
------------ ------------
Shares outstanding at end of period....................................... 36,930,508 29,474,985
============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>
<TABLE>
[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.
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------
1995 1994 1993 1992 1991
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of period............... $18.66 $11.40 $10.75 $ 10.27 $ 14.45
------ ------ ------ ------- -------
Income from investment operations (a):
Net investment income (loss)................... (.07) (.03) .02 .08 .09
Net realized and unrealized gain (loss) on
investment transactions..................... 2.50(b) 7.13 .86 .78 (2.13)
------ ------ ------ ------- -------
Total from investment operations................... 2.43 7.10 .88 .86 (2.04)
------ ------ ------ ------- -------
Less distributions from:
Net investment income.......................... - (.01) (.04) (.06) -
Net realized gains on investment
transactions................................ (.15) - (.20) (.34) (2.20)
------ ------ ------ ------- -------
Total distributions................................ (.15) (.01) (.24) (.40) (2.20)
------ ------ ------ ------- -------
Antidilution (dilution) resulting from the rights
offering (1995), fourth tranche (1994), and
reinvestment of distributions for shares at
market value................................... (1.02) .22 .01 .02 .06
------ ------ ------ ------- -------
Broker and dealer manager fees and
offering costs................................. (.03) (.05) - - -
------ ------ ------ ------- -------
Net asset value, end of period..................... $19.89 $18.66 $11.40 $ 10.75 $ 10.27
====== ====== ====== ======= =======
Market value, end of period........................ $19.63 $22.00 $15.00 $ 11.38 $ 14.13
====== ====== ====== ======= =======
TOTAL RETURN
Per share market value (%)......................... (5.43) 46.74 34.54 (17.01) (23.57)
Per share net asset value (%) (c).................. 13.00 63.77 8.20 7.87 (14.91)
RATIOS AND SUPPLEMENTAL DATA
Net assets, end of period ($ millions)............. 735 550 258 241 228
Ratio of operating expenses to average
net assets (%)................................. 1.32 1.37 1.52 1.52 1.47
Ratio of net investment income (loss) to
average net assets (%)......................... (.36) (.18) .15 .70 .83
Portfolio turnover rate (%)........................ 10.5 14.3 14.3 18.2 19.2
<FN>
(a) Based on monthly average of shares outstanding during each period.

(b) Due to the timing and magnitude of the rights offering, the amount reported herein is not proportional to the aggregate
value reported in the Statements of Operations and Changes in Net Assets and Note E to the financial statements.

(c) 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.
</FN>
</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 ($39,776,807) over the
local share price ($194,180,131) for these securities valued by the Valuation
Committee was approximately 5.4% of the Fund's net assets at June 30, 1995.
Other securities valued in good faith by the Valuation Committee amounted to
$40,380,462 or 5.5% of the Fund's net assets at June 30, 1995.

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 June 30, 1995 the exchange rate for Korean won was U.S. $.001319 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.

RIGHTS OFFERING. During the year ended June 30, 1995, the Fund issued 7,386,102
shares in connection with a rights offering of the Fund's shares. Shareholders
of record on June 5, 1995 were issued one transferable right for each share
owned. The rights entitle shareholders the opportunity to purchase one share of
common stock for each four rights held at a subscription price of $15.50 per
share. Rights offering costs were approximately $860,000 and broker and dealer
manager fees were $4,006,960. The net asset value per share of the Fund's common
shareholders was reduced by approximately $1.02 per share as a result of
the share issuance.

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 and acquisition discounts are accreted for both tax and financial
reporting purposes.

B. PURCHASES AND SALES OF SECURITIES
---------------------------------
For the year ended June 30, 1995, purchases and sales of investment securities
(excluding short-term investments) aggregated $62,394,762 and $70,934,118,
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.

<PAGE>
===============================================================================

For the year ended June 30, 1995, the fee pursuant to such agreements amounted
to $6,260,081 which was equivalent to an annual effective rate of 1.01% 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.

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 year ended June 30, 1995, brokerage commissions on investment
transactions amounting to $74,082 were paid by the Fund to Daewoo Securities
Co., Ltd., the parent company of the Korean Adviser.

The Fund paid 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 year ended June 30,
1995, Directors' fees and expenses amounted to $174,331.

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 and Economy issued
thereunder impose certain limitations and controls which generally affect
foreign investors in Korea. The Fund has obtained from the Minister of Finance
and Economy 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 and Economy 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 and Economy 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 and Economy 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 Economy 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.

<PAGE>
[LOGO]The Korea Fund, Inc.
Notes to Financial Statements (continued)
===============================================================================

At December 1, 1994, the general limit was increased from 10% to 12%. Effective
July 1, 1995, the general limit increased from 12% to 15%. 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.

<TABLE>
E. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) (000 OMITTED)
---------------------------------------------------------
<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)
March 31, 1995 4,878 .17 2,977 .10 (1,963) (.08) 1,014 .02
June 30, 1995 33 .00 (2,139) (.07) 15,982 .49 13,843 .42
------ ---- ------- ----- -------- ----- -------- -----
Totals $5,934 $.20 $(2,245) $(.07) $ 79,797 $2.65 $ 77,552 $2.58
====== ==== ======= ===== ======== ===== ======== =====
<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.
</FN>
</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 June 30, 1995, and
the related statement of operations for the year then ended, the statements
of changes in net assets for each of the two years in the period then ended,
and the financial highlights for each of the five years in the period then
ended. 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 June 30, 1995 by correspondence with the custodian and brokers. 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 June 30, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the two years
in the period then ended, and the financial highlights for each of the five
years in the period then ended in conformity with generally accepted accounting
principles.

As explained in Note A, the financial statements include certain equity and
convertible debt securities valued at $40,380,462 (5.5% of net assets) and
equity securities valued at a premium of $39,776,807 (5.4% 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.
August 23, 1995

<PAGE>
[LOGO]The Korea Fund, Inc.
Tax Information
===============================================================================

Pursuant to section 852 of the Internal Revenue Code, the Fund designates
$8,791,734 as capital gain dividend for its fiscal year ended June 30, 1995.

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).

The Fund paid taxes to the Republic of Korea of $.03 per share during the
taxable year ended June 30, 1995. Pursuant to an election made by the Fund
under Section 853 of the Internal Revenue Code, shareholders may treat their
proportionate share of such taxes as having been paid by them. During the same
year, the Fund recognized $.03 per share of foreign source income, all of which
was derived from the Republic of Korea.

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 Plan

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 provides for cash investments in Fund
shares of $100 to $3,000 semiannually through State Street Bank and Trust
Company, the Plan Agent.

Automatic Participation

Each shareholder of record is automatically a participant in the Plan
unless the shareholder has instructed the Plan Agent in writing otherwise. Such
a notice must be received by the Plan Agent not less than 10 days prior to the
record date for a dividend or distribution in order to be effective with respect
to that dividend or distribution. A notice which is not received by that time
will be effective only with respect to subsequent dividends and distributions.

Shareholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
shareholder by State Street Bank and Trust Company, as dividend paying agent.

Shares Held by a Nominee

If your shares are held in the name of a brokerage firm, bank, or other
nominee as the shareholder of record, please consult your nominee (or any
successor nominee) to determine whether it is participating in the Plan on your
behalf. Many nominees are generally authorized to receive cash dividends unless
they are specifically instructed by a client to reinvest. If you would like your
nominee to participate in the Plan on your behalf, you should give your nominee
instructions to that effect as soon as possible.

Pricing of Dividends and Distributions

If the market price per share on the payment date for the dividend or
distribution (the "Valuation Date") equals or exceeds net asset value per share
on that date, the Fund will issue new shares to participants at the greater of
the following on the Valuation Date: (a) net asset value, or (b) 95% of the mean
market price. The Valuation Date will be the dividend or distribution payment
date or, if that date is not a New York Stock Exchange trading date, the next
preceding trading date. If the net asset value exceeds the market price of Fund
shares at such time, participants in the Plan are considered to have elected to
receive shares of stock from the Fund, valued at market price, on the Valuation
Date. In either case, for Federal income tax purposes, the shareholder receives
a distribution equal to the market value on Valuation Date of new shares issued.
State and local taxes may also apply. If the Fund should declare an income
dividend or net capital gains distribution payable only in cash, the Plan Agent
will, as agent for the participants, buy Fund shares in the open market, on the
New York Stock Exchange or elsewhere, for the participants' account on, or
shortly after, the payment date.

Voluntary Cash Purchases

Participants in the Plan have the option of making additional cash payments
to the Plan Agent, semiannually, in any amount from $100 to $3,000, for
investment in the Fund's shares. The Plan Agent will use all such monies
received from participants to purchase Fund shares in the open market on or
about February 15 and August 15. Any voluntary cash payments received more than
30 days prior to these dates will be returned by the Plan Agent, and interest
will not be paid on any uninvested cash payments. To avoid unnecessary cash
accumulations, and also to allow ample time for receipt and processing by the
Plan Agent, it is suggested that participants send in voluntary cash payments to
be received by the Plan Agent approximately ten days before February 15, or
August 15, as the case may be. A participant may withdraw a voluntary cash
payment by written notice, if the notice is received by the Plan Agent not less
than 48 hours before such payment is to be invested.

29
<PAGE>

Participant Plan Accounts

The Plan Agent maintains all participant accounts in the Plan and furnishes
written confirmation of all transactions in the account, including information
needed by participants for personal and tax records. Shares in the account of
each plan participant will be held by the Plan Agent in non-certificated form in
the name of the participant, and each participant will be able to vote those
shares purchased pursuant to the Plan at a shareholder meeting or by proxy.

No Service Fee to Reinvest

There is no service fee charged to participants for reinvesting dividends
or distributions from net realized capital gains. The Plan Agent's fees for the
handling of the reinvestment of dividends and capital gains distributions will
be paid by the Fund. There will be no brokerage commissions with respect to
shares issued directly by the Fund as a result of dividends or capital gains
distributions payable either in stock or in cash. However, participants will pay
a pro rata share of brokerage commissions incurred with respect to the Plan
Agent's open market purchases in connection with the reinvestment of any
dividends or capital gains distributions payable only in cash.

Costs for Cash Purchases

With respect to purchases of Fund shares from voluntary cash payments, the
Plan Agent will charge $0.75 for each such purchase for a participant. Each
participant will pay a pro rata share of brokerage commissions incurred with
respect to the Plan Agent's open market purchases of Fund shares in connection
with voluntary cash payments made by the participant.

Brokerage charges for purchasing small amounts of stock for individual
accounts through the Plan are expected to be less than the usual brokerage
charges for such transactions, because the Plan Agent will be purchasing stock
for all participants in blocks and pro-rating the lower commission thus
attainable.

Amendment or Termination

The Fund and the Plan Agent each reserve the right to terminate the Plan.
Notice of the termination will be sent to the participants of the Plan at least
30 days before the record date for a dividend or distribution. The Plan also may
be amended by the Fund or the Plan Agent, but (except when necessary or
appropriate to comply with applicable law, rules or policies of a regulatory
authority) only by giving at least 30 days' written notice to participants in
the Plan.

A participant may terminate his account under the Plan by written notice to
the Plan Agent. If the written notice is received 10 days before the record day
of any distribution, it will be effective immediately. If received after that
date, it will be effective as soon as possible after the reinvestment of the
dividend or distribution.

If a participant elects to sell his shares before the Plan is terminated,
the Plan Agent will deduct a $2.50 fee plus brokerage commissions from the sale
transaction.

Plan Agent Address and Telephone Number

You may obtain more detailed information by requesting a copy of the Plan
from the Plan Agent. All correspondence (including notifications) should be
directed to: The Korea Fund Dividend Reinvestment and Cash Purchase Plan, c/o
State Street Bank and Trust Company, P.O. Box 8200, Boston, MA 02266-8200,
1-800-426-5523.

30
<PAGE>

Investment Manager
- --------------------------------------------------------------------------------

The investment manager and administrator of The Korea Fund, Inc. (the
"Fund") is Scudder, Stevens & Clark, Inc. ("Scudder"), 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 nine other open-end investment companies
which invest primarily in foreign securities.

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.

31
<PAGE>

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

DR. SANG C. LEE
Director

TAI HO LEE
Director

DR. 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.