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<SEC-DOCUMENT>0000088053-01-000310.txt : 20010308
<SEC-HEADER>0000088053-01-000310.hdr.sgml : 20010308
ACCESSION NUMBER:		0000088053-01-000310
CONFORMED SUBMISSION TYPE:	N-30D
PUBLIC DOCUMENT COUNT:		1
CONFORMED PERIOD OF REPORT:	20001231
FILED AS OF DATE:		20010306

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			KOREA FUND INC
		CENTRAL INDEX KEY:			0000748691
		STANDARD INDUSTRIAL CLASSIFICATION:	UNKNOWN SIC - 0000 [0000]
		IRS NUMBER:				133226146
		STATE OF INCORPORATION:			MD
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		N-30D
		SEC ACT:		
		SEC FILE NUMBER:	811-04058
		FILM NUMBER:		1562134

	BUSINESS ADDRESS:	
		STREET 1:		345 PARK AVE
		STREET 2:		C/O SCUDDER STEVENS & CLARK INC
		CITY:			NEW YORK
		STATE:			NY
		ZIP:			10154
		BUSINESS PHONE:		6173305464
</SEC-HEADER>
<DOCUMENT>
<TYPE>N-30D
<SEQUENCE>1
<FILENAME>0001.txt
<DESCRIPTION>SEMIANNUAL REPORT - THE KOREA FUND, INC.
<TEXT>



[LOGO]

THE KOREA
FUND, INC.


Semiannual Report
December 31, 2000

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




<PAGE>




[LOGO] 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

For Fund Information: 1-800-349-4281

Transfer Agent, Registrar and Dividend Reinvestment Plan Agent

For Account Information: 1-800-621-1048

   Kemper Service Company
   P.O. Box 219153
   Kansas City, MO 64121-9153

Custodian

   Brown Brothers Harriman & Co.

   Subcustodian -- Citibank, N.A. - Seoul office

Legal Counsel

   Debevoise & Plimpton

Independent Accountants

   PricewaterhouseCoopers LLP

New York Stock Exchange Symbol -- KF

Contents
- --------------------------------------------------------------------------------

Letter to Stockholders ....................................................    3
Other Information .........................................................    6
Investment Summary ........................................................    8
Portfolio Summary .........................................................    9
Investment Portfolio ......................................................   10
Financial Statements ......................................................   17
Financial Highlights ......................................................   20
Notes to Financial Statements .............................................   21
Report of Independent Accountants..........................................   26
Stockholder Meeting Results ...............................................   27
Dividend Reinvestment and Cash Purchase Plan ...............................  28
Directors and Officers ....................................................   30







- --------------------------------------------------------------------------------
This report is sent to the stockholders 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>


[LOGO] The Korea Fund, Inc.
Letter to Stockholders
- --------------------------------------------------------------------------------

Dear Stockholders:

   The year 2000 was abysmal for Korea, particularly during the second half. The
country ranks among the worst-performing markets in the world for the year. At
the beginning of 2000, we believed Korea had embraced sufficient reform to
sustain growth at the macroeconomic level and that an encouraging number of
Korean companies were committed to increasing shareholder value to support
expanding valuations. As the year progressed, however, it became increasingly
apparent that Korea was taking almost as many steps backward as forward. The
staggering potential and renewed momentum for change encountered a ballast of
old, vested interests and the traditional economic system. These forces have
slowed the restructuring process which in turn has been buffeted by external
factors such as weakening export demand, tightening global liquidity and
deflationary forces. Against this backdrop, The Korea Fund's NAV total return
for the semiannual period was -35.28%, while its share price total return
declined 23.86% to close at $10.56 per share, representing a discount of 17.4%
to NAV.

Investment Backdrop

   The event that has had perhaps the most lingering impact on the market during
the period was the decision by Ford Motor Company to withdraw its offer for
Daewoo's auto division, a move that raised anxieties over the slowing pace of
restructuring in Korea. The consensus view is that after several years of rapid
progress on this front, the chaebols (Korea's traditional, family-run
conglomerates) are growing increasingly resistant to change. At Zurich Scudder
Investments, we feel that investors reacted too strongly to this development,
given that occasional setbacks in the restructuring process are inevitable. We
firmly believe that Korea's commitment to growing more competitive in the global
marketplace will lead to significant structural changes over the next 10 years.

   Korea's stock market has also been pressured by the explosive rise in oil
prices, which is viewed as a distinct negative given the country's dependence on
imports to fill its energy needs. However, oil is not as important to the
economy as it was in the past, given that the technology and service areas have
become very significant drivers of Korea's economic growth. Another concern was
that the semiconductor cycle had entered the early stages of a downturn, though
we feel that this is essentially a short-term issue. In general, Korean
technology, media and telecommunications stocks (TMT) were further hampered by
the global slump in TMT throughout most of the period.

   The power of the chaebol (Korea's large, industrial conglomerates) needs to
be further reduced for true economic restructuring to occur. Chaebols have the
reputation of operating their empires with a certain disregard for existing
laws. In the past, government planners arranged for chaebols to receive cheap
capital to enter industries deemed important for Korea's development. This
combination succeeded in industrializing Korea rapidly, but this practice became
inappropriate as the economy developed and matured. Additionally, some of the
chaebols' apparent insensitivity to the views of minority shareholders has
discouraged foreign investment at a time when Korea needs outside capital.

Fund Strategy

   We continue to emphasize intensive fundamental research to identify
well-managed companies with strong balance sheets, lower-than-average debt
ratios and promising prospects for long-term profit growth. This strategy has
led us to concentrate our holdings in a select group of the country's top-tier,
global




                                       3
<PAGE>

[LOGO] The Korea Fund, Inc.
Letter to Stockholders
- --------------------------------------------------------------------------------

companies, as well as some smaller companies that have demonstrated
consistent earnings growth. Over the last year, using our seven-member research
team on the ground in Korea, we have been able to identify attractive, unlisted
companies whose shares we have begun to include in the portfolio. Our
expectation is that these companies will become publicly listed within a
reasonable time. Since the 1997-1998 financial crisis, an extraordinary number
of new companies has been created, far exceeding the number of bankruptcies.
This is clear evidence of the transformation that is taking place within the
structure of Korean industry. Despite the problems facing telecommunications in
recent months, we remain very positive on this sector for 2001 and the long
term.

   Our holdings include SK Telecom, Korea Telecom, KTM.com, and Korea Telecom
Freetel. Despite our long-term enthusiasm for the telecommunications sector, we
have decided to reduce somewhat our position in SK Telecom since its
extraordinary performance -- an eighty-fold increase since our first purchases
- -- had led to a significant overweighting in the portfolio. As stockholders have
been informed in a separate communication, we are reducing the SK Telecom
holding by transferring ownership of part of it directly to you, thereby giving
you the option of either holding the shares or selling them at the market price
on the New York Stock Exchange. The portfolio will continue to hold an
important, though somewhat reduced, position in the company.

   Our second largest holding is Samsung Electronics. After a very strong year
in 2000, the company will be facing a more challenging environment given the
weakness of semiconductor prices at the moment. Longer term, however, we remain
very positive on the company's prospects. It has been a core holding of the fund
since inception and over the years has demonstrated an impressive ability to
adjust to rapidly changing industry conditions. We have been disappointed,
however, in certain aspects of the company's corporate governance and have been
active in representing stockholders' interests in the knowledge that improved
corporate governance will have a beneficial impact on the share price over time.

Outlook

   The present government is in a unique position to challenge the chaebols.
President Dae Jung Kim was the first opposition leader to be properly elected.
Striking progress has already been achieved. Daewoo is defunct, for example, and
the government has challenged Hyundai. Government policy continues to evolve and
remains committed to reform. On June 13, 2000 there was an historic meeting
between the leaders of North and South Korea in Pyongyang. A second meeting
between President Kim and the North Korean leader, Kim Jong IL has been
scheduled for some time this year in Seoul. These meetings are highly
significant and indicate that some form of change is under way in North Korea.
All the evidence points to the fact that the economic situation in the North is
disastrous and that the country has trouble even feeding its population. Kim
Jong IL, visited factories in China recently, suggesting that he is willing to
look overseas to find solutions for his country's economic and industrial
problems. While a rapid rapprochement between the two Koreas is unlikely, over
time there is every likelihood that relations will gradually improve. The
economic, political, and humanitarian imperative is too strong to resist.

   The positives in Korea's outlook include:

o    Leadership committed to reform

o    Fast transformation into a new economy

o    A highly educated workforce

o    A high level of Internet usage



                                       4
<PAGE>

[LOGO] The Korea Fund, Inc.
Letter to Stockholders
- --------------------------------------------------------------------------------

o    Companies with global scale and global competitiveness

o    A growing awareness of corporate governance and of the rights of minority
     investors

o    A newfound focus on profitability and return on capital

o    Attractive valuations by global standards

   The stature of President Kim as a leader has been enhanced by the Nobel Peace
Prize, strengthening his position on the global stage and in north-east Asia in
particular. Despite the challenges that the Korean economy currently faces, the
general direction of government policy is positive. Restructuring of the
industrial and financial sectors of the economy continues. While the stock
market performed badly in 2000, the foundations have been laid for a much more
satisfactory 2001.


   Thank you for your interest and your ongoing support.


Sincerely,

/s/ Nicholas Bratt              /s/ Juris Padegs

Nicholas Bratt                  Juris Padegs
President                       Chairman of the Board
and Director                    and Director



                                       5
<PAGE>



[LOGO] The Korea Fund, Inc.
Other Information
- --------------------------------------------------------------------------------

Investment Manager

         The investment manager of The Korea Fund, Inc. is Zurich Scudder
Investments, Inc., formerly Scudder Kemper Investments, Inc., (the "Manager"),
one of the most experienced investment management firms in the world.
Established in 1919, the firm manages investments for institutional and
corporate clients, retirement and pension plans, insurance companies, mutual
fund investors, and individuals. The Manager has offices throughout the United
States and has subsidiaries in the United Kingdom, Switzerland, Hong Kong, and
Japan.

         The Manager has been a leader in international investment management
for over 40 years. It manages Scudder International Fund, which was originally
incorporated in Canada in 1953 as the first foreign investment company
registered with the United States Securities and Exchange Commission. The
Manager's clients that invest primarily in foreign securities include 21
open-end investment companies as well as portfolios for institutional investors.

         The Manager also manages the assets of other closed-end investment
companies that invest primarily in foreign securities, including: The Argentina
Fund, Inc., The Brazil Fund, Inc., Scudder Global High Income Fund, Inc., and
Scudder New Asia Fund, Inc.

Korean Adviser

         Daewoo Capital Management Co., Ltd., registered under the U.S.
Investment Advisers Act of 1940, acts as Korean adviser to Zurich Scudder
Investments, 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 the Manager. The staff makes specific investment
recommendations, which are then evaluated by the Manager's research department
and portfolio managers in light of their own expertise and information from
other sources in making investment decisions for the fund.

         It is expected that Scudder Investments Korea, Ltd., a subsidiary of
the Manager, will acquire certain assets from Daewoo Capital Management Co.,
Ltd. and will become Korean adviser to the Manager. Korean regulatory approval
for this transaction is pending.

A Team Approach to Investing

   The Korea Fund, Inc. is managed by a team of 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's
portfolio. They are supported by the Manager's large staff of economists,
research analysts, traders, and other investment specialists who work in the
Manager's offices across the United States and abroad. The Manager believes the
team approach benefits fund investors by bringing together many disciplines and
leveraging its extensive resources.

   Lead Portfolio Manager John J. Lee has set fund investment strategy and
overseen its daily operation since 1991, the year he joined the Manager's global
equity area. Portfolio manager Nicholas Bratt has been a member of the fund team
since 1984 when the fund was launched and has over 27 years of experience in
worldwide investing. Mr. Bratt, who has been with the Manager since 1976, is the
Director of the Manager's Global Portfolio Management Group.

Dividend Reinvestment and Cash Purchase Plan

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



                                       6
<PAGE>

- --------------------------------------------------------------------------------
reinvested in shares of the fund. We believe this Plan is attractive for
stockholders. Its features are more fully described on page 28.

Net Asset Value

   The fund's NAV is published every weekday 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 stockholders, 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 Zurich Scudder
Investments, Inc. banner.






                                       7
<PAGE>



[LOGO] The Korea Fund, Inc.
Investment Summary as of December 31, 2000
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
Historical
Information
                                      Total Return (%)
<S>                <C>      <C>         <C>        <C>         <C>        <C>       <C>        <C>
               -------------------------------------------------------------------------------------
                  Market Value        Net Asset Value (a)         Index (b)            Index (c)
               -------------------   --------------------   -------------------  -------------------
                           Average                Average               Average              Average
               Cumulative   Annual   Cumulative    Annual   Cumulative   Annual  Cumulative   Annual
               -------------------   --------------------   -------------------  -------------------
Current Quarter    -10.77      --      -18.74         --       -27.46       --      -17.71       --
One Year           -37.01  -37.01      -44.24     -44.24       -55.77   -55.77      -50.92   -50.92
Three Year          63.15   17.72      192.09      42.95        69.61    19.26       34.10    10.27
Five Year          -48.49  -12.43      -31.51      -7.29       -65.00   -18.94      -42.85   -10.59
Ten Year             3.06     .30       40.57       3.46       -58.95    -8.52      -27.51    -3.17

- ------------------------------------------------------------------------------------------------------
</TABLE>

Per Share Information and Returns (a)
Yearly Periods Ended December 31, 2000

THE PRINTED DOCUMENT CONTAINS A BAR CHART HERE ILLUSTRATING THE FUND TOTAL
RETURN (%) WITH THE EXACT DATA POINTS LISTED IN THE TABLE BELOW.

<TABLE>
<CAPTION>
<S>                  <C>      <C>     <C>     <C>    <C>     <C>     <C>     <C>     <C>      <C>
                      1991    1992     1993   1994    1995    1996    1997    1998    1999    2000
                     --------------------------------------------------------------------------------------
Net Asset Value...   $10.55  $10.62  $16.64  $20.65  $20.04  $13.55  $ 4.44   $ 9.59  $23.13  $12.79
Income Dividends..   $ 0.06  $  .04  $  .01  $   --  $  .06  $   --  $   --   $   --  $   --  $  .17
Capital Gains
Distributions.....   $  .34  $  .20  $   --  $  .15  $  .36  $  .60  $   --   $   --  $   --  $   --
Total
Return (%)........    -2.05    2.71   56.77   24.84    4.26  -30.01  -66.50   115.99  141.19  -44.24
</TABLE>

(a)  Total investment returns reflect changes in net asset value per share
     during each period and assume that 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 price.

(b)  Korea Stock Price Index ("KOSPI") in U.S. Dollars.

(c)  Korea Stock Price Index ("KOSPI") in local terms.

     Past results are not necessarily indicative of future performance of the


                                       8
<PAGE>

[LOGO] The Korea Fund, Inc.

Portfolio Summary as of June 30, 2000
- --------------------------------------------------------------------------------

Diversification

A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.

Common Stocks               80%
Short-Term Investments      10%
Preferred Stocks             5%
Corporate Bonds              4%
Convertible Bonds            1%
                          -----
                           100%
                          -----

- --------------------------------------------------------------------------------

Sectors

                Sector breakdown of the Fund's equity securities

A PIE CHART APPEARS HERE, ILLUSTRATING THE EXACT DATA POINTS IN THE TABLE BELOW.

Communications            36%
Financial                 19%
Technology                18%
Consumer Staples           7%
Metals & Minerals          4%
Consumer Discretionary     4%
Durables                   3%
Manufacturing              2%
Service Industries         2%
Other                      5%
                         -----
                          100%
                         -----

- --------------------------------------------------------------------------------

Ten Largest Equity Holdings
     (68% of Portfolio)

1. SK Telecom Co., Ltd.
Provider of telecommunication services

2. Samsung Electronics Co., Ltd.
Manufacturer of industrial electronic parts and consumer products

3. Samsung Fire & Marine Insurance
Writer of non-life insurance policies, such as auto, fire and marine

4. Samsung Electro-Mechanics Co., Ltd.
Manufacturer of precision electronic parts

5. Pohang Iron & Steel Co., Ltd.
Producer of steel products

6. H & CB
Provider of a full range of commercial banking services as well as housing
finance services

7.
Shinhan Bank
Provider of commercial banking and internet banking services

8. Kookmin Bank
Provider of commercial banking and internet banking services

9. Hyundai Motor Co., Ltd.
Manufacturer and seller of automobiles and auto parts

10.Samsung SDI Co., Ltd.
Manufacturer and distributor of electronic components




                                       9
<PAGE>



[LOGO] The Korea Fund, Inc.
Investment Portfolio as of December 31, 2000
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------

                                                   Principal
                                                  Amount (c)       Value ($)
- -----------------------------------------------------------------------------------------------------------
<S>                                                                             <C>              <C>
SHORT-TERM INVESTMENTS 10.5%

Federal Home Loan Bank, 5.75%**, 1/2/2001................................. U.S.$  5,000,000       4,999,201
Federal Home Loan Mortgage Corporation, 5.7%**, 1/2/2001.................. U.S.$ 25,966,000      25,961,889
Federal National Mortgage Association, 5.75%**, 1/2/2001 ................. U.S.$ 30,000,000      29,995,208
                                                                                                -----------
Total Short-Term Investments (Cost $60,956,298) ..........................                       60,956,298
                                                                                                -----------
- -----------------------------------------------------------------------------------------------------------
CORPORATE BONDS 3.8%

Consumer Staples 0.0%
Haitai Confectionery Co., 2%, 11/28/2009 (b) .............................      784,805,479         380,891
                                                                                                -----------
Financial 1.7%

Korea Exchange Bank, 13.75%, 6/30/2010.................................... U.S.$ 10,000,000      10,000,000
                                                                                                -----------
Durables 0.4%

Nexen Tire Corp., 9.5%, 5/27/2002 (b) ....................................    3,000,000,000       2,410,993
                                                                                                -----------
Utilities 1.7%

Korea Electric Power Co., 6.375%, 12/1/2003............................... U.S.$ 10,000,000       9,777,800
                                                                                                -----------
Total Corporate Bonds (Cost $20,961,315) .................................                       22,569,684
                                                                                                -----------
- -----------------------------------------------------------------------------------------------------------

CONVERTIBLE BONDS 1.0%

Consumer Staples 0.6%

Food & Beverage

Halim & Co., Ltd., 5% with 42.27% bonus interest at maturity,
  12/31/2001 (b) (d) (f) .................................................    3,400,000,000       3,536,718
                                                                                                -----------
Durables 0.3%

Tires

Hankook Tire Co., Ltd., Zero Coupon with 5.83% bonus interest
  at maturity, 12/31/2002 (b) (d) ........................................    1,890,000,000       1,480,965
                                                                                                -----------
Technology 0.1%

Miscellaneous

S. E. Co., Ltd., 4% with 38.61% bonus interest at maturity,
  12/31/2003 (b) (d) (h) .................................................      500,000,000         395,257
                                                                                                -----------
Total Convertible  Bonds (Cost $5,901,393) ...............................                        5,412,940
                                                                                                -----------
- -----------------------------------------------------------------------------------------------------------
</TABLE>

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


                                       10
<PAGE>
[LOGO] The Korea Fund, Inc.
Investment Portfolio
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                                                             Shares       Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                        <C>           <C>
PREFERRED STOCKS 5.0%

Consumer Discretionary 0.1%
Department & Chain Stores
Shinsegae Department Store Co. ......................................................................        20,784        633,378
                                                                                                                         ---------
Hotels & Casinos 0.0%
Hotel Shilla Co., Ltd.* .............................................................................        32,070         83,661
                                                                                                                         ---------
Consumer Staples 0.8%

Food & Beverage
Cheil Jedang Corp. (f) ..............................................................................       297,200      3,406,640
Cheil Jedang Corp. (2nd) (f) ........................................................................        50,335        557,067
Cheil Jedang Corp. (3rd) (f) ........................................................................        30,201        325,884
Nam Yang Dairy Products Co., Ltd. (f) ...............................................................         1,160        151,304
                                                                                                                         ---------
                                                                                                                         4,440,895
                                                                                                                         ---------
Health 0.0%

Pharmaceuticals
Korea Green Cross Corp. (2nd) (New)* ................................................................         3,262         46,674
                                                                                                                         ---------
Financial 1.0%
Insurance 0.7%
Samsung Fire & Marine Insurance .....................................................................       533,850      4,009,150
                                                                                                                         ---------
Other Financial Companies 0.3%
Dongwon Securities Co. ..............................................................................       435,000        722,134
Dongwon Securities Co.* (2nd) .......................................................................       211,750        334,783
LG Investment & Securities Co., Ltd. ................................................................       470,000      1,096,047
                                                                                                                         ---------
                                                                                                                         2,152,964
                                                                                                                         ---------
Durables 0.5%

Automobiles
Hyundai Motor Co., Ltd. (2nd) .......................................................................       738,593      2,773,373
                                                                                                                         ---------
Manufacturing 0.3%

Chemicals
LG Chemical Co., Ltd. ...............................................................................       292,430      1,560,397
                                                                                                                         ---------
Technology 2.3%

Electronic Components/Distributors
Samsung SDI Co., Ltd. ...............................................................................        34,318        480,181


    The accompanying notes are an integral part of the financial statements



                                       11
<PAGE>


                                                                                                            Shares        Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------
Samsung Electro-Mechanics Co., Ltd.* (f) ............................................................       180,000      1,992,095
Samsung Electronics Co., Ltd. (e) ...................................................................       198,201     10,810,964
                                                                                                                        ----------
                                                                                                                        13,283,240
                                                                                                                        ----------
Total  Preferred Stocks (Cost $33,080,509) ..........................................................                   28,983,732
                                                                                                                        ----------
- ----------------------------------------------------------------------------------------------------------------------------------

COMMON STOCKS 79.7%

Consumer Discretionary 3.0%

Department & Chain Stores 1.2%
Hyundai Department Store Co., Ltd. ..................................................................       500,000      2,648,221
Shinsegae Department Store Co. ......................................................................       119,014      4,243,108
                                                                                                                        ----------
                                                                                                                         6,891,329
                                                                                                                        ----------
Hotels & Casinos 0.2%
Hotel Shilla Co., Ltd.* .............................................................................       378,391      1,346,055
                                                                                                                        ----------
Specialty Retail 1.6%
LG Home Shopping, Inc. ..............................................................................       414,000      9,098,182
                                                                                                                        ----------
Consumer Staples 4.9%
Alcohol & Tobacco 1.5%
Hite Brewery Co., Ltd. ..............................................................................        50,000      1,422,925
Kook Soon Dang Co., Ltd. ............................................................................       250,000      2,262,846
Korea Tobacco and Ginseng Corp. .....................................................................       319,880       4,804,52
                                                                                                                        ----------
                                                                                                                         8,490,293
                                                                                                                        ----------

Food & Beverage 2.9%
Cheil Jedang Corp. (f) ..............................................................................        99,606      2,401,568
Haitai Confectionery Co.* (b) .......................................................................       296,200        449,568
Halim & Co., Ltd.* (f) ..............................................................................     2,808,988      2,620,242
Nam Yang Dairy Products Co., Ltd. (f) ...............................................................        43,390      8,575,099
Nhong Shim Co., Ltd. ................................................................................        93,601      3,329,680
                                                                                                                        ----------
                                                                                                                        17,376,157
                                                                                                                        ----------
Textiles 0.5%
BYC Co., Ltd. (f) ...................................................................................        39,530      1,206,212
Tae Kwang Industrial Co., Ltd. ......................................................................        11,760      1,761,676
                                                                                                                        ----------
                                                                                                                         2,967,888
                                                                                                                        ----------

    The accompanying notes are an integral part of the financial statements

                                       12
<PAGE>





                                                                                                           Shares        Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------

Health 1.2%

Pharmaceuticals
Yuhan Corporation ...................................................................................       228,970      7,240,158
                                                                                                                       -----------
Communications 31.1%

Cellular Telephone 29.8%
KT M.com Co., Ltd.* .................................................................................       784,969      5,621,991
Korea Telecom Freetel ...............................................................................       330,000      8,569,565
SK Telecom Co., Ltd. (e) ............................................................................       251,590     50,318,000
SK Telecom Co., Ltd. (ADR)* (e) .....................................................................     4,627,930    109,045,601
                                                                                                                       -----------
                                                                                                                       173,555,157
                                                                                                                       -----------

Telephone/Communications 1.3%
Korea Telecom Corp. .................................................................................       130,570      6,915,565
Locus Corp. .........................................................................................        50,000        397,233
                                                                                                                       -----------
                                                                                                                         7,312,798
                                                                                                                       -----------

Financial 15.2%

Banks 8.4%
H & CB (ADR) ........................................................................................     1,741,281     19,589,411
Hanvit Bank* (b) ....................................................................................     2,000,000        537,549
Kookmin Bank ........................................................................................       420,000      4,947,036
Kookmin Bank (GDS) ..................................................................................       535,022      6,701,151
Koram Bank Ltd. .....................................................................................     1,365,000      5,481,581
Shinhan Bank ........................................................................................       600,000      4,932,806
Shinhan Bank (GDR) ..................................................................................       408,798      6,949,566
                                                                                                                       -----------
                                                                                                                        49,139,100
                                                                                                                       -----------

Insurance 5.1%
LG Insurance Co., Ltd. ..............................................................................     1,071,920      1,152,420
Oriental Fire & Marine Insurance Co. ................................................................       211,660        519,529
Samsung Fire & Marine Insurance .....................................................................     1,279,625     27,817,935
                                                                                                                       -----------
                                                                                                                        29,489,884
                                                                                                                       -----------
Other Financial Companies 1.7%
Dongwon Securities Co.* .............................................................................       356,500      1,104,727
Hankang Restructuring Fund* (g) .....................................................................     3,000,000      6,391,304
Kookmin Credit Card Co., Ltd.* ......................................................................       100,000      2,205,534
                                                                                                                       -----------
                                                                                                                         9,701,565
                                                                                                                       -----------

    The accompanying notes are an integral part of the financial statements


                                       13
<PAGE>





                                                                                                            Shares      Value ($)
- ----------------------------------------------------------------------------------------------------------------------------------

Media 0.5%

Advertising 0.1%
Cheil Communications, Inc. ..........................................................................        17,000        833,202
                                                                                                                       -----------
Cable Television 0.4%
Qrix Networks, Inc. (b) (h) .........................................................................       120,000      2,371,542
                                                                                                                       -----------
Service Industries 1.3%
Miscellaneous Commercial Services 0.4%
S1 Corp. ............................................................................................       278,270      2,221,760
Miscellaneous Consumer Services 0.9%
Brainrush Asia, Inc. (b) (h) ........................................................................       105,579      1,328,063
Korea Information & Communications Co., Ltd.* .......................................................       366,000      4,050,593
                                                                                                                       -----------
                                                                                                                         5,378,656
                                                                                                                       -----------
Durables 2.1%

Tires 1.0%
Hankook Tire Co., Ltd. ..............................................................................     3,335,275      4,469,005

Nexen Tire Corp. ....................................................................................       400,000      1,422,925
                                                                                                                       -----------
                                                                                                                         5,891,930
                                                                                                                       -----------
Automobiles 1.1%
Hyundai Motor Co., Ltd. (GDR)* ......................................................................     3,020,000      6,870,500
                                                                                                                       -----------
Manufacturing 1.7%

Chemicals 0.9%
Honam Petrochemical Corp. ...........................................................................       100,000        501,976
LG Chemical Co., Ltd. (GDR) .........................................................................       321,949      2,905,590
Samsung Fine Chemicals Co., Ltd. ....................................................................       225,000      1,618,577
                                                                                                                       -----------
                                                                                                                         5,026,143
                                                                                                                       -----------
Diversified Manufacturing 0.1%
Halla Climate Control Co. ...........................................................................        60,000        941,502
                                                                                                                       -----------
Machinery/Components/Controls 0.5%
HS R&A Co., Ltd. ....................................................................................       200,000      1,002,372
Samsung Climate Control Co., Ltd. (f) ...............................................................       827,630      1,962,759
                                                                                                                       -----------
                                                                                                                         2,965,131
                                                                                                                       -----------
Specialty Chemicals 0.2%
Korea Fine Chemical Co. .............................................................................        83,333      1,357,043
                                                                                                                       -----------

    The accompanying notes are an integral part of the financial statements


                                       14
<PAGE>



                                                                                                          Shares           Value ($)
- -----------------------------------------------------------------------------------------------------------------------------------

Technology 13.1%

Diverse Electronic Products 0.9%
Dae Duck Electronics Co. ............................................................................       631,447      4,966,718
                                                                                                                       -----------
Electronic Components/Distributors 11.2%
Jahwa Electronics Co., Ltd. .........................................................................        50,000        270,751
L G Electronics, Inc. (GDR) (b) .....................................................................       200,000        944,000
Samsung SDI Co., Ltd. ...............................................................................       245,306      9,114,136
Samsung Electro-Mechanics Co., Ltd.* (f) ............................................................       794,005     21,529,147
Samsung Electronics Co., Ltd. (e) ...................................................................       267,259     33,380,966
                                                                                                                       -----------
                                                                                                                        65,239,000
                                                                                                                       -----------
Semiconductors 0.1%

Jusung Engineering Co., Ltd.* .......................................................................       177,784        489,082
                                                                                                                       -----------
Miscellaneous 0.9%
Anycell, Inc. (b) (h) ...............................................................................     1,250,000      1,976,285
Insung Information Co., Ltd. ........................................................................       721,000      1,806,775
S.E. Co., Ltd. (b) (h) ..............................................................................       636,950      1,581,046
                                                                                                                       -----------
                                                                                                                         5,679,158
                                                                                                                       -----------
Energy 1.0%

Oil & Gas Production
S-Oil Corp. .........................................................................................        82,000      1,782,609
SK Corp. ............................................................................................       354,614      3,896,549
                                                                                                                       -----------
                                                                                                                         5,679,158
                                                                                                                       -----------
Metals & Minerals 3.5%

Steel & Metals
Pohang Iron & Steel Co., Ltd. .......................................................................       315,930     19,105,648
Pohang Iron & Steel Co., Ltd. (ADR) .................................................................        72,608      1,129,962
                                                                                                                       -----------
                                                                                                                        20,235,610
                                                                                                                       -----------
Utilities 1.1%

Electric Utilities
Korea Electric Power Co. ............................................................................       342,000      6,380,394
                                                                                                                       -----------
Total Common Stocks (Cost $323,918,789) .............................................................                  464,820,043
                                                                                                                       -----------
- ----------------------------------------------------------------------------------------------------------------------------------
Total Investment Portfolio-- 100.0% (Cost $444,818,304) (a) .........................................                  582,742,697
                                                                                                                       -----------
- ----------------------------------------------------------------------------------------------------------------------------------

</TABLE>


    The accompanying notes are an integral part of the financial statements


                                       15
<PAGE>

[LOGO] The Korea Fund, Inc.
Investment Portfolio
- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------

    * Non-income producing security.

   ** Annualized yield at time of purchase; not a coupon rate.

  (a) The cost for federal income tax purposes was $444,818,304. At December 31
      ,2000, net unrealized appreciation for all securities based on tax cost
      was $137,924,393. This consisted of aggregate gross unrealized
      appreciation for all securities in which there was an excess of value over
      tax cost of $237,198,553 and aggregate gross unrealized depreciation for
      all securities in which there was an excess of tax cost over value of
      $99,274,160.

  (b) Securities valued in good faith by the Valuation Committee of the Board of
      Directors at fair value amounted to $17,392,877 (2.7% of net assets).
      Their values have been estimated by the Board of Directors in the absence
      of readily ascertainable values. 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. The cost of
      these securities at December 31, 2000 aggregated $20,634,327. These
      securities may also have certain restrictions as to resale.

  (c) Principal amount stated in Korean Won unless otherwise noted. U.S.$
      represents United States Dollars.

  (d) Bonus interest represents the amount available to be paid to the holder at
      maturity in lieu of conversion.

  (e) At December 31, 2000, 32% of the Fund's net assets were invested in SK
      Telecom Co., Ltd. and Samsung Electronics Co., Ltd. (see Note H to the
      Notes to Financial Statements).

  (f) Affiliated issuers (see Note F to the Notes to Financial Statements).

  (g) Managed by Zurich Scudder Investments, Inc.

  (h) Included in (b) above are private placement securities with a market value
      which aggregated $7,652,192 (0.01% of net assets) at December 31, 2000. No
      quoted market price exists for these private placement securities.
      Information concerning such private placement securities at December 31,
      2000 is as follows:




      Security                               Acquisition Date       Cost ($)
      --------------------------------------------------------------------------
      Anycell, Inc.........................     12/22/2000          2,020,774
      Brainrush Asia, Inc..................     07/29/2000          1,504,365
      Qrix Networks, Inc...................     07/28/2000          2,686,367
      S.E. Co., Ltd. (convertible bond)....     12/22/2000            404,154
      S.E. Co., Ltd. (equity)..............     12/22/2000          1,616,637
                                                                 ------------
                                                                    8,232,297


    The accompanying notes are an integral part of the financial statements

                                       16
<PAGE>

The Korea Fund, Inc.
Financial Statements
- --------------------------------------------------------------------------------


- --------------------------------------------------------------------------------
 Statement of Assets and Liabilities
 December 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<S>                                                                            <C>
 ASSETS

Investments in securities, at value:
Unaffiliated issuers (cost $402,181,822) ..................................   $ 534,477,962
Affiliated issuers (cost $42,636,482) .....................................      48,264,735
                                                                          -----------------
Total investments in securities, at value (cost $444,818,304) .............     582,742,697
                                                                          -----------------
Cash ......................................................................          39,440
Won, at value (cost $48,675,545) ..........................................      45,985,296
Receivable for proceeds from maturities ...................................      18,549,779
Dividends receivable ......................................................         767,129
Interest receivable .......................................................         856,328
                                                                          -----------------
Total assets ..............................................................     648,940,669
                                                                          -----------------

LIABILITIES

Dividends payable .........................................................       8,500,000
Accrued management fee ....................................................         526,286
Other accrued expenses and payables .......................................         319,565
                                                                          -----------------
Total liabilities .........................................................       9,345,851
                                                                          -----------------
Net assets, at value ......................................................   $ 639,594,818
                                                                          =================
NET ASSETS


Net assets consist of:
Undistributed net investment income .......................................   $     411,993
Net unrealized appreciation (depreciation) on:
   Investments ............................................................     137,924,393
   Won related transactions ...............................................      (2,707,758)
Accumulated net realized gain (loss) ......................................     (26,121,941)
Paid-in capital ...........................................................     530,088,131
                                                                         ------------------
Net assets, at value ......................................................   $ 639,594,818
                                                                         ==================
Netasset value per share ($639,594,818 B 49,999,999 shares of capital stock
    outstanding, $.01 par value, 200,000,000 shares authorized) ...........   $       12.79
                                                                                    =======
</TABLE>

    The accompanying notes are an integral part of the financial statements


                                       17
<PAGE>

[LOGO] The Korea Fund, Inc.
Financial Statement
- --------------------------------------------------------------------------------
 Statement of Operations
 Six Months Ended December 31, 2000
- --------------------------------------------------------------------------------
<TABLE>
<S>                                                                                 <C>
 Investment Income
Income:
Dividends-- (net of foreign taxes withheld of $30,850) ....................   $   2,654,725
Interest-- Unaffiliated issuers (net of foreign taxes withheld of $566,833)       3,922,252
Interest-- Affiliated issuers (net of foreign taxes withheld of $9,897) ...          64,739
                                                                          -----------------
Total Income (net of foreign taxes withheld of $607,580) ..................       6,641,716
                                                                          -----------------
Expenses:
Management fee ............................................................       3,756,688
Services to shareholders ..................................................          14,898
Custodian and accounting fees .............................................         516,861
Auditing ..................................................................          60,745
Legal .....................................................................          83,910
Directors' fees and expenses ..............................................          81,666
Reports to shareholders ...................................................         102,851
Other .....................................................................          62,551
                                                                          -----------------
Total expenses before expense reductions ..................................       4,680,170
Expense reductions ........................................................         (48,630)
                                                                         ------------------
Total expenses after expense reductions ...................................       4,631,540
                                                                          -----------------
Net investment income (loss) ..............................................       2,010,176
                                                                          -----------------
Realized and unrealized gain (loss) on investment transactions
Net realized gain (loss) from:
Investments ...............................................................       3,974,577
Won related transactions ..................................................      (5,548,478)
                                                                         ------------------
                                                                                 (1,573,901)
Net unrealized appreciation (depreciation) during the period on:
Investments ...............................................................    (351,876,449)
Won related transactions ..................................................      (2,564,237)
                                                                         ------------------
                                                                               (354,440,686)
Net gain (loss) on investment transactions ................................    (356,014,587)
                                                                         ------------------
Net increase (decrease) in net assets resulting from operations ...........   $(354,004,411)
                                                                          =================
</TABLE>



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


                                       18
<PAGE>

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

- --------------------------------------------------------------------------------
 Statements of Changes in Net Assets
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                             Six Months
                                                                                Ended          Year Ended
                                                                            December 31,        June 30,
 Increase (Decrease) in Net Assets                                               2000              2000
- ----------------------------------------------------------------------------------------------------------------
<S>                                                                       <C>                    <C>
Operations:
Net investment income (loss) .........................................  $     2,010,176    $     2,372,275
Net realized gain (loss) on investment transactions ..................       (1,573,901)       148,775,458
Net unrealized appreciation (depreciation) on investment transactions.     (354,440,686)       (35,234,521)
                                                                       ----------------    ---------------
   during the period
Net increase (decrease) in net assets resulting from operations ......     (354,004,411)       115,913,212
                                                                       ----------------    ---------------
Distributions to shareholders from: ..................................       (8,500,000)                --
                                                                       ----------------    ---------------
   Net investment income
Increase (decrease) in net assets ....................................     (362,504,411)       115,913,212
Net assets at beginning of period ....................................    1,002,099,229        886,186,017
                                                                        ---------------    ---------------
Net assets at end of period (including undistributed net investment
income of $411,993 and $6,901,817, respectively)......................   $   639,594,818    $ 1,002,099,229
                                                                        ================   ================
Other Information
Shares outstanding at beginning and end of period ....................       49,999,999         49,999,999
                                                                        =================  ================
</TABLE>


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


                                       19
<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, 2000
                                                               ---------------------------------------------------------

                                                                2000       1999        1998       1997        1996
- ------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>           <C>        <C>         <C>        <C>         <C>

Per Share Operating Performance
Net asset value, beginning of period .............   $    20.04      $      17.72 $     5.63$    13.22 $    18.52 $    19.89
                                                        -------           -------    -------   -------    -------    -------
Income (loss) from investment operations:
Net investment income (loss) (a) .................          .04               .05        .04       .07        .07        .02
Net realized and unrealized gain (loss) on
   investment transactions .......................        (7.12)             2.27      12.05     (7.66)     (4.48)      (.97)
                                                        -------           -------    -------    ------     ------     ------
Total from investment operations .................        (7.08)             2.32      12.09     (7.59)     (4.41)      (.95)
                                                        -------           -------    -------    ------     ------     ------
Less distributions from:
Net investment income ............................         (.17)              --         --        --         --        (.06)
Net realized gains on investment transactions ....           --               --         --        --        (.60)      (.36)
                                                        -------           -------    -------   -------     ------     ------
Total distributions ..............................         (.17)            --         --        --          (.60)      (.42)
                                                        -------           -------    -------   -------     ------     ------
Antidilution (dilution) resulting from the
   rights offering (1997) and reinvestment of
   distributions for shares at market value ......           --                --         --        --       (.29)        --
                                                        -------           -------    -------   -------    -------    -------
Net asset value, end of period ...................   $    12.79      $      20.04 $    17.72$     5.63 $    13.22 $    18.52
                                                        =======           =======    =======   =======    =======    =======
Market value, end of period ......................   $    10.56      $      14.06 $    14.88$     6.31 $    14.75 $    21.13
                                                        =======           =======    =======   =======    =======    =======
Total Return (%)
Per share market value (%) .......................       (23.86)**          (5.46)    135.64    (57.20)    (26.11)      9.73
Per share net asset value (%) (b) ................       (35.28)**          13.09     214.74    (57.41)    (24.40)     (5.09)

Ratios to Average Net Assets and Supplemental Data
Net assets, end of period ($ millions) ...........          640             1,002        886       281        661        689
Ratio of expenses before expense reductions (%) ..         1.24*             1.20       1.36      1.38       1.28       1.28
Ratio of expenses after expense reductions (%) ...         1.23*             1.19       1.36      1.38       1.28       1.28
Ratio of net investment income (loss) (%) ........          .27(c)**          .24        .37       .90        .46        .10
Portfolio turnover rate (%) ......................           32*               31         10        24         13         33
</TABLE>

(a) Based on monthly average shares outstanding during the period.


(b) Total investment returns reflect changes in net asset value per share during
    each period and assume that 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 price.


(c) The ratio for the six months ended December 31, 2000 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).

*   Annualized

**  Not annualized




                                       20
<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 Fund's financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America which require the
use of management estimates. The policies described below are followed
consistently by the Fund in the preparation of its financial statements.

Security Valuation. Investments are stated at value determined as of the close
of regular trading on the New York Stock Exchange. Securities which are traded
on the 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. Money Market investments
purchased with an original 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.

Foreign Currency Translations. The books and records of the Fund are maintained
in U.S. dollars. Investment securities and other assets and liabilities
denominated in a foreign currency are translated into U.S. dollars at the
prevailing exchange rates at period end. Purchases and sales of investment
securities, income and expenses are translated into U.S. dollars at the
prevailing exchange rates on the respective dates of the transactions.

Net realized and unrealized gains and losses on foreign currency transactions
represent net gains and losses between trade and settlement dates on securities
transactions, the disposition of forward foreign currency exchange contracts and
foreign currencies, and the difference between the amount of net investment
income accrued and the U.S. dollar amount actually received. That portion of
both realized and unrealized gains and losses on investments that results from
fluctuations in foreign currency exchange rates is not separately disclosed but
is included with net realized and unrealized gains and losses on investment
securities.

At December 31, 2000 the exchange rate for Korean Won was U.S. $.00079 to W 1.

Repurchase Agreements. The Fund may enter into repurchase agreements with
certain banks and broker/dealers whereby the Fund, through its custodian or
sub-custodian bank, receives delivery of the underlying securities, the amount
of which at the time of purchase and each subsequent business day is required to
be maintained at such a level that the market value is equal to at least the
principal amount of the repurchase price plus accrued interest.

Forward Foreign Currency Exchange Contracts. A forward foreign currency exchange
contract (forward contract) is a commitment to purchase or sell a foreign
currency at the settlement date at a negotiated rate. During the period, the
Fund utilized forward contracts as a hedge against changes in the exchange rates
relating to foreign currency denominated assets.


Forward contracts are valued at the prevailing forward exchange rate of the
underlying currencies and unrealized gain/loss is recorded daily. Sales and
purchases of forward contracts having the same settlement date and broker are
offset and any gain (loss) is realized on the date of offset; otherwise, gain
(loss) is realized on settlement date. Realized and unrealized gains and losses
which represent the difference between the value of a forward contract to buy
and a forward contract to sell are included in net realized and unrealized gain
(loss) from foreign currency related transactions.




                                       21
<PAGE>


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

Certain risks may arise upon entering into forward contracts from the potential
inability of counterparties to meet the terms of their contracts. Additionally,
when utilizing forward contracts to hedge, the Fund gives up the opportunity to
profit from favorable exchange rate movements during the term of the contract.

Taxes. The Fund's policy is to comply with the requirements of the Internal
Revenue Code, as amended, which are applicable to regulated investment companies
and to distribute all of its taxable income to its shareholders. Accordingly,
the Fund paid no federal income taxes and no federal income tax provision was
required. At June 30, 2000, the Fund had a net tax basis capital loss
carryforward of approximately $23,558,000 which may be applied against any
realized net taxable capital gains of each succeeding year until fully utilized
or until June 30, 2007, whichever occurs first.

Under the United States-Korea Income Tax Treaty (the "Treaty"), as presently in
effect, the government of Korea imposes a nonrecoverable withholding tax and
resident tax aggregating 16.5% on dividends and 13.2% on interest earned by the
Fund from Korean issuers. Under the Treaty, there is no Korean withholding tax
on realized capital gains.

Distribution of Income and Gains. Distributions of net investment income, if
any, are made annually. Net realized gains from investment transactions, in
excess of available capital loss carryforwards, would be taxable to the Fund if
not distributed and, therefore, will be distributed to shareholders at least
annually.

The timing and characterization of certain income and capital gains
distributions are determined annually in accordance with federal tax regulations
which may differ from accounting principles generally accepted in the United
States of America. These differences primarily relate to investments in foreign
denominated investments, forward contracts, investments in passive foreign
investment companies and certain securities sold at a loss. As a result, net
investment income (loss), 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.

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.

Investment Transactions and Investment Income. Investment transactions are
accounted for on trade date. Interest income is recorded on the accrual basis.
Dividend income is recorded on the ex-dividend date. Certain dividends from
Korean securities may be recorded subsequent to the ex-dividend date as soon as
the Fund is informed of such dividends. Realized gains and losses from
investment transactions are recorded on an identified cost basis. All discounts
are accreted for both tax and financial reporting purposes.

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.

B. Purchases and Sales of Securities
   ----------------------------------

During the six months ended December 31, 2000, purchases and sales of investment
securities (excluding short-term investments) aggregated $145,691,839 and
$186,664,133, respectively.




                                       22
<PAGE>

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

C. Related Parties
   ----------------

Under the Investment Management Agreement (the "Agreement") with Zurich Scudder
Investments, Inc., formerly Scudder Kemper Investments, Inc., ("Scudder" or the
"Manager"), the Manager directs the investments of the Fund in accordance with
its investment objectives, policies and restrictions. The Manager determines the
securities, instruments and other contracts relating to investments to be
purchased, sold or entered into by the Fund. In addition to portfolio management
services, the Manager provides certain administrative services in accordance
with the Agreement. The management fee payable under the Agreement is equal to
an annual rate of 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 net
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. The market
value of Hankang Restructuring Fund, which is managed by Scudder, has been
excluded from the net assets used to calculate the management fee. For the six
months ended December 31, 2000, the Manager did not impose a portion of its fee
amounting to $48,630, and the portion imposed amounted to $3,708,058 which was
equivalent to an annualized effective rate of 0.98% of the Fund's average
month-end net assets.

Under the Agreement, the Manager pays Daewoo Capital Management Co., Ltd. (the
"Korean Advisor") 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. It is expected that Scudder Investments Korea, Ltd., a
subsidiary of the Manager, will acquire certain assets from Daewoo Capital
Management Co., Ltd. and will become Korean Advisor to the Manager. Korean
regulatory approval for this transaction is pending.

For six months ended December 31, 2000, there were no brokerage commissions on
investment transactions paid by the Fund to Daewoo Securities Co., Ltd., the
parent company of the Korean Advisor.

Scudder Service Corporation ("SSC"), a subsidiary of the Manager, provides
shareholder communications services for the Fund. Effective November 17, 2000,
Kemper Service Company ("KSC") a wholly owned subsidiary of the Manager, is the
shareholder service agent of the Fund. For the six months ended December 31,
2000, the amount charged by SSC and KSC to the Fund aggregated $12,781, of which
$5,528 is unpaid at December 31, 2000.

Scudder Fund Accounting Corporation ("SFAC"), a subsidiary of the Manager, is
responsible for determining the daily net asset value per share and maintaining
the portfolio and general accounting records of the Fund. For the six months
ended December 31, 2000, the amount charged to the Fund by SFAC aggregated
$175,371, of which $17,347 is unpaid at December 31, 2000.

The Fund pays each Director not affiliated with the Manager or the Korean
Advisor an annual retainer plus specified amounts for attended board and
committee meetings. For the six months ended December 31, 2000, Directors' fees
and expenses aggregated $81,666.

D. Foreign Investment and Exchange Controls in Korea
   -------------------------------------------------

The Foreign Exchange Transaction 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 or to repatriate from investment principal up
to




                                       23
<PAGE>


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

10% of the net asset value (taken at current value) of the Fund (except upon
termination of the Fund, or for expenses in excess of Fund income, in which case
the foregoing restriction shall not apply). 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 may issue
orders when it deems that transactions cannot be normally concluded due to
natural disaster, warfare, uprising, sudden change in economic conditions, or
other incidents similar thereto, or order the temporary closing of the
securities market or take other necessary measures. Under the Foreign Exchange
Transaction 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.

Currently there are certain restrictions with respect to investing in equity
securities of certain designated public corporations and telecommunication
corporations listed on the Korea Stock Exchange. As of December 31, 2000, two of
the Fund's holdings had ownership limits still in place: Pohang Iron & Steel
Co., Ltd., which had a foreign ownership limit of 30%, and SK Telecom Co., Ltd.,
which had a foreign ownership limit of 49%.

E. Investing in the Korean Market
   ------------------------------

Investing in the Korean market may involve special risks and considerations not
typically associated with investing in the United States. These risks include
revaluation of currency, high rates of inflation, Korean taxes, repatriation
restrictions on income and capital, corporate bankruptcy and future adverse
political and economic developments.

Moreover, securities issued in this market may be less liquid, subject to
government ownership controls, delayed settlements and their prices more
volatile than those of comparable securities in the United States.

At December 31, 2000, included in receivable for proceeds from maturities in the
statement of assets and liabilities is $539,802 (0.09% of net assets) due from a
company in the process of restructuring its debt. This amount has been valued in
good faith by the Valuation Committee of the Board of Directors.

F. Transactions in Securities of Affiliated Issuers
   ------------------------------------------------

An affiliated issuer is a company in which the Fund has ownership of at least 5%
of the voting securities. A summary of the Fund's transactions during the period
with companies which are or were affiliates is as follows:

<TABLE>
<CAPTION>

                                              Purchases         Sales
                   Affiliate                   Cost ($)         Cost ($)        Income ($)*      Value ($)
     ------------------------------------------------------------------------------------------------------------
<S>                                        <C>             <C>                <C>              <C>

     BYC Co., Ltd.                                     --              --                --         1,206,212
     Halim & Co., Ltd.                                 --              --            64,739         6,156,960
     Cheil Jedang Corp.                         1,973,549              --                --         6,691,159
     Samsung Climate Control Co., Ltd.          2,476,849              --                --         1,962,759
     Nam Yang Dairy Products Co., Ltd.                 --              --                --         8,726,403
     Samsung Electro-Mechanics Co., Ltd.        5,649,994              --                --        23,521,242
                                           --------------   -------------     -------------    --------------
                                               10,100,392              --            64,739        48,264,735
                                           ==============   =============     =============    ==============
</TABLE>




* Net of foreign taxes withheld.





                                       24
<PAGE>

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

G. Line of Credit
   --------------

The Fund and several affiliated Funds (the "Participants") share in a $1 billion
revolving credit facility with Chase Manhattan Bank for temporary or emergency
purposes. The Participants are charged an annual commitment fee which is
allocated pro rata based upon net assets among each of the Participants.
Interest is calculated based on the market rates at the time of the borrowing.
The Fund may borrow up to a maximum of 5 percent of its net assets under the
agreement.

H. In-Kind Dividend
   ----------------

On December 21, 2000, the Fund announced a special 10% in-kind dividend payable
in the form of American Depository Receipts (ADRs) of SK Telecom. This special
dividend is payable on February 28, 2001 to shareholders of record as of the
close of business on January 26, 2001. The total amount of SK Telecom ADRs to be
distributed will represent 10% of the Fund's net asset value at the time of
payment.




                                       25
<PAGE>

[LOGO] The Korea Fund, Inc.
Report of Independent Accountants9.
- --------------------------------------------------------------------------------

To the Board of Directors and the Shareholders of The Korea Fund, Inc.:

In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Korea Fund, Inc. (the "Fund")
at December 31, 2000, and the results of its operations, the changes in its net
assets and the financial highlights for each of the periods indicated therein,
in conformity with accounting principles generally accepted in the United States
of America. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with auditing standards generally accepted in the
United States of America which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 2000 by
correspondence with the custodians, provide a reasonable basis for the opinion
expressed above.

Boston, Massachusetts                       PricewaterhouseCoopers LLP
February 26, 2001




                                       26
<PAGE>

[LOGO] The Korea Fund, Inc.
Stockholder 10.Meeting Results (Unaudited)
- --------------------------------------------------------------------------------

The Annual Meeting of Stockholders of The Korea Fund, Inc.
(the "Fund") was held on October 4, 2000 at the office of
Zurich Scudder Investments, Inc., 345 Park Avenue, New York,
NY 10154. At the Meeting the following matters were voted upon
by the stockholders and the resulting votes are presented
below.


1.    To elect three Directors of the Fund to hold office for a term of three
      years or until their respective successors shall have been duly elected
      and qualified.

<TABLE>
<CAPTION>
                                                                     Number of Votes:
                                                                     ----------------
            Director (Class I)                     For                  Withheld           Broker Non-Votes*
            --------                               ---                  --------           -----------------
<S>                                            <C>                    <C>                   <C>

            Nicholas Bratt                     26,917,386              6,603,769                   0


            Director (Class III)
            --------

            Kenneth Froewiss                   26,877,527              6,604,602                   0

            Ronaldo A. da Frota                26,858,925              6,662,230                   0
              Nogueira
</TABLE>

2.      To ratify or reject the action taken by the Board of Directors in
        selecting PricewaterhouseCoopers LLP as the Fund's independent
        accountants for the fiscal year ending June 30, 2001.

<TABLE>
<CAPTION>
                                                                Number of Votes:
                                                                -----------------
                  For                      Against                    Abstain               Broker Non-Votes*
                  ---                      -------                    -------               -----------------
<S>                                         <C>                        <C>                          <C>
              33,360,599                    69,336                     91,220                       0
</TABLE>



- --------------------------------------------------------------------------------

*  Broker non-votes are proxies received by the Fund from brokers or nominees
   when the broker or nominee neither has received instructions from the
   beneficial owner or other persons entitled to vote nor has discretionary
   power to vote on a particular matter.




                                       27
<PAGE>

[LOGO] The Korea Fund, Inc.
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 Kemper Service Company, the Plan
Agent.

Automatic Participation

   Each stockholder of record is automatically a participant in the Plan unless
the stockholder 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.

   Stockholders who do not participate in the Plan will receive all
distributions in cash paid by check in dollars mailed directly to the
stockholder by Kemper Service 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 stockholder 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 stockholder 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



                                       28
<PAGE>

[LOGO] The Korea Fund, Inc.
Dividend Reinvestment and Cash Purchase Plan
- --------------------------------------------------------------------------------

less than 48 hours before such payment is to be invested.

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 stockholder 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
Kemper Service Company, P.O. Box 219153, Kansas City, MO, 64121-9153,
1-800-621-1048.


                                       29
<PAGE>

The Korea Fund, Inc.
Directors and Officers
- --------------------------------------------------------------------------------

Juris Padegs*
    Chairman of the Board and Director

NICHOLAS BRATT*
    President and Director

ROBERT J. CALLANDER
    Director

KENNETH C. FROEWISS
    Director

TAI HO LEE
    Director

RONALDO A. da FROTA NOGUEIRA
    Director

HUGH T. PATRICK
    Director

KESOP YUN
    Director

WILLIAM H. GLEYSTEEN, JR.
    Honorary Director

WILSON NOLEN
    Honorary Director

SIDNEY M. ROBBINS
    Emeritus Founding Director

JUDITH A. HANNAWAY*
    Vice President

JOHN J. LEE*
    Vice President

DONG WOOK PARK
    Vice President

JOHN MILLETTE*
    Vice President and Secretary

KATHRYN L. QUIRK*
    Vice President and Assistant Secretary

JOHN R. HEBBLE*
    Treasurer

BRENDA LYONS*
    Assistant Treasurer

CAROLINE PEARSON*
    Assistant Secretary

* Zurich Scudder Investments, Inc.




                                       30
<PAGE>


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                                       31
<PAGE>




</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
