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Korea Bond Fund PLC (KBF)

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Monday 04 June, 2001

Korea Bond Fund PLC

Interim Results

Korea Bond Fund PLC
31 May 2001



KOREA BOND FUND PLC

Interim Unaudited Report for the six months ended 31 March 2001



CONTENTS
                                             Page

General Information                            1

Investment Advisers' Report                    4

Portfolio of Investments                       5

Statement of Total Return                      6

Balance Sheet                                  7

Cashflow Statement                             8

Notes to the Interim Unaudited Report          9

Other Information                              14




KOREA BOND FUND PLC

General Information

The following information is derived from and should be read in conjunction with
the full text and definitions section of the Prospectus.

Korea Bond Fund plc (the 'Company') was incorporated on 31 May 1996 under the
laws of the Republic of Ireland, and is listed on the London Stock Exchange.

The Company is a closed-ended investment Company with variable capital,
authorised by the Central Bank of Ireland (the 'Bank'), pursuant to the
provisions of Part XIII of the Companies Act, 1990.

The Company has been authorised as a closed-ended investment company, which
markets its Shares solely to professional investors. Accordingly, some of the
requirements of the Bank which are deemed necessary for the protection of retail
investors, in particular the conditions set down by the Bank in relation to
investment and leverage, do not apply to the Company.

INVESTMENT OBJECTIVES AND POLICIES
The principal investment objective is to achieve a high level of income,
initially through the acquisition of a portfolio of five year bonds issued by
Korean corporations. If however, circumstances develop and the Company disposes
of this portfolio with the proceeds being reinvested in other Korean debt
securities, a secondary investment objective will be capital appreciation.

The Company is required to invest, unless the Investment Manager considers a
higher level of liquidity to be appropriate on a temporary basis, 80 per cent or
more of the Net Asset Value of the Company in Korean debt securities (including
equity related debt instruments such as convertible bonds) issued by national
and local governmental bodies, public sector, corporations, financial
institution and private corporations. This policy, which is required under the
license granted to the Company, the Ministry of Finance and Economy Korea (the
'License'), may under certain circumstances not be fully consistent with
otherwise prudent investment policies. Until such time as the Company shall be
permitted to invest in unlisted bonds, such investments shall be in listed
bonds.

The investment objectives and policies set out above will, in the absence of
unforeseen circumstances, be adhered to for at least three years following the
listing of the Shares on the London Stock Exchange becoming effective. Within
the first three years following the listing of the Shares on the London Stock
Exchange, prior approval of the Shareholders will also be required to any change
to the investment objectives and to any material change to the investment policy
of the Company. Thereafter, the Shareholders must approve any amendment in the
investment objectives of the Company and be notified of any amendment in its
investment policy. Prior approval of the Ministry of Finance and Economy and the
Central Bank will be required to amend the investment objectives and policy of
the Company at any time.

The Company may use forwards, swaps, futures, options, repurchase/reverse
repurchase and stocklending agreements relating to transferable securities for
the purpose of efficient portfolio management in accordance with the limits laid
down by the Central Bank. The Company may employ futures, options, swaps and/or
forwards for hedging purposes in any currency to provide protection against
exchange rate risks associated with all or part of its underlying investments
and proposed distributions or may employ forwards to protect against interest
rate risks in the context of the management of its assets and liabilities.


                                                                        1


KOREA BOND FUND PLC

General information cont/d

INVESTMENT OBJECTIVES AND POLICIES CONT/D
Under the License, the Company may engage in currency forward transactions or
over-the-counter financial futures transactions involving Won and foreign
currencies with foreign exchange banks, subject to the limits of the Gross
Asset Value of the Company for the purpose of hedging against exchange rate and
interest rate risks arising from investments made by the Company and subject to
the limits of the Central Bank.

PRICES
Shareholders are not entitled to have their Shares redeemed or repurchased
while the Company remains closed-ended except in the case of a winding up of
the Company. Should the Company become open-ended then Shareholders may redeem
their Shares at the relevant Net Asset Value per Share. A repurchase charge is
payable on any repurchase of Shares effected at the rate of three per cent of
the relevant Net Asset Value per Share.

VALUATION
A Business Day is any day (except Saturday or Sunday) on which commercial banks
in Dublin, New York City, London and Seoul are open for business. Valuation Day
is the Thursday in each week or if Thursday is not a Business Day, the next
succeeding Business Day. Should the Company become open-ended, not less than
ten Business Days prior written notice must be given for a repurchase of
Shares. All deals should be addressed to the Administrator:

Deutsche International Fund Services (Ireland) Limited 
Guild House 
Guild Street
International Financial Services Centre 
Dublin 1 
Ireland

Telephone:  353-1-6076300
Fax:        353-1-6076489


DIVIDENDS
The Directors may declare any such dividends to the Shareholders as appear to
the Directors to be appropriate. No dividend may be declared or paid other than
from funds lawfully available for distribution. Surpluses arising from the
realisation of investments shall not be available for distribution as dividends.
The Directors intend to distribute as dividends a substantial portion of
interest income or dividends received from the Company's investments less
expenses. The Directors expect that dividends, if any, will usually be paid
annually in or about October of each year, but the Directors may from time to
time approve the payment to Shareholders of such interim dividends as appear to
the Directors to be justified by the position of the Company.

MINIMUM INVESTMENT
Any further issue of Shares is subject to a minimum investment of the equivalent
of EUR 125,000.

                                                                          2


KOREA BOND FUND PLC

General information cont/d

SHARES

The Shares were placed at a price per Share of US$10.37 and the Company paid to
the Lead Managers, out of the proceeds of the Placing, a combined management
commission and selling concession equal to US$0.25 per Share for each Share
subscribed in the Placing. The Lead Managers agreed to pay the Company's
preliminary expenses and all other costs of the Placing, and the Company agreed,
in consideration thereof, to pay the Lead Managers US$0.12 per Share for each
Share subscribed in the Placing as a contribution to such costs and expenses.
The Placing of 10,500,000 Shares was underwritten by the Lead Managers.

SIGNIFICANT SHAREHOLDERS (IN EXCESS OF 10% OF THE SHARES IN ISSUE)

Shareholder                                   Shares       % Held
Morgan Guaranty Trust Co                   5,000,000       47.62%
LG Investments & Securities Co Ltd         2,500,000       23.81%
Korea Exchange Bank                        1,400,000       13.34%

CHANGE IN NAME OF INVESTMENT ADVISER
On 1 January 2001 the Investment Advisers, Zurich Scudder Investments, Inc.,
changed its name from Scudder Kemper Investments, Inc.

                                                                      3


KOREA BOND FUND PLC

Investment Adviser's Report for the six months ended 31 March 2001

The Korea Bond Fund returned -10.74% gross (assumes reinvestment of
distributions) in US$ terms during the six month period ending 31 March 2001.
Concerns over the progress of corporate restructurings as well as financial
stability during a period of external shocks emanating from slowing global
demand weighed on Korean assets during the period. The economic transition is
expected to take some time and financial markets will continue to monitor the
corporate and financial restructurings as well as both macro and domestic
economic conditions.

The won depreciated some 15% during the period as the main driver of the US$/Won
exchange rate was the US$/Yen cross-exchange rate. The depreciation of the
US$/Yen has led to selling of the Won as external weakness continues to be a
drag on export growth. The US and Japan account for roughly one third of Korea's
exports. So with Japan faltering and the potential for a sharp slowdown in the
United States rising, the prospects for an export led recovery have dimmed
putting additional pressure on the currency. Specifically, the demand for
high-tech products is expected to slow, adversely impacting exports as tech
accounts for some 30% of the export mix.

GDP forecasts for 2001 have been revised down to reflect anticipation of a
faster than expected weakening of domestic demand. Manufacturing production has
begun to drop and unemployment has started to rise. Private consumption has also
begun to slow as witnessed by the fall in wholesale and retail sales growth.
January's data has shown some sign of improvement but further indications are
necessary to upgrade the fundamental outlook. Industrial production rose for the
first time in five months in January with gains driven largely by
semiconductors. In addition, the consumer survey outlook index surged higher
after being flat for almost three months. However, closer inspection of the
industrial production numbers indicate the lack of a broad based rally. And
while consumer demand may be picking up, unemployment may cap any potential
recovery.

On the restructuring front, Korean Development Bank has begun implementing its
plans to assist companies facing short-term liquidity problems. KDB is expected
to buy up to KRW25 trillion worth of maturing bonds and help underwrite their
refinancing efforts. The government is also discussing plans to provide KRW54
trillion in new credit guarantees for CBOs, CL0s, and bank loans. Domestic
banks plan to roll over almost KRW350bln maturing in corporate debt for
companies including Hyundai Electronics and Hyundai Engineering and
Construction. With large maturities slated over the coming months, further
rollover measures are expected. However, the IMF has warned that generous
government bailouts could threaten any meaningful economic recovery and US
officials have expressed concerns over potential subsidies to electronic
exporters.

Evidence of a global economic recovery and further progress on the restructuring
front will impact the outlook for Korea during 2001. While signs of an economic
recovery remain ambiguous, global economic growth remains key for Korea. In
addition, further corporate adjustments need to be undertaken in order to insure
corporate viability and improvement in the balance sheets of financial
institutions. Success on these issues should lead to a sustainable economic
recovery which will provide an excellent investment environment for the Korea
Bond Fund plc.


Zurich Scudder Investments, Inc.
Date: 18 May 2001

                                                                     4

KOREA BOND FUND PLC

Portfolio of Investments as at 31 March 2001

NOMINAL         SECURITY*         SERIES  COUPON    MATURITY   VALUE US$ FUND %

15,000,000,000  CHOSUN BREWERY CO     84  11.00%  19/09/2001  11,447,664  16.26
 5,000,000,000  DAEHAN PULP           44  11.00%  11/10/2001   3,830,648   5.44
15,000,000,000  DONGBU STEEL CO       36  11.00%  30/09/2001  11,457,538  16.29
15,000,000,000  HANSOL PAPER CO      111  11.00%  01/10/2001  11,483,177  16.32
 5,000,000,000  KOOK MIN VENTURE       5  11.00%  01/10/2001   3,821,206   5.43
                  CAPITAL 
10,000,000,000  KUKJE CORPORATION     50  11.00%  20/10/2001   7,646,677  10.86
15,000,000,000  LG CALTEX OIL         88  11.00%  17/10/2001  11,487,900  16.32
 5,000,000,000  SHINMOORIM PAPER MFG  28  11.00%  09/09/2001   3,818,235   5.42

PORTFOLIO OF INVESTMENTS                                      64,993,045  92.34


Cash and bank balances                                         4,606,780   6.54

Debtors                                                          967,995   1.38

Creditors                                                       (179,794) (0.26)

NET ASSET VALUE AS AT 31/03/2001                              70,388,026 100.00


                                 31/03/2001      31/03/2000      31/03/1999

Net Asset Value               US$70,388,026   US$84,139,380   US$78,480,644

Number of Shares in Issue        10,500,000      10,500,000      10,500,000

Net Asset Value per Share           US$6.70         US$8.01         US$7.47


Note : With the exception of LG Caltex Oil Corporation, which has its own credit
rating from Moody's, all other securities have been guaranteed by a specific
guarantor bank.

Note : KUKJE Corporation defaulted on 31 August, 1998. Payments are being made
by the guarantor, Hanvit Bank, as successor to Hanil Bank. Hanvit Bank merged
with Commercial Bank of Korea and changed its name to Hanvit Bank.


* All securities are admitted to official stock exchange listing or are dealt in
  on another regulated market.

SECURITY                         GUARANTOR

CHOSUN BREWERY CO                HANVIT BANK
DAEHAN PULP CO                   KOREA DEVELOPMENT BANK
DONGBU STEEL CO                  KOREA EXCHANGE BANK
HANSOL PAPER CO                  KOREA DEVELOPMENT BANK
KOOKMIN VENTURE CAPITAL CO       KOOKMIN BANK
KUKJE CORPORATION                HANVIT BANK
SHINMOORIM PAPER MFG             KOREA DEVELOPMENT BANK

                                                                     5

KOREA BOND FUND PLC

Statement of Total Return for the six months ended 31 March 2001

                                             Six months            Six months
                                                  Ended                 Ended
                                               31/03/01              31/03/00
                         Note         US$           US$        US$        US$

Net gains on investments    2               (12,679,090)            7,497,108
   during the period   

Other gains and losses      3                    44,414                     0

Gross income                4   3,691,761                4,356,631

Expenses                    5    (424,291)                (466,233)

Net income for the period                     3,267,470             3,890,398

Total return for the period                  (9,367,202)           11,387,506

Distributions               6                (8,238,951)           (7,875,000)

Net increase in                             (17,606,153)            3,512,506
   Shareholders' funds 
   from investment 
   activities



Statement of Movements in Shareholders' Funds for the six months ended 31 March
2001

                                              Six months        Six months
                                          ended 31/03/01    ended 31/03/00
                                                     US$               US$

Net assets at the start of the period         87,994,179        80,626,874

Net increase in Shareholders' funds
from investment activities                   (17,606,153)        3,512,506

Net assets at the end of the period           70,388,026        84,139,380


                                                                     6

KOREA BOND FUND PLC

Balance Sheet as at 31 March 2001

                                          31//03/2001     31/03/2000
                               Note               US$            US$

Portfolio of Investments       1(e)        64,993,045     77,768,234

Net current assets

Debtors                          7            967,995      1,667,779

Cash and bank balances           8          4,606,780      4,813,522

                                            5,574,775      6,481,301

Less

Creditors                        9           (179,794)      (110,155)

Net current assets                          5,394,981      6,371,146

Net assets                                 70,388,026     84,139,380

Shareholders' Funds                        70,388,026     84,139,380


                                                                     7

KOREA BOND FUND PLC

Cashflow Statement for the six months ended 31 March 2001

                                                   2001                2000
                              Note      US$         US$      US$        US$

Net cash inflow from             A            3,937,946           3,637,659
operating activities   

Capital expenditure and 
   financial investment
Acquisition of investments                0                    0
Sale of investments                       0                    0

Net cash outflow from capital 
expenditure and financial 
investment

Dividends paid                   6           (8,238,951)         (7,875,000)

Net cash outflow                             (8,238,951)         (7,875,000)

Decrease in cash                             (4,301.005)         (4,237,341)


Movement in Cash                             (4,301,005)         (4,237,341)
Cash at 1 October                             8,907,785           9,050,863
Cash at 31 March                              4,606,780           4,813,522


NOTE A.
Reconciliation of Net Income to Net Cash Inflow from Operating Activities

                                                   2001                2000
                                                    US$                 US$

Net Income for the year                       3,267,470           3,890,398
Currency Exposure                3               44,414                   0
                                              3,311,884           3,890,398

Decrease/(increase) in debtors                  579,304            (258,430)
Increase/(decrease) in creditors                 46,758               5,691

Net cash inflow from operating 
activities                                    3,937,946           3,637,659



                                                                       8


KOREA BOND FUND PLC

Notes to the interim unaudited report for the six months ended 31 March 2001

1. Accounting policies

a) Basis of accounting
   The financial statements are prepared under the historical cost convention
   as modified by the inclusion of securities at valuation. The financial
   statements are prepared in US Dollars.

b) Income recognition
   Income on interest bearing securities together is accounted for on an
   accruals basis. Income is shown net of any withholding tax. Bank deposit
   interest is shown on a receipts basis.

c) Realised gains and losses on investments
   Realised gains and losses on sales of investments are calculated based on
   the average book cost of the investment in local currency. The associated
   foreign exchange movement between the date of purchase and the date of sale
   on the sale of investments is included in net gains or losses on investments
   in the Statement of Total Return.

d) Unrealised gains and losses on investments
   Unrealised gains and losses on investments arising during the year are taken
   to the Statement of Total Return.

e) Valuation of securities
   Bonds - Each individual bond within the portfolio is valued on a discounted
   basis by reference to the yield curves for bonds of similar credit rating and
   duration. A spread of 50 basis points is added to reflect the liquidity risk 
   inherent in the bond. This procedure has been approved by the Directors on   
   the recommendation of the Investment Advisers.

f) Foreign exchange
   Foreign currency assets and liabilities, including investments, are
   translated into US dollars at the exchange rate prevailing at the period
   end. The foreign exchange gain or loss based on the translation of the
   original cost of the investments is included in net gains or losses on
   investments in the Statement of Total Return. The gain or loss arising on
   the translation of other assets and liabilities is included in other gains
   or losses in the Statement of Total Return.

   Realised gains and losses arising between the transactions and settlement
   dates on purchases or sales of non-US Dollar investments are included in net
   gains or losses in the Statement of Total Return.


                                                                      9


KOREA BOND FUND PLC

Notes to the interim unaudited report for the six months ended 31 March 2001
cont/d

2. Net gains on investments during the period

   The net gains on investments during the period comprise:

                                             Six months       Six months
                                         ended 31/03/01            Ended        
                                                                31/03/00
                                                    US$              US$
                                                                    
Gains realised on investments sold                    0                0
during the period

Net unrealised depreciation at the           22,143,806       29,544,811
start of the period

Net unrealised depreciation at the          (34,822,896)     (22,047,703)
end of the period

Net gains on investments during             (12,679,090)       7,497,108
the period



3. Other Gains and Losses
                                             Six months       Six months
                                         ended 31/03/01            Ended        
                                                                31/03/00
                                                    US$              US$

Gains on currency exposure                       44,414                0



4. Gross income
                                             Six months       Six months
                                         ended 31/03/01            Ended        
                                                                31/03/00
                                                    US$              US$

Income from investments                       3,577,893        4,155,854
Bank interest                                   113,868          200,777
 
                                              3,691,761        4,356,631
                                               


                                                                      10

KOREA BOND FUND PLC

Notes to the interim unaudited report for the six months ended 31 March 2000
cont/d

5. Expenses
                                             Six months       Six months
                                         ended 31/03/01            Ended        
                                                                31/03/00
                                                    US$              US$

Payable to the Investment Manager
Investment Management fee                      (282,858)        (310,602)

Payable to the Administrator
Administration fee                              (36,929)         (41,379)

Payable to the Custodian
Custody fee                                     (18,465)         (20,690)

Other expenses
Directors' fees                                  (9,972)         (10,026)
Audit fee                                        (2,073)          (3,739)
Sub-Custody fee                                 (21,218)         (33,959)
Other                                           (52,776)         (45,838)

                                                (86,039)         (93,562)

Total expenses                                 (424,291)        (466,233)



6. Distributions
                                             Six months       Six months
                                         ended 31/03/01            Ended        
                                                                31/03/00
                                                    US$              US$

Undistributed income at 30 September          8,729,354        8,763,055

Distribution paid during the period*         (8,238,951)      (7,875,000)

Net income for the six months                 3,267,470        3,890,398
ended 31 March   

Undistributed income at 31 March              3,757,873        4,778,453

* Rate per Share                                US$0.78          US$0.75



                                                                      11


KOREA BOND FUND PLC

Notes to the interim unaudited report for the six months ended 31 March 2001
cont/d

7.  Debtors
                                           31/03/2001   31/03/2000
                                                  US$          US$

    Accrued income                             967,995    1,657,828
    Other debtors                                    0        9,951
                                              967,995    1,667,779

8.  Cash and bank balances
                                           31/03/2001   31/03/2000
                                                  US$          US$
  
    Cash and bank balances                   4,606,780    4,813,522

    All cash balances are held with 
    Deutsche Bank A.G., London.

9.  Creditors
                                           31/03/2001   31/03/2000
                                                  US$          US$

    Accrued expenses                         (179,794)    (110,155)


10. Investment in bonds

    The Company's portfolio consists of five year bonds issued by Korea
    Corporations. LG Securities Co., Limited  ('LGS') arranged for certain      
    Korean Corporations to issue such bonds in 1996, just prior to or during the
    time when the Company was assembling its bond portfolio. The Company's bond
    portfolio was purchased, in its entirety, from LGS at LGS's costs of        
    acquisition and funding. These bonds are currently listed on the Korea Stock
    Exchange. The Company is the sole holder of these bonds.

11. Exchange rates

    The following US$ exchange rate as at 31 March 2001 has been used in this
    report:

    KSWN     1,330.95

12. Soft commission arrangements

    There were no soft commission arrangements in existence during the period
    under review.

                                                                     12


KOREA BOND FUND PLC

Notes to the interim unaudited report for the six months ended 31 March 2001
cont/d

13. Portfolio changes

    There have been no purchases or sales of securities during the period under
    review.

14. Approval of the interim unaudited report

   The interim unaudited report was approved by the Board of Directors on 25
   May 2001.

                                                                      13


KOREA BOND FUND PLC

Other Information

INVESTMENT MANAGER

Korea Bond Fund Management Co., Limited
Ugland House
PO Box 309
South Church Street
George Town
Grand Cayman
Cayman Islands
British West Indies


INVESTMENT ADVISERS

Foreign Adviser                    Korean Adviser
Zurich Scudder Investments, Inc.   LG Investment Trust Management Co., Ltd
345 Park Avenue                    44-37, Yoido-dong, Youngdeungpo-ku
New York                           Seoul 150-010
New York 10154-0010                Korea
USA

Korean Adviser
Kyobo Investment Trust Management Co., Ltd
The Korean Securities Dealers Association
Building
11th Floor
34, Yoido-dong, Youngdeungpo-ku
Seoul 150-010
Korea

ADMINISTRATOR & REGISTRAR
Deutsche International Fund Services (Ireland) Limited
Guild House
Guild Street
International Financial Services Centre
Dublin 1
Ireland

CUSTODIAN
Deutsche International Custodial Services (Ireland) Limited
Guild House
Guild Street
International Financial Services Centre
Dublin 1
Ireland

                                                                   14

KOREA BOND FUND PLC

Other information cont/d

SUB-CUSTODIAN IN KOREA

Deutsche Bank A.G., Seoul Branch
Sei An Building 110-700
116, Shinmoonro 1-Ka Chong-Ro-Ka
Seoul
Korea

AUDITORS AND IRISH TAX ADVISERS

PricewaterhouseCoopers
Chartered Accountants
George's Quay
Dublin 2
Ireland

LEGAL ADVISERS
To the Company and the Lead Managers as to Irish Law
Dillon Eustace
Grand Canal House
1 Upper Grand Canal Street
Dublin 4
Ireland

To the Company and the Lead Managers as to English Law
Slaughter and May
35 Basinghall Street
London
EC2V 5DB
United Kingdom

To the Company as to Korean Law
Kim & Chang
Seyang Building
223, Naeja-dong, Chongro-ku
Seoul 100-053
Korea

To the Lead Managers as to Korean Law
Shin & Kim
Samdo Building
4th Floor
1-170, Soonhwa-dong, Chung-ku
Seoul 100-130, Korea

                                                                     15

KOREA BOND FUND PLC

Other information cont/d

LEGAL ADVISERS cont/d

To the Company and the Lead Managers as to United States law
Davis Polk & Wardell
Akasaka Twin Tower East
13th Floor
17-22, Akasaka 2-chome, Minato-ku
Tokyo 107
Japan

To the Investment Manager as to United States Law
Debevoise & Plimpton
875 Third Avenue
New York
New York 10022
USA

To the Investment Manager as to Cayman Islands Law
Maples & Calder
Ugland House
PO Box 309
South Church Street
Grand Cayman
Cayman Island
British West Indies


SECRETARY

Tudor Trust Limited
Grand Canal House
1 Upper Grand Canal Street
Dublin 4
Ireland


DIRECTORS

Mr. Juris Padegs
Mr. Kyu Won Cho
Mr. Yasushi li
Mr. David Dillon
Mr. Paul McNaughton

                                                                    16

KOREA BOND FUND PLC

Other information cont/d

LEAD MANAGERS

LG Securities Co., Ltd 
34-6 Yoido-dong, Youngdeungpo-ku 
Seoul 150-010 
Korea

Nomura International plc 
Nomura House 
1 St. Martin's le Grand 
London EC1A 4NP
United Kingdom


REGISTERED OFFICE

Guild House 
Guild Street 
International Financial Services Centre 
Dublin 1
Ireland


SPONSORING BROKER

NCB Stockbrokers Ltd 
3 George's Dock 
International Financial Services Centre
Dublin 1 
Ireland

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