N-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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Number: 3235-0578
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FORM N-Q
QUARTERLY
SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED MANAGEMENT
INVESTMENT COMPANY
Investment Company Act File Number: 811-04058
Registrant Name: The Korea Fund, Inc.
Address of Principal Executive Offices: 4 Embarcadero Center, 30th Floor, San Francisco,
CA 94111
Name and Address of Agent for Service: Brian S. Shlissel — 1345 Avenue of the Americas, New York,
New York 10105
Registrant’s telephone number, including area code: 212-739-3369
Date of Fiscal Year End: June 30, 2009
Date of Reporting Period: September 30, 2008
Form N-Q
is to be used by management investment companies, other than small business
investment companies registered on Form N-5 (§§ 239.24 and 274.5 of this chapter), to file reports
with the Commission, not later than 60 days after the close of the first and third fiscal quarters,
pursuant to rule 30b 1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-5). The
Commission may use the information provided on Form N-Q in its regulatory, disclosure review,
inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-Q, and the Commission will
make this information public. A registrant is not required to the collection of information
contained in Form N-Q unless the Form displays a currently valid Office of Management and Budget
(“OMB”) control number. Please direct comments concerning the accuracy of the information
collection burden estimate and any suggestions for reducing the burden to the Secretary, Securities
and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this
collection of information under the clearance requirements of 44 U.S.C. § 3507.
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| Item 1. |
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Schedule of Investments |
The Korea Fund, Inc. Schedule of Investments
September 30, 2008 (unaudited)
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| Shares |
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Value* |
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| COMMON STOCK—93.5% |
| Chemicals—2.1% |
27,873 |
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KCC Corp. (d) |
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$ |
8,694,594 |
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| Commercial Banks—7.9% |
291,410 |
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Hana Financial Group, Inc. |
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6,853,205 |
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1,397,260 |
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Korea Exchange Bank |
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12,976,660 |
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384,106 |
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Shinhan Financial Group Co., Ltd. |
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13,742,387 |
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33,572,252 |
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| Commercial Services & Supplies—2.8% |
231,633 |
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S1 Corp. (d) |
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11,800,365 |
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| Communications—3.8% |
462,110 |
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KT Corp. |
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15,956,634 |
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| Construction & Engineering—9.3% |
107,942 |
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GS Engineering & Construction Corp. (d) |
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8,717,018 |
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300,000 |
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Heerim Architects & Planners |
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2,129,001 |
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258,378 |
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Hyundai Development Co. (d) |
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9,651,198 |
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234,802 |
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Hyundai Engineering & Construction Co., Ltd. (d) |
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14,084,672 |
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213,890 |
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Korea Plant Service & Engineering Co., Ltd. |
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4,941,855 |
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39,523,744 |
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| Consumer Finance—2.2% |
269,899 |
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Samsung Card Co., Ltd. |
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9,206,748 |
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| Diversified Industrials—2.4% |
192,519 |
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LG Corp. (d) |
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10,024,735 |
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| Electronic Equipment & Instruments—1.4% |
134,591 |
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SFA Engineering Corp. (d) |
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6,001,037 |
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| Food & Staples Retailing—6.3% |
60,748 |
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CJ Cheil Jedang Corp. (b) |
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9,877,510 |
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41,051 |
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CJ Home Shopping |
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2,356,557 |
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30,365 |
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Nong Shim Co., Ltd. (d) |
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5,576,916 |
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18,615 |
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Shinsegae Co., Ltd. |
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8,785,931 |
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26,596,914 |
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| Insurance—3.0% |
71,704 |
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Samsung Fire & Marine Insurance Co., Ltd. |
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12,552,219 |
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| Internet Software & Services—5.2% |
155,719 |
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Daum Communications Corp. (b)(d) |
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5,339,903 |
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684,503 |
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LG Dacom Corp. |
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12,158,116 |
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34,326 |
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NHN Corp. (b)(d) |
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4,403,072 |
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21,901,091 |
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| Media—2.2% |
49,437 |
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Cheil Communications, Inc. |
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9,280,887 |
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| Metals & Mining—11.3% |
392,595 |
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Dongkuk Steel Mill Co., Ltd. |
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12,124,225 |
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221,930 |
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Hyundai Steel Co. (d) |
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11,134,426 |
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65,892 |
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POSCO |
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24,718,693 |
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47,977,344 |
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The Korea Fund, Inc. Schedule of Investments
September 30, 2008 (unaudited)
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| Shares |
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Value* |
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| Pharmaceuticals—3.0% |
72,005 |
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Yuhan Corp. (d) |
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$ |
12,914,060 |
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| Road & Rail—2.1% |
108,846 |
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Korea Express Co., Ltd. (b) |
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8,817,191 |
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| Semi-conductors—13.0% |
866,880 |
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Hynix Semiconductor, Inc. (b)(d) |
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14,364,683 |
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88,669 |
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Samsung Electronics Co., Ltd. |
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40,632,869 |
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54,997,552 |
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| Shipbuilding—3.0% |
252,693 |
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Daewoo Shipbuilding & Marine Engineering Co., Ltd. (d) |
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6,378,554 |
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28,147 |
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Hyundai Heavy Industries Co., Ltd. (d) |
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6,516,131 |
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12,894,685 |
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| Tobacco—4.6% |
258,896 |
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KT&G Corp. |
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19,323,243 |
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| Wholesale—6.6% |
496,560 |
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Daewoo International Corp. (d) |
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13,060,194 |
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333,320 |
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Samsung Corp. (d) |
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14,772,371 |
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27,832,565 |
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| Wireless Telecommunications Services—1.3% |
31,799 |
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SK Telecom Co., Ltd. |
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5,443,133 |
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Total Common Stock (cost—$347,183,901) |
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395,310,993 |
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| SHORT-TERM INVESTMENT—22.9% |
| Collateral Invested for
Securities on Loan (c)—22.9% |
97,296,755 |
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BNY Institutional Cash Reserves
Fund, 2.089% (cost—$97,296,755) |
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97,072,002 |
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Total Investments
(cost—$444,480,656) (a)—116.4% |
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492,382,995 |
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Liabilities in excess of other
assets—(16.4)% |
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(69,384,274 |
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Net Assets—100.0% |
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$ |
422,998,721 |
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Notes to Schedule of Investments:
*Portfolio securities and other financial instruments for which market quotations are readily
available are stated at market value. Market value is generally
determined on the basis of last reported sales prices, or if no sales
are reported, based on quotes obtained from a quotation reporting
system, established market makers, or pricing services.
Portfolio securities and other financial instruments for which market quotations are not readily
available or if a development/event occurs that may significantly impact the value,
are fair-valued, in good faith, by the Board of Directors or
persons acting at the Board’s direction pursuant to guidelines established by the Board of Directors.
The Fund’s investments are valued daily and the net asset value (‘‘NAV’’) is calculated as of the
close of regular trading (normally 4:00 p.m. Eastern time) on the New York Stock Exchange
(‘‘NYSE’’) on each day the NYSE is open for business using prices supplied by dealer quotations, or
by using the last sale price on the exchange that is the primary market for such securities, or the
last quoted mean price for those securities for which the over-the-counter market is the primary
market or for listed securities in which there were no sales. With respect to Korean equity
securities, the Fund fair values its securities daily using modeling tools provided by a
statistical research service. This service utilizes statistics and programs based on historical
performance of markets and other economic data (which may include changes in the value of U.S.
securities or security indices). Short-term securities maturing in 60 days or less are valued at
amortized cost, if their original term to maturity was 60 days or less, or by amortizing their
value on the 61st day prior to maturity, if the original term to maturity exceeded 60 days. The
prices used by the Fund to value securities may differ from the value that would be realized if the
securities were sold.
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Securities with an aggregate value of $395,310,993, representing 93.5% of net assets, have been
valued utilizing modeling tools provided by a third-party vendor. |
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| (b) |
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Non-income producing. |
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| (c) |
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Security purchased with cash proceeds from securities on loan. |
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| (d) |
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All or portion of securities on loan with an aggregate market
value of $89,399,847; cash
collateral of $97,296,755 was received with which the Fund purchased short-term investments. |
Fair Value Measurements—Effective July 1, 2008, the Fund adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements” (“SFAS
157”). This standard clarifies the definition of fair value for financial reporting, establishes a
framework for measuring fair value and requires additional disclosures about the use of the fair
value measurements. The three levels of the fair value hierarchy under SFAS 157 are described
below:
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Level 1 — quoted prices in active markets for identical investments |
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Level 2 — other significant observable inputs (including quoted prices for
similar investments, interest rates, prepayment speeds, credit risk, etc.) |
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Level 3 — significant unobservable inputs (including the Fund’s own
assumptions in determining the fair value of investments) |
The valuation techniques used by the Fund to measure fair value during the three months ended
September 30, 2008 maximized the use of observable inputs and minimized the use of unobservable
inputs. The Fund utilized the following fair value technique:
estimation of the price that would have prevailed in a liquid market
for international equities given information available at the time of evaluation.
The inputs or methodology used for valuing securities are not necessarily an indication of the risk
associated with investing in those securities.
The following is a summary of the inputs used at September 30, 2008 in valuing the Fund’s
investments carried at value:
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| Valuation Inputs |
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Investments
in
Securities |
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Level 1 — Quoted Prices |
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$ |
— |
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Level 2 — Other Significant Observable Inputs |
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492,382,995 |
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Level 3 — Significant Unobservable Inputs |
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— |
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Total |
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$ |
492,382,995 |
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| Item 2. |
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Controls and Procedures |
(a) The
registrant’s President & Chief Executive Officer and
Treasurer, Principal Financial & Officer have
concluded that the registrant’s disclosure controls and
procedures (as defined in Rule 30a-3(c)
under the Act (17 CFR 270.30a-3(c))), are effective based on their evaluation of these
controls and procedures as of a date within 90 days of the filing date of this document.
(b) There were no significant changes in the registrant’s internal controls over financial
reporting (as defined in Rule 30a-3 (d) under the Act (17 CFR
270.30a-3(d))) that occurred during
the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting.
(a) Exhibit 99.302 Cert. — Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Registrant: The Korea Fund, Inc.
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| By: |
/s/ Robert Goldstein
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Robert Goldstein |
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President & Chief Executive Officer |
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Date:
November 25, 2008
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| By: |
/s/ Brian S. Shlissel
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Brian S. Shlissel |
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Treasurer, Principal Financial & Accounting Officer |
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Date:
November 25, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act
of 1940, this report has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
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| By: |
/s/ Robert Goldstein
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Robert Goldstein |
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President & Chief Executive Officer |
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Date:
November 25, 2008
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| By: |
/s/ Brian S. Shlissel
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Brian S. Shlissel |
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Treasurer, Principal Financial & Accounting Officer |
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Date:
November 25, 2008