UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY
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Investment Company Act file number 811-4058
Korea Fund, Inc.
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(Exact name of registrant as specified in charter)
345 Park Avenue
New York, NY 10154
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(Address of principal executive offices) (Zip code)
Salvatore Schiavone
Two International Place
Boston, Massachusetts 02110
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(Name and address of agent for service)
Registrant's telephone number, including area code: (617) 295-2663
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Date of fiscal year end: 06/30
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Date of reporting period: 9/30/04
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Form N-Q is to be used by registered management investment companies, other than
small business investment companies registered on Form N-5 (ss.ss. 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
30b1-5 under the Investment Company Act of 1940 (17 CFR 270.30b1-4). 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 respond 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. ss. 3507.
ITEM 1. SCHEDULE OF INVESTMENTS
The Korea Fund, Inc.
Investment Portfolio as of September 30, 2004 (Unaudited)
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Shares Value ($)
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Common Stocks 84.6%
Consumer Discretionary 15.1%
Auto Components 4.6%
Halla Climate Control Corp. 600,000 5,419,019
Hankook Tire Co., Ltd. 4,464,307 40,126,424
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45,545,443
Automobiles 4.3%
Hanil E-Wha Co., Ltd. 706,950 724,447
Hyundai Motor Co. (GDR) (Preferred) 144A 3,020,000 35,787,000
Nexen Tire Corp. 400,000 5,419,019
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41,930,466
Hotels Restaurants & Leisure 2.0%
Hotel Shilla Co., Ltd. 858,391 4,211,819
Kangwon Land, Inc. 1,471,530 15,846,263
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20,058,082
Internet & Catalog Retail 0.2%
LG Home Shopping, Inc. 56,200 2,169,422
Media 0.7%
Cheil Communications, Inc. 57,600 7,428,224
Multiline Retail 3.1%
Shinsegae Co., Ltd. 80,003 21,294,763
Taegu Department Store Co., Ltd. (b) 1,286,110 8,890,521
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30,185,284
Textiles, Apparel & Luxury Goods 0.2%
BYC Co., Ltd. (b) 39,530 1,586,006
Consumer Staples 5.1%
Beverages 1.6%
Hite Brewery Co., Ltd. 50,000 3,673,469
Nam Yang Dairy Products Co., Ltd. (b) 43,390 11,568,155
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15,241,624
Food Products 1.4%
CJ Corp. 99,606 5,363,067
Nhong Shim Co., Ltd. 38,229 8,167,029
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13,530,096
Household Products 0.1%
LG Household & Health Care Ltd. 51,511 1,377,802
Tobacco 2.0%
KT&G Corp. (GDR) 144A 413,800 5,458,022
KT&G Corp. 552,570 14,612,033
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20,070,055
Energy 8.1%
Oil & Gas
S-Oil Corp. 827,300 41,095,580
SK Corp. 826,200 38,099,193
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79,194,773
Financials 12.0%
Banks 4.2%
Jeonbuk Bank (b) 2,706,500 9,342,890
Kookmin Bank (ADR)* 100,917 3,213,197
Kookmin Bank* 909,198 28,780,084
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41,336,171
Diversified Financial Services 0.7%
Dongwon Financial Holding Co., Ltd. 2 12
Nong Shim Holdings Co., Ltd. 22,521 1,198,903
Samsung Securities Co., Ltd. 164,720 2,796,592
Telephus Co., Ltd.* (b)(c)(d) 2,266,667 2,952,671
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6,948,178
Insurance 7.1%
Korean Reinsurance Co. 1,643,310 5,637,060
Oriental Fire & Marine Insurance Co. (b) 584,860 7,872,627
Samsung Fire & Marine Insurance Co., Ltd. 979,625 56,403,941
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69,913,628
Health Care 0.5%
Biotechnology 0.1%
LG Life Sciences Ltd. * 14,825 419,065
Pharmaceuticals 0.4%
Choongwae Pharma Corp. 88,600 1,023,344
Yuhan Corp. 46,500 3,069,040
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4,092,384
Industrials 6.4%
Commercial Services & Supplies 2.1%
Insun ENT Co., Ltd. 193,000 3,427,573
S1 Corp. 564,270 17,053,057
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20,480,630
Construction & Engineering 0.2%
Ssangyong Engineering & Construction Co., Ltd.* 234,301 1,521,990
Industrial Conglomerates 2.5%
Anycell, Inc. (b)(c)(d)(h) 1,250,000 0
Daeyang E&C Ltd.* 1,153,948 4,259,035
Hyundai Mobis 350,480 17,653,357
SFA Engineering Corp. 276,800 2,980,738
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24,893,130
Machinery 0.4%
HS R&A Co., Ltd. 144,800 670,242
Samsung Climate Control Co., Ltd. (b) 827,630 3,622,454
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4,292,696
Trading Companies & Distributors 0.8%
Jahwa Electronics Co., Ltd. 779,900 7,754,976
Transportation Infrastructure 0.4%
Korea Express Co., Ltd.* 301,880 3,696,490
Information Technology 22.0%
Computers & Peripherals 0.1%
Ahnlab, Inc.* 89,600 1,023,222
Electronic Equipment & Instruments 5.2%
Dae Duck Electronics Co., Ltd. 360,901 2,808,227
Hankuk Electric Glass Co., Ltd. 142,400 5,880,261
Interflex Co., Ltd. 178,700 3,724,533
Mtekvision Co., Ltd.* 83,200 2,127,868
Samsung Electro-Mechanics Co., Ltd.* 548,525 14,052,529
Samsung SDI Co., Ltd. 209,956 20,694,751
SE Co., Ltd.(b)(c)(d) 636,950 1,736,885
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51,025,054
Internet Software & Services 1.6%
Daum Communications Corp.* 379,200 9,978,080
NCsoft Corp.* 70,000 5,756,839
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15,734,919
Semiconductors & Semiconductor Equipment 15.1%
NEPES Corp.* 353,900 2,667,696
Samsung Electronics Co., Ltd. (i) 340,299 135,351,231
Seoul Semiconductor Co., Ltd. (b) 1,003,900 10,461,832
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148,480,759
Materials 10.3%
Chemicals 1.4%
Korea Fine Chemical Co. 21,233 194,536
LG Chemical Ltd. 212,486 8,063,950
Samsung Fine Chemicals Co., Ltd. 425,000 5,720,799
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13,979,285
Containers & Packaging 0.2%
Youlchon Chemical Co., Ltd. 351,300 2,227,086
Metals & Mining 8.7%
Dongkuk Steel Mill Co., Ltd. 1,170,900 12,608,910
Korea Iron & Steel Co., Ltd. 227,200 3,946,157
POSCO 443,000 65,978,724
Samwoo EMC Co., Ltd. (b) 754,800 1,864,877
SeAH Steel Corp. 77,110 1,094,875
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85,493,543
Telecommunication Services 5.1%
Wireless Telecommunication Services
SK Telecom Co., Ltd. 329,990 50,293,743
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Total Common Stocks (Cost $361,147,478) 831,924,226
Principal
Amount (f) Value ($)
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Convertible Bond 0.4%
Consumer Staples 0.0%
Haitai Confectionery Loan Certificates, Zero Coupon,
11/28/2009 (c)(e)(f) 15,820,881 12,444
Financials 0.4%
LG Card Co., Ltd., 3.0%, 2/12/2009 6,000,000,000 3,644,811
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Total Convertible Bond (Cost $2,586,386) 3,657,255
Shares Value ($)
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Preferred Stocks 12.5%
Consumer Discretionary 3.4%
Automobiles 2.0%
Hyundai Motor Co. (2nd) 738,593 19,114,261
Hotels Restaurants & Leisure 0.0%
Hotel Shilla Co., Ltd. 32,070 128,670
Multiline Retail 1.4%
Shinsegae Co., Ltd. 55,784 14,145,834
Consumer Staples 1.2%
Beverages 0.0%
Nam Yang Dairy Products Co., Ltd. 1,160 93,284
Food Products 1.1%
CJ Corp. 297,200 7,897,803
CJ Corp. (2nd) 50,335 2,113,501
CJ Corp. (3rd) 30,201 1,131,718
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11,143,022
Household Products 0.1%
LG Household & Health Care Ltd. 46,788 788,265
Energy 0.4%
Oil & Gas
S-Oil Corp. 156,040 4,295,673
Financials 1.4%
Insurance
Samsung Fire & Marine Insurance Co., Ltd. 533,850 13,769,297
Information Technology 5.6%
Electronic Equipment & Instruments 0.3%
Samsung Electro-Mechanics Co., Ltd.* 96,800 1,277,777
Samsung SDI Co., Ltd. 34,318 2,020,634
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3,298,411
Semiconductors & Semiconductor Equipment 5.3%
Samsung Electronics Co., Ltd. (i) 198,201 51,895,442
Materials 0.5%
Chemicals
LG Chemical Ltd. 193,003 4,408,145
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Total Preferred Stocks (Cost $28,521,604) 123,080,304
Investment Fund 0.1%
Financials
Hankang Restructuring Fund (c)(g)
(Cost $2,065,316) 1,724,310 1,340,215
Cash Equivalents 0.4%
Scudder Cash Management QP Trust 1.70% (a)
(Cost $3,980,474) 3,980,474 3,980,474
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% of
Net Assets Value ($)
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Total Investment Portfolio (Cost $398,301,258) 98.0 963,982,474
Other Assets and Liabilities, Net 2.0 20,032,459
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Net Assets 100.0 984,014,933
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For information on the Fund's policies regarding the valuation of investments
and other significant accounting policies, please refer to the Fund's most
recent semi-annual or annual financial statements.
* Non-income producing security.
(a) Scudder Cash Management QP Trust is managed by Deutsche Investment
Management Americas Inc. The rate shown is the annualized seven-day yield at
period end.
(b) Transactions in Securities of Affiliated Issuers. An affiliated issuer
includes any company in which the Fund has ownership of at least 5% of the
outstanding voting securities. A summary of the Fund's transactions during the
three months ended September 30, 2004 with companies which are or were
affiliates is as follows:
Purchases Sale Realized Divdend
Affiliate Shares Cost ($) Cost ($) Gain/Loss ($) Income ($)* Value ($)
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Anycell, Inc. 1,250,000 - - - - -
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BYC Co., Ltd. 39,530 - - - - 1,586,006
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Jeonbuk Bank 2,706,500 - - - - 9,342,890
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Nam Yang Dairy Products Co., Ltd. 44,550 - - - - 11,661,439
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Oriental Fire & Marine Insurance Co. 584,860 - - - - 7,872,627
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Samsung Climate Control Co., Ltd. 827,630 - - - - 3,622,454
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Samwoo EMC Co., Ltd. 754,800 2,092,375 - - - 1,864,877
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SE Co., Ltd. 636,950 - - - - 1,736,885
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Seoul Semiconductor Co., Ltd. 1,003,900 4,775,077 - - - 10,461,832
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Taegu Department Store Co., Ltd. 1,286,110 3,965,096 - - - 8,890,521
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Telephus Co., Ltd. 2,266,667 - - - - 2,952,671
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10,832,548 59,992,202
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* Net of foreign taxes withheld.
(c) Securities valued at fair value by management and approved in good faith
following procedures approved by the Directors, amounted to $6,042,215 (0.6% of
net assets at September 30, 2004). Their values have been estimated by
management in the absence of readily ascertainable market 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 September 30, 2004 aggregated $8,622,435. The
securities may also have certain restrictions as to resale.
(d) The Fund may purchase securities that are subject to legal or contractual
restrictions on resale ("restricted securities"). Restricted securities are
securities which have not been registered with the Securities and Exchange
Commission under the Securities Act of 1933. The Fund may be unable to sell a
restricted security and it may be more difficult to determine a market value for
a restricted security. Moreover, if adverse market conditions were to develop
during the period between the Fund's decision to sell a restricted security and
the point at which the Fund is permitted or able to sell such security, the Fund
might obtain a price less favorable than the price that prevailed when it
decided to sell. This investment practice, therefore, could have the effect of
increasing the level of illiquidity of the Fund.
The issuers of Anycell, Inc. and SE Co., Ltd. have given the Fund a put option,
payable on demand. Information concerning such private placement securities at
September 30, 2004 is as follows:
Acquisition Acquisition Value as % of
Securities Date Cost ($) Value ($) Net Assets
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Anycell, Inc. 12/22/2000 2,020,774 - -
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SE Co., Ltd. 12/22/2000 1,616,637 1,736,885 0.2%
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Telephus Co., Ltd. 6/10/2004 2,919,708 2,952,671 0.3%
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Total Restricted Securities 6,557,119 4,689,556 0.5%
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(e) Company in restructuring process, principal only subject to repayment.
(f) Principal amount stated in Korean Won.
(g) The Fund owns 1.36% of outstanding shares of Hankang Restructuring Fund,
which is managed by Deutsche Investment Management Americas, Inc.
(h) Company is in process of liquidation.
(i) At September 30, 2004, 19.4% of the Fund's investment portfolio is invested
in Samsung Electronics Co., Ltd.
144A: Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from registration,
normally to qualified institutional buyers.
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
By: /s/Julian Sluyters
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Julian Sluyters
Chief Executive Officer
Date: November 19, 2004
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.
Registrant: The Korea Fund
By: /s/Julian Sluyters
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Julian Sluyters
Chief Executive Officer
Date: November 19, 2004
By: /s/Paul Schubert
Paul Schubert
Chief Financial Officer
Date: November 19, 2004