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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM N-Q

Registrant Name: The Korea Fund, Inc.

Address of Principal Executive Offices: 555 Mission Street, Suite 1700, San Francisco, CA 94105

Name and Address of Agent for Service: Lawrence G. Altadonna — 1345 Avenue of the Americas, New York, New York 10105

Registrant’s telephone number, including area code: 212-739-3371

Date of Fiscal Year End: June 30, 2011

Date of Reporting Period: March 31, 2011

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 30b1-5 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 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, 100 F Street, NE, Washington, DC 20549-2001. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.

 

 

Item 1. Schedule of Investments

The Korea Fund, Inc. Schedule of Investments
March 31, 2011 (unaudited)

Shares						Value*
COMMON STOCK—97.9%
Auto Components—1.0%
	18,880			Hyundai Mobis		$	5,629,060
Automobiles—10.3%
	150,275			Hyundai Motor Co.			27,772,940
	452,220			Kia Motors Corp.			28,418,802
							56,191,742
Capital Markets—1.0%
	275,320			Daewoo Securities Co., Ltd.			5,613,655
Chemicals—14.1%
	56,210			Honam Petrochemical Corp.			19,825,787
	54,630			LG Chemical Ltd.			22,857,775
	47,210			OCI Co., Ltd.			21,230,469
	279,030			SKC Co., Ltd.			13,140,287
							77,054,318
Commercial Banks—7.8%
	293,931			Daegu Bank Ltd.			4,822,309
	390,417			KB Financial Group, Inc.			20,422,849
	377,362			Shinhan Financial Group Co., Ltd.			17,129,531
							42,374,689
Construction & Engineering—1.5%
	58,170			Hyundai Engineering & Construction Co., Ltd.			4,194,845
	20,750			Samsung Engineering Co., Ltd.			3,951,213
							8,146,058
Diversified Telecommunication Services—0.9%
	145,478			KT Corp.			5,158,904
Electric Utilities—0.8%
	176,720			Korea Electric Power Corp. (b)			4,328,735
Electronic Equipment, Instruments & Components—2.3%
	146,099			Interflex Co., Ltd.			4,205,278
	54,430			Samsung SDI Co., Ltd.			8,325,381
							12,530,659
Food Products—0.5%
	1,965			Lotte Confectionery Co., Ltd.			2,685,398
Hotels, Restaurants & Leisure—2.7%
	386,470			Hotel Shilla Co., Ltd. (d)			8,994,123
	192,077			Modetour Network, Inc.			6,046,870
							15,040,993
Household Durables—3.3%
	187,340			LG Electronics, Inc. (d)			17,913,723

The Korea Fund, Inc. Schedule of Investments
March 31, 2011 (unaudited)

Shares						Value*
Household Products—2.4%
	34,670			LG Household & Health Care Ltd. (d)		$	13,005,793
Industrial Conglomerates—2.5%
	180,927			LG Corp.			13,473,544
Insurance—5.9%
	63,464			Samsung Fire & Marine Insurance Co., Ltd.			14,020,610
	192,843			Samsung Life Insurance Co., Ltd.			18,076,270
							32,096,880
Internet & Catalog Retail—2.0%
	100,311			Hyundai Home Shopping Network Corp.			11,100,769
Machinery—6.3%
	187,080			Daewoo Shipbuilding & Marine Engineering Co., Ltd.			5,801,625
	60,240			Hyundai Heavy Industries Co., Ltd.			28,407,324
							34,208,949
Metals & Mining—6.2%
	93,040			Hyundai Steel Co.			11,860,130
	20,420			Korea Zinc Co., Ltd. (d)			7,425,829
	32,104			POSCO			14,730,078
							34,016,037
Multiline Retail—1.9%
	408,740			Hyundai Greenfood Co., Ltd.			4,542,448
	14,500			Lotte Shopping Co., Ltd.			5,936,814
							10,479,262
Oil, Gas & Consumable Fuels—2.4%
	151,863			GS Holdings			12,927,040
Pharmaceuticals—0.8%
	40,685			Dong-A Pharmaceutical Co., Ltd. (d)			4,154,751
Semiconductors & Semiconductor Equipment—14.3%
	260,312			Duksan Hi-Metal Co., Ltd. (b)			5,990,476
	76,907			Samsung Electronics Co., Ltd.			65,214,440
	194,380			Silicon Works Co., Ltd.			6,713,942
							77,918,858
Software—3.1%
	74,026			Gamevil, Inc. (b)			1,787,577
	335,493			Neowiz Games Corp. (b)			15,376,528
							17,164,105
Textiles, Apparel & Luxury Goods—1.3%
	100,078			Fila Korea Ltd.			6,913,496
Tobacco—1.4%
	142,800			KT&G Corp.			7,428,754

The Korea Fund, Inc. Schedule of Investments
March 31, 2011 (unaudited)

Shares						Value*
Trading Companies & Distributors—0.4%
	41,370			Samsung C&T Corp.		$	2,705,041
Wireless Telecommunication Services—0.8%
	27,634			SK Telecom Co., Ltd.			4,113,631
				Total Common Stock (cost—$346,160,969)			534,374,844
SHORT-TERM INVESTMENTS—4.8%
Collateral Invested for Securities on Loan (c)(e)—4.7%
	25,543,965			BNY Institutional Cash Reserves Fund, 0.154% (cost—$25,543,965)			25,543,965
Principal
Amount
(000s)
Time Deposits—0.1%
				Brown Brothers Harriman & Co. — Grand Cayman,
HKD         45				0.005%, 4/1/11			5,836
¥	965			0.005%, 4/1/11			11,606
£	16			0.117%, 4/1/11			25,908
€	46			Citibank — London, 0.11%, 4/1/11			65,492
$	328			HSBC Bank — Grand Cayman, 0.03%, 4/1/11			328,191
				Total Time Deposits (cost—$438,120)			437,033
				Total Short-Term Investments (cost—$25,982,085)			25,980,998
				Total Investments (cost—$372,143,054) (a)(f)—102.7%			560,355,842
				Liabilities in excess of other assets—(2.7)%			(14,684,528	)
				Net Assets—100%		$	545,671,314

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, on the basis of quotes obtained from a quotation reporting system, established market makers, or independent pricing services.
		Portfolio securities and other financial instruments for which market quotations are not readily available, or for which a development/event occurs that may significantly impact the value of a security, are fair-valued, in good faith, pursuant to procedures established by the Board of Directors, or persons acting at their discretion pursuant to procedures 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. For foreign equity securities (with certain exceptions, if any), 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. Investments initially valued in currencies other than the U.S. dollar are converted to the U.S. dollar using exchange rates obtained from pricing services. As a result, the NAV of the Fund’s shares may be affected by changes in the value of currencies in relation to the U.S. dollar. The value of securities traded in markets outside the United States or denominated in currencies other than U.S. dollar may be affected significantly on a day that the NYSE is closed. The prices used by the Fund to value securities may differ from the value that would be realized if the securities were sold.
(a)		Securities with an aggregate value of $521,369,051, representing 95.5% of net assets, were valued utilizing modeling tools provided by a third-party vendor.
(b)		Non-income producing.
(c)		Purchased with cash proceeds from securities on loan.
(d)		All or portion of securities on loan with an aggregate market value of $24,716,304; cash collateral of $25,543,965 was received with which the Fund purchased short-term investments.
(e)		In connection with the Fund’s cash collateral investment in BNY Intuitional Cash Reserves (“CR”) at September 12, 2008, the Fund may be subject to losses on investments in certain Lehman Brothers securities held in CR.
(f)		At March 31, 2011, the cost basis of portfolio securities for federal income tax purposes was $372,179,260. Aggregate gross unrealized appreciation for securities in which there was an excess value over tax cost was $190,829,645; aggregate gross unrealized depreciation for securities in which there was an excess of tax cost over value was $2,653,063; and net unrealized appreciation for federal income tax purposes was $188,176,582. The difference between book and tax cost was attributable to wash sales.

Glossary:
£—British Pound
€—Euro
HKD—Hong Kong Dollar
¥—Japanese Yen

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e. the “exit price”) in an orderly transaction between market participants. The three levels of the fair value hierarchy are described below:

	•		Level 1 — quoted prices in active markets for identical investments that the Fund has the ability to access
	•		Level 2 — valuations based on other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) or quotes from inactive exchanges
	•		Level 3 — valuations based on significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)

An investment asset’s or liability’s level within the fair value hierarchy is based on the lowest level input, individually or in the aggregate, that is significant to fair value measurement. The objective of fair value measurement remains the same even when there is a significant decrease in the volume and level of activity for an asset or liability and regardless of the valuation technique used.

The valuation techniques used by the Fund to measure fair value during the nine months ended March 31, 2011 maximized the use of observable inputs and minimized the use of unobservable inputs. When fair-valuing securities, the Fund utilized the estimation of the price that would have prevailed in a liquid market for a foreign equity given information available at 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 are certain inputs and techniques that the Fund generally uses to evaluate how to classify each major category of assets and liabilities for level 2 and level 3, in accordance with Generally Accepted Accounting Principles.

Equity Securities (Common and Preferred Stock) — Equity securities traded in inactive markets and certain foreign equity securities are valued using inputs which include broker-dealer quotes, recently executed transactions adjusted for changes in the benchmark index, or evaluated price quotes received from independent pricing services that take into account the integrity of the market sector and issuer, the individual characteristics of the security, and information received from broker-dealers and other market sources pertaining to the issuer or security. To the extent that these inputs are observable, the values of equity securities are categorized as Level 2. To the extent that these inputs are unobservable, the values are categorized as Level 3.

The Fund’s policy is to recognize transfers between levels at the end of the reporting period.

A summary of the inputs used at March 31, 2011 in valuing the Fund’s assets and liabilities is listed below:

						Level 2 —				Level 3 —
						Other Significant				Significant
		Level 1 —				Observable				Unobservable				Value at
		Quoted Prices				Inputs				Inputs				3/31/11
Investments in Securities — Assets
Common Stock:
Household Products		$	13,005,793				—				—			$	13,005,793
All Other			—			$	521,369,051				—				521,369,051
Short-Term Investments			—				25,980,998				—				25,980,998
Total Investments		$	13,005,793			$	547,350,049				—			$	560,355,842

There were no significant transfers between Levels 1 and 2 during the nine months ended March 31, 2011.

Item 2. Controls and Procedures

(a) The registrant’s President & Chief Executive Officer and Treasurer, Principal Financial & Accounting 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.

Item 3. Exhibits

(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.

Date: May 23, 2011

Date: May 23, 2011

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.

Date: May 23, 2011

Date: May 23, 2011