UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM N-Q

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANY

Investment Company Act file number:                811-08002                                 

KOREA EQUITY FUND, INC.
(Exact name of registrant as specified in charter)

Worldwide Plaza
309 West 49th Street
New York, NY 10019
(Address of principal executive offices)

Korea Equity Fund, Inc.
Worldwide Plaza
309 West 49th Street
New York, NY 10019
(Name and address of agent for service)

Registrant’s telephone number, including area code: (800) 833-0018
 
Date of fiscal year end:          October 31, 2013                                 

Date of reporting period:      May 1, 2013 – July 31, 2013
 
 
 
 
 
Item 1.  Schedule of Investments
 
KOREA EQUITY FUND, INC.
SCHEDULE OF INVESTMENTS
IN SECURITIES OF UNAFFILIATED ISSUERS
July 31, 2013



                           
% of
 
               
Market
   
Unrealized
   
Net
 
   
Shares
   
Cost
   
Value
   
Gain or Loss
   
Assets
 
KOREAN EQUITY SECURITIES
                             
Automotive Equipment and Parts
                             
Hankook Tire Worldwide Co., Ltd
    33,770     $ 1,412,750     $ 1,810,112     $ 397,362       2.1  
 Manufactures tires
                                       
Hyundai Mobis
    32,994       5,710,667       8,049,395       2,338,728       9.2  
 Automotive service components
                                       
Hyundai Motor Company
    41,981       3,353,660       3,835,327       481,667       4.4  
 Passanger cars, trucks, autoparts, and commercial vehicles
                                       
Kia Motors Corporation
    21,946       1,172,862       1,244,722       71,860       1.4  
 Passenger cars, mini-buses, trucks, and commercial vehicles
                                       
Total Automotive Equipment and Parts
            11,649,939       14,939,556       3,289,617       17.1  
                                         
Banking and Financial Services
                                       
Shinhan Financial Group Co., Ltd.
    84,020       3,214,440       3,067,215       (147,225 )     3.5  
Consumer and commercial-related financial services
                                       
Total Banking and Financial Services
            3,214,440       3,067,215       (147,225 )     3.5  
                                         
Consumer Electronics
                                       
Samsung Electronics Co., Ltd.
    13,547       9,793,981       14,553,080       4,759,099       16.6  
 Consumer electronics, computers, and telecommunications
                                       
SK Hynix Inc
    264,500       6,209,113       6,405,784       196,671       7.3  
Semiconductors
                                       
Total Consumer Electronics
            16,003,094       20,958,864       4,955,770       23.9  
                                         
Information and Software
                                       
NCsoft Corporation
    28,125       4,905,632       4,269,673       (635,959 )     4.9  
Online gaming
                                       
Total Information and Software
            4,905,632       4,269,673       (635,959 )     4.9  
                                         
Insurance
                                       
Dongbu Insurance Co., Ltd.
    96,070       3,691,461       4,067,392       375,931       4.6  
 Non-life insurance
                                       
Hyundai Marine & Fire Insurance Co., Ltd.
    59,470       1,674,631       1,630,896       (43,735 )     1.9  
 Non-life insurance
                                       
Samsung Fire & Marine Insurance Co., Ltd.
    11,249       2,051,378       2,403,825       352,447       2.8  
 Non-life insurance
                                       
Total Insurance
            7,417,470       8,102,113       684,643       9.3  
                                         
Miscellaneous Manufacturing
                                       
Dongsung Finetec Corporation
    151,605       675,691       1,179,784       504,093       1.3  
Superconducting materials
                                       
Doosan Infracore Co., Ltd.
    75,900       872,058       834,615       (37,443 )     1.0  
General industry machinery
                                       
Huvis Corporation
    114,270       1,143,790       1,170,059       26,269       1.3  
Textile products and services
                                       
Interojo Co Ltd
    89,143       1,283,579       1,190,574       (93,005 )     1.4  
Manufactures and sale of contact lens
                                       
Korea Zinc Co., Ltd.
    11,360       3,006,203       2,897,882       (108,321 )     3.3  
 Non-ferrous metals
                                       
Lock&Lock Co., Ltd.
    107,150       2,370,034       2,270,632       (99,402 )     2.6  
Plastic food storage
                                       
Woongjin Coway Co., Ltd.
    44,260       1,762,014       2,364,506       602,492       2.7  
Water purifiers and home appliances
                                       
Youngone Corporation
    77,264       2,564,886       2,394,055       (170,831 )     2.7  
Outdoor sportswear and shoes
                                       
Total Miscellaneous Manufacturing
            13,678,255       14,302,107       623,852       16.3  
 
 
 
 
 
                           
% of
 
               
Market
   
Unrealized
   
Net
 
   
Shares
   
Cost
   
Value
   
Gain or Loss
   
Assets
 
Services
                             
Cheil Worldwide Inc.
    60,210       1,017,156       1,380,459       363,303       1.6  
Marketing communications
                                       
CJ O Shopping Co., Ltd.
    3,448       998,017       1,123,637       125,620       1.3  
Online retail marketing company
                                       
iMarketKorea Inc.
    47,320       1,097,485       1,078,605       (18,880 )     1.2  
 Maintenance, repair, and operations procurement services
                                       
Samsung Engineering Co., Ltd.
    53,935       5,482,032       3,779,402       (1,702,630 )     4.3  
 Engineering and construction
                                       
Total Services
            8,594,690       7,362,103       (1,232,587 )     8.4  
                                         
Transportation
                                       
AJ Rent a Car Co Ltd *
    97,090       1,097,804       1,093,560       (4,244 )     1.2  
 Auto rental company
                                       
Total Transportation
            1,097,804       1,093,560       (4,244 )     1.2  
                                         
Wholesale
                                       
GS Retail Company Ltd.
    55,300       1,374,031       1,661,792       287,761       1.9  
Owns and operates various stores and online retail businesses
                                       
Hyundai Greenfood Co., Ltd.
    173,920       2,679,075       2,748,689       69,614       3.1  
Wholesale and distributon of food
                                       
Total Wholesale
            4,053,106       4,410,481       357,375       5.0  
                                         
TOTAL SOUTH KOREAN EQUITY SECURITIES
          $ 70,614,430     $ 78,505,672     $ 7,891,242       89.6  
                                         
                                         
INVESTMENTS IN FOREIGN CURRENCY
                                       
South Korea Won
                                       
  Non-interest bearing account
            1,009,394       1,000,241       (9,153 )        
TOTAL INVESTMENTS IN FOREIGN CURRENCY
            1,009,394       1,000,241       (9,153 )     1.1  
                                         
                                         
TOTAL INVESTMENTS
          $ 71,623,824     $ 79,505,913     $ 7,882,089       90.7  
                                         
OTHER ASSETS LESS LIABILITIES, NET
                    7,988,327               9.3  
                                         
NET ASSETS
                  $ 87,494,240               100.0  
                                         
                                         
 
* Non-Income Producing Security
Aggregate gross unrealized appreciation for all securities in which there is an excess of value over tax cost was $10,952,917.
Aggregate gross unrealized depreciation for all securities in which there is an excess of tax cost over value was $3,061,675.
 
 
 
Portfolio securities and foreign currency holdings were
 
 
translated at the following exchange rate as of July 31, 2013.
 
             
 
Korean won
1,123.11
 = $1.00
   
 
 
 
 
 
 
The tax basis of investments, exclusive of investments in foreign currencies of $1,000,241, at July 31, 2013 was $77,358,161. 

The following table summarizes the valuation of the Fund’s investments by fair value hierarchy levels as of July 31, 2013. 
Level 1 – quoted prices in active markets for identical investments.
Level 2 – other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.).
Level 3 – (including the Fund’s own assumptions in determining the fair value of investments).
 

Level
 
Investments in
     Securities
Level 1
   
      Equity Securities
 
$78,505,672
      Foreign Currency
 
    1,000,241
Level 2
 
   -0-
Level 3
 
   -0-
Total
 
$79,505,913

During the quarter ended July 31, 2013, there were no transfers between Level 1 and 2 and the Fund did not hold any instruments which used significant observable inputs (Level 3) in determining fair value.

Item 2.  Controls and Procedures.

(a)   The Registrant’s Principal Executive Officer and Principal Financial Officer evaluated the Registrant’s disclosure controls and procedures within 90 days of the filing of this report and concluded that they were effective in providing reasonable assurance that the information required to be disclosed by the Registrant in its reports or statements filed under the 1934 Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission.
 
(b)   There were no changes in the Registrant’s internal control over financial reporting that occurred during the Registrant’s last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Registrant’s internal control over financial reporting.

Item 3.  Exhibits.

(a)   Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 are attached hereto as an exhibit.


 
 
 

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.

 
KOREA EQUITY FUND, INC.

 

By:   /s/ Hiromichi Aoki         
        Hiromichi Aoki
        ( Vice President and Acting  Principal Executive Officer)

Date:  September 30, 2013


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.


By:   /s/ Hiromichi Aoki         
        Hiromichi Aoki
        (Vice President and Acting  Principal Executive Officer)



By:   /s/ Robert Kleinman              
        Robert Kleinman, Treasurer
        (Principal Financial Officer)

Date:  September 30, 2013
 
 
 
 
 
 

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