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PROSPECTUS
[LOGO]
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane, New York, New York 10038
(Telephone: (1-800) 833-0018)
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Nomura Pacific Basin Fund, Inc. (the "Fund") is a no-load, open-end
diversified management investment company seeking long-term capital appreciation
primarily through investments in equity securities of corporations domiciled in
Japan and other Far Eastern and Western Pacific ("Pacific Basin") countries. The
Fund contemplates that under normal conditions at least 70% of its assets will
consist of equity securities of Pacific Basin issuers and that a substantial
portion of its assets will be invested in securities of Japanese corporations.
Investments on an international basis involve certain special considerations and
risks. See "Investment Objective and Policies--Special Considerations and
Risks".
Nomura Capital Management, Inc. acts as the Manager for the Fund. Nomura
Investment Management Co., Ltd. and Nomura Capital Management (Singapore) Ltd.
act as Investment Advisers for the Fund. The Manager and the Investment Advisers
are affiliated with The Nomura Securities Co., Ltd., Tokyo, Japan.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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Shares of the Fund are being offered at a price equal to the net asset
value per share next determined after receipt of the order, without sales
charge. The minimum initial investment is $1,000, and there is no minimum
subsequent investment. Shares may be redeemed at any time at net asset value as
described herein. See "Purchase of Shares" and "Redemption of Shares".
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This Prospectus is a concise statement of information about the Fund that
is relevant to making an investment in the Fund. Investors are encouraged to
read this Prospectus carefully and retain it for future reference. Additional
information about the Fund has been filed with the Securities and Exchange
Commission in a Statement of Additional Information, bearing the same date as
this Prospectus, which information is incorporated herein by reference and is
available without charge upon request by calling or writing the Fund at the
above telephone number or address.
Nomura Capital Management, Inc.--Manager
Nomura Investment Management Co., Ltd.--Investment Adviser
Nomura Capital Management (Singapore) Ltd.--Investment Adviser
Nomura Securities International, Inc.--Distributor
July 27, 1995
(as amended December 29, 1995)
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NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE FUND, THE MANAGER, THE
INVESTMENT ADVISERS OR THE DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFERING IN ANY STATE IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
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TABLE OF CONTENTS
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PAGE
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<S> <C>
Fee Table........................................................ 3
Financial Highlights............................................. 4
Investment Objective and Policies................................ 5
Investment Restrictions..................................... 7
Special Considerations and Risks............................ 7
Management of the Fund........................................... 9
Board of Directors.......................................... 9
Management and Investment Advisory Arrangements............. 9
Purchase of Shares............................................... 11
Through Securities Brokers and Dealers...................... 11
By Mail..................................................... 11
By Telephone................................................ 11
By Bank Wire................................................ 12
General..................................................... 12
Redemption of Shares............................................. 13
By Mail..................................................... 13
By Telephone................................................ 13
Repurchase.................................................. 13
Dividends, Distributions and Taxes............................... 14
Additional Information........................................... 16
Determination of Net Asset Value............................ 16
Portfolio Transactions and Brokerage........................ 16
Shareholder Services........................................ 17
Organization of the Fund.................................... 17
Performance Data............................................ 18
Shareholder Inquiries....................................... 18
</TABLE>
2
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FEE TABLE
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases (as a percentage of offering
price)....................................................................... None
Maximum Sales Charge Imposed on Dividend Reinvestments (as a percentage
of offering price)......................................................... None
Redemption Fees.............................................................. None
Exchange Fee................................................................. None
ANNUAL FUND OPERATING EXPENSES (AS A PERCENTAGE OF AVERAGE NET ASSETS)
FOR THE YEAR ENDED MARCH 31, 1995:
Management Fees.............................................................. 0.75%(a)
12b-1 Fees................................................................... None(b)
Other Expenses
</TABLE>
<TABLE>
<S> <C>
Custodian Fees................................................ 0.17%
Shareholder Servicing Costs................................... 0.08%(c)
Other......................................................... 0.38%
</TABLE>
<TABLE>
<S> <C>
Total Other Expenses (as a percentage of average net assets).... 0.63%
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TOTAL FUND OPERATING EXPENSES..................................................... 1.38%
-----
-----
<FN>
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(a) See "Management of the Fund--Management and Investment Advisory
Arrangements"--page 9.
(b) See "Purchase of Shares--General--Distribution Plan"--page 12.
(c) See "Shareholder Services"--page 17.
</TABLE>
EXAMPLE:
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CUMULATIVE EXPENSES PAID FOR THE PERIOD OF:
-------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following expenses on a
$1,000 investment assuming an operating expense
ratio of 1.38% and a 5% annual return throughout
the period..................................... $14 $45 $78 $170
</TABLE>
The foregoing Fee Table is intended to assist investors in understanding
the costs and expenses that a shareholder in the Fund will bear directly or
indirectly. The Example set forth above assumes reinvestment of all dividends
and distributions and utilizes a 5% annual rate of return as mandated by
Securities and Exchange Commission regulations. THE EXAMPLE SHOULD NOT BE
CONSIDERED A REPRESENTATION OF PAST OR FUTURE EXPENSES OR ANNUAL RATE OF RETURN,
AND ACTUAL EXPENSES AND ANNUAL RATE OF RETURN MAY BE MORE OR LESS THAN THOSE
ASSUMED FOR PURPOSES OF THE EXAMPLE.
3
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FINANCIAL HIGHLIGHTS
The financial information in the table below has been examined in
conjunction with the audits of the financial statements of the Fund for each of
the periods noted by Price Waterhouse LLP, independent accountants. Financial
statements and the report of Price Waterhouse LLP for the year ended March 31,
1995 are included in the Statement of Additional Information, copies of which
may be obtained by shareholders as noted on the Prospectus cover page. Further
information about the performance of the Fund is contained in the Fund's most
recent annual report to shareholders which may be obtained, without charge, by
calling or by writing the Fund at the telephone number or address on the front
cover of this Prospectus.
Selected data for a share of common stock outstanding throughout each
period:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
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1995 1994 1993 1992 1991 1990 1989 1988 1987
------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period................ $18.07 $14.33 $12.49 $15.19 $15.36 $19.15 $20.59 $24.20 $15.68
------ ------ ------ ------ ------ ------ ------ ------ ------
Income from investment
operations:
Net investment income
(loss)................. (0.01)++ (0.01)++ 0.00++ 0.00++ 0.04 0.08 0.03 0.06++ 0.03++
Net realized and
unrealized gain (loss)
on investments and
foreign currencies..... (0.74)++ 4.03++ 1.87++ (1.84)++ 2.53 0.20 (0.21) 6.87++ 8.85++
------ ------ ------ ------ ------ ------ ------ ------ ------
Total from investment
operations............. (0.75)++ 4.02++ 1.87++ (1.84)++ 2.57 0.28 (0.18) 6.93++ 8.88++
Distributions to
shareholders from:
Net investment income.... -- (0.05) (0.02) (0.01) (0.04) (0.10) (0.05) (0.08) 0.00
Net realized capital
gains.................. (2.25) (0.21) (0.01) (0.85) (2.70) (3.97) (1.21) (10.46) (0.36)
In excess of net
investment income...... -- (0.02) -- -- -- -- -- -- --
------ ------ ------ ------ ------ ------ ------ ------ ------
Total distributions........ (2.25) (0.28) (0.03) (0.86) (2.74) (4.07) (1.26) (10.54) (0.36)
------ ------ ------ ------ ------ ------ ------ ------ ------
Net asset value, end of
period................... $15.07 $18.07 $14.33 $12.49 $15.19 $15.36 $19.15 $20.59 $24.20
------ ------ ------ ------ ------ ------ ------ ------ ------
------ ------ ------ ------ ------ ------ ------ ------ ------
Total investment return.... (4.2%) 28.2% 15.0% (12.9%) 17.4% (1.7%) (0.9%) 35.3% 57.6%
Ratio to average net
assets/ supplemental
data:
Net assets, end of period
(in 000)............... 42,684 55,060 46,095 43,203 54,274 53,933 73,169 94,786 81,850
Operating Expenses....... 1.38% 1.39% 1.51% 1.46% 1.42% 1.32% 1.25% 1.22% 1.45%
Net investment income.... (0.07%) (0.10%) 0.01% 0.00% 0.28% 0.40(Sect) 0.07% 0.28% 0.14%
Portfolio turnover....... 49% 76% 55% 41% 76% 46% 37% 61% 46%
<CAPTION>
7/8/85*
TO
3/31/86
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<S> <C>
Net asset value, beginning
of period................ $10.00
-------
Income from investment
operations:
Net investment income
(loss)................. 0.06 ++
Net realized and
unrealized gain (loss)
on investments and
foreign currencies..... 5.62 ++
-------
Total from investment
operations............. 5.68 ++
Distributions to
shareholders from:
Net investment income.... 0.00
Net realized capital
gains.................. 0.00
In excess of net
investment income...... --
-------
Total distributions........ 0.00
-------
Net asset value, end of
period................... $15.68
-------
-------
Total investment return.... 56.8%
Ratio to average net
assets/ supplemental
data:
Net assets, end of period
(in 000)............... 32,426
Operating Expenses....... 1.50%+**
Net investment income.... 0.88%**
Portfolio turnover....... 3%
<FN>
---------------
*Commencement of operations.
**Annualized.
+Net of expense reimbursement which amounted to $0.06** per share and 0.62% of
average net assets.
++Based on average shares outstanding.
</TABLE>
4
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INVESTMENT OBJECTIVE AND POLICIES
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The Fund is designed for United States investors seeking diversification of
investments by participating in the economies of Pacific Basin countries. The
investment objective of the Fund is to seek long-term capital appreciation
primarily through investments in equity securities of corporations domiciled in
Pacific Basin countries including Japan, Australia, Hong Kong, Indonesia, Korea,
Malaysia, New Zealand, Singapore, Taiwan, Thailand and the Philippines. Current
income from dividends and interest will not be an important consideration in
selecting portfolio securities. The Fund may, however, for defensive purposes as
described below invest in non-convertible fixed income securities denominated in
currencies of Pacific Basin countries and in United States dollars. The
investment objective described in this paragraph is a fundamental policy of the
Fund and may not be changed without the approval by the holders of a majority of
the Fund's outstanding shares. There can be no assurance that the Fund will
realize its objective.
The Fund anticipates that under normal conditions at least 70% of its
assets will consist of Pacific Basin corporate securities, primarily common
stock and, to a lesser extent, securities convertible into common stock and
rights to subscribe for common stock. It is expected that the Fund's investment
in securities of Japanese corporations will constitute a substantial part of its
assets under normal circumstances due to the size and liquidity of the Japanese
market and the availability of investment alternatives.
Over the past few decades to the present, certain foreign economies,
especially in the Pacific Basin region, have grown faster than the United
States' economy, and the return on equity investments in these markets has often
been superior to similar investments in the United States. The securities
markets of the Pacific Basin region have at times in the past moved relatively
independently of one another due to different economic, financial, political and
social factors. To the extent the various markets move independently, total
portfolio volatility tends to be reduced when the various markets are combined
into a single portfolio. A low correlation may, however, reduce the gains the
Fund might otherwise derive from movements in a particular market. Exchange
rates frequently move independently of securities markets in a particular
country. As a result, gains or losses in a particular securities market may be
affected by changes in exchange rates.
The Fund will attempt to maximize opportunity and reduce risk by investing
in a diversified portfolio of companies in different stages of development.
Portfolio companies will range from large, well-established companies to
medium-sized companies and smaller, less seasoned companies in an earlier stage
of development.
Investments in larger companies present certain advantages in that such
companies generally have greater financial resources, more extensive research
and development, manufacturing, marketing and service capabilities, more
stability and greater depth of management and technical personnel. Investments
in smaller, less seasoned companies may present greater opportunities for growth
but also involve greater risks than customarily are associated with more
established companies. The securities of smaller companies may be subject to
more abrupt or erratic market movements than larger, more established companies.
These companies may have limited product lines, markets or financial resources,
or they may be dependent upon a limited management group. Their securities may
be traded only in the over-the-counter market or on a regional securities
exchange and may not be traded every day or in the volume typical of trading on
a major securities exchange. As a result, the disposition by the Fund of
portfolio securities to meet redemptions or otherwise may require the Fund to
sell these securities at a discount from market prices or during a period when
such disposition is not otherwise desirable or to make many small sales over a
lengthy period of time. However, the Fund has adopted an investment restriction
pursuant to which it may not invest in securities which are subject to
restrictions on resale, or which are not otherwise readily marketable, if as a
result more than 5% of its total assets would be invested in such securities.
See "Investment Objective and Policies" in the Statement of Additional
Information.
5
<PAGE>
Although there can be no assurance that the conditions described above will
continue in the future, or that Nomura Capital Management, Inc. (the "Manager")
will be able to identify and invest in companies participating in the faster
growing foreign economies and markets, the Manager believes that investment in
foreign securities offers significant potential for prospective long-term
capital appreciation and an opportunity to achieve effective investment
diversification. The investment program of the Fund has been developed in light
of these beliefs.
Among the countries in the Far East, direct investments in listed
securities in certain countries by non-residents have historically been limited,
due to limitations set by the respective governments. The Fund may invest in the
shares of investment companies organized to invest in such markets subject to
the provisions of the Investment Company Act of 1940 and the policies and review
of the Board of Directors of the Fund. The applicable limitations under the
Investment Company Act of 1940 are discussed under "Investment Objective and
Policies" in the Statement of Additional Information.
If the Fund purchases securities of other investment companies, the
management fee paid by the Fund to the Manager will be proportionately reduced
to reflect the amount of management or other investment advisory fees paid by
such investment companies attributable to the value of the Fund's investment in
such companies.
Subject to policies and review of, and overall control by, the Board of
Directors of the Fund, the allocation of the Fund's assets among the various
securities markets in the Pacific Basin countries will be determined by the
Manager. In making the allocation of assets among the securities markets, the
Manager will consider such factors as technological developments in the various
countries, the condition and growth potential for the various economies and
securities markets, currency and taxation considerations and other pertinent
financial, social, national and political factors. Under certain adverse
investment conditions, the Fund may restrict the securities markets in which its
assets will be invested, and may increase the proportion of assets invested in
United States Government and money market securities.
As indicated above, the Fund anticipates that under normal conditions at
least 70% of its assets will consist of Pacific Basin corporate securities,
primarily equity securities. The Fund reserves the right as a defensive measure
to invest in non-convertible fixed income securities denominated in currencies
of Pacific Basin countries and in United States dollars. (For this purpose,
investments made for defensive purposes will be maintained only during periods
in which the Manager, subject to review by the Board of Directors, determines
that economic or financial conditions are adverse for holding equity securities
of Pacific Basin corporate issuers.) Securities held for defensive purposes,
which include non-convertible preferred stock, debt securities, government
securities issued by United States and Pacific Basin countries and money market
securities, may be held in such proportions as, in the opinion of the Manager,
prevailing market or economic conditions warrant. Debt securities that may be
held by the Fund include Euro-yen securities, which are debt securities
denominated in Japanese yen issued in the Euromarket. The Fund may also hold
cash (in United States dollars or Pacific Basin currencies) or short-term
securities denominated in such currencies to provide for redemptions; it is not
expected that such reserve for redemptions will exceed 10% of the Fund's assets.
Money market securities which may be held for defensive purposes or to
provide for redemptions include short-term corporate or government obligations
and bank certificates of deposit. The Fund may invest in securities subject to
repurchase agreements with banks and securities firms, which are instruments
under which the purchaser (i.e., the Fund) acquires a debt security and the
seller agrees, at the time of sale, to repurchase the obligation at a mutually
agreed upon time and price, thereby determining the yield during the purchaser's
holding period. Repurchase agreements may be construed to be collateralized
loans by the purchaser to the seller secured by the securities transferred to
the purchaser. The underlying securities will be limited to those which
otherwise qualify for investment by the Fund. In addition, the Fund will require
the seller to provide additional securities to it if the market value of the
securities falls below the repurchase price at any time during the term of the
repurchase
6
<PAGE>
agreement. In the event of default by the seller under a repurchase agreement,
the Fund may suffer time delays and incur costs or losses in connection with the
disposition of the underlying securities. The Fund will not enter into
repurchase agreements maturing in more than seven days.
The Fund may invest in the securities of foreign issuers in the form of
American Depositary Receipts (ADRs), European Depositary Receipts (EDRs), Global
Depositary Receipts (GDRs) or other securities convertible into securities of
foreign issuers. These securities may not necessarily be denominated in the same
currency as the securities into which they may be converted. ADRs are receipts
typically issued by an American bank or trust company which evidence ownership
of underlying securities issued by a foreign corporation. EDRs are receipts
issued in Europe, typically by banking institutions in London and Brussels,
which evidence a similar ownership arrangement. GDRs are receipts issued
globally, typically by banking institutions, and evidence a similar ownership
arrangement. Generally ADRs, in registered form, are designed for use in the
United States securities markets, and EDRs, in bearer form, are designed for use
in European securities markets. GDRs are tradeable both in the United States and
Europe and are designed for use throughout the world.
INVESTMENT RESTRICTIONS
The Fund has adopted a number of restrictions and policies relating to the
investment of its assets and its activities, which are fundamental policies and
may not be changed without the approval of the holders of a majority of the
Fund's outstanding voting securities, as defined in the Investment Company Act
of 1940. Among the more significant restrictions, the Fund may not:
--Invest in the securities of any one issuer if, immediately after and as a
result of such investment, the value of the holdings of the Fund in the
securities of such issuer exceeds 5% of the Fund's total assets, taken at market
value, except that such restriction shall not apply to securities issued or
guaranteed by the United States Government or its agencies or instrumentalities
or, with respect to 25% of the Fund's total assets, to securities issued or
guaranteed by the government of any country which is a member of the
Organisation for Economic Co-operation and Development.
--Invest in the securities of a single issuer if, immediately after and as
a result of such investment, the Fund owns more than 10% of the outstanding
securities, or more than 10% of the outstanding voting securities, of such
issuer.
--Invest more than 25% of its total assets, taken at market value at the
time of each investment, in the securities of issuers in any particular
industry.
Nothing in the foregoing restrictions shall be deemed to prohibit the Fund from
purchasing the securities of any issuer pursuant to the exercise of subscription
rights distributed to the Fund by the issuer, except that no such purchase may
be made if as a result the Fund will no longer be a diversified investment
company as defined in the Investment Company Act of 1940 or fail to meet the
diversification requirements of the Internal Revenue Code of 1986, as amended.
SPECIAL CONSIDERATIONS AND RISKS
Investing on an international basis involves certain considerations and
risks which are not typically associated with investing in United States
securities. Since the Fund will invest in securities denominated or quoted in
currencies other than the United States dollar, changes in foreign currency
exchange rates will affect the values of the Fund's portfolio securities and the
unrealized appreciation or depreciation of investments. Foreign corporations are
not generally subject to uniform accounting, auditing and financial reporting
standards, or to practices and requirements comparable to those applicable to
United States corporations. There may also be less government
7
<PAGE>
supervision and regulation of foreign securities exchanges, brokers and listed
companies than exists in the United States. In addition, there may be the
possibility of expropriation of assets, confiscatory taxation, political,
economic or social instability or diplomatic developments which could affect
assets of the Fund held in foreign countries. Moreover, certain foreign
economies may also differ adversely from the United States economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
Many of the securities held by the Fund will not be registered with the
Securities and Exchange Commission nor will the issuers thereof be subject to
the reporting requirements of such agency. Accordingly, there may be less
publicly available information about foreign companies and governments compared
to reports and ratings published about United States companies. Although many
foreign financial markets have grown in volume of trading activity, securities
of some foreign companies are less liquid and their prices more volatile than
securities of comparable United States companies. Brokerage commissions and
other transaction costs on foreign securities exchanges are generally higher
than in the United States. Foreign markets also have different clearance and
settlement procedures, and in certain markets there have been periods when
settlements have been unable to keep pace with the volume of securities
transactions. The inability to make intended purchases or dispositions of
securities due to settlement problems could result in losses to the Fund.
The Fund has authority to deal in forward foreign exchange contracts
between currencies of the different countries in which it will invest as a hedge
against possible variations in the foreign exchange rates between these
currencies. This is accomplished through contractual agreements to purchase or
sell a specified currency at a specified future date (up to one year) and price
set at the time of the contract. The Fund's dealings in forward foreign exchange
will be limited to hedging involving either specific transactions or portfolio
positions. Transaction hedging is the purchase or sale of forward foreign
currency with respect to specific receivables or payables of the Fund arising
from the purchase and sale of its portfolio securities, the sale and redemption
of shares of the Fund or the payment of dividends and distributions by the Fund.
Position hedging is the sale of forward foreign currency with respect to
portfolio security positions. The Fund may not commit more than 15% of its total
assets to position hedging contracts. Hedging against a decline in the value of
a currency does not eliminate fluctuations in the prices of portfolio securities
or prevent losses if the prices of such securities decline, and it precludes the
opportunity for gain if the value of the hedged currency should rise. Risks
associated with transactions in forward foreign exchange contracts are discussed
more fully in the Statement of Additional Information.
The Fund may from time to time lend securities from its portfolio, with a
market value not exceeding 10% of its total assets at the time of the loan, to
banks, brokers and other financial institutions and receive collateral in cash
or securities issued or guaranteed by the United States Government or its
instrumentalities which will be maintained at all times in an amount equal to at
least 100% of the current market value of the loaned securities. During the
period of such a loan, the Fund will receive income on both the loaned
securities and the collateral or on the investment of any cash received as
collateral and thereby increase its yield. With respect to the lending of
portfolio securities, there is the risk of failure by the borrower to return the
securities involved in such transactions, in which event the Fund may incur a
loss.
The operating expense ratio of the Fund can be expected to be higher than
that of an investment company investing exclusively in domestic securities since
the expenses of the Fund, such as custodial costs and advisory fees, are higher.
8
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
BOARD OF DIRECTORS
The Board of Directors of the Fund consists of six individuals, four of
whom are not "interested persons" of the Fund as defined in the Investment
Company Act of 1940. The Directors of the Fund are responsible for the overall
supervision of the Fund and perform the various duties imposed on the directors
of investment companies under the Investment Company Act of 1940. The Directors
of the Fund are also directors of Jakarta Growth Fund, Inc., Japan OTC Equity
Fund, Inc. and Korea Equity Fund, Inc., closed-end, non-diversified investment
companies also managed by the Manager and advised by Nomura Investment
Management Co., Ltd.
The Directors of the Fund are as follows:
WILLIAM G. BARKER, JR.--Consultant to the television industry since 1991.
Senior Vice President and Chief Financial Officer of The CBS/Fox Company from
1982 to 1991.
GEORGE H. CHITTENDEN--Director of Bank Audi (USA).
IWAO KOMATSU--President of the Manager since 1995 and Director since 1994.
Managing Director of Nomura Investment Management Co., Ltd. since 1990 and
Director from 1987 to 1990.
CHOR WENG TAN--Managing Director for Education, The American Society of
Mechanical Engineering since 1991; Dean, School of Engineering, The Cooper Union
from 1975-1987. Director of Tround International, Inc.
ARTHUR R. TAYLOR--President of Muhlenberg College since 1992. Dean of the
Faculty of Business of Fordham University from 1985 to 1992. Chairman of Arthur
R. Taylor & Co. (investment firm). Director of Pitney Bowes Inc. and Louisiana
Land & Exploration Company.
JOHN F. WALLACE--Senior Vice President of the Manager since 1981, Secretary
since 1976, Treasurer since 1984 and Director since 1986. Senior Vice President
of Nomura Securities International, Inc. since 1978.
MANAGEMENT AND INVESTMENT ADVISORY ARRANGEMENTS
Nomura Capital Management, Inc. (the "Manager") acts as the management
company for the Fund. The Manager, a New York corporation with its office
located at 180 Maiden Lane, New York, New York 10038, is a wholly-owned
subsidiary of Nomura Investment Management Co., Ltd. The Manager also provides
global investment advisory services, primarily with respect to Japanese and
other Pacific Basin securities, for United States institutional clients. The
Manager also acts as one of the investment advisers to eight other investment
companies, three of which are registered investment companies.
Under its management agreement with the Fund (the "Management Agreement"),
the Manager agrees to provide, or arrange for the provision of, investment
advisory and management services to the Fund, subject to the oversight and
supervision of the Board of Directors of the Fund. In addition to the management
of the Fund's portfolio in accordance with the Fund's investment policies and
the responsibility for making decisions to buy, sell or hold particular
securities, the Manager is obligated to perform, or arrange for the performance
of, the administrative and management services necessary for the operation of
the Fund. The Manager is also obligated to provide all the office space,
facilities, equipment and personnel necessary to perform its duties thereunder.
Pursuant to the Management Agreement, the Manager has retained Nomura
Investment Management Co., Ltd. ("NIMCO") and Nomura Capital Management
(Singapore) Ltd. ("NCM-Singapore") to act as investment advisers for the Fund
and Nomura Securities International, Inc. ("NSI") to provide administrative
services for the Fund. NIMCO and NCM-Singapore are referred to together as the
"Investment Advisers".
9
<PAGE>
Investment Advisory Agreements. Pursuant to the Investment Advisory
Agreement between the Manager and NIMCO, NIMCO has agreed to furnish the Manager
with advice as to the allocation of the Fund's assets among various Pacific
Basin markets in which the Fund may invest. NIMCO will also provide economic
research, securities analysis and investment recommendations and will review and
render investment advice with respect to issuers of securities domiciled or
based in Japan and certain other Pacific Basin countries. NIMCO will not be
responsible for the actual portfolio decisions of the Fund. NIMCO, a Japanese
corporation with its principal office located at 1-12-11, Nihonbashi, Chuo-ku,
Tokyo 103, Japan provides investment advisory services for Japanese and
international clients. NIMCO, together with its affiliates, had $28.0 billion in
assets under management as of March 31, 1995. NIMCO is a subsidiary of Nomura
Research Institute ("NRI") and an affiliate of The Nomura Securities Co., Ltd.
("Nomura"), the largest securities firm in Japan. NRI is a diversified research
organization which undertakes business consulting, economic and social research,
investment research and other projects for a variety of Japanese and
international clients.
Pursuant to the Investment Advisory Agreement between the Manager and
NCM-Singapore, NCM-Singapore has agreed to furnish the Manager with economic
research, securities analysis and investment recommendations with respect to
securities of companies domiciled or based in Pacific Basin countries other than
Japan. NCM-Singapore will not be responsible for the actual portfolio decisions
of the Fund. NCM-Singapore, a Singapore corporation with its principal office
located at 6 Battery Road, Singapore 0104, provides investment advisory services
relating to Pacific Basin securities to institutional clients, including pension
and profit sharing plans. NCM-Singapore is a wholly-owned subsidiary of NIMCO.
Mr. Iwao Komatsu, President of the Fund and President of the Manager, is
primarily responsible for the day-to-day management of the portfolio of the
Fund. Mr. Komatsu has held such responsibilities for the Fund since 1995 and has
served as President of the Manager since 1995.
Administrative Agreement. The Administrative Agreement between the Manager
and NSI obligates NSI to assist the Manager in administering shareholder
accounts and handling shareholder relations at its expense on behalf of the
Manager. NSI, a New York corporation with its principal office located at 2
World Financial Center, New York, New York 10281, is a registered broker-dealer
under the Securities Exchange Act of 1934 and is a wholly-owned subsidiary of
Nomura Holding America Inc., a Delaware corporation that is a subsidiary of
Nomura.
Compensation and Expenses. As compensation for its services to the Fund,
the Manager will receive a monthly fee, computed daily, at the annual rate of
0.75 of 1% of the value of the Fund's average daily net assets. This fee is
higher than that paid by many investment companies. For the year ended March 31,
1995, the Fund paid or accrued fees to the Manager of $430,670. At June 30,
1995, the net assets of the Fund aggregated approximately $39 million. At this
net asset level, the annual management fee would be approximately $293,000. For
services performed under the Investment Advisory Agreements and the
Administrative Agreement, NIMCO, NCM-Singapore and NSI will receive monthly fees
from the Manager at the annual rates of 0.26125 of 1%, 0.0275 of 1% and 0.10 of
1%, respectively, of the average daily net assets of the Fund. For the year
ended March 31, 1995, NIMCO, NCM-Singapore and NSI received $150,017, $15,791
and $57,423, respectively, from the Manager. As set forth under "Purchase of
Shares -- Distribution Plan", the Fund has adopted a Distribution Plan which
authorizes NSI to utilize its administrative compensation for distribution
activities.
The Fund pays certain expenses incurred in its operations, including, among
other things, the management fee, legal and audit fees, unaffiliated directors'
fees and expenses, custodian and transfer agency fees, costs of issuing and
redeeming shares and certain of the costs of printing proxies, shareholder
reports, prospectuses and statements of additional information. For the year
ended March 31, 1995, the ratio of expenses to average daily net assets was
1.38%.
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PURCHASE OF SHARES
- --------------------------------------------------------------------------------
The Fund's shares may be purchased as described below at a public offering
price equal to the net asset value next determined after receipt of the purchase
order by NSI or the Fund's transfer agent, State Street Bank and Trust Company
(the "Transfer Agent"), without a sales charge. If purchase orders are not
received by NSI or the Transfer Agent prior to 4:00 p.m., New York time, such
orders will be deemed received on the next business day. The Fund has
established a minimum initial investment of $1,000. There is no minimum
subsequent investment. Any order may be rejected by NSI or the Fund.
THROUGH SECURITIES BROKERS AND DEALERS
NSI is the principal underwriter of the Fund's shares. Shares may be
purchased directly from NSI, or from securities brokers and dealers which have
entered into agreements with NSI. Such securities firms may impose a charge to
the investor for their services. Such fees and services may vary in amount among
securities brokers and dealers, who may impose higher initial or subsequent
investment requirements than those established by the Fund.
BY MAIL
Shares of the Fund may be purchased at the per share net asset value by
sending a completed purchase order to the Transfer Agent, State Street Bank and
Trust Company, accompanied by a check payable to Nomura Pacific Basin Fund, Inc.
in payment for shares. Purchase orders sent to the Fund will be forwarded to the
Transfer Agent, and will not be effective until received by the Transfer Agent.
Subsequent purchases by mail (no minimum) may be made by sending to the Transfer
Agent the stub from the shareholder statement with the shareholder's full name
and account number along with a check payable to Nomura Pacific Basin Fund, Inc.
The Fund will not accept mail orders without payment enclosed, nor will the Fund
accept a conditional purchase order.
BY TELEPHONE (ONLY FOR INVESTORS WHO HAVE MADE A WRITTEN ELECTION TO DO
SO -- SEE "GENERAL" BELOW)
Subsequent investments may be made by telephone by calling the Transfer
Agent at (800) 680-1836. Telephone purchase orders from existing shareholders
may be placed in an amount ($1,000 minimum or such lower amount as may be
established by the Board of Directors) not exceeding $10,000 or seven times the
shareholder's then current account balance, whichever is less. Telephone orders
will be taken in dollar amounts only, for full and fractional shares. Payment
for shares purchased must be received by the Transfer Agent by the third day. No
bill will be sent to the investor, and it will be the responsibility of the
investor to make payment within the time limitation described herein. If payment
is not received by the Transfer Agent, the shareholder's account will be debited
by the amount of the purchase. For assistance, shareholders should call the
Transfer Agent at (800) 680-1836.
Accuracy of Investor Account Information. The Fund will employ reasonable
procedures to confirm that instructions communicated by telephone are genuine.
Such procedures may include, among others, requiring some form of personal
identification prior to acting upon telephonic instructions, providing written
confirmations of all such transactions, and/or tape recording all telephonic
instructions. ASSUMING PROCEDURES SUCH AS THE ABOVE HAVE BEEN FOLLOWED, NEITHER
STATE STREET BANK AND TRUST COMPANY, THE FUND'S TRANSFER AGENT, NOR THE FUND
WILL BE LIABLE FOR ANY LOSS, COST, OR EXPENSE FOR ACTING UPON AN INVESTOR'S
TELEPHONE INSTRUCTIONS. THE FUND SHALL HAVE AUTHORITY, AS THE INVESTOR'S AGENT,
TO REDEEM SHARES IN THE INVESTOR'S ACCOUNT TO COVER ANY SUCH LOSS. As a result
of this policy, the investor will bear the risk of any loss unless the Fund has
failed to follow procedures such as the above.
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<PAGE>
BY BANK WIRE
Shares of the Fund may be purchased by domestic or overseas bank wire. The
wire order must contain registration instructions (i.e. full names and addresses
of all investors, taxpayer identification number, and the account number).
Shareholders opening an account must telephone in advance to obtain a new
account number. The name of the Fund must appear on the wire for proper credit.
The investor must have the bank wire transmitted to the Transfer Agent, State
Street Bank and Trust Company, ABA #011000028, for credit to Boston Financial
Data Services, Inc. A/C #99029944 further credit (Nomura/Shareholder's A/C# and
name). Wires received by the Transfer Agent will be executed at the Fund's net
asset value per share as next determined after receipt of the wired funds. For
assistance the shareholder should call the Transfer Agent at (800) 680-1836.
GENERAL
After an initial investment, a shareholder may participate in the telephone
purchase and redemption service only by making a written election to do so. The
election may be on the initial application form or by writing to the Fund, with
the shareholder's signature guaranteed. A shareholder who wants to change any
telephone service option previously elected may do so by filing with Fund a
letter with instructions.
Order numbers are assigned to telephone purchase orders in order to
distinguish payment for those purchase orders from mail purchase orders. If an
investor who utilizes the telephone purchase order service fails to include the
order number on the payment for such purchase order, the investor should be
aware that the Fund may treat this as a separate and additional purchase order.
If such an event occurs, resulting from the investor's failure to include the
order number assigned to the purchase order, the investor's account will be
charged for any loss incurred from the cancellation of the purchase order. In
the event the shareholder's account balance is insufficient to cover the loss,
Nomura Capital Management, Inc. will reimburse the Fund for the difference.
All purchases made by check should be in U.S. dollars and made payable to
Nomura Pacific Basin Fund, Inc., or State Street Bank and Trust Company. Third
party checks which are payable to an existing shareholder of Nomura Pacific
Basin Fund, Inc. who is a natural person (as opposed to a corporation or
partnership) and endorsed over to the Fund or State Street Bank and Trust
Company will be accepted. When purchases are made by check or periodic automatic
investment, redemptions will not be allowed until the investment being redeemed
has been in the account for 15 business days.
If payment for any purchase order is not received by the Fund or the
Transfer Agent, as specified herein, or if the investor's check is not honored
upon presentment, the order is subject to cancellation by the Fund, and the
purchaser's existing account with the Fund immediately will be charged for any
loss incurred.
Each subscriber will be sent a Confirmation Advice in lieu of a stock
certificate reflecting full and fractional shares purchased, unless a stock
certificate is specifically requested in writing by all registered owners of
such shares with their signatures guaranteed. It is recommended to all
shareholders that a stock certificate not be requested unless needed for a
specific purpose. This eliminates the trouble and expense of safeguarding the
stock certificates and the cost of a lost instrument bond in the event of loss
or destruction.
The Fund reserves the right to discontinue the acceptance of telephone
orders, without notice, and to waive minimum purchase requirements at its
discretion. The Fund may also decline to accept any purchase when, in its
judgment, acceptance would not be to the advantage or in the best interests of
existing shareholders and may, on a case-by-case basis, prohibit or restrict
purchase of its shares by an investor whose activity it deems excessive.
A new account application is included with this Prospectus or can be
obtained by calling (800) 680-1836.
Distribution Plan. The Fund has adopted a Distribution Plan pursuant to
Rule 12b-1 under the Investment Company Act which authorizes NSI to utilize its
administrative fee to finance sales and promotional activities. These activities
and services relate to the sale, promotion and marketing of shares of the Fund,
and the Plan permits NSI to compensate salesmen and dealers who sell shares of
the Fund.
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<PAGE>
REDEMPTION OF SHARES
- --------------------------------------------------------------------------------
Shares of the Fund may be redeemed at any time for cash at the net asset
value per share next determined after the request for redemption is received in
proper form by the Transfer Agent.
BY MAIL
A shareholder wishing to redeem shares by mail may do so by tendering the
shares directly to the Transfer Agent, State Street Bank and Trust Company, P.O.
Box 8500, North Quincy, Massachusetts 02171-8500. If shares are held in
non-certificate form, a written request for redemption signed by the
shareholder(s) exactly as the account is registered is required. If certificates
are held by the shareholder(s), the certificates, signed in the name(s) shown on
the face of the certificates, must be returned in order to be redeemed. The
certificates may be signed either on their reverse side or on a separate stock
power. Any signature appearing on a redemption request, share certificate or
stock power must be guaranteed by an "eligible guarantor institution" as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, the
existence and validity of which may be verified by the Transfer Agent through
the use of industry publications. Additional documentation may be required for
redemptions made by corporations, executors, administrators, trustees or
guardians. Redemption payments will be mailed within seven days of receipt of a
redemption request in proper form by the Transfer Agent.
If the Fund is requested to redeem shares for which it has not yet received
good payment, the Fund may delay or cause to be delayed the mailing of a
redemption check until it has assured itself that good payment (e.g., cash or
certified check drawn on a United States bank) has been collected for the
purchase of the shares. In the case of purchases by check, it may take up to 10
days to ascertain whether good payment has been received.
BY TELEPHONE
Shares of the Fund may be redeemed by calling the Transfer Agent, State
Street Bank and Trust Company, at (800) 680-1836. In order to utilize the
procedure for redemption by telephone, a shareholder previously must have
elected this procedure in writing, the shareholder's account must have been
opened previously by the shareholder and be reflected as such in the computer
records of the Transfer Agent, the stock certificate for shares being redeemed
must be held by the Transfer Agent, and the redemption proceeds must be
transmitted directly to the shareholder's predesignated account at a domestic
bank. A shareholder may elect at any time to use the telephone redemption
service. For assistance the shareholder should call the Transfer Agent at (800)
680-1836.
When utilizing the telephone redemption service, the shareholder must give
the full name, number of shares to be redeemed and account number or the
redemption request will not be processed.
Shareholders should understand that with the telephone redemption option,
they may be giving up a measure of security that they might otherwise have if
they were to redeem their shares in writing. The Fund will employ procedures it
considers reasonable to confirm that redemption instructions communicated by
telephone are genuine. Assuming that the Fund's procedures are followed, neither
the Fund nor the Transfer Agent will be liable for any loss or expenses
resulting from acting on telephonic redemption instructions. In addition,
interruptions in telephone service may mean that a shareholder will be unable to
effect a redemption by telephone when desired.
The Fund reserves the right to change or discontinue without prior notice
telephone service for redemption requests.
REPURCHASE
The Fund will also repurchase shares which are presented by wire or
telephone from a shareholder's listed securities dealer. The repurchase price is
the net asset value per share next determined after the repurchase order is
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<PAGE>
received. These repurchase arrangements are for the convenience of shareholders
and do not involve a charge by the Fund; however, securities dealers may impose
a charge on the shareholder for transmitting the notice of repurchase to the
Fund. Repurchase orders received by dealers prior to the close of business on
the New York Stock Exchange on the day received will be priced at the net asset
value next computed after receipt of the order by the dealer. It is the
responsibility of dealers to transmit such repurchase requests to NSI or the
Transfer Agent not later than 4:30 p.m., New York time, in order to obtain that
day's applicable redemption price.
DIVIDENDS, DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
It is the Fund's intention to distribute substantially all of its net
investment income, if any, in dividend payments declared twice annually. All net
realized long-term or short-term capital gains, if any, will be distributed to
the Fund's shareholders at least annually. Dividends and distributions will be
automatically reinvested in shares of the Fund at net asset value, without a
sales charge, unless the shareholder elects in writing to receive any such
dividends or distributions, or both, in cash. Dividends and distributions are
taxable to shareholders as discussed below whether they are reinvested in shares
of the Fund or received in cash.
The Fund intends to continue to qualify for the special tax treatment
afforded regulated investment companies ("RICs") under the Internal Revenue Code
of 1986, as amended (the "Code"). If it so qualifies, the Fund (but not its
shareholders) will not be subject to Federal income tax on the part of its net
ordinary income and net realized capital gains which it distributes to
shareholders. The Fund intends to distribute substantially all of such income.
Dividends paid by the Fund from its ordinary income or from an excess of
net short-term capital gains over net long-term capital losses (together,
referred to hereinafter as "ordinary income dividends") are taxable to
shareholders as ordinary income. Distributions made from an excess of net
long-term capital gains over net short-term capital losses ("capital gain
dividends") are taxable to shareholders as long-term capital gains, regardless
of the length of time the shareholder has owned Fund shares. Any loss upon the
sale of Fund shares held for six months or less, however, will be treated as
long-term capital loss to the extent of any capital gain dividends received by
the shareholder. Distributions in excess of the Fund's earnings and profits will
first reduce the adjusted tax basis of a holder's shares, and after such
adjusted tax basis is reduced to zero, will constitute capital gains to such
holder (assuming the shares are held as a capital asset).
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. Not later than 60 days after the close of its
taxable year, the Fund will provide its shareholders with a written notice
designating the amounts of any ordinary income dividends or capital gain
dividends. Distributions by the Fund, whether from ordinary income or capital
gains, generally will not be eligible for the dividends received deduction
allowed to corporations under the Code. If the Fund pays a dividend in January
which was declared in October, November or December of the previous year to
shareholders of record on a specified date in one of such months, then such
dividend will be treated for tax purposes as being paid by the Fund and received
by its shareholders on December 31 of the year in which the dividend was
declared.
Ordinary income dividends paid to shareholders who are nonresident aliens
or foreign entities will be subject to a 30% United States withholding tax under
existing provisions of the Code applicable to foreign individuals and entities
unless a reduced rate of withholding or a withholding exemption is provided
under applicable treaty law. Nonresident shareholders are urged to consult their
own tax advisers concerning the applicability of the United States withholding
tax.
Dividends and interest received by the Fund may give rise to withholding
and other taxes imposed by foreign countries. Tax conventions between certain
countries and the United States may reduce or eliminate such taxes. Shareholders
may be able to claim United States foreign tax credits with respect to such
taxes, subject to certain
14
<PAGE>
conditions and limitations contained in the Code. For example, certain
retirement accounts cannot claim foreign tax credits on investments in foreign
securities held in the Fund. If more than 50% in value of the Fund's total
assets at the close of its taxable year consists of securities of foreign
corporations, the Fund will be eligible, and intends, to file an election with
the Internal Revenue Service pursuant to which shareholders of the Fund will be
required to include their proportionate shares of such withholding taxes in
their United States income tax returns as gross income, treat such proportionate
shares as taxes paid by them, and deduct such proportionate shares in computing
their taxable incomes or, alternatively, use them as foreign tax credits against
their United States income taxes. No deductions for foreign taxes, however, may
be claimed by noncorporate shareholders who do not itemize deductions. A
shareholder that is a nonresident alien individual or a foreign corporation may
be subject to United States withholding tax on the income resulting from the
Fund's election described in this paragraph but may not be able to claim a
credit or deduction against such United States tax for the foreign taxes treated
as having been paid by such shareholder. The Fund will report annually to its
shareholders the amount per share of such withholding taxes.
Under certain provisions of the Code, some shareholders may be subject to a
31% withholding tax on ordinary income dividends, capital gain dividends and
redemption payments ("backup withholding"). Generally, shareholders subject to
backup withholding will be those for whom no certified taxpayer identification
number is on file with the Fund or who, to the Fund's knowledge, have furnished
an incorrect number. When establishing an account, an investor must certify
under penalty of perjury that such number is correct and that such investor is
not otherwise subject to backup withholding.
The Fund may invest up to 10% of its total assets in securities of
closed-end investment companies. If the Fund purchases shares of an investment
company (or similar investment entity) organized under foreign law, the Fund
will be treated as owning shares in a passive foreign investment company
("PFIC") for U.S. Federal income tax purposes. The Fund may be subject to U.S.
Federal income tax, and an additional tax in the nature of interest (the
"interest charge"), on a portion of the distributions from such a company and on
gain from the disposition of the shares of such a company (collectively referred
to as "excess distributions"), even if such excess distributions are paid by the
Fund as a dividend to its shareholders. The Fund may be eligible to make an
election with respect to certain PFICs in which it owns shares that will allow
it to avoid the taxes on excess distributions. However, such election may cause
the Fund to recognize income in a particular year in excess of the distributions
received from such PFICs. Alternatively, under proposed regulations the Fund
would be able to elect to "mark-to-market" at the end of each taxable year all
shares that it holds in PFICs. If it made this election, the Fund would
recognize as ordinary income any increase in the value of such shares.
Unrealized losses, however, would not be recognized. By making the
mark-to-market election, the Fund could avoid imposition of the interest charge
with respect to its distributions from PFICs, but in any particular year might
be required to recognize income in excess of the distributions it received from
PFICs and its proceeds from dispositions of PFIC stock.
Under Code Section 988, foreign currency gains or losses from certain debt
instruments, from certain forward contracts, from futures contracts that are not
"regulated futures contracts" and from unlisted options will generally be
treated as ordinary income or loss. Such Code Section 988 gains or losses will
generally increase or decrease the amount of the Fund's investment company
taxable income available to be distributed to shareholders as ordinary income.
Additionally, if Code Section 988 losses exceed other investment company taxable
income during a taxable year, the Fund would not be able to make any ordinary
income dividend distributions, and any distributions made before the losses were
realized but in the same taxable year would be recharacterized as a return of
capital to shareholders, thereby reducing the basis of each shareholder's Fund
shares, and resulting in a capital gain for any shareholder who received a
distribution greater than such shareholder's basis in Fund shares (assuming the
shares were held as a capital asset).
A loss realized on a sale of shares of the Fund will be disallowed if other
Fund shares are acquired (whether through the automatic reinvestment of
dividends or otherwise) within a 61-day period beginning 30 days before and
15
<PAGE>
ending 30 days after the date that the shares are disposed of. In such a case,
the basis of the shares acquired will be adjusted to reflect the disallowed
loss.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and Treasury regulations presently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
the Treasury regulations promulgated thereunder. The Code and the Treasury
regulations are subject to change by legislative, judicial or administrative
action either prospectively or retroactively.
Ordinary income and capital gain dividends may also be subject to state and
local taxes.
Certain states exempt from state income taxation dividends paid by RICs
which are derived from interest on United States Government obligations. State
law varies as to whether dividend income attributable to United States
Government obligations is exempt from state income tax.
Shareholders are urged to consult their tax advisers regarding specific
questions as to Federal, foreign, state or local taxes. Foreign investors should
consider applicable foreign taxes in their evaluation of an investment in the
Fund.
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
DETERMINATION OF NET ASSET VALUE
The Fund's net asset value per share is determined once daily as of 15
minutes after the close of business on the New York Stock Exchange (generally,
4:00 P.M., New York time), on each day during which the New York Stock Exchange
is open for trading.
The Fund's net asset value per share is computed by dividing the sum of the
market value of the securities held by the Fund plus any cash and other assets
(including interest and dividends accrued but not yet received) minus all
liabilities (including accrued expenses) by the total number of shares
outstanding at such time, rounded to the nearest cent. Expenses, including the
management fee payable to the Manager, are accrued daily.
Portfolio securities, including ADR's or EDR's which are traded on stock
exchanges, are valued at the last sale price (regular way) on the exchange on
which such securities are traded, as of the close of business on the day the
securities are being valued or, lacking any sales, at the last available bid
price. In cases where securities are traded on more than one exchange, the
securities are valued on the exchange designated by or under the authority of
the Directors as the primary market. During periods when one or more securities
exchanges are closed for holidays and the New York Stock Exchange is open,
securities traded on such exchanges will be valued on the basis of their last
sale price on the relevant exchange unless management of the Fund believes that
such prices are not representative of the current value of the securities.
Securities traded in the over-the-counter market are valued at the last
available bid price in such market prior to the time of valuation. Any assets or
liabilities expressed in terms of foreign currencies are translated into United
States dollars at the prevailing market rates quoted by State Street Bank and
Trust Company at the time.
Securities and assets for which market quotations are not readily available
will be valued at fair value as determined in good faith by or under the
direction of the Board of Directors of the Fund. Such valuations and procedures
will be reviewed periodically by the Directors.
PORTFOLIO TRANSACTIONS AND BROKERAGE
In executing portfolio transactions, the Manager will seek to obtain the
best net results for the Fund, taking into account such factors as price
(including the applicable brokerage commission or dealer spread), size of order,
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<PAGE>
difficulty of execution and operational facilities of the firm involved and the
firm's risk in positioning a block of securities. While the Manager will
generally seek reasonably competitive commission rates, the Fund will not
necessarily pay the lowest commission or spread available. The Fund has no
obligation to deal with any broker or group of brokers in the execution of
transactions in portfolio securities. The Fund contemplates that, consistent
with its policy of obtaining best net results, brokerage transactions may be
conducted through Nomura and other affiliates of the Manager, and the amount of
such transactions may be significant. Fixed commissions are charged on the
securities exchanges of Japan and certain other Pacific Basin countries. Such
fixed commissions are generally higher than negotiated commissions on comparable
United States transactions. For the year ended March 31, 1995, Nomura and its
affiliates earned $93,939 of the aggregate commissions of $286,325 incurred by
the Fund.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services and investment plans
designed to facilitate investment in its shares. Full details as to each of such
services can be obtained from the Fund or NSI.
Investment Account. An Investment Account is established by the Transfer
Agent for each shareholder. The shareholder will receive statements with respect
to share transactions showing the activity in the shareholder's Investment
Account since the beginning of the year. Share certificates for full shares will
be issued without charge upon the request of the shareholder to the Transfer
Agent.
Reinvestment of Dividends and Capital Gains Distributions. Unless specific
instructions to the contrary are given as to the method of payment of dividends
and capital gains distributions, dividends and distributions will automatically
be reinvested in additional shares of the Fund. Such reinvestments will be at
the net asset value of shares of the Fund, without sales charge, as of the close
of business on the ex-dividend date of the dividend or distribution.
Shareholders may elect in writing to receive either their income dividends or
gains distributions, or both, in cash, in which event payment will be mailed on
the payment date.
Shareholders may, at any time, notify the Transfer Agent in writing that
they no longer wish to have their dividends and/or distributions reinvested in
shares of the Fund or vice versa, and commencing ten days after the receipt by
the Transfer Agent of such notice, those instructions will be effected.
Retirement Plans. Shares of the Fund may be purchased in connection with
individual retirement accounts. Copies of plans establishing such accounts are
available from NSI or from dealers offering shares of the Fund.
Capital gains and ordinary income received in retirement plans are
generally exempt from federal taxation until distributed from the plans.
However, as described under "Dividends, Distributions and Taxes", there may be
foreign withholding taxes on dividends and interest received on portfolio
securities which shareholders of the Fund can offset either by claiming a
deduction, or, as the alternative, use as a foreign tax credit against their
United States income taxes. However, because the retirement plans are exempt
from United States income taxes, participants in such plans will not be able to
offset such withholding taxes. Investors considering participation in any such
plan should review specific tax laws relating thereto and should consult their
attorneys or tax advisers with respect to the establishment and maintenance of
any such plan.
ORGANIZATION OF THE FUND
The Fund was incorporated under Maryland law on March 14, 1985. It is a
diversified open-end investment company. All shares of Common Stock are of the
same class. Shareholders are entitled to one vote for each full share held and
fractional votes for fractional shares held and will vote on the election of
Directors and any other matter submitted to a shareholder vote. Shares issued
are fully paid and non-assessable and have no preemptive or
17
<PAGE>
conversion rights. Upon liquidation of the Fund, shareholders are entitled to
share pro rata in the net assets of the Fund available for distribution to
shareholders.
PERFORMANCE DATA
The Fund may from time to time include its average annual total return in
advertisements or information furnished to present or prospective shareholders.
Total return figures are based on the Fund's historical performance and are not
intended to indicate future performance. Average annual total return is
determined in accordance with a formula specified by the Securities and Exchange
Commission.
Average annual total return quotations for the specified period will be
computed by finding the average annual compounded rates of return (based upon
net investment income and any capital gains or losses on portfolio investments
over such periods) that would equate the initial amount invested to the
redeemable value of such investment at the end of each period. Average annual
total return will be computed assuming all dividends and distributions are
reinvested and taking into account all applicable recurring and nonrecurring
expenses.
The Fund's average annual total return will vary depending upon market
conditions, the securities comprising the Fund's portfolio, the Fund's operating
expenses, changes in foreign currency exchange rates and the amount of net
capital gains or losses realized by the Fund during the period. An investment in
the Fund will fluctuate, and an investor's shares, when redeemed, may be worth
more or less than their original cost.
On occasion, the Fund may compare its average annual total return to
various indices, including those comprised of Pacific Basin securities, and to
performance data published by various sources, including that published by
Lipper Analytical Services, Inc. As with other performance data, performance
comparisons should not be considered representative of the Fund's relative
performance for any future period.
SHAREHOLDER INQUIRIES
Shareholder inquiries may be addressed to the Fund at the address or
telephone number set forth on the cover page of this Prospectus.
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MANAGER
Nomura Capital Management, Inc.
180 Maiden Lane
New York, New York 10038-4936
INVESTMENT ADVISERS
Nomura Investment Management Co., Ltd.
1-12-11, Nihonbashi, Chuo-ku,
Tokyo 103, Japan
Nomura Capital Management
(Singapore) Ltd.
6 Battery Road
Singapore 0104
DISTRIBUTOR
Nomura Securities International, Inc.
2 World Financial Center
New York, New York 10281-1198
CUSTODIAN AND TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 8500
North Quincy, Massachusetts 02171-8500
COUNSEL
Brown & Wood
One World Trade Center
New York, New York 10048-0557
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
1177 Avenue of the Americas
New York, New York 10036-2798
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Nomura Pacific Basin
Fund, Inc.
[LOGO]
Prospectus
July 27, 1995
(as amended December 29, 1995)
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- --------------------------------------------------------------
