NOMURA PACIFIC BASIN FUND, INC.
PACIFIC BASIN PORTFOLIO
[LOGO] [Graphic omitted]
November 29, 1999
To Our Shareholders:
We present the Semi-Annual Report of the Pacific Basin Portfolio (the
"Fund"), a series of Nomura Pacific Basin Fund, Inc. (the "Corporation"),
for the six months ended September 30, 1999.
The Net Asset Value per Share ("NAV") of the Fund's share classes as of
September 30, 1999 were Class A $15.05, Class B $15.05, and Class Z $15.05.
The NAV of the Fund's Class A and B shares increased by 8.4% and 8.4% for
the period August 2, 1999 (commencement of the Class share offering) to
September 30, 1999, respectively, based on the changes in share prices. The
NAV of the Fund's Class Z shares increased by 14.6% and 29.4% during the
quarter and six-months ended September 30, 1999, respectively, based on the
changes in share prices. The total net assets of the Fund aggregated
$17,015,218 and the total number of shares outstanding was 1,130,657 on
September 30, 1999.
The average annual return of the Fund's Class Z shares for the one-year,
five-year and ten-year periods ended September 30, 1999 and since inception
(July 8, 1985) were 79.8%, 0.7%, 3.1%, and 12.5%, respectively. Total return
consists of changes in the NAV and the reinvestment of dividends and capital
gains distributions. This performance information represents past
performance, and investment return and principal value of an investment in
the Fund will fluctuate so that, when redeemed, it may be worth more or less
than the original cost. Changes in currency rates have influenced the Fund's
performance for certain of the specified periods. (Please refer to the Fund
High lights for additional performance data.)
The United States dollar-based returns of the Pacific Basin, as measured
by the Morgan Stanley Capital International Index ("MSCI") (an unmanaged
index), for the three months and six months ended September 30, 1999 were
11.5% and 25.5%, respectively. The Fund's Class Z shares outperformed the MSCI
Index by 3.1 % in the quarter ended September 30, 1999. The Fund outperformed
in all countries except for Malaysia. The outperformance was most notable in
Japan, which generated a significant positive contribution. Stock selection in
the Export/High-Technology and Financial sectors proved to be especially
successful. Semiconductor related stocks benefited from a recovery in the
industry cycle, which was reflected in a sharp increase in Dynamic Random
Access Memory prices. Meanwhile, banking shares surged following the
announcement of a merger between three large city banks.
The Fund outperformed the MSCI Index by 3.9% for the six months ended
September 30, 1999, due to effective stock selection and sector allocation,
with the Japanese equity portfolio providing considerable added return. The
Fund continued to focus on the Export/High Technology and Telecommunications
sectors. Companies that possess some unique competitive advantage consistently
outperformed the market despite the sharp appreciation of the Japanese yen
(the "Yen"), which could undermine export profitability. Telecommunications
stocks reflected robust growth spurred by the increasing use of mobile phones
and data communications.
The foreign exchange rate of the Yen at September 30, 1999 was 106.78 Yen
to one U.S. dollar. The Yen appreciated by 13.3% and by 10.9% against the U.S.
dollar for the quarter and six months ended September 30, 1999, respectively.
The NAV of the Fund's share classes as of November 24, 1999 were Class A
shares $16.21, Class B shares $16.20, and Class Z shares $16.21.
The Portfolio
Despite an increase in the Fund's exposure to Japan, it remains
underweight. Although a recovery in the Japanese economy has become apparent,
requiring a re-assessment of the state of the economy, the Fund has
reservations concerning the sustainability of the recovery and the negative
impact of the appreciating Yen.
While positions in non-Japan markets in the region were reduced, the Fund
remained overweight in Australia and Singapore but underweight in Hong Kong.
Australia continued to be a favored market, as its economy remains buoyant
with little sign of inflation. With surging exports of electronics products
and a bottoming out of the local property market, Singapore is leading the
economic recovery in Southeast Asia. Meanwhile, the Hong Kong economy is still
struggling under persistent deflationary pressure and high real interest
rates. Approximately 5.0% of the Fund's net assets were hedged back to the
U.S. dollar, at September 30, 1999.
The Stock Market
Pacific Basin stock markets experienced a period of consolidation in the
quarter ended September 30, 1999, with MSCI Pacific Basin (excluding Japan)
declining by 4.9%, following the 17.3% gain in the second quarter. Meanwhile,
the Tokyo stock market continued to demonstrate its resilience, with the MSCI
Japan index increasing 15.9% during the third quarter, while the Yen's 13.3%
appreciation against the U.S. dollar significantly enhanced the return in
U.S. dollar terms.
Consolidation in the Southeast Asian stock markets over the last quarter
can be attributed to three principal factors. First, interest rates in the
region tended to increase, mirroring the increase in interest rates in the
U.S. and the firmer domestic demand in the region. Second, political and other
developments have damaged investor confidence, and could have serious and
prolonged consequences for future economic, political and social developments
in the region. The most serious political issues included the intensified
China-Taiwan tensions, instigated by remarks from Taiwan's President Lee; the
Bank Bali scandal; and the turmoil in East Timor, which led to a
destablization of the Indonesian political situation ahead of the scheduled
presidential election in November. Meanwhile, economic factors are also
weighing on the region's prospects, including the crucial, yet prolonged and
painful process of restructuring the failing Daewoo Group in Korea, the
enormous difficulties in Thailand over its bank and corporate recapitalization
efforts; and the other effects of the devastating earthquake in Taiwan. Given
such a combination of events, the apparent nervousness of investors is of
little surprise.
One notable aspect of the quarter has been the Tokyo stock market's
relative immunity to the troubles of the region. Tokyo has remained on a firm
note as foreigners continue to purchase Japanese stocks, encouraged by
increasing signs that the economy has embarked on a recovery track. Sentiment
benefited from the second quarter gross domestic product ("GDP") figure,
which registered an annualized growth rate of 0.9%, far in excess of
expectations. This helped the Yen to appreciate markedly against the U.S.
dollar during the third quarter, which in turn raised fears that it might
undermine the nascent economic recovery, placing significant pressure on the
government the Central Bank.
Despite the upheavals noted above, improvements in economic fundamentals
across the region were in place throughout the third quarter. In fact, the
second quarter GDP announcements revealed that most Southeast Asian countries
had entered a firm recovery trend, although some divergence in economic growth
rates could be observed, i.e. Korea, 9.8%, Singapore 6.7%, Thailand 3.5%,
Malaysia 4.1 %, Hong Kong 0.5%. Meanwhile, inflation rates remained subdued
and trade and current account balances have in general been improving.
The Investment Outlook Strategy
Japan
After the Nikkei Average Index (a price weighted index of 225 leading
stocks on the Tokyo Stock Exchange) reached a twenty-two month closing high
of 18,532 on July 19, 1999, the Japanese market entered a retrenchment phase
lasting until late September. However, a late recovery helped the Japanese
stock market to record a gain of 6.4% for the quarter ended September 30,
1999.
Liquidity has become more broad-based, as private and foreign investors
were joined by domestic investment trusts, which became net buyers of Japanese
equities for the first time in nine years, based on year-to-date figures.
Outperforming sectors included Financials, as the city banks outperformed
significantly on expectations that industry consolidation would continue.
Information and Telecommunication related stocks also outperformed. The
Consumption sector performed well, helped by an upsurge in the shares of Seven
Eleven. Economically sensitive sectors, such as Resources and Iron/Heavy
engineering, continued to underperform the Japanese stock market, possibly
indicating that investors remain cautious about the strength of the economic
recovery.
The Fund is cautiously optimistic both on the prospects for the Japanese
economy and the stock market and expects the Nikkei Average Index to trade
between 16,000 and 19,500 over the next quarter. The Japanese stock market
appears to have largely discounted the positive surprise caused by the
stronger than expected macroeconomic figures this year with a second quarter
GDP growth rate of 0.9%. Given the present circumstances, for the Nikkei
Average Index to make a sustainable break through the 19,500 level, the
Japanese stock market would need firm evidence that corporate earnings can
continue to recover in the fiscal year ended 2000 with the support of
corporate restructuring and government policy. Although this scenario is
highly plausible, the Fund should not overlook the near-term potential risk
factors, such as a sharp correction on the New York Stock Exchange and a
dramatic appreciation of the Yen against the U.S. dollar.
Australia
The Australian stock market declined 3.0% during the quarter. The
Resource sector outperformed the Industrial sector by 12.6 percentage points
in the quarter, underpinned by a strong rally in the price of gold. Gold
rallied strongly following the decision by the European Central Bank to limit
sales and stop any further lending of gold (this will limit gold producing
companies' ability to sell forward).
Ten-year bonds ended September at the 6.30% level, with the spread
against U.S. Treasuries marginally improved to 35 basis points. The
Australian dollar declined by $0.02 over the quarter to $0.65 in response to
the stronger Yen and the current account deficit growing to 6.2% of GDP. The
U.S. dollar rallied from its low of $0.63 late in the quarter as commodity
prices improved (in particular gold).
The Australian economy continues to perform strongly and there is a risk
that the Reserve Bank of Australia ("RBA") will increase interest rates. The
RBA is becoming concerned that the introduction of a Goods and Service Tax
will lead to higher inflation. Wages and inflation seem to be well contained
and these are the principal arguments against an imminent interest rate
increase.
Earnings momentum is positive and the Government's adoption of the Ralph
Report's recommendation to lower corporate taxes appears to help buoy
corporate sentiment. The stock market's weakness is due to its interest rate
sensitivity, and as long as the Federal Reserve feels the need to tighten
monetary policy, it is hard to see the market outperforming.
Hong Kong
External factors, including the stalling Chinese economy, fears of a
Renminbi devaluation, and upward pressure on U.S. interest rates, have over-
shadowed the stock market, despite the Hong Kong economy's early signs of
modest recovery. Increasing interbank interest rates, from 5.875% to 6.375% in
one month, have dampened property stocks. Meanwhile, small to medium
capitalization stocks, especially technology and internet related companies,
have outperformed others.
Economic fundamentals continue to recover, as demonstrated by 0.5% GDP
growth in the quarter ended June 30 1999, with improvements in retail sales
volume and firm exports. However, most of the recovery is attributed to such
external factors as increased tourist arrivals and rising Chinese exports.
Domestic demand, especially domestic investment, is likely to remain weak.
This delay in domestic demand recovery is partly attributed to the Hong Kong's
reluctance to restructure its economy. With continued deflationary pressure,
represented by the 6.1 % decline in the Consumer Price Index and consequent
high real interest rates of 12%, consumer sentiment regarding property prices
is rapidly deteriorating, as indicated by the sharp decline in property
transactions.
The stock market is expected to remain in the doldrums, with the expected
launch of index-linked unit trusts by the government, which intends to dispose
of part of its equity holdings, and the reduction in Hong Kong's weighting in
some of the MSCI regional indices and a possible interest rate increase in the
U.S. Earnings growth will offer little support to the market given the
continuous down ward revisions.
Malaysia
Malaysian equities were volatile during the third quarter, declining
16.7%. Favorable economic figures, news of reinstatement in the MSCI emerging
market indices next February, and the replacement of the existing two-tier
exit levy with a flat 10% capital gains tax on stock market investment, all
boosted market sentiment. However, political concerns, due to the increase in
anti-government protests in Kuala Lumpur, overshadowed this positive news.
The forced merger of 58 financial institutions into six core banking groups
by the first quarter of next year also dampened sentiment as the selection
process for the six core banks was not considered to be fair and transparent.
Malaysia's economy appears to have bottomed out. After five consecutive
quarters of year-over-year ("y-o-y") contractions, real GDP grew by 4.1 %
y-o-y (8.2% quarter-over-quarter) in the second quarter of 1999, led by strong
growth in both the Manufacturing and Agriculture sectors. Private consumption
has also reversed its downtrend, growing by 3% y-o-y in the second quarter
after declining by 4.1 % y-o-y in the first quarter.
Portfolio capital outflow, after the relaxation of capital controls on
September 1, 1999, was slower than expected. For the first two weeks of
September, less than $800 million in assets were removed from Malaysia.
Concerns of Year 2000 and the potential political instability may
continue to dampen market sentiment in the coming quarter. However, with the
economic recovery clearly in place and impediments to investing in the
Malaysian stock market being removed gradually over time, downside risk has
been reduced.
New Zealand
The New Zealand stock market declined by 5.3% during the quarter ended
September 30, 1999. During the quarter Telecommunications Corp. of New
Zealand, Carter Holt Harvey and Fletcher Group all declined.
Telecommunications Corp. of New Zealand's bid for AAPT Ltd. heightened concern
over its strategy. Also impacting sentiment are fears of rising regulatory
risk should Labor Party win the election or a minority party hold the balance
of power. The Fletcher Group also suffered as its proposed paper group merger
met with shareholder resistance. Share issues from Tower, Westpac Banking
Corp. and Australia and New Zealand Banking Group, Ltd. also put pressure on
the market.
The ten-year bond rate increased, ending the quarter at 6.95%. While the
Reserve Bank of New Zealand adopted a tightening bias in its quarterly
statement, lower than expected June quarter economic growth (-0.3%) dampened
expectations of an interest rate increase. Consensus growth estimates have
been reduced. Weakness in economic activity was highlighted by the downtrend
in business confidence. The measure fell again during September, for the
seventh consecutive month. A precarious external trade position and election
uncertainty (called for November 27th) ensured little improvement to the risk
premium, with the New Zealand dollar closing the quarter at $0.52 (from $0.53
in June).
There has been little appetite for New Zealand stocks. The stock market
appears overvalued, compounded by continuing earnings uncertainty with a
weaker consensus growth forecasts. The prospect of tighter industry regulation
is real, especially if either major political party has to rely on minority
party support. While one positive aspect from the weaker GDP number is a
likely benign interest rate environment, the New Zealand bond market will
remain captive to the U.S. interest rate cycle.
Singapore
The Straits Times Index declined by 6.7%, with the index ranging between
1,940 and 2,200 during the quarter ended September 30, 1999. Positive factors
are underpinning the economic recovery, including rising consumer confidence,
signs of regional recovery, improved corporate interim results, and faster
economic and corporate restructuring; but these failed to stir much
excitement, as they had been anticipated in the second quarter. These factors
caused the government to revise its GDP forecast higher for the year to 4 to
5% from 1 to 2% previously. Partial restoration of Central Provident Fund
reductions are expected next year.
The currency strengthened in early August against the U.S. dollar helped
by the Yen appreciation and sustained strength in domestic exports, but later
gave up most gains to end flat at 1.70 to one U.S. dollar.
The pace of the property market slowed ahead of the government's
announcement of an in creased land sale program of 7,000 to 9,000 units. While
the number is not especially daunting, the government's intention to moderate
prices through micro-management is a long-term issue. Property stocks
therefore had to contend with rising inter bank rates as well as supply.
Nonetheless, developers continued to bid rather aggressively for prime
freehold segments, which are less subject to affordability issues.
The recovery has broadened as exports and domestic indicators reveal
increasing strength. Economic liberalization and corporate restructuring are
positive but require time for benefits to filter through. The stock market
should range between 1900 and 2200 until a new catalyst emerges.
Investment Strategy
Given these prospects, the Fund intends to adopt the following country
allocation strategy to ward the end of 1999:
1) The Fund will reduce the overweight position in Australian equities as
the positive elements have been increasingly factored into stock prices.
2) The exposure to Singapore will be increased as part of the strategy to
exploit the future rebound in the Association of Southeast Asian Nations
("ASEAN") markets, coupled with valuation considerations.
3) Japan's exposure will be kept underweight.
4) The cash position will be minimized, as the basic economic trend in
the region points to a continuous improvement in fundamentals despite the near
term turbulence.
The sector strategy in the Japanese equity portfolio is expected to be as
follows:
1) The Fund will increase its exposure to the Financial sector. The
consolidation in the banking industry is likely to continue, and one should
not underestimate the potential improvements that can be derived from industry
consolidation and restructuring.
2) The Fund will reduce its positions in the Pharmaceutical/Information
Services sector due to the sector's consistent outperformance and the
demanding valuations that have resulted.
3) Despite the recent appreciation of the Yen, the Fund will maintain its
exposure to the Export High/Technology sector. The Fund sees more stock
selection opportunities in this sector and to date we have been very
successful in this respect. The Fund is still overweight in this sector by 4
percentage points over the benchmark, but this degree of overexposure
represents a historical low.
We appreciate your continuing support of your Fund.
Sincerely,
Nobuo Katayama
President
Year 2000 Issues. Many computer systems were designed using only two
digits to designate years. These systems may not be able to distinguish the
Year 2000 from the Year 1900 (commonly known as the "Year 2000 Problem"). Like
other investment companies and financial and business organizations, the Fund
could be adversely affected if the computer systems used by Nomura Asset
Management U.S.A. Inc. ("NAM-U.S.A.") or other Fund service providers do not
properly address this problem prior to January 1, 2000. NAM-U.S.A. has hired
consultants to analyze these issues and to implement any system modifications
necessary to prepare for the Year 2000. In addition, NAM-U.S.A. has sought
assurances from the Fund's other service providers that they are taking all
necessary steps to ensure that their Computer systems will accurately reflect
the Year 2000, and NAM-U.S.A. will continue to monitor the situation. However,
no assurance can be given that the Fund's service providers have anticipated
every step necessary to avoid any adverse effect on the Fund attributable to
the Year 2000 Problem.
In addition, the companies in which the Fund invests, the markets for
their securities and related securities trade processing could be adversely
affected by the Year 2000 Problem. If the value of a Fund investment is
adversely affected by a Year 2000 Problem, the Fund's investment return will
be reduced.
SHAREHOLDERS ACCOUNT INFORMATION
Shareholders whose accounts are held in their own name may contact the
Fund's transfer agent, State Street Bank and Trust Company at (800) 680-1836
for information concerning their accounts.
PACIFIC BASIN PORTFOLIO
FUND HIGHLIGHTS -SEPTEMBER 30,1999
(Unaudited)
KEY STATISTICS
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Net Assets .............................................................................$17,015,218
Net Asset Value per Share Class A ...........................................................$15.05
Class B .....................................................................................$15.05
Class Z .....................................................................................$15.05
PERFORMANCE COMPARISON CHART AND TABLE
Average Annual Total Return:* Class A Class B Class Z
Year Ended 9/30/99 ......................................N/A N/A 79.8%
Five Years Ended 9/30/99 ................................N/A N/A 0.7%
Ten Years Ended 9/30/99 .................................N/A N/A 3.1%
Since Inception (7/8/85 to 9/30/99) .....................N/A N/A 12.5%
Cumulative Total Return:*
Five Years Ended 9/30/99 ................................N/A N/A 3.4%
Ten Years Ended 9/30/99 .................................N/A N/A 36.3%
Since Inception (7/8/85 to 9/30/99) .....................N/A N/A 447.5%
</TABLE>
*Performance data quoted above represents past performance, and the investment
return and principal value of an investment in the Fund will fluctuate so
that, when redeemed, it may be worth more or less than the original cost.
Changes 'n currency rates have influenced the Fund's performance for certain
of the specified periods. Expense reimbursement is in effect, and without
such reimbursement performance would have been lower.
GEOGRAPHICAL ALLOCATION:
<TABLE>
<CAPTION>
% of Net Assets
----------------------------------------
Cash and % of
Equities Cash Equivalents Total MSCI Index+
-------- ---------------- ----- -------------
<S> <C> <C> <C> <C>
Japan ................................................. 71.7 - 71.7 82.7
Australia ............................................. 11.7 1.5 13.2 7.5
Hong Kong ............................................. 4.6 - 4.6 6.4
Malaysia .............................................. 2.2 0.9 3.1 -
New Zealand ........................................... 0.4 - 0.4 0.5
Singapore ............................................. 4.6 0.7 5.3 2.9
United States ......................................... - 5.6 5.6 -
---- --- ----- -----
Total Investments ..................................... 95.2 8.7 103.9 100.0
Liabilities in excess of Other Assets, Net ............ ==== === (3.9) -
----- -----
Total ................................................. 100.0 100.0
===== =====
+ Source: Morgan Stanley Capital International Index (an unmanaged index).
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
FUND HIGHLIGHTS -(Continued)
SEPTEMBER 30,1999
(Unaudited)
INDUSTRY DIVERSIFICATION
% of % of
Net Assets Net Assets
---------- ----------
Japanese Securities Hong Kong Securities
<S> <C> <C> <C>
Banking and Insurance ..............9.1 Conglomerate ......................1.3
Electrical Machinery ...............8.1 Real Estate .......................1.2
Electrical and Electronics .........7.9 Banking ...........................0.6
Consumer Electronics and Parts .....6.0 Utilities .........................0.6
Telecommunications .................5.5 Telecommunications ................0.5
Chemicals and Pharmaceuticals ......4.8 Electrical and Electronics ........0.4
Retail .............................3.5 Malaysian Securities
Motor Vehicles .....................3.3 Conglomerate ......................0.7
Miscellaneous Manufacturing ........3.3 Utilities .........................0.5
Construction .......................2.6 Banking ...........................0.4
Wholesale ..........................2.6 Construction ..................... 0.3
Services ...........................2.5 Telecommunications ................0.2
Information and Software ...........2.2 Gaming ............................0.1
Iron and Steel .....................2.0 New Zealand Securities
Food and Beverage ..................1.9 Telecommunications ................0.2
Textiles and Apparel ...............1.4 Forest Products and Paper .........0.2
Commerce ...........................1.3 Singapore Securities
Financials .........................1.0 Banking ...........................1.8
Non-Ferrous Metals .................0.9 Airlines ..........................0.7
Precision Machinery ................0.9 Real Estate .......................0.6
Shipbuilding .......................0.6 Conglomerate ......................0.5
Real Estate ........................0.3 Telecommunications ................0.4
Australian Securities Miscellaneous Manufacturing .......0.3
Non-Ferrous Metals .................2.3 Publishing and Printing ...........0.3
Banking ............................1.9
Financials .........................1.5
Telecommunications .................1.5
Miscellaneous Manufacturing ........1.4
Publishing and Printing ............1.0
Oil and Gas ........................0.9
Transportation .....................0.7
Retail .............................0.5
TEN LARGEST EQUITY HOLDINGS BY MARKET VALUE:
Market % of
Security Value Net Assets
- -------- ------ ----------
Advantest Corp . ...................................................$490,354 2.9
Fujitsu, Ltd ........................................................466,379 2.8
Nippon Telegraph and Telephone Corp .................................466,192 2.7
Tokyo Electron, Ltd. ................................................415,808 2.4
Fuji Soft ABC, Inc . ................................................382,235 2.2
The Dai-ichi Kangyo Bank, Ltd. ......................................360,667 2.1
Toyota Motor Corp . .................................................349,223 2.1
Sony Corp . .........................................................342,695 2.0
Taiyo Yuden Co., Ltd ................................................329,650 1.9
NTT Mobile Communication Network, Inc ...............................294,999 1.7
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Assets
------ ---- ------ -------
JAPANESE EQUITY SECURITIES
<S> <C> <C> <C> <C>
Banking and Insurance
The Bank of Tokyo-Mitsubishi, Ltd ....................17,450 $ 234,936 267,192 1.6
Commercial bank
The Dai-ichi Kangyo Bank, Ltd ........................29,000 219,481 360,667 2.1
City bank
The Industrial Bank of Japan, Ltd ....................19,000 155,332 232,918 1.4
Long term credit bank
The Mitsubishi Trust and Banking Corp . ..............11,000 142,858 133,920 0.8
Commercial bank
The Sanwa Bank, Ltd . ................................22,000 208,551 293,594 1.7
City bank
The Suruga Bank, Ltd .................................15,000 108,147 161,126 0.9
Commercial bank
The Tokio Marine & Fire Insurance Co., Ltd . ..........8,000 102,904 94,400 0.6
--------- --------- ----
Non-life insurance
Total Banking and Insurance ............................. 1,172,209 1,543,817 9.1
--------- --------- ----
Chemicals and Pharmaceuticals
Fuji Photo Film Co., Ltd . ............................1,000 37,650 34,182 0.2
Photo film
Hitachi Chemical Co., Ltd .............................5,000 59,389 85,222 0.5
Synthetic resins
Mitsui Chemicals, Inc . ..............................20,000 114,764 178,498 1.1
Chemicals
Sankyo Co., Ltd . .....................................4,000 94,722 119,873 0.7
Pharmaceuticals
Shin-Etsu Chemical Co., Ltd . .........................3,000 60,400 124,742 0.7
Synthetic resins
Takeda Chemical Industries, Ltd .......................5,000 159,843 269,245 1.6
--------- --------- ----
Pharmaceuticals
Total Chemicals and Pharmaceuticals ..................... 526,768 811,762 4.8
--------- --------- ----
Commerce
Ito-Yokado Co., Ltd . .................................2,000 115,988 164,825 1.0
Supermarkets
Mitsui & Co., Ltd .....................................8,000 65,010 60,386 0.3
--------- --------- ----
General trader
Total Commerce .......................................... 180,998 225,211 1.3
--------- --------- ----
Construction
Toda Corp ............................................41,000 198,579 226,541 1.3
General contractor
Tostem Corp ...........................................9,000 199,106 209,871 1.3
--------- --------- ----
Aluminum housing materials
Total Construction ...................................... 397,685 436,412 2.6
--------- --------- ----
Consumer Electronics and Parts
Futaba Corporation ....................................2,200 106,727 115,377 0.7
Vacuum fluorescent flat panel displays
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS- (Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------ -----
<S> <C> <C> <C> <C>
Sony Corp .............................................2,300 $ 160,575 $ 342,695 2.0
Consumer electronics
Taiyo Yuden Co., Ltd .................................10,000 106,691 329,650 1.9
Ceramic capacitors
TDK Corporation .......................................2,000 102,747 230,943 1.4
--------- --------- ----
Magnetic tapes
Total Consumer Electronics and Parts ....................... 476,740 1,018,665 6.0
--------- --------- ----
Electrical and Electronics
Advantest Corp ........................................3,400 256,698 490,354 2.9
Semiconductor testing equipment
Matsushita Electric Industrial Co., Ltd . ............11,000 210,791 233,330 1.4
Videos, home systems, and industrial equipment
Rohm Company ..........................................1,000 64,689 208,372 1.2
Custom integrated circuits
Tokyo Electron, Ltd ...................................4,800 214,476 415,808 2.4
--------- --------- ----
Electric wires and cables
Total Electrical and Electronics ........................... 746,654 1,347,864 7.9
--------- --------- ----
Electrical Machinery
Fujitsu Ltd ..........................................15,000 226,349 466,379 2.8
Computers
Minebea Co., Ltd . ...................................18,000 186,797 228,414 1.3
Miniature bearings
Mitsubishi Electric Corp . ...........................42,000 214,134 239,146 1.4
Defense electronics
NEC Corporation ......................................14,000 134,015 281,232 1.7
Computers, telecommunications devices, electric
appliances and circuit boards
Sanken Electric Co., Ltd .............................20,000 121,037 156,022 0.9
--------- --------- ----
Semiconductor devices
Total Electrical Machinery ................................. 882,332 1,371,193 8.1
--------- --------- ----
Financials
Shinki Co., Ltd . .....................................3,800 123,828 165,125 1.0
--------- --------- ----
Consumer financing services
Food and Beverage
Fuji Oil Co., Ltd ....................................14,000 87,305 125,211 0.7
Palm oil and coconut oil
Kikkoman Corp ........................................10,000 53,651 84,285 0.5
Soy sauce
Meiji Seika Kaisha, Ltd . ............................15,000 61,318 114,347 0.7
--------- --------- ----
Confectionery products
Total Food and Beverage .................................... 202,274 323,843 1.9
--------- --------- ----
Information and Software
Fuji Soft ABC Inc . ...................................4,500 184,088 382,235 2.2
--------- --------- ----
Computer systems development
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS -(Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------ -----
<S> <C> <C> <C> <C>
Iron and Steel
Nippon Steel Corp . ..................................75,000 $ 140,822 $ 202,987 1.2
Steelmaker
Yodogawa Steel Works, Ltd . ..........................30,000 123,161 139,071 0.8
--------- --------- ----
Surface-treated steel sheets
Total Iron and Steel .................................... 263,983 342,058 2.0
--------- --------- ----
Miscellaneous Manufacturing
Nippon Paper Industries Co., Ltd .....................34,000 177,177 239,446 1.4
Paper products
Sanwa Shutter Corp ...................................19,000 101,612 100,534 0.6
Heavy and lightweight shutters
Shiseido Co., Ltd . ...................................6,000 67,839 89,343 0.5
Cosmetic and toiletry products
SMC Corporation .......................................1,000 79,181 140,475 0.8
Pneumatic equipment
--------- --------- ----
Total Miscellaneous Manufacturing ....................... 425,809 569,798 3.3
Motor Vehicles
--------- --------- ----
Honda Motor Co., Ltd ..................................5,000 147,739 208,841 1.2
Motorcycles, automobiles, and power products
Toyota Motor Corp . ..................................11,000 309,973 349,223 2.1
--------- --------- ----
Automobiles
Total Motor Vehicles .................................... 457,712 558,064 3.3
--------- --------- ----
Non-Ferrous Metals
Sumitomo Metal Mining Co., Ltd . .....................32,000 163,399 157,932 0.9
--------- --------- ----
Copper, gold, and nickel mining
Precision Machinery
Amada Co., Ltd .......................................23,000 117,822 160,039 0.9
--------- --------- ----
Metal cutting, forming and pressing
Real Estate
Mitsubishi Estate Co., Ltd . ..........................5,000 51,546 50,618 0.3
--------- --------- ----
Real estate development
Retail
Aoyama Trading Co., Ltd . .............................5,400 184,291 182,057 1.1
Men's chain store
Circle K Japan Co., Ltd . .............................3,940 122,062 167,149 1.0
Convenience stores
Marui Co., Ltd .......................................13,000 212,565 242,030 1.4
--------- --------- ----
Department store
Total Retail ............................................ 518,918 591,236 3.5
--------- --------- ----
Services
Dai Nippon Printing Co., Ltd .........................11,000 174,948 203,868 1.2
Commercial and industrial printing
Namco, Ltd ............................................5,600 214,423 220,266 1.3
--------- --------- ----
Commercial-used game equipment maker
Total Services .......................................... 389,371 424,134 2.5
--------- --------- ----
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS -(Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------ -----
<S> <C> <C> <C> <C>
Shipbuilding
Mitsubishi Heavy Industries, Ltd . ...................28,000 $ 147,745 $ 107,511 0.6
--------- --------- ----
Shipbuilding and heavy machinery
Telecommunications
DDI Corporation ..........................................24 127,562 179,809 1.1
Long distance telephone and mobile
communications
Nippon Telegraph and Telephone Corp . ....................38 353,038 466,192 2.7
Telecommunications
NTT Mobile Communication Network, Inc . ..................15 107,952 294,999 1.7
--------- --------- ----
Mobile telephone network operator
Total Telecommunications ................................... 588,552 941,000 5.5
--------- --------- ----
Textiles and Apparel
Naigai Clothes Co., Ltd . ............................11,000 62,564 76,232 0.5
Clothing
Toray Industries Inc .................................31,000 161,803 159,674 0.9
Synthetic fibers
--------- --------- ----
Total Textiles and Apparel ................................. 224,367 235,906 1.4
--------- --------- ----
Wholesale
ArcLand Sakamoto Co., Ltd ............................12,000 64,160 216,895 1.3
Home appliances
Hakuto Co., Ltd........................................8,505 138,208 227,002 1.3
--------- --------- ----
Electric parts
Total Wholesale ............................................ 202,368 443,897 2.6
--------- --------- ----
TOTAL INVESTMENTS IN JAPANESE EQUITY SECURITIES 8,445,168 12,208,320 71.7
--------- --------- ----
AUSTRALIAN EQUITY SECURITIES
Banking
National Australia Bank, Ltd .........................13,223 172,481 193,609 1.1
Commercial bank
Westpac Banking Corp., Ltd . .........................21,000 139,763 129,579 0.8
--------- --------- ----
Commercial bank
Total Banking .............................................. 312,244 323,188 1.9
--------- --------- ----
Financials
AMP, Ltd . ...........................................10,000 110,688 93,160 0.5
Insurance and financial services
Colonial, Ltd . ......................................20,000 58,565 72,586 0.4
Financial services
Lend Lease Corp . .....................................7,866 71,584 96,021 0.6
--------- --------- ----
Insurance and financial services
Total Financials ........................................... 240,837 261,767 1.5
--------- --------- ----
Miscellaneous Manufacturing
Smorgon Steel Group, Ltd . ...........................60,000 90,412 91,059 0.5
Galvanized wire, reinforced steel,
and steel welded mesh
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS- (Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------ -----
<S> <C> <C> <C> <C>
Tabcorp Holdings, Ltd . ..............................22,000 $ 123,480 149,34 0.9
--------- ------ -----
Computer software components and games
Total Miscellanous Manufacturing ........................... 213,892 240,408 1.4
--------- --------- ----
Non-Ferrous Metals
The Broken Hill Proprietary Co., Ltd .................21,215 272,738 244,419 1.4
Minerals exploration and production
Western Mining Corp. Holdings, Ltd . .................27,941 155,746 142,260 0.9
--------- --------- ----
Mineral and petroleum products
Total Non-Ferrous Metals ................................... 428,484 386,679 2.3
--------- --------- ----
Oil and Gas
Australian Gas & Light Co., Ltd . ....................25,329 148,757 149,794 0.9
Distribution of natural gas and oil
--------- --------- ----
Publishing and Printing
News Corporation, Ltd ................................25,000 184,438 175,459 1.0
International media
--------- --------- ----
Retail
Coles Myer, Ltd ......................................15,209 76,794 79,501 0.5
--------- --------- ----
Operates diversified retail stores
Telecommunications
Telstra Corporation, Ltd . ...........................49,000 195,945 254,023 1.5
--------- --------- ----
Domestic and international telecommunications
Transportation
Brambles Industries, Ltd ..............................4,000 70,412 115,850 0.7
--------- --------- ----
Railroad car rentals
TOTAL INVESTMENTS IN AUSTRALIAN EQUITY SECURITIES 1,871,803 1,986,669 11.7
--------- --------- ----
HONG KONG EQUITY SECURITIES
Banking
Hong Kong & Shanghai Banking Corp .....................9,400 42,783 107,397 0.6
--------- --------- ----
International bank
Conglomerate
CDL Hotels International, Ltd .......................100,000 35,205 34,115 0.2
Investment holding company
Hutchison Whampoa, Ltd ...............................21,000 121,499 194,647 1.1
--------- --------- ----
Property and shipping related services
Total Conglomerate ......................................... 156,704 228,762 1.3
--------- --------- -----
Electrical and Electronics
Johnson Electric Holdings, Ltd .......................13,000 31,832 62,758 0.4
--------- --------- ----
Micromotors used in automobile components
Real Estate
Cheung Kong Holdings, Ltd ............................10,000 89,179 83,356 0.5
Property development
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS -(Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------- -----
<S> <C> <C> <C> <C>
New World Development Co., Ltd .......................20,000 $ 100,342 $ 43,770 0.
Property development
Sun Hung Kai Properties, Ltd .........................10,000 99,462 76,275 0.
--------- --------- ----
Property development
Total Real Estate .................................... 288,983 203,401 1.
--------- --------- ----
Telecommunications
Cable & Wireless HKT, Ltd . ..........................40,800 78,909 89,028 0.
--------- --------- ----
Telecommunications
Utilities
CLP Holdings, Ltd . ..................................20,000 102,513 93,976 0.
--------- --------- ----
Generates and supplies electricity
TOTAL INVESTMENTS IN HONG KONG EQUITY SECURITIES....... 701,724 785,322 4.
-------- --------- ----
MALAYSIAN EQUITY SECURITIES
Banking
Malayan Banking Berhad . .............................20,000 36,732 62,105 0.
--------- --------- ----
Banking and financial services
Conglomerate
101 Corporation Berhad ...............................70,000 52,430 33,711 0.
Oil palm, rubber, and cocoa
Sime Darby Berhad ....................................10,000 23,946 11,579 0.
Manufacturing, trading, banking, property,
and heavy equipment
UMW Holdings Berhad ..................................45,000 76,422 71,644 0.
--------- --------- ----
Investment holding company
Total Conglomerate ................................... 152,798 116,934 0.
--------- --------- ----
Construction
IJM Corporation Berhad ...............................70,000 37,672 52,132 0.
--------- --------- ----
Civil engineering contracts
Gaming
Berjaya Sports Toto Berhad ...........................11,000 30,560 23,303 0.
--------- --------- ----
Forecast games
Telecommunications
Telekom Malaysia Berhad ..........................10,000 31,009 25,921 0.
--------- --------- ----
Telecommunications
Utilities
Tenaga Nasional Berhad ...............................42,000 129,926 86,211 0.
--------- --------- ----
Power supplier
TOTAL INVESTMENTS IN MALAYSIAN EQUITY SECURITIES....... 418,697 366,607 2.
--------- --------- ----
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
SCHEDULE OF INVESTMENTS- (Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Market Net
Shares Cost Value Asset
------ ---- ------- -----
<S> <C> <C> <C> <C>
NEW ZEALAND EQUITY SECURITIES
Forest Products and Paper
Carter Holt Harvey ...................................21,000 $ 39,303 $ 25,309 0.2
Paper and wood products -------- -------- ---
Telecommunications
Telecommunications Corp. of New Zealand ..............10,000 28,464 39,466 0.2
------ ------- ----
Telecommunications
TOTAL INVESTMENTS IN NEW ZEALAND EQUITY SECURITIES 67,767 64,775 0.4
------ ------- ----
SINGAPORE EQUITY SECURITIES
Airlines
Singapore Airlines ...................................12,000 111,681 117,176 0.7
International airline ------- -------- ---
Banking
DBS Group Holdings, Ltd ..............................26,827 213,770 299,831 1.8
International bank ------- -------- ---
Conglomerate
Keppel Corp., Ltd ....................................16,750 55,534 48,871 0.3
Shipyards, properties, financial services
and engineering
Singapore Technologies Engineering, Ltd . ............35,000 37,907 44,676 0.2
Production, upgrade, and maintenance ------- -------- ---
of engineering products
Total Conglomerate ...................................... 93,441 93,547 0.5
------- -------- ---
Miscellaneous Manufacturing
Venture Manufacturing (Singapore), Ltd ................5,000 18,511 43,529 0.3
Contract manufacturing for electronics companies ------- -------- ---
Publishing and Printing
Singapore Press Holdings, Ltd ..........................3,600 49,982 56,753 0.3
Newspapers and magazines ------- --------- ---
Real Estate
City Development, Ltd . ..............................11,000 84,534 55,971 0.3
Property development
DBS Land, Ltd . ......................................23,000 37,676 42,753 0.3
Property investment and development ------ ------ ---
Total Real Estate ....................................... 122,210 98,724 0.6
------- ------ ---
Telecommunications
Singapore Telecommunications, Ltd . ..................39,000 65,601 71,118 0.4
Basic telecommunications and postal services ------- ------ ---
TOTAL INVESTMENTS IN SINGAPORE EQUITY SECURITIES 675,196 780,678 4.6
------- ------ ---
TOTAL INVESTMENTS IN EQUITY SECURITIES ................ 12,180,355 $ 16,192,371 95.2
---------- ------------ ---
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC 13ASIN PORTFOLIO
SCHEDULE OF INVESTMENTS -(Continued)
SEPTEMBER 30,1999
(Unaudited)
% of
Principal Market Net
Amounts Cost Value Asset
---------- ---- ------ -----
<S> <C> <C> <C> <C>
INVESTMENTS IN FOREIGN CURRENCIES
Australian Dollar
Westpac Banking Corporation, Sydney 4.25%-interest
bearing call account ..........................................AUD390,632 $ 255,466 $ 254,985 1.5
Japanese Yen
The Fuji Bank, Limited, Tokyo non-interest
bearing call account ..........................................JPY384,888 3,629 3,605 0.0
Malaysian Ringgit
Standard Chartered Bank Malaysia Berhad, Kuala Lampur
non-interest bearing call account .............................MYR576,456 151,699 151,699 0.9
Singapore Dollar
Development Bank of Singapore Ltd. non-interest
bearing call account ..........................................SGD204,245 119,651 120,144 0.7
-------- --------- ----
TOTAL INVESTMENTS IN FOREIGN CURRENCIES ................................. 530,445 530,433 3.1
-------- --------- ----
INVESTMENTS IN SHORT-TERM SECURITIES
State Street Bank and Trust Company, interest bearing
call account 4.75% due 10/1/99 ...................................951,185 951,185 951,185 5.6
-------- --------- ----
TOTAL INVESTMENTS IN SHORT-TERM SECURITIES .............................. 951,185 951,185 5.6
-------- --------- ----
TOTAL INVESTMENTS ....................................................... 13,661,985 17,673,989 103.9
LIABILITIES IN EXCESS OF OTHER ASSETS, NET .............................. (618,388) (658,771) (3.9
-------- --------- ----
NET ASSETS .............................................................. $ 13,043,597 $ 17,015,218 100.0
============= ============= =====
FORWARD FOREIGN CURRENCY CONTRACT
- ---------------------------------
</TABLE>
<TABLE>
<CAPTION>
Cost Delivery Maturity Unrealized
(Local Currency Value Date Depreciation
-------------- --------- --------- ------------
<S> <C> <C> <C> <C>
U.S. Dollars-Long Contract ..................JPY $90,854,720 $848,000 12/9/99 ($12,211)
=========== ======== ========
</TABLE>
Portfolio securities and foreign currency holdings were translated
at the following exchange rates as of September 30, 1999.
Australian Dollar AUD. 1.532=$1.00
Hong Kong Dollar HKD. 7.77=$1.00
Japanese Yen JPY. 106.780=$1.00
Malaysian Ringgit MYR. 3.800=$1.00
New Zealand Dollar NZD. 1.933=$1.00
Singapore Dollar SGD. 1.700=$1.00
See notes to financial statements
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30,1999
(Unaudited)
ASSETS:
<S> <C>
Investments in securities, at market value (cost -$12,180,355) ........................................$ 16,192,371
Investments in short-term securities, at market value (cost-$951,185) .....................................951,185
Investments in foreign currency, at market value (cost-$530,445) ...........................................530,433
Receivable for capital stock sold ...........................................................................80,523
Receivable for dividends and interest, net of withholding taxes .............................................47,159
--------
Total Assets ............................................................................................17,801,671
--------
LIABILITIES:
Payable for investments purchased ..........................................................................680,352
Payable for capital stock redeemed ..........................................................................39,161
Unrealized depreciation on foreign currency contract ........................................................12,211
Other accrued expenses ......................................................................................54,729
--------
Total Liabilities ..........................................................................................786,453
--------
NET ASSETS:
Capital stock (Class A shares-par value of 667 shares of capital stock
outstanding, authorized 50,000,000 par value $0.10 each) ........................................................67
Capital stock (Class B shares-par value of 706 shares of capital stock
outstanding, authorized 50,000,000 par value $0.10 each) ........................................................71
Capital stock (Class Z shares-par value of 1,129,284 shares of capital stock
outstanding, authorized 50,000,000 par value $0.10 each) ....................................................112,928
Paid-in capital ..........................................................................................16,527,271
Accumulated net realized loss on investments and foreign currency transactions ..........................(3,571,016)
Unrealized net appreciation on investments and foreign exchange ...........................................3,971,621
Accumulated net investment loss ............................................................................(55,724)
------------
Net Assets .............................................................................................$ 17,015,218
=============
Class A Class B Class Z
------- ------- -------
Net asset value and redemption price per share outstanding ....................$15.05 $15.05 $15.05
Maximum sales charge (for Class A: 5.75% of offering price;
6.10 % of net asset value per share) ............................................0.92 0.00* 0.00
----- ------ ------
Maximum offering price per share outstanding ..................................$15.97 $15.05 $15.05
====== ====== =====
*Class B shares are not subject to an initial sales charge but may be subject
to a contingent deferred sales charge on redemption of shares.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED SEPTEMBER 30,1999
(Unaudited)
INCOME:
<S> <C> <C>
Dividend income (less $2,724 withholding taxes) ...........$134,850
Interest income .............................................18,737
------
Total Income ...................................................... $ 153,587
EXPENSES:
Management fee ..............................................56,241
Custodian fee ...............................................40,077
Legal fees ..................................................30,012
Transfer agency fee .........................................25,071
Auditing and tax reporting fees .............................25,071
Shareholder reports .........................................25,071
Directors' fees and expenses ................................20,092
Registration fees ............................................7,503
Insurance ....................................................1,647
Distribution fees (Class A) ......................................1
Distribution fees (Class B) ......................................2
Miscellaneous ................................................2,742
-------
Total Expenses .............................................233,530
Expense reimbursement .......................................(70,36)
-------
Net Expenses ...................................................... 163,161
-------
INVESTMENT LOSS-NET ............................................... ($9,574)
--------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND FOREIGN CURRENCIES:
Realized gain on investments and foreign currency transactions:
Net realized gain on investments ...............................................1,205,474
Net realized gain on foreign exchange .......................................... 18,036
---------
Net realized gain on investments and foreign exchange ..........................1,223,510
---------
Change in unrealized appreciation on translation of investments, foreign
currencies, other assets and liabilities denominated in foreign currencies .....1,154,551
Change in net unrealized appreciation on investments ...........................1,438,443
---------
Net realized and unrealized gain on investments and foreign exchange
transactions ...................................................................3,816,504
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ...........................3,806,930
=========
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
PACIFIC BASIN PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
For the Six Months Ended
Septemeber 30, 1999 For the Year Ended
(unaudited) March 31, 1999
--------------
<S> <C> <C>
FROM INVESTMENT ACTIVITIES:
Net investment loss .................................................... $ (9,574) $ (38,716)
Net realized gain (loss) on investments ............................... 1,205,474 (406,874)
Net realized gain (loss) on foreign currencies ........................ 18,036 (821,426)
Change in unrealized appreciation on investments
and foreign currencies ................................................ 2,592,994 2,256,686
--------- ---------
Increase in net assets derived from investment activities ............. 3,806,930 989,670
--------- ---------
FROM CAPITAL SHARE TRANSACTIONS:
Proceeds from continuous offering (Class A) ........................... 9,707 -
Proceeds from continuous offering (Class B) ........................... 10,286 -
Proceeds from continuous offering (Class Z) ........................... 2,987,330 819,459
Net asset value of shares issued to shareholders on reinvestment
of dividends and distributions ........................................ - -
Cost of shares redeemed (Class A)...................................... - -
Cost of shares redeemed (Class B)...................................... - -
Cost of shares redeemed (Class Z) ..................................... (2,524,109) (2,819,804)
---------- ----------
Increase (decrease) in net assets derived from
capital share transactions ............................................ 483,214 (2,000,345)
----------- ----------
Net increase (decrease) in net assets ................................. 4,290,144 (1,010,675)
NET ASSETS:
Beginning of period ................................................... 12,725,074 13,735,749
------------ ------------
End of period ......................................................... $ 17,015,218 $ 12,725,074
============ =============
For the Six Months Ended
September 30, 1999 For the Year Ended
SHARE ACTIVITY: (unaudited) March 31, 1999
------------------------ -------------------
Class A Class B Class Z Class Z
shares shares shares shares*
------- ------- ------- --------
Shares offered on continuous offering................................... 667 706 220,886 80,343
Shares issued to shareholders on reinvestment of net investment
income and realized gain on investments ........................... - - - -
Shares redeemed during the year ................................... - (185,401) (280,750)
---- ---- ---------- -----------
Net shares subscribed (redeemed) during the period ................ 667 706 35,485 (200,407)
Shares outstanding at beginning of period ......................... - - 1,093,799 1,294,206
---- ---- ---------- -----------
Shares outstanding at end of period ............................... 667 706 1,129,284 1,093,799
==== ==== ========== ===========
Total ............................................................. 1,130,657 1,093,799
========== ===========
- --------------
*Class Z shares were the only class share offered during the year ended March 31, 1999.
See notes to financial statements
</TABLE>
PACIFIC BASIN PORTFOLIO
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Nomura Pacific Basin Fund, Inc. (the "Corporation") is a series company
currently offering one portfolio, the Pacific Basin Portfolio (the "Fund").
The investment objective of the Fund is to seek long-term capital appreciation
by primarily investing in equity securities of corporations domiciled in Far
Eastern or Western Pacific ("Pacific Basin" countries. The Corporation is
registered under the Investment Company Act of 1940 as a diversified, open-
end management investment company. The Corporation was incorporated in
Maryland on March 14, 1985. The Fund currently offers three classes of shares,
Class A shares, whose distribution commenced August 2, 1999 are generally
offered at net asset value plus an initial sales charge and bear certain
expenses related to the shareholder services and distribution associated with
such shares. Class B shares, whose distribution commenced August 2, 1999, are
offered without an initial sales charge, although a declining contingent
deferred sales charge may be imposed on redemptions made within six years of
purchase. In addition, Class B shares bear certain expenses related to
shareholder services and distribution associated with such shares and may be
subject to lower shareholder services and distribution expenses when they are
converted to Class A shares after eight years. Class Z shares are the original
no load shares of the Fund, whose distribution commenced July 8, 1985. Class Z
shares are not subject to either an initial sales charge or ongoing
shareholder services and distribution expenses. The following is a summary of
significant accounting policies followed by the Fund.
(a) Valuation of Securities- Investments traded on the stock exchanges
are valued at the last sale price on the primary 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.
Securities traded in the over-the-counter market are valued at the last
available bid price. Securities for which market quotations are not readily
available and restricted securities are valued in good faith at fair value
using methods determined by the Board of Directors. In determining fair
value, consideration is given to cost, operating and other financial data.
Short-term debt securities which mature in 60 days or less are valued at
amortized cost if their original maturity at the date of purchase was 60
days or less, or by amortizing their value on the 61st day prior to maturity
if their term to maturity at the date of purchase exceeded 60 days. Securities
and other assets, including futures contracts and related options, are stated
at market value or otherwise at fair value as determined in good faith by or
under the direction of the Board of Directors of the Fund.
(b) Foreign Currency Transactions - Transactions denominated in foreign
currencies are recorded in the Fund's records at the current prevailing rate
at the time of the transaction. Asset and liability accounts that are
denominated in the foreign currency are adjusted to reflect the current
exchange rate at the end of the period. Transaction gains or losses resulting
from changes in the exchange rate during the reporting period or upon
settlement of foreign currency transactions are included in operations for the
current period.
The net assets of the Fund are presented at the exchange rate and market
values at the end of the period. The Fund isolates that portion of the change
in unrealized appreciation (depreciation) included in the statement of
operations arising as a result of changes in foreign currencies at September
30, 1999 on investments and other assets and liabilities. Net realized foreign
exchange gains or losses includes gains or losses arising from sales of
portfolio securities, sales and maturities of short-term securities, currency
gains or losses realized between the trade and settlement dates on securities
transactions, the difference between the amounts of dividends, interest, and
foreign withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid.
(c) Financial Instruments with Off-Balance Sheet Risk-At September 30,
1999, the Fund had outstanding one forward foreign currency exchange contract
("for ward contract") in order to hedge against changes in the Japanese
exchange rate. The forward contract involves elements of market risk in excess
of the amounts reflected in the Statement of Assets and Liabilities. The Fund
bears the risk of an unfavorable change in the foreign exchange rate
underlying forward contracts. Risks may arise as a result of the potential
inability of the counterparty to meet the terms of the contracts.
(d) Security Transactions, Investment Income, Distributions to Shareholders
- -Security transactions are accounted for on the trade date. Dividend income is
recorded on the ex-dividend date and interest is recorded on the accrual
basis. Realized gains and losses on the sale of investments are calculated on
the identified cost basis.
Dividends from net investment income and distributions from net realized
gains, if any, are paid at least annually.
Distributions from net investment income and net realized gains are
determined in accordance with Federal income tax regulations, which may differ
from generally accepted accounting principles. To the extent these "book/tax"
differences are permanent in nature (i.e., that they result from other than
timing of recognition-"temporary"), such accounts are reclassified within
the capital accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification. Dividends and distributions
which exceed net investment income or net realized gains for financial
reporting purposes, but not for tax purposes, are reported as distributions
in excess of net investment income.
(e) Capital Account Reclassification -For the year ended March 31, 1999,
the Fund's accumulated net investment loss and paid-in-capital were
decreased by $78,567 and $37,882, respectively, with an offsetting increase in
accumulated net realized loss of $40,685. This adjustment was primarily the
result of the reclassification of net foreign currency gains and losses, a net
operating loss, and the sale of investments in passive foreign investment
companies.
(f) Income Taxes - A provision for United States income taxes has not
been made since it is the intention of by the Fund to continue to qualify as a
regulated investment company under the Internal Revenue Code and to distribute
within the allowable time limit all taxable income to its shareholders.
Under the applicable foreign tax laws, a withholding tax may be imposed
on gross sales proceeds on the disposition of equity securities, interest,
dividends and realized gains at various rates; such withholding taxes are
reflected as a reduction of the related income or realized gain.
(g) Use of Estimates in Financial Statement Preparation-The preparation
of financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that affect
the reported amounts and disclosures in the financial statements. Actual
results could differ from these estimates.
2. MANAGEMENT AGREEMENT AND TRANS ACTIONS WITH AFFILIATED PERSONS
Nomura Asset Management U.S.A. Inc. (the "Manager") acts as the Manager
of the Fund pursuant to a management agreement. Under the agreement, the
Manager provides all office space, facilities and is necessary to perform its
duties. Pursuant to such management agreement, the Manager has retained its
parent company Nomura Asset Management Co., Ltd. ("NAM") and Nomura Asset
Management Singapore Limited ("NAM Singapore") to act as investment advisors
for the Fund. On July 30, 1999, the Corporation terminated its Distribution
Agreement with Nomura Securities International, Inc. and entered into a new
Distribution Agreement with Funds Distributor, Inc.
As compensation for its services to the Fund, the Manager receives a
monthly fee computed daily, at the annual rate of .75 of 1 % of the Fund's
average daily net assets. For services performed, NAM, NAM-Singapore receive a
monthly fee from the Manager at the annual rates of .26125 of 1 % and .0275 of
1 %, respectively, of the average daily net assets of the Fund. Under the
Management Agreement, the Fund accrued fees to the Manager of $56,241 for the
six months ended September 30, 1999 (see voluntary expense reimbursement
arrangement as described below). For the six months ended September 30, 1999,
the Manager informed the Fund that no payments were made to NAM and
NAM-Singapore, due to the voluntary expense reimbursement arrangement. At
September 30, 1999, the fee payable to the Manager, the Fund, was $0.
Effective August 2, 1999, the Manager has contractually agreed, through
the end of the Fund's fiscal year on March 31, 2000, to limit the annual
operating expenses (excluding taxes, brokerage fees and commissions and
extraordinary charges such as litigation costs) of each of the Fund's classes
as follows: Class A-1.90%, Class B-2.65% and Class Z-1.65% of average net
assets. For the period April 1, 1999 to August 1, 1999 the Manager agreed to
reimburse the Fund's Class Z shares (only Class share available for sale
during that period) in any amount necessary to prevent the ordinary operating
expenses from exceeding in any fiscal year 2.5% of the Class Z shares first
$30 million of average net assets, 2.0% of the next $70 million of average net
assets and 1.5% of the remaining average net assets. Under the reimbursement
arrangement, the Fund has recorded expense reimbursement of $70,369 for the
six months ended September 30, 1999. This voluntary reimbursement arrangement
may be terminated for subsequent fiscal years. Certain officers and/or
directors of the Fund are officers and/or directors of the Manager. The Nomura
Securities Co., Ltd., the Manager's indirect parent, earned $1,004 in
commissions on the execution of portfolio security transactions for the six
months ended September 30, 1999. The Fund pays fees to each Director not
affiliated with the Manager an annual fee of $5,000 plus $500 per meeting
attended, together with such Director's actual expenses related to attendance
at meetings. Such fees and expenses for the unaffiliated Directors aggregated
$20,092 for the six months ended September 30, 1999.
Distribution fees-The Corporation on July 30, 1999 entered into a new
Distribution Agreement with Funds Distributor, Inc. (the "Distributor"). The
Corporation has adopted a Distribution Plan (the "Plan") in accordance with
the provisions oil Rule 12b-1 under the Investment Company Act of 1940.
Pursuant to the Class A shares Plan, the Distributor receives a monthly
fee, at the annual rate of 0.25% of the average aggregate net asset value of
the Class A shares of the Fund outstanding during the month, which is an
expense of the Class A shares for distribution or other service activities as
designated by the Distributor.
Pursuant to the Class B shares Plan, the Distributor receives a monthly
distribution fee, which is an expense of Class B shares, at the annual rate of
0.75% of the aver age aggregate net asset value of the Class B shares of the
Fund outstanding during the month. The Plan provides that Class B shares of
the Fund also incur a service fee for ongoing shareholder servicing and
account maintenance, which is an expense of Class B shares, at the annual
rate of 0.25% of the average aggregate net asset value of Class B shares of
the Fund outstanding during the month.
3. PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments for the six months ended September 30,
1999, exclusive of investments in foreign currencies and short term
securities, were $6,984,246 and $6,473,800 respectively.
As of September 30, 1999, net unrealized appreciation on investments,
exclusive of investments in foreign currencies and short-term securities, for
Federal income tax purposes was $4,012,016 of which $4,404,467 related to
appreciated securities and $392,451 related to depreciated securities. The
aggregate cost of investments, exclusive of investments in foreign currencies
and short-term securities, at September 30, 1999 for Federal income tax
purposes was $12,180,355. The Fund has a capital loss carry forward as of March
31, 1999 of $4,682,269 of which $1,907,538 expires March 31, 2006 and
$2,774,731 expires March 31, 2007. which expires March 31, 2006.
Capital losses and currency losses incurred after October 31, within the
taxable year are deemed to arise on the first business day of the Fund's next
taxable year. Accordingly, the Fund incurred and elected to defer capital
losses of $14,129 and currency losses of $0 to the taxable year ending March
81, 2000.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share of common stock outstanding throughout each period:
August 2, 1999 (commencement
of Class share offering)
through September 30, 1999
(unaudited) For the Six
------------------------------ Months Ended
Class A Class B September 30,1999
shares shares (unaudited)
-------- ------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period: ................ $13.95 $13.95 $11.63
--------- --------- -----------------
Income from investment operations:
Net Investment income (loss) ......................... 0.08+ 0.08+ (0.01)+
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ 1.02+ 1.02+ 3.43+
--------- -------- ----------
Total from investment operations ..................... 1.10+ 1.10+ 3.42+
Distributions to shareholders from:
Net investment income ................................
Net realized capital gains ...........................
Total distributions .................................. - - -
Net asset value, end of period ....................... $15.05 $15.05 $15.05
====== ====== ======
Total investment return .............................. 8.4% 8.4% 29.4%
Ratio to average net assets/supplemental data:
Net assets, end of period (000) .................... $10 $10 $16,995
Operating expenses, net of
reimbursement ...................................... 0.12%* 0.11%* 2.18%*
Total expenses ..................................... 0.12%* 0.11%* 3.12%*
Net investment income (loss) ....................... 1.24%* 1.24%' (0.13%)
Portfolio turnover ................................. 46% 46% 46%
+Based on average shares outstanding.
*Annualized
Class Z shares
For the Year Ended March 31,
----------------------------------------------------------
1999 1998 1997 1996 1995
----- ----- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period: ................ $10.61 $13.76 $16.52 $15.07 $18.07
Income from investment operations:
Net Investment income (loss) ......................... (0.03)+ (0.07)+ (0.14)+ (0.04)+ (0.01)+
Net realized and unrealized gain (loss)
on investments and foreign currencies ................ 1.05+ (3.01)+ (0.87)+ 2.07+ (0.74)+
----- ------- ------- ------ -------
Total from investment operations ..................... 1.02+ (3.08)+ (1.01)+ 2.03+ (0.75)+
Distributions to shareholders from:
Net investment income ................................ - (0.04) (0.28)
Net realized capital gains ........................... - (0.03) (1.47) (0.58) (2.25)
---- ------ ------- ------ -----
Total distributions .................................. - (0.07) (1.75) (0.58) (2.25)
---- ------ ------- ------ -----
Net asset value, end of period ....................... $11.63 $10.61 $13.76 $16.52 $15.07
======= ======= ======== ======= =======
Total investment return .............................. 9.6% (22.4%) (6.9%) 13.7% (4.2%)
ratio to average net assets/supplemental data:
Net assets, end of period (000) .................... $12,725 $13,736 $22,128 34,022 $42,684
Operating expenses, net of
reimbursement ...................................... 2.50% 2.49% 2.21% 1.78% 1.38%
Total expenses ..................................... 3.35% 2.91% 2.21% 1.78% 1.38%
Net investment income (loss) ....................... (0.33%) (0.55%) (0.87%) (0.28%) (0/07%)
Portfolio turnover ................................. 48% 45% 62% 45% 49%
-------------------------
+Based on average shares outstanding.
*Annualized
</TABLE>
-----------------------------
BOARD OF DIRECTORS
William G. Barker, Jr.
George H. Chittenden
Nobuo Katayama
Chor Weng Tan
Arthur R. Taylor
John F. Wallace
OFFICERS
Nobuo Katayama, President NOMURA
Keisuke Haruguchi, Vice President Pacific Basin
David G. Stoeffel, Vice President
John F. Wallace, Vice President Fund, Inc.
John J. Boretti, Secretary and Treasurer
Terence P. Brennan, Assistant Secretary and
Assistant Treasurer
MANAGER
Nomura Asset Management U.S.A. Inc.
180 Maiden Lane
New York, New York 10038-4936
Internet Address
www.nomura-asset.com
INVESTMENT ADVISORS
Nomura Asset Management Co., Ltd.
2-1-14 Nihonbashi, Chuo-ku,
Tokyo 103-8260, Japan
Nomura Asset Management Singapore Limited
6 Battery Road
Singapore 049909 SEMI-ANNUAL REPORT
DISTRIBUTOR
Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109 SEPTEMBER 30, 1999
CUSTODIAN AND SHAREHOLDER SERVICING AGENT
State Street Bank and Trust Company
P.O. Box 8500
North Quincy, Massachusetts 02171-8500
COUNSEL [LOGO]
Brown & Wood LLP
One World Trade Center
New York, New York 10048-0557
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of The Americas
New York, New York 10036-2798
NOMURA PACIFIC BASIN FUND, INC.
180 MAIDEN LANE
NEW YORK, NEW YORK 10038-4936
This Report, is not to be construed
as an offering for the sale of
shares of Pacific Basin Portfolio a
series company of Nomura Pacific
Basin Fund, Inc., or as a
solicitation of an offer to buy any
such shares, unless accompanied by
an effective prospectus setting
forth both details of the Fund and
other material information.
The Financial Statements including
the Schedule of Investments, have
not been examined by the Fund's
independent accountants,
PricewaterhouseCoopers LLP, and
accordingly, they express no
opinion thereon.
-----------------------------
