As filed with the Securities and Exchange Commission on May 28, 1999
Securities Act File No. 2-96612
Investment Company Act File No. 811-4269
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 15 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 16 |X|
(Check appropriate box or boxes)
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Nomura Pacific Basin Fund, Inc.
(Exact Name of Registrant as Specified in Charter)
180 Maiden Lane
New York, New York 10038
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code (212) 509-8181
John F. Wallace
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane, New York, N.Y. 10038
(Name and Address of Agent for Service)
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Copy to:
Brown & Wood LLP
One World Trade Center
New York, N.Y. 10048
Attention: John A. MacKinnon, Esq.
It is proposed that this filing will become effective (check appropriate box):
|_| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|X| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(l)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
|_| this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Title of Securities Being Registered: Common Stock, par value $.10 per share.
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<PAGE>
The information in this prospectus is not complete and may be changed. We may
not use this prospectus to sell securities until the registration statement
containing this prospectus, which has been filed with the Securities and
Exchange Commission, is effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these securities in any state
where the offer or sale is not permitted.
Subject to Completion
Preliminary Prospectus dated May 28, 1999
PROSPECTUS
Nomura Pacific Basin Fund, Inc. [GRAPHIC OMITTED]
180 Maiden Lane, New York, New York 10038-4939
(Telephone: l-800-833-0018)
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This Prospectus contains information you should know before investing, including
information about risks. Please read it before you invest and keep it for future
reference.
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The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of the Prospectus. Any representation to
the contrary is a criminal offense.
Nomura Asset Management U.S.A. Inc.--Manager
Nomura Asset Management Co., Ltd.--Investment Adviser
Nomura Asset Management Singapore Limited--Investment Adviser
Nomura Securities International, Inc.--Distributor
July , 1999
<PAGE>
TABLE OF CONTENTS Page
Summary ................................................................... 3
Investment Objective .................................................... 3
Principal Investment Strategies ......................................... 3
Investment Risks ........................................................ 3
Investment Considerations ............................................... 4
Risk/Return Bar Graph and Table ......................................... 4
Fees and Expenses ......................................................... 6
Principal Investment Strategies ........................................... 8
Investment Risks .......................................................... 10
Management of the Fund .................................................... 15
Year 2000 Issues .......................................................... 15
Fund Share Pricing ........................................................ 16
Purchase of Fund Shares ................................................... 17
Class A Shares .......................................................... 18
Class B Shares .......................................................... 18
Class Z Shares .......................................................... 18
Initial sales charges for Class A Shares ................................ 19
Deferred sales charges for Class B Shares ............................... 19
You may be eligible for reductions and waivers of sales charges ......... 19
Distribution (12b-1) Plans .............................................. 19
Selling Fund Shares ....................................................... 20
Selling shares through your financial advisor ........................... 20
Selling shares directly to the Fund ..................................... 20
Fund Distributions and Taxes .............................................. 21
Financial Highlights ...................................................... 23
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Nomura Pacific Basin Fund, Inc.
SUMMARY
Investment Objective
The 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
primarily through investments in equity securities of corporations domiciled in
Far Eastern or Western Pacific ("Pacific Basin") countries including, but not
limited to, Japan, Australia, China, Hong Kong, Indonesia, Malaysia, New
Zealand, Singapore, South Korea, Taiwan, Thailand, and the Philippines.
Principal Investment Strategies
In trying to meet its investment objective, the Fund primarily invests in common
stocks of companies located in Pacific Basin countries. Current income from
dividends and interest will not be an important factor in selecting the
securities in which the Fund will invest. The Fund expects that under normal
conditions at least 70% of its assets will consist of securities of companies
located in the Pacific Basin. For the most part, these securities will be common
stocks or securities convertible into common stock, rights to subscribe for
common stock and preferred stocks.
The Fund cannot guarantee that it will achieve its objective.
Investment Risks
As with any mutual fund, the value of the Fund's investments--and therefore the
value of the Fund's shares--may go up or down. These changes may occur because a
particular stock market is rising or falling. At other times, there are specific
factors that may affect the value of a particular investment. If the value of
the Fund's investments goes down, you may lose money.
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The Fund will invest most of its assets in non-United States securities. Foreign
investing involves special risks--including foreign currency risk and the
possibility of substantial volatility due to adverse political, economic or
other developments. Foreign securities may also be less liquid and harder to
value than U.S. securities. Many of the markets in which the Fund may invest are
emerging markets. The risks of foreign investing are greater for investments in
emerging markets.
You may lose money by investing in the Fund. The Fund may not achieve its
investment objective, and is not intended as a complete investment program. An
investment in the Fund is not a deposit of a bank and is not insured or
guaranteed by any government agency.
Investment Considerations
The Fund may be an appropriate investment for you if you:
o Are looking for capital appreciation for long-term goals, such as
retirement or funding a child's education.
o Want a professionally managed portfolio.
o Are looking for a diversified investment opportunity in Pacific Basin
markets.
o Are willing to accept the risk that the value of your investment may
fluctuate over certain time periods.
o Are willing to accept the risks of foreign investing in order to seek
potential long-term capital appreciation.
o Are not looking for a significant amount of current income.
Risk/Return Bar Graph and Table
The bar graph and table shown below provide an indication of the risks of
investing in the Fund. The Fund is currently the only portfolio of the
Corporation.
The Fund offers Class A shares, Class B shares and Class Z shares. Prior to June
17, 1999, the Corporation only offered
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one class of shares, which was reclassified as Class Z shares on such date.
Class Z shares are not subject to any distribution related sales charges. For a
description of the classes, see Purchase of Fund Shares.
The bar graph shows changes in the Fund's performance for Class Z shares for the
past ten calendar years. Sales charges are not reflected in the bar graph. The
table compares the average annual total returns for the Fund's shares for the
periods shown with those of the Morgan Stanley Capital International ("MSCI")
Pacific Basin Index. How the Fund performed in the past is not necessarily an
indication of how the Fund will perform in the future.
[GRAPHIC OMITTED]
[The following table was depicted as a bar graph in the printed material.]
<TABLE>
<CAPTION>
Year 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Performance 22.7% -15.3% 11.8% -12.7% 40.5% 4.2% 3.5% 3.1% -28.7% 0.4%
</TABLE>
During the period shown in the bar graph, the highest return for a quarter was
25.0% (quarter ended December 31, 1998) and the lowest return for a quarter was
(21.4%) (quarter ended December 31, 1997). Performance for the Fund's Class Z
shares for the quarter ending June 30, 1999 was xxx %.
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Average Annual Total Returns
(for the calendar year
ended December 31, 1998)
----------------------------
Past Past Past Since Inception
One Five Ten (July 8, 1985) to
Year Years Years December 31, 1998
---- ----- ----- -----------------
Nomura Pacific Basin Fund-Class A* ... N/A N/A N/A N/A
Nomura Pacific Basin Fund-Class B* ... N/A N/A N/A N/A
Nomura Pacific Basin Fund-Class Z+ ... 0.4% (4.5%) 1.3% 10.3%
MSCI Pacific Basin Index** ........... 2.7% (4.0%) (3.7%) 8.8%
- ----------
* The initial subscription period for Class A and Class B shares started
August 2, 1999.
+ Does not include sales charge. Class Z shares were the only shares
outstanding during the periods for which performance figures are
presented. Class Z shares are the original shares of the Fund. However,
only Class A and Class B shares are generally offered to new investors.
The performance figures of the Class A and Class B shares would have been
lower than those presented for Class Z shares because of the initial and
deferred sales charge structures and distribution fees of these two
classes. Expense reimbursement was in effect in certain periods, and
without such reimbursement performance of the Class Z shares would have
been lower. Past performance is not predictive of future performance.
** This unmanaged market capitalization-weighted index is comprised of a
representative sampling of stocks of large-, medium-, and
small-capitalization companies in Australia, Hong Kong, Japan, New
Zealand and Singapore.
FEES AND EXPENSES
This table summarizes the fees and expenses you may pay if you invest in the
Fund. Expenses for Class Z shares are based on the Fund's last fiscal year.
Class A and B shares are newly offered classes of shares. Their initial
subscription periods will start August 2, 1999. The expenses for these classes
were derived from Class Z shares which represent the Fund's no-load shares.
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Shareholder Fees
(Fees paid directly from your investment)
Class A Class B Class Z
------- ------- -------
Maximum Sales Charge (Load) Imposed
On Purchases (as a percentage of the
offering price) ................................ 5.75% NONE* NONE
Maximum Deferred Sales Charge (Load)
(as a percentage of the original
purchase cost or redemption proceeds,
whichever is lower) ............................ NONE** 5.00% NONE
Annual Fund Operating Expenses
(Expenses that are deducted from Fund assets)
Operating Expenses Class A Class B Class Z
- ------------------ ------- ------- -------
Management Fees .................................. 0.75% 0.75% 0.75%
Distribution (12b-1) Fees ........................ 0.25% 1.00% --
Other Expenses ................................... 2.60% 2.60% 2.60%
---- ---- ----
Total Annual Fund Operating Expenses ............. 3.60% 4.35% 3.35%
Less Expense Reimbursement ....................... 1.70% 1.70% 1.70%
---- ---- ----
Net Annual Fund Operating Expenses+ .............. 1.90% 2.65% 1.65%
==== ==== ====
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* The higher 12b-1 fees borne by Class B shares may cause long-term Class B
shareholders to pay more than the total sales charges paid by Class A
shareholders.
** A deferred sales charge of up to 1% may be imposed on certain redemptions
of Class A shares bought without an initial sales charge.
+ For the period from the date of this prospectus through the end of the
Fund's fiscal year on March 31, 2000, the Manager, by separate contractual
agreement, has agreed to limit each Class's Net Annual Fund Operating
Expenses to the amounts shown in table. Absent such contractual agreement,
Net Annual Fund Operating Expenses for each Class of shares would be as
follows: Class A shares--3.60%; Class B shares--4.35%; and Class Z
share--3.35%.
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EXAMPLES
These examples translate the Total Net Annual Fund Operating Expenses shown in
the preceding table into dollar amounts. By doing this, you may easily compare
the cost of investing in the Fund to the cost of investing in other mutual
funds. The example makes certain assumptions. It assumes that you invest $10,000
in the Fund for the time periods shown. It also assumes a 5% return on your
investment each year, that you pay the sales charge, if any, that applies to the
particular class and that the Fund's operating expenses remain the same. The
example is hypothetical; your actual costs may be higher or lower.
Expenses if you did redeem your shares:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A ............... $ 757 $1,138 $1,542 $2,669
Class B ............... $ 768 $1,123 $1,605 $2,798*
Class Z ............... $ 168 $ 520 $ 897 $1,955
Expenses if you did not redeem your shares:
1 year 3 years 5 years 10 years
------ ------- ------- --------
Class A ............... $ 757 $1,138 $1,542 $2,669
Class B ............... $ 268 $ 823 $1,405 $2,798*
Class Z ............... $ 168 $ 520 $ 897 $1,955
- ----------
* Reflects the automatic conversion after eight years of Class B shares to
Class A shares, which pay lower 12b-1 fees.
PRINCIPAL INVESTMENT STRATEGIES
Any investment carries some level of risk that generally reflects its potential
for reward. The Fund's main objective is long-term capital appreciation. The
Fund tries to achieve its objective by investing in a portfolio consisting
primarily of common stocks of companies located in Pacific Basin countries.
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Subject to policies and review of 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 considers 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.
The Fund generally invests at least 70% of its total assets in common stocks or
securities convertible into common stocks, rights to subscribe for common stocks
and preferred stocks of Pacific Basin issuers.
As a defensive measure, the Fund may invest in other types of securities,
including debt securities that are not convertible into common stock, government
and money market securities of U.S. and non-U.S. issuers, or cash (foreign
currencies or U.S. dollars). The Fund may invest in these other types of
securities in whatever amounts the Manager believes are appropriate in light of
the general market, economic, or political conditions. Part of the Fund's
portfolio normally is held in U.S. dollars or short-term interest bearing U.S.
dollar-denominated securities to help pay for redemptions. The Fund does not
expect this portion of its portfolio to exceed 10% of net assets. This type of
security ordinarily may be sold easily and has limited risk of loss, but earns
only limited returns. Short-term investments and temporary defensive positions
may reduce the potential for the Fund to achieve its goal of long-term capital
appreciation.
The Fund may invest in American Depositary Receipts, European Depositary
Receipts, Global Depositary Receipts or other securities convertible into
securities of companies located in Pacific Basin countries. These securities are
not necessarily denominated in the same currency as the securities into which
they may be converted.
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The Fund may hedge its portfolio against currency risks. This strategy includes
the purchase and sale of forward foreign exchange contracts. The Fund employs
hedging activity periodically and its portfolio may not be hedged when movements
in currency exchange rates occur.
INVESTMENT RISKS
This section contains a summary discussion of the general risks of investing in
the Fund. As with any mutual fund, there can be no guarantee that the Fund will
meet its objective or that the Fund's performance will be positive for any
period of time.
Stock Market and Selection Risk-- Stock market risk is the risk that the stock
market in one or more countries in which the Fund invests will go down in value,
including the possibility that the market value will go down sharply and
unpredictably. Selection risk is the risk that the investments that the Manager
selects will underperform the stock market or other funds with similar
investment objectives and investment strategies.
Foreign Market Risk--Because the Fund primarily invests in foreign securities,
it offers investors the potential for more diversification than an investment
only in the U.S. This is because stocks traded on foreign markets have often,
though not always, performed differently than stocks in the U.S. However, such
investments involve special risks not present in U.S. investments that may
increase the chances that the Fund will lose money. In particular, prices of
foreign securities may fluctuate more than prices of securities traded in the
U.S.
Investments in foreign markets also may be adversely affected by governmental
actions such as the imposition of capital controls, nationalization of companies
or industries, expropriation of assets or the imposition of punitive taxes. Any
of these actions could severely affect security prices, impair the Fund's
ability to purchase or sell foreign securities
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or transfer the Fund's assets or income back into the U.S., or otherwise
adversely affect the Fund's operations. Other foreign market risks include
foreign exchange control, difficulties in pricing securities, defaults on
foreign government securities, difficulties in enforcing favorable legal
judgments in foreign courts, and political and social instability. Legal
remedies available to investors in certain foreign countries may be less
extensive than those available to investors in the U.S. or other foreign
countries.
Foreign Economy Risk--The economies of certain foreign countries often do not
compare favorably with that of the U.S. with respect to such issues as growth of
gross national product, reinvestment of capital, resources, and balance of
payments position. Certain such economies may rely heavily on particular
industries or foreign capital and are more vulnerable to diplomatic
developments, the imposition of economic sanctions against a particular country
or countries, changes in international trading patterns, trade barriers, and
other protectionist or retaliatory measures.
Currency Risk--Securities in which the Fund invests are usually denominated or
quoted in currencies other than the U.S. dollar. Changes in foreign currency
exchange rates affect the value of the Fund's portfolio. Generally, when the
U.S. dollar rises in value against a foreign currency, a security denominated in
that currency loses value because the currency is worth fewer U.S. dollars.
Conversely, when the U.S. dollar decreases in value against a foreign currency,
a security denominated in that currency gains value because the currency is
worth more U.S. dollars. The risk, generally known as "currency risk," means
that a strong U.S. dollar will reduce returns for U.S. investors while a weak
U.S. dollar will increase those returns.
Emerging Markets Risk--Some of the markets in which the Fund may invest
generally are considered emerging markets. The risks of foreign investments are
usually much greater for emerging markets. Investments in emerging markets may
be considered speculative. Emerging markets are more likely to
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experience hyperinflation and currency devaluations, which adversely affect
returns to U.S. investors. Since these markets are so small, they may be more
likely to suffer sharp and frequent price changes or long-term price depression
because of adverse publicity, investor perceptions, or the actions of a few
large investors.
Many emerging markets have histories of political instability and abrupt changes
in policies. Certain emerging markets also may face other significant internal
or external risks, including the risk of war, and ethnic, religious, and racial
conflicts. In addition, governments in many emerging market countries
participate to a significant degree in their economies and securities markets,
which may impair investment and economic growth.
Governmental Supervision and Regulation/Accounting Standards--Many foreign
governments supervise and regulate stock exchanges, brokers and the sale of
securities less than the U.S. does. Other countries may not have laws to protect
investors the way that the U.S. securities laws do. For example, some foreign
countries may have no laws or rules against insider trading. Accounting
standards in other countries are not necessarily the same as in the U.S. If the
accounting standards in another country do not require as much detail as U.S.
accounting standards, it may be harder for the Fund's portfolio manager to
completely and accurately determine a company's financial condition. Also,
brokerage commissions and other costs of buying or selling securities often are
higher in foreign countries than they are in the U.S.
Certain Risks of Holding Fund Assets Outside the U.S.--The Fund generally holds
its foreign securities and cash in foreign banks and securities depositories.
Some foreign banks and securities depositories may be recently organized or new
to the foreign custody business. In addition, they also may have operations
subject to limited or no regulatory oversight. Also, the laws of certain
countries may put limits on the Fund's ability to recover its assets if a
foreign bank, depository or issuer of a security or any of their agents goes
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bankrupt. In addition, it is often more expensive for the Fund to buy, sell and
hold securities in certain foreign markets than in the U.S. market due to higher
brokerage, transaction, custody and/or other costs. The increased expense of
investing in foreign markets typically results in a higher operating expense
ratio for the Fund than that of investment companies invested only in the U.S.
Dividends or interest on, or proceeds from the sale of, foreign securities may
be subject to foreign withholding taxes. Shareholders may be able to take a
credit or a deduction for foreign taxes paid by the Fund if certain requirements
are met.
In addition, as further described under the caption Year 2000 Issues, 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's investment is adversely affected by the Year
2000 Problem, the Fund's investment return will be reduced.
Settlement Risk--Settlement and clearance procedures in certain foreign markets
differ significantly from those in the U.S. Foreign settlement, clearance
procedures and trade regulations also may involve certain risks (such as delays
in payment for delivery of securities) not typically generated by the settlement
of U.S. investments. Communications between the U.S. and emerging market
countries may be unreliable, increasing the risk of delayed settlements or
losses of securities certificates. If the Fund cannot settle or is delayed in
settling a purchase of securities, it may miss attractive investment
opportunities and certain of its assets may be uninvested and not earn any
return for some period. If the Fund cannot settle or is delayed in settling a
sale of securities, it may lose money if the value of the securities then
declines or, if it has contracted to sell the securities to another party, the
Fund could be liable to that party for any losses incurred.
Forward Foreign Exchange Contracts--The Fund has authority to deal in forward
foreign exchange contracts between currencies of the different countries in
which it will
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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. 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 precludes the opportunity for gain if the value of the hedged currency
should rise.
Illiquid Investments--The Fund may invest up to 15% of its total assets in
illiquid securities that it cannot easily resell within seven days at current
value or that have contractual or legal restrictions on resale. If the Fund buys
illiquid securities it may be unable to quickly resell them or may be able to
sell them only at a price below current value.
Rule 144A Securities--Rule 144A securities are restricted securities that may be
resold to qualified institutional buyers but not the general public. Rule 144A
securities may have an active trading market, but carry the risk that the active
trading market may not continue.
Securities Lending--The Fund may lend securities with a value not exceeding 10%
of its total assets to financial institutions which provide cash or government
securities as collateral. Securities lending involves the risk that the borrower
may fail to return the securities in a timely manner or at all.
Repurchase Agreements--The Fund may enter into certain types of repurchase
agreements. Under a repurchase agreement, the seller agrees to repurchase a
security (typically a security issued or guaranteed by the U.S. Government) at a
mutually agreed upon time and price. This insulates the Fund from changes in the
market value of the security during the period, except for currency
fluctuations. If the seller fails to repurchase the security and the market
value declines, the Fund may lose money.
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Statement of Additional Information
If you would like further information about the Fund, including how it invests,
please see the Statement of Additional Information.
MANAGEMENT OF THE FUND
Nomura Asset Management U.S.A. Inc. the Fund's Manager, manages the Fund's
investments and its business operations under the overall supervision of the
Corporation's Board of Directors. The Manager has investment advisory agreements
with its parent company, Nomura Asset Management Co., Ltd. ("NAM") and an
affiliate, Nomura Asset Management Singapore Limited ("NAM-Singapore") under
which the Manager may pay a fee for services it receives. NAM and NAM-Singapore
provide investment recommendations to the Manager, which has the responsibility
for making all investment decisions for the Fund. Mr. Nobuo Katayama, President
of the Fund and President of the Manager, is primarily responsible for the
day-to-day management of the Fund's portfolio. Mr. Katayama has held such
responsibilities for the Fund and has served as President of the Manager since
1999. Mr. Katayama was a Marketing Officer of NAM from 1997 to 1999, Director
and Chief Portfolio Manager of NAM from 1993 to 1997. The Fund has agreed to pay
the Manager a fee at the annual rate of 0.75% of the average daily net assets of
the Fund.
NAM had approximately $120 billion in assets under management as of March 31,
1999.
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 the Manager or other Fund service providers do not
properly
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address this problem prior to January 1, 2000. The Manager has hired consultants
to analyze these issues and to implement any system modifications necessary to
prepare for the Year 2000. In addition, the Manager has sought assurance 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
the Manager 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.
FUND SHARE PRICING
The price of the Fund's shares is based on its net asset value ("NAV"). The NAV
per share of each class equals the total value of its assets, less its
liabilities, divided by the number of its outstanding shares. Shares are only
valued as of the close of regular trading on the New York Stock Exchange
(currently 4:00 p.m. Eastern time) each day the New York Stock Exchange is open.
The Fund values its investments for which market quotations are readily
available at market value. It values short-term investments that will mature
within 60 days at amortized cost, which approximates market value. It values all
other investments and assets at their fair value as determined in good faith by
or under the direction of the Board of Directors.
The Fund translates prices for its investments quoted in foreign currencies into
U.S. dollars at current exchange rates. As a result, changes in the value of
those currencies in relation to the U.S. dollar may affect the Fund's NAV.
Because Pacific Basin markets may be open at different times than the New York
Stock Exchange, the value of the Fund's shares may change on days when
shareholders are not able to buy or sell them. If events materially affecting
the values of the Fund's Pacific Basin investments occur between the close of
the Pacific Basin markets and the close of regular trading on the New York Stock
Exchange, these investments will be valued at their fair value.
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PURCHASE OF FUND SHARES
You may open a Fund account with as little as $2,000 and make additional
investments at any time with as little as $250. The Fund sells its shares at the
applicable offering price, which is the NAV plus any applicable sales charge.
Your financial advisor or State Street Bank and Trust Company (the "Transfer
Agent") generally must receive your completed buy order before the close of
regular trading on the New York Stock Exchange (currently 4:00 p.m. Eastern
time) for your shares to be purchased at that day's offering price.
The address of the Transfer Agent is
State Street Bank and Trust Company
P.O. Box 8119
Boston, Massachusetts 02266-8119
You may buy shares
o Through a financial advisor. Your financial advisor will be responsible
for furnishing all necessary documents to the Transfer Agent, and may
charge you for such services.
o Through systematic investing. You may make regular investments of $50 or
more each month through automatic deductions from your bank checking or
savings account. Application forms are available through your financial
advisor or the Transfer Agent at 1-800-680-1836.
o You also may complete an order form and write a check for the amount you
wish to invest, payable to the Fund. Forward the check and completed form
to the Transfer Agent.
The Fund may refuse any order to buy shares if the Fund determines that doing so
would be in the best interests of the Fund and its shareholders.
This prospectus offers you a choice of three Classes of Fund shares: A, B, and
Z. This allows you to choose among different types of sales charges and
different levels of ongoing operating expenses, as illustrated in the Fees and
Expenses section. The Class of shares that is best for you depends on a number
of factors, including the amount you plan to invest
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and how long you plan to hold the shares. Below is a summary of the differences
among the Classes of shares.
Class A Shares
o Initial sales charge of up to 5.75%.
o Lower annual expenses than Class B shares because of lower 12b-1 fees.
o Lower sales charge for investments of $50,000 or more.
o No deferred sales charge (except on certain redemptions of shares bought
without an initial sales charge).
Class B Shares
o No initial sales charge; your entire investment goes to work for you.
o Higher annual expenses than Class A shares because of higher 12b-1 fees.
o Convert automatically to Class A shares after 8 years, reducing future
12b-1 fees.
o Orders for Class B shares for more than $250,000 are treated as orders for
Class A shares or refused.
o Deferred sales charge of up to 5% if you sell shares within 6 years after
you bought them.
Class Z Shares
o No initial sales charge; your entire investment goes to work for you.
o No 12b-1 fee.
o Shares only available to:
1. Existing Class Z shareholders.
2. Current and retired Directors of the Fund.
3. Directors and current and retired full time employees of the Manager
and Nomura Securities International, Inc. ("NSI"), the Fund's
Distributor.
18
<PAGE>
Initial Sales Charges For Class A Shares
Class A sales charges as a percentage of:
Amount of purchase at offering price Net amount invested Offering price*
Under $50,000 ....................... 6.10% 5.75%
$50,000 but under $100,000 .......... 4.71 4.50
$100,000 but under $250,000 ......... 3.63 3.50
$250,000 but under $500,000 ......... 2.56 2.50
$500,000 but under $1,000,000 ....... 2.04 2.00
$1,000,000 and above ................ None** None**
- ----------
* Offering price includes sales charge.
** Shares are purchased at NAV. However, a deferred sales charge of up to 1%
may apply to Class A shares purchased without an initial sales charge, if
redeemed within one year after purchase.
Deferred Sales Charges For Class B Shares
If you sell (redeem) Class B shares within six years after you bought them, you
generally will pay a deferred sales charge according to the following schedule:
Year after purchase ........... 1 2 3 4 5 6 7+
Charge ........................ 5% 4% 3% 3% 2% 1% 0%
Deferred sales charges are based on the lower of the shares' cost or current
value. Shares not subject to any deferred sales charge will be redeemed first,
followed by shares held the longest. You may sell shares acquired by
reinvestment of distributions without a charge at any time.
You may be eligible for reductions and waivers of sales charges. Sales charges
may be reduced or waived under certain circumstances and for certain groups.
Information about reductions and waivers of sales charges is included in the
Statement of Additional Information. You may consult your financial advisor or
NSI for assistance.
Distribution (12b-1) Plans. The Fund has adopted distribution plans to pay for
the marketing of Fund shares and for services provided to shareholders. The
plans provide for payments at the annual rates (based on average net assets) of
19
<PAGE>
up to 0.25% on Class A shares and up to 1.00% on Class B shares. Because these
fees are paid out of the Fund's assets on an ongoing basis, they will increase
the cost of your investment. The higher fees for Class B shares may cost you
more over time than paying the initial sales charge for Class A shares.
SELLING FUND SHARES
You may sell your shares back to the Fund any day the New York Stock Exchange is
open, either through your financial advisor or directly to the Fund. Payment for
a redemption of shares may be delayed until the Fund collects the purchase price
of such shares, which may take up to 15 calendar days after the purchase date.
Selling shares through your financial advisor. Your financial advisor must
receive your request in proper form before the close of regular trading on the
New York Stock Exchange (currently 4:00 p.m. Eastern time) for you to receive
that day's NAV, less any applicable deferred sales charge. Your financial
advisor is responsible for furnishing all necessary documents to the Transfer
Agent on a timely basis and may charge you for such services.
Selling shares directly to the Fund. The Transfer Agent must receive your
request in proper form before the close of regular trading on the New York Stock
Exchange (currently 4:00 p.m. Eastern time) in order to receive that day's NAV,
less any applicable deferred sales charge.
By mail. Send a signed letter of instruction to the Transfer Agent. If you have
certificates for the shares you want to sell, you must include them along with
completed stock power forms.
By telephone. You may use a Telephone Redemption Privilege to redeem shares as
long as you previously elected this procedure in writing and the shares are held
at the Transfer Agent. Unless you indicate otherwise on the account application,
the Transfer Agent will be authorized to accept redemption and transfer
instructions received by telephone.
20
<PAGE>
The Telephone Redemption Privilege is not available if there are certificates
for your shares. The Telephone Redemption Privilege may be modified or
terminated without notice. A signature guarantee letter is required for
redemptions over $25,000.
Additional documents. If you:
o sell shares with a value of $25,000 or more, or
o want your redemption proceeds sent to an address other than your address
as it appears on the Transfer Agent's records, or
o have notified the Transfer Agent of a change in address within the
preceding 15 business days, the signatures of the registered owners or
their legal representatives must be guaranteed by a bank, broker-dealer,
or certain other financial institutions. Stock power forms are available
from your financial advisor, NSI, and many commercial banks.
The Transfer Agent usually requires additional documents for the sale of shares
by a corporation, partnership, agent or fiduciary, or a surviving joint owner.
Contact the Transfer Agent for details.
When will the Fund pay me? The Fund generally sends payment for your shares the
business day after your request is received in proper form. Under unusual
circumstances, the Fund may suspend redemptions, or postpone payment for more
than seven business days, as permitted by Federal securities law.
FUND DISTRIBUTIONS AND TAXES
The Fund distributes any net investment income and any net realized capital
gains at least once a year.
You may choose to:
o reinvest all distributions in additional shares; or
o receive any dividends from net investment income in cash while reinvesting
capital gains distributions in additional shares; or
21
<PAGE>
o receive any distributions from capital gains distributions in cash while
reinvesting dividends from net investment income in additional shares; or
o receive all distributions in cash.
If you do not select an option when you open your account, all distributions
will be reinvested. If you do not cash a distribution check within a six month
period or notify the Transfer Agent to issue a new check, the distribution will
be reinvested in the Fund at the current NAV and all future dividends will be
reinvested in the Fund. You will not receive any interest on uncashed
distribution or redemption checks. Similarly, if any correspondence sent by the
Fund or the Transfer Agent is returned as "undeliverable," Fund distributions
will automatically be reinvested in the Fund.
For Federal income tax purposes, distributions of investment income are taxable
as ordinary income. The tax applicable to distributions of capital gains is
determined by how long the Fund had owned the investments that generated them,
rather than how long you have owned your Fund shares. Distributions are taxable
to you even if they are paid from income or gains earned by the Fund before your
investment (and thus were included in the price you paid). Distributions of
gains from investments that the Fund owned for more than one year will be
taxable as capital gains. Distributions of gains from investments that the Fund
owned for one year or less will be taxable as ordinary income. Distributions are
taxable whether you receive them in cash or reinvest them in additional shares.
The Fund's investments in foreign securities may be subject to foreign
withholding and other taxes. In that case, the Fund's yield on those securities
would be decreased. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. Shareholders may be entitled to claim a credit
or deduction with respect to foreign taxes if certain requirements are met. In
addition, currency value fluctuation with respect to the Fund's investment in
foreign
22
<PAGE>
securities or foreign currencies may increase the amount of taxes payable by
shareholders.
Any gain resulting from the sale or exchange of your shares generally also will
be subject to tax, and the applicable tax will depend on how long you have held
the Fund shares. You should consult your tax advisor for more information on
your own tax situation, including possible foreign, state and local taxes.
Financial Highlights
The Financial Highlights table is intended to help you understand the Fund's
financial performance for the past five years. Certain information reflects
financial results for a single Fund share held throughout the year. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in the Fund, assuming reinvestment of all dividends and
distributions. This information, which represents Class Z shares (the Fund's
no-load shares), has been audited by PricewaterhouseCoopers LLP, whose report
along with the Fund's financial statements, are included in the Fund's annual
report to shareholders, which is available upon request.
Class A and B shares initial offering period began August 2, 1999 and
accordingly, no financial highlights are presented.
23
<PAGE>
Financial Highlights
<TABLE>
<CAPTION>
For the years ended March 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ..... $ 10.61 $ 13.76 $ 16.52 $ 15.07 $ 18.07
Income from investment operations:
Net investment loss .................. (0.03)+ (0.07)+ (0.14)+ (0.04)+ (0.01)+
Net realized and unrealized
gains (losses) 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)+
Less 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 year ........... $ 11.63 $ 10.61 $ 13.76 $ 16.52 $ 15.07
======== ======== ======== ======== ========
Total return ........................... 9.6% (22.4%) (6.9%) 13.7% (4.2%)
Ratios/supplemental data:
Net assets, end of year (000) .......... $ 12,725 $ 13,736 $ 22,128 $ 34,022 $ 42,684
Ratio of operating expenses, net of
reimbursement to average net assets .. 2.50% 2.49% 2.21% 1.78% 1.38%
Ratio of total expenses to average
net assets ........................... 3.35% 2.91% 2.21% 1.78% 1.38%
Ratio of net investment income
(loss) to average net assets ......... (0.33%) (0.55%) (0.87%) (0.28%) (0.07%)
Portfolio turnover rate ................ 48% 45% 62% 45% 49%
</TABLE>
- ----------
+ Based on average shares outstanding.
24
<PAGE>
Manager
Nomura Asset Management U.S.A. Inc.
180 Maiden Lane
New York, New York 10038-4939
Investment Advisers
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
Distributor
Nomura Securities International, Inc.
2 World Financial Center
New York, New York 10281-1198
Custodian and Shareholder Servicing Agent
State Street Bank and Trust Company
P.O. Box 8119
Boston, Massachusetts 02266-8119
Counsel
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
25
<PAGE>
ACCOUNT APPLICATION
NOMURA PACIFIC BASIN FUND, INC.
1-(800)-833-0018
- --------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION (Please print or type. Check only one box)
- --------------------------------------------------------------------------------
|_| Individual
|_| Joint Tenant (For Joint Owners, Rights of Survivorship is assumed unless
otherwise specified)
|_| Tenants in Common
|_| Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act
(UTMA)-use the name of the adult custodian on the shareholder line and the
name of the child on the co-shareholder line. Use the child's Social
Security number.
|_| Trust Account-please indicate the name(s) of the trustee(s) authorized to
act on behalf of the trust on the shareholder line and the name of the
trust and date of the trust on the co-shareholder line.
|_| I am a Dealer Firm registered representative or employee entitled to NAV
purchases of Class A shares.
|_| Other form of ownership (please specify)__________________________________
_______________________________ ____________________________________________
Name of shareholder Social Security number or taxpayer ID number
(required by law) or submit W-8 Form.
_______________________________
Name of co-shareholder (if any)
_______________________________ ____________________________________________
Address Telephone number
_______________________________ ____________________________________________
City State Zip Code Citizenship
- --------------------------------------------------------------------------------
2. ESTABLISHING YOUR ACCOUNT
- --------------------------------------------------------------------------------
SHARE CLASS TO BE PURCHASED |_| A |_| B |_| Z
|_| A. A check in the amount of $_________________payable to Nomura Pacific
Basin Fund, Inc. is enclosed ($2,000 initial purchase or $250 subsequent
purchase)
|_| B. A purchase in the amount of $_________________was made through the
Dealer named below on Date _____/_____/_____, Confirmation
___________________.
|_| C. I/ We wish to authorize monthly investments from my/our checking
account in the amount of $_______________ (minimum $50) into Nomura
Pacific Basin Fund, Inc. I/We authorize State Street Bank & Trust Company
to debit my/our account via ACH for this amount on the |_| 10th or |_|
25th of each month and agree to the terms and conditions as set forth in
the Prospectus. ATTACH A "VOID" CHECK TO THIS APPLICATION.
- --------------------------------------------------------------------------------
3. DISTRIBUTION OPTION (If not completed, Option A will be assigned)
- --------------------------------------------------------------------------------
|_| A. Reinvest all dividends and capital gains.
|_| B. Dividends to be paid in cash; capital gains to be reinvested.
|_| C. Pay all dividends and capital gains in cash.
Cash distribution should be sent to: |_| Address of Record, or
|_| Special Payee, as follows:
________________________________________________________________________________
Name
________________________________________________________________________________
Address City State Zip Code
- --------------------------------------------------------------------------------
4. TELEPHONE REDEMPTIONS
- --------------------------------------------------------------------------------
THE PRIVILEGE AUTOMATICALLY APPLIES UNLESS BOX IS CHECKED.
|_| NO, I/We would not like the telephone redemption privilege.
NOTE: A SIGNATURE GUARANTEE LETTER IS REQUIRED FOR REDEMPTIONS OVER $25,000. See
Prospectus for details.
<PAGE>
- --------------------------------------------------------------------------------
5. REDEMPTIONS TO A BANK ACCOUNT, if this section is not completed, proceeds
will be sent to the address in Section 1. See Prospectus for details.
- --------------------------------------------------------------------------------
Please send proceeds of redemptions requested to:
_______________________________________ ___________________________________
Name of Bank ABA Routing Number
________________________________________________________________________________
Address City State Zip Code
_______________________________________ ___________________________________
Registration of Bank Account Bank Account Number
I/We elect to utilize redemptions via o ACH or o Federal Wire to the bank
account named above. If Wire, please provide the bank's ABA Routing Number
above.
- --------------------------------------------------------------------------------
6. RIGHT OF ACCUMULATION (Optional)
- --------------------------------------------------------------------------------
|_| I/We own shares in more than one account, which may entitle a reduced sales
charge. Please link my/our account numbers to qualify (Attach an additional
sheet if necessary):
|_| The registrations of some of my accounts differ. Their account numbers are:
See Statement of Additional Information for details.
- --------------------------------------------------------------------------------
7. STATEMENT OF INTENTION (Optional)
- --------------------------------------------------------------------------------
I/We understand that through accumulated investments I/We can reduce the sales
charges on Class A Shares. I/We intend to invest over a 13-month period
beginning (date)______________in shares of one or more of the funds listed for
an aggregate amount of at least:
|_| $50,000 |_| $100,000 |_| $250,000 |_| $500,000 |_| $1,000,000
|_| amendment to existing Statement of Intention
I/We understand that by entering into a Statement of Intention, shares will be
escrowed to guarantee payment of any sales charge due if I/We invest less than
the agreed upon amount within 13 months. See Statement of Additional Information
for details.
- --------------------------------------------------------------------------------
8. SIGNATURES AND CERTIFICATION
- --------------------------------------------------------------------------------
I am of legal age and have read the current prospectus(es) and this application.
I agree to the terms thereof including any amendments thereto. I hold harmless
and indemnify NSI, the mutual fund for which it is distributor ("Nomura Pacific
Basin Fund, Inc.") and each of their respective partners, affiliates, directors,
officers, employees and agents from any losses, expenses, costs or liability
(including attorney fees) which I may incur in connection with my instructions
in this application and any other instructions given in writing, by telephone or
electronically reasonably believed to be genuine. Under the penalty of perjury,
I certify that (1) the Social Security Number or Taxpayer Identification Number
shown on this form is my correct Taxpayer Identification Number, and (2) I am
not subject to backup withholding either because I have not been notified by the
Internal Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest and dividends, or the IRS has
notified me that I am no longer subject to backup withholding. If I am
affiliated with, or work for, a NASD member firm, I will attach information
concerning my employment. This application shall apply to any Nomura Pacific
Basin Fund, Inc. account I establish at any later date unless specifically
changed in writing.
|_| Social Security/Tax I.D. Number applied for.
______________________ ____/____/____ ______________________ ____/____/____
Signature Date Signature of Co-Owner Date
(if any)
- --------------------------------------------------------------------------------
9. DEALER AUTHORIZATION (FOR DEALER COMPLETION ONLY)
- --------------------------------------------------------------------------------
_____________________________________ ________________________________________
Representative Name Rep Number Branch Number
________________________________________________________________________________
Branch Office Address City State Zip Code
_____________________________________ ________________________________________
Representatives Phone Number
_____________________________________ ________________________________________
Dealer Name Dealer Number
________________________________________________________________________________
Dealer Main Office Address City State Zip Code
_____________________________________ ________________________________________
Dealers Authorized
_____________________________________ ____/____/____
Signature Date
- --------------------------------------------------------------------------------
10. MAILING ADDRESS
- --------------------------------------------------------------------------------
State Street Bank and Trust Company
P.O. Box 8119
Boston, MA 02266-8119
<PAGE>
================================================================================
More information about Nomura Pacific Basin Fund, Inc.
The Fund's Statement of Additional Information ("SAI") and annual and
semi-annual reports to shareholders include additional information about the
Fund. The SAI, and the report of the independent accountants and financial
statements included in the Fund's most recent annual report to its shareholders,
are incorporated by reference into this Prospectus, which means they are part of
this Prospectus for legal purposes. The Fund's annual report discusses the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year. You may get free copies of these
materials, request other information about the Fund, or make shareholder
inquiries, by contacting your financial advisor or the Transfer Agent or by
calling the Manager toll free at 1-800-833-0018.
Internet Address www.nomura-asset.com
You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Fund on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Fund's file number
which is 811-4269.
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane
New York, New York 10038-4939
1-800-833-0018
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.
================================================================================
================================================================================
Nomura Pacific Basin
Fund, Inc.
[GRAPHIC OMITTED]
Prospectus
July , 1999
================================================================================
<PAGE>
The information in this statement of additional information is not complete and
may be changed. This statement of additional information is not an offer to sell
these securities and is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
Subject to Completion
Preliminary Statement of Additional Information dated May 28, 1999
STATEMENT OF ADDITIONAL INFORMATION
Nomura Pacific Basin Fund, Inc. [GRAPHIC OMITTED]
180 Maiden Lane, New York, New York 10038-4939
(Telephone: l-800-833-0018)
- --------------------------------------------------------------------------------
Nomura Pacific Basin Fund, Inc. (the "Corporation") is a series company
currently offering one portfolio, the Pacific Basin Portfolio (the "Fund"). The
Fund seeks long-term capital appreciation primarily through investments in
equity securities of corporations domiciled in Far Eastern and Western Pacific
("Pacific Basin") countries including, but not limited to Japan, Australia,
China, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, South Korea,
Taiwan, Thailand, and the Philippines. Nomura Asset Management U.S.A. Inc. acts
as the Manager for the Fund. Nomura Asset Management Co., Ltd. ("NAM") and
Nomura Asset Management Singapore Limited ("NAM-Singapore") act as the
Investment Advisers for the Fund. The Manager and the Investment Advisers are
affiliated with The Nomura Securities Co., Ltd.
- --------------------------------------------------------------------------------
This Statement of Additional Information of the Corporation is not a
prospectus and should be read in conjunction with the Prospectus of the
Corporation, bearing the same date as this Statement of Additional Information,
which has been filed with the Securities and Exchange Commission and is
available without charge upon request by calling or writing the Fund. This
Statement of Additional Information has been incorporated by reference into the
Prospectus, and the Prospectus is incorporated by reference into this Statement
of Additional Information. The Corporation's audited financial statements are
incorporated in this Statement of Additional Information by reference to its
1999 annual report to shareholders. You may request a copy of the annual report
at no charge by calling the Fund at 1-800-833-0018.
Nomura Asset Management U.S.A. Inc.--Manager
Nomura Asset Management Co., Ltd.--Investment Adviser
Nomura Asset Management Singapore Limited--Investment Adviser
Nomura Securities International, Inc.--Distributor
July , 1999
<PAGE>
INVESTMENT OBJECTIVE AND POLICIES
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, but not limited to, Japan,
Australia, China, Hong Kong, Indonesia, Malaysia, New Zealand, Singapore, South
Korea, Taiwan, Thailand, and the Philippines. Current income from dividends and
interest will not be an important consideration in selecting portfolio
securities. Reference is made to "Summary--Investment Objective", "Principal
Investment Strategies" and "Investment Risks" in the prospectus.
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 and preferred stocks. 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.
At various times over the past few decades, 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 during
many periods has been superior to similar investments in the U.S. 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, however, may 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, and 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 15% of its total assets would be invested in such securities.
See "Investment Restrictions".
Although there can be no assurance that the conditions described above
will continue in the future, or that Nomura Asset Management U.S.A. 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 Pacific Basin region, 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
2
<PAGE>
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 Corporation. The applicable
limitations under the Investment Company Act of 1940 are discussed under
"Investment Restrictions".
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 supervision by, the Board
of Directors of the Corporation, 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
U.S. Government and money market 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 the U.S. 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 U.S. 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 also may hold cash (in U.S. 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 companies, 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 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 underlying securities. The Fund will not
enter into repurchase agreements maturing in more than seven days.
The Fund may invest in warrants. A warrant gives the Fund the right to buy
a quantity of stock. The warrant specifies the amount of underlying stock, the
purchase (or "exercise") price, and the date the warrant expires. The Fund has
no obligation to exercise the warrant and buy the stock. A warrant has value
only if the Fund may either exercise it or sell it before it expires. If the
price of the underlying stock does not rise above the exercise price before the
warrant expires, the warrant generally expires without any value and the Fund
loses any amount it paid for the warrant. Thus, investments in warrants may
involve substantially more risk than investments in common stock. Warrants may
trade in the same markets as their underlying stock; however, the price of the
warrant does not necessarily move with the price of the underlying stock.
3
<PAGE>
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 U.S. 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 U.S. securities markets, and EDRs,
in bearer form, are designed for use in European securities markets. GDRs are
tradable both in the U.S. and Europe and are designed for use throughout the
world.
Special Considerations and Risks
Investing on an international basis involves certain considerations and
risks which are not typically associated with investing in U.S. securities.
Since the Fund will invest in securities denominated or quoted in currencies
other than the U.S. 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. Pacific Basin corporations are not
generally subject to uniform accounting, auditing and financial reporting
standards, or to practices and requirements comparable to those applicable to
U.S. corporations. There may also be less government supervision and regulation
of Pacific Basin securities exchanges, brokers and listed companies than exists
in the U.S. In addition, there maybe 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 Pacific Basin
countries. Moreover, certain Pacific Basin economies may also differ adversely
from the U.S. 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 Pacific Basin companies and governments
compared to reports and ratings published about U.S. companies. Although many
Pacific Basin financial markets have grown in volume of trading activity,
securities of some Pacific Basin companies are less liquid and their prices more
volatile than securities of comparable U.S. companies. Brokerage commissions and
other transaction costs on Pacific Basin securities exchanges are generally
higher than in the U.S. Pacific Basin 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'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 will not speculate in forward foreign exchange.
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 U.S. 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.
4
<PAGE>
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, management fees, and/or other
costs, are higher.
Investment Restrictions
The Fund has adopted a number of fundamental restrictions and policies
relating to the investment of its assets and its activities. The fundamental
policies set forth below may not be changed without the approval of the holders
of a majority of the Fund's outstanding voting securities, which for this
purpose under the Investment Company Act of 1940 means the lesser of (i) 67% of
the shares represented at the meeting at which more than 50% of the outstanding
shares are represented or (ii) more than 50% of the outstanding shares. Under
the fundamental investment restrictions the Fund may not:
1. 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 exceed 5% of the Fund's total assets, taken at market
value, except that such restrictions shall not apply to securities issued or
guaranteed by the U.S. 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 Organization for Economic
Cooperation and Development.
2. 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 that 10% of the outstanding voting securities, of such
issuer.
3. 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
(excluding the U.S. Government and its agencies and instrumentalities).
4. Make investments for the purpose of exercising control of management.
5. Purchase securities of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization, or by purchase in
the open market of securities of closed-end investment companies where no
underwriter or dealer's commission or profit, other than customary broker's
commission, is involved and only if immediately thereafter not more than 10% of
the Fund's total assets, taken at market value, would be invested in such
securities.
6. Purchase or sell real estate; provided that the Fund may invest in
securities secured by real estate or interests therein or issued by companies
which invest in real estate or interest therein.
7. Purchase or sell commodities or commodity contracts, provided that this
restriction shall not be deemed to prohibit forward foreign exchange
transactions.
8. Purchase any security on margin, except that the Fund may obtain such
short-term credit as may be necessary for the clearance of purchases and sales
of portfolio securities, or make short sales of securities or maintain a short
position.
9. Make loans to other persons (except as provide in (10) below); provided
that for purposes of this restriction the acquisition of bonds, debentures, or
other corporate debt securities and investment in government obligations,
short-term commercial paper, certificates of deposit, bankers' acceptances and
repurchase agreements shall not be deemed to be the making of a loan.
10. Lend its portfolio in excess of 10% of its total assets, taken at
market value. Any such loans shall be made in accordance with the guidelines set
forth below.
11. Borrow amounts in excess of 10% of its total assets, taken at market
value. Any such borrowings shall be made only from banks as a temporary measure
for extraordinary or emergency purposes such as the redemption of
5
<PAGE>
Fund shares. The Fund will not purchase securities while borrowings are
outstanding except to exercise prior commitments or to exercise subscription
rights.
12. Mortgage, pledge, hypothecate or in any manner transfer (except as
provided in (10) above), as security for indebtedness, any securities owned or
held by the Fund except as may be necessary in connection with borrowings
mentioned in (11) above, and then such mortgaging, pledging or hypothecating may
not exceed 10% of the Fund's total assets, taken at market value.
13. Invest in securities which cannot be readily resold because of legal
or contractual restrictions or which are not otherwise readily marketable if,
regarding all such securities, more than 15% of its total assets, taken at
market value, would be invested in such securities.
14. Underwrite securities of issuers except insofar as the Fund may be
deemed an underwriter under the Securities Act of 1933 in selling its portfolio
securities.
15. Write, purchase or sell puts, calls or combinations thereof.
16. Purchase or sell interests in oil, gas or other mineral exploration or
development programs.
Subject to investment restriction (10) above, the Fund may from time to
time lend securities from its portfolio to brokers, dealers and financial
institutions such as banks and trust companies and receive collateral in cash or
securities issued or guaranteed by the U.S. Government or its instrumentalities
which will be maintained in an amount equal or at least 100% of the current
market value of the loaned securities. Such cash will be invested in short-term
securities, which will increase the current income of the Fund. Such loans will
not be for more than 30 days and will be terminable at any time. The Fund will
have the right to regain record ownership of loaned securities to exercise
beneficial rights such as voting rights, subscription rights and rights to
dividends, interest or other distributions. The Fund may pay reasonable fees to
persons affiliated with the Fund for services in arranging such loans. 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.
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. Corporations in Pacific Basin countries frequently issue additional
capital stock by means of subscription rights offerings to existing shareholders
at a price substantially below the market price of the shares. The failure to
exercise such rights would result in the Fund's interest in the issuing
corporation being diluted. The market for such rights is not well developed and,
accordingly, the Fund may not always realize full value on the sale of rights.
Therefore, the exception applies in cases where the limits set forth in the
investment restrictions in the prospectus would otherwise be exceeded by
exercising rights as a result of fluctuations in the market value of the Fund's
portfolio securities with the result that the Fund would otherwise be forced
either to sell securities at a time when it might not otherwise have done so or
to forego exercising the rights.
Because of the affiliation of Nomura Securities International, Inc.
("NSI") the Fund's distributor, with the Fund, the Fund is prohibited from
engaging in certain transactions with such Company or its affiliates except for
brokerage transactions permitted under the Investment Company Act of 1940
involving only usual and customary commissions or transactions pursuant to an
exemptive order under the Investment Company Act of 1940. See the "Portfolio
Transactions and Brokerage." Without such an exemptive order, the Fund is
prohibited from engaging in portfolio transactions with NSI or its affiliates
acting as principal. In addition, the Fund may not purchase securities during
the existence of any underwriting syndicate for such securities of which NSI or
its affiliates is a member except pursuant to procedures adopted by the Board of
Directors of the Fund that comply with rules adopted by the Securities and
Exchange Commission.
6
<PAGE>
Portfolio Turnover
While it is the policy of the Fund generally not to engage in trading for
short-term gains, the Manager, subject to the overall supervision of the Board
of Directors, will effect portfolio transactions without regard to holding
periods, if, in its judgement, such transactions are advisable in light of a
change in circumstances of a particular company or within a particular industry
or in general market, economic or political conditions of a particular country.
As a result of the investment policies of the Fund, under certain conditions the
Fund's portfolio turnover may be higher than that of other investment companies;
however, it is impossible to predict portfolio turnover rates. The portfolio
turnover rate is calculated by dividing the lesser of the Fund's annual proceeds
from sales or cost of purchases of portfolio securities (exclusive of purchases
or sales of U.S. Government securities and of all other securities whose
maturities at the time of acquisition were one year or less) by the monthly
average market value of the securities in the portfolio during the year. The
rates of portfolio turnover for the years ended March 31, 1997, March 31, 1998
and March 31, 1999 were 62%, 45% and 48%, respectively.
MANAGEMENT OF THE FUND
Directors and Officers
The Board of Directors of the Corporation consists of six individuals,
four of whom are not "interested persons" of the Fund as defined in the
Investment Company Act of 1940 (the "non-interested Directors"). The Directors
are responsible for the overall supervision of the operations of the Fund and
perform the various duties imposed on the directors of investment companies by
the Investment Company Act of 1940. The Directors of the Corporation 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 NAM.
The Directors and principal executive officers of the Fund, their ages and
their principal occupations for at least the last five years are set fort below.
Unless otherwise noted, the address of each Director and officer is 180 Maiden
Lane, New York, New York 10038-4939.
William G. Barker, Jr. (66)--Director(2)--111 Parsonage Road, Greenwich,
Connecticut 06830. Consultant to the television industry since 1991.
George H. Chittenden (82)--Director(2)--155 Buffalo Bay Neck Road,
Madison, Connecticut 06443. Director of Bank Audi (USA).
Nobuo Katayama (52)--President and Director(1)(2)--President and Director
of the Manager since 1999. Marketing Officer of NAM from 1997 to 1999, Director
and Chief Portfolio Manager thereof from 1993 to 1997.
Chor Weng Tan (63)--Director(2)--3 Park Avenue, New York, New York 10016.
Managing Director for Education, The American Society of Mechanical Engineering,
since 1991. Director of Tround International, Inc. from 1984 to 1997.
Arthur R. Taylor (64)--Director(2)--2400 Chew Street, Allentown,
Pennsylvania 18104. 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 Louisiana Land & Exploration
Company and Pitney Bowes, Inc. from 1982 to 1997.
John F. Wallace (70)--Vice President and Director(1)(2)--Senior Vice
President of the Manager since 1981, Secretary thereof since 1976, Treasurer
thereof since 1984 and Director thereof since 1986.
Mitsutoyo Kohno ( 50)--Vice President(1)(2)--Director of the Manager since
1994, Senior Vice President since 1991 and Vice President thereof from 1989 to
1991.
7
<PAGE>
John J. Boretti (47)--Secretary and Treasurer(1)(2)--Senior Vice President
of the Manager since 1996. Vice President and Chief Financial Officer of Kidder
Peabody Asset Management, Inc. and Kidder, Peabody Mutual Funds and Vice
President of Kidder, Peabody & Co., Inc. from 1993 to 1995.
- ----------
(1) "Interested person", as defined in the Investment Company Act of 1940, of
the Fund.
(2) Such Director or officer is a director or officer of one or more other
investment companies for which the Manager or the Investment Advisers act
as investment advisers.
The Fund's Audit and Nominating Committees consist of all non-affiliated
Directors. As of June 30, 1999, the Directors and Officers of the Fund as a
group owned an aggregate of less than 1% of the outstanding shares of the Fund.
Compensation of Directors
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 out-of-pocket expenses related to attendance at such meetings.
Fees and out-of-pocket expenses paid to unaffiliated Directors aggregated
$33,226 for the year ended March 31, 1999.
The following table sets forth for the periods indicated compensation paid
by the Fund to its Directors and the aggregate compensation paid by all
investment companies managed by NAM-U.S.A. or advised by NAM to the Directors:
<TABLE>
<CAPTION>
Aggregate Pension or Retirement Total Compensation from
Compensation Benefits Accrued as Part of Fund Complex Paid to
from Fund for Fund Expenses for its Directors During the
its Fiscal Year Ended Fiscal Year Ended Calendar Year Ended
Name of Director March 31, 1999 March 31, 1999 December 31, 1998*
---------------- -------------- -------------- ------------------
<S> <C> <C> <C>
William G. Barker, Jr ...... $ 7,500 None $29,000
George H. Chittenden ....... $ 7,500 None $29,000
Nobuo Katayama** ........... -- None --
Chor Weng Tan .............. $ 7,500 None $29,000
Arthur R. Taylor ........... $ 7,500 None $29,000
John F. Wallace ............ -- None --
</TABLE>
- ----------
* In addition to the Fund the "Fund Complex" includes Jakarta Growth Fund,
Inc., Japan OTC Equity Fund, Inc. and Korea Equity Fund, Inc.
** Elected as a Director effective June 1, 1999.
Directors and officers of the Fund may purchase Class Z shares, which shares are
sold at net asset value per share without any initial or deferred sales charge.
Management and Investment Advisory Arrangements
Nomura Asset Management U.S.A. 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 10038-4939, is a majority-owned
subsidiary of Nomura Asset Management Co., Ltd. The Manager also provides global
investment advisory services, primarily with respect to Japanese and other
Pacific Basin securities, for U.S. institutional clients. The Manager also acts
as one of the investment advisers to four 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,
8
<PAGE>
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, as well as to pay the fees of all Directors of
the Fund who are affiliated persons of the Manager or any of its affiliates.
The Fund pays all other expenses incurred in its operation, including,
among other things the management fee; distribution fee; taxes; expenses for
legal, tax and auditing services; cost of printing proxies, stock certificates,
shareholder reports, prospectuses and statements of additional information
(except to the extent paid by NSI); charges of the custodian, sub-custodians and
transfer agent; expenses of redemption of shares; Securities and Exchange
Commission fees; expenses of registering the shares under Federal, state or
foreign laws; fees and expenses of unaffiliated Directors; accounting and
pricing costs (including the daily calculation of net asset value); insurance;
interest; brokerage costs; litigation and other extraordinary or non-recurring
expenses; and other expenses properly payable by the Fund. As required by the
Corporation's Distribution Agreement, NSI will pay the promotional expenses of
the Fund incurred in connection with the offering of shares of the Fund. See
"Purchase of Fund Shares."
Pursuant to the Management Agreement, the Manager has retained NAM and
NAM-Singapore to act as investment advisers for the Fund and NSI to provide
administrative services for the Fund. NAM and NAM-Singapore are referred to
together as the "Investment Advisers".
Investment Advisory Agreements. Pursuant to the Investment Advisory
Agreement between the Manager and NAM, NAM furnishes the Manager with advice as
to the allocation of the Fund's assets among various Pacific Basin markets in
which the Fund may invest. NAM also provides economic research, securities
analysis and investment recommendations and reviews and renders investment
advice with respect to issuers of securities domiciled or based in Japan and
certain other Pacific Basin countries. NAM is not responsible for the actual
portfolio decisions of the Fund. For services performed under the Investment
Advisory Agreement, NAM receives monthly fees from the Manager at the annual
rate of 0.26125 of 1% of the average daily net assets of the Fund. NAM, a
Japanese corporation with its principal office located at 2-1-14, Nihonbashi,
Chuo-ku, Tokyo 103-8260, Japan provides investment advisory services for
Japanese and international clients. NAM together with its affiliates, had
approximately $120 billion in assets under management as of March 31, 1999. NAM
is owned approximately 30% by The Nomura Group Companies, including 5% owned
directly by The Nomura Securities Co., Ltd., ("Nomura Securities") and
approximately 70% owned by unaffiliated persons with no single shareholder
owning more than 5%. Nomura Securities is the largest securities company in
Japan.
Pursuant to the Investment Advisory Agreement between the Manager and
NAM-Singapore, NAM-Singapore furnishes 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.
NAM-Singapore is not responsible for the actual portfolio decisions of the Fund.
For services performed under the Investment Advisory Agreement, NAM-Singapore
receives monthly fees from the Manager at the annual rate of 0.0275 of 1% of the
average daily net asset of the Fund. NAM-Singapore, a Singapore corporation with
its principal office located at 6 Battery Road, Singapore 049909, provides
investment advisory services relating to Pacific Basin securities to
institutional clients, including pension and profit sharing plans. NAM-Singapore
is a majority-owned subsidiary of NAM.
Mr. Nobuo Katayama, President of the Fund and President of the Manager, is
primarily responsible for the day-to-day management of the Fund's portfolio. Mr.
Katayama has held such responsibilities for the Fund since 1999 and has served
as President of the Manager since 1999.
Compensation and Expenses. As compensation for its services to the Fund,
the Manager receives a monthly fee,
9
<PAGE>
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 years ended March 31, 1997, March 31, 1998 and March 31,
1999, the Fund paid or accrued fees to the Manager of $245,892, $160,712 and
$87,968, portions of which were waived or reimbursed as described below for
March 31, 1998 and March 31, 1999, respectively. For such years, the Manager
paid fees of, $73,734, $24,616, and $0, respectively, to NAM, and fees of,
$7,761, $2,591, and $0, respectively, to NAM-Singapore.
The Manager waived fees or reimbursed expenses of $77,926 and $98,715 from
the Fund for the years ended March 31, 1998 and March 31, 1999. For the years
ended March 31, 1998 and March 31, 1999, NAM and NAM-Singapore waived a portion
of their fees payable by the Manager.
Duration and Termination. Unless earlier terminated as described below,
the Management Agreement and Investment Advisory Agreements will remain in
effect from year to year if approved annually (a) by the Directors of the Fund
or by a majority of the outstanding shares of the Fund and (b) by a majority of
the Directors who are not parties to such contracts or interested persons (as
defined in the Investment Company Act of 1940) of any such party. Such contracts
are not assignable and may be terminated without penalty on 60 days' written
notice at the option of either party thereto or by the vote of the shareholders
of the Fund.
PURCHASE OF FUND SHARES
The prospectus contains a general description of how investors may
purchase Fund shares and states that the Fund offers three classes of shares.
This Statement of Additional Information contains additional information which
may be of interest to investors.
Class A shares generally are sold with a sales charge payable at the time
of purchase. The prospectus contains a table of applicable sales charges.
Certain purchases of Class A shares may be exempt from a sales charge or may be
subject to a contingent deferred sales charge ("CDSC").
Class B shares are sold subject to a CDSC payable upon redemption within a
specified period after purchase. The prospectus contains a table of applicable
CDSCs. Class B shares automatically convert into Class A shares no later than
the end of the month eight years after the purchase date. Class B shares
acquired through reinvestments of distributions will convert into Class A shares
based on the date of the initial purchase to which such shares relate. For this
purpose, Class B shares acquired through reinvestment of distributions will be
attributed to particular purchases of Class B shares in accordance with such
procedures as the Board of Directors of the Fund may determine from time to
time. The conversion of Class B shares to Class A shares is subject to the
condition that such conversions will not constitute taxable events for Federal
tax purposes.
Class Z shares, which are not subject to a sales charge or a CDSC, are
only available to:
1. Shareholders in the Fund as of July 31, 1999.
2. Current and retired Directors of the Fund.
3. Directors and current and retired employees of NAM-U.S.A. and NSI.
Class A, Class B, and Class Z shares of the Fund each represent an
identical interest in the investment portfolio of the Fund and have the same
rights, except that Class A and Class B shares bear the expense of the ongoing
account maintenance fees (also know as service fees) and Class B shares bear the
expense of the ongoing distribution fees.
The CDSCs, distribution fees and account maintenance fees that are imposed
on Class A and Class B shares are imposed directly against those classes and not
against all assets of the Fund and, accordingly, such charges do not affect the
net asset value of any other class or have any impact on investors choosing
another sales charge option. Dividends paid by the Fund for each class of shares
are calculated in the same manner at the same time and differ only to the extent
that account maintenance and distribution fees relating to a particular class
are borne exclusively by that class.
10
<PAGE>
Investors should understand that the purpose and function of the initial
sales charges with respect to the Class A shares are the same as those of the
CDSCs and distribution fees with respect to the Class B shares in that the sales
charges and distribution fees applicable to each class provide for the financing
of the distribution of the shares of the Fund. The distribution-related revenues
paid with respect to a class will not be used to finance the distribution
expenditures of another class. Sales personnel may receive different
compensation for selling different classes of shares.
The Fund is currently making a continuous offering of its shares. The Fund
receives the entire net asset value of shares sold. The Fund will accept
unconditional orders for shares to be executed at the public offering price
based on the net asset value per share next determined after the order is
placed. In the case of Class A shares, the public offering price is the net
asset value plus the applicable sales charge, if any. No sales charge is
included in the public offering price of other classes of shares. In the case of
orders for purchase of shares placed through dealers, the public offering price
will be based on the net asset value determined on the day the order is placed,
but only if the dealer receives the order before the close of regular trading on
the New York Stock Exchange (currently, 4:00 p.m. Eastern time). Dealers have
the responsibility of submitting such purchase requests to the Fund not later
than 30 minutes after the close of business on the New York Stock Exchange, in
order to obtain that day's closing price. If the dealer receives the order after
the close of the New York Stock Exchange, the price will be based on the net
asset value next determined. If money for the purchase of shares are sent
directly to State Street Bank and Trust Company, the Fund's Transfer Agent, they
will be invested at the public offering price based on the net asset value next
determined after receipt. Payment for shares of the Fund must be in U.S.
dollars; if made by check, the check must be drawn on a U.S. bank.
As a convenience to investors, shares may be purchased through a
Systematic Investment Plan. Pre-authorized monthly bank drafts for fixed amount
(at least $50) are used to purchase Fund shares at the applicable public
offering price next determined after the Transfer Agent receives the proceeds
from the draft. A shareholder may choose any day of the month and, if a given
month (for example, February) does not contain that particular date, or if the
date falls on a weekend or holiday, the draft will be processed on the next
business day. Further information and application forms are available from your
financial advisor, broker dealers or from The Transfer Agent.
Dividends and distributions to be reinvested are reinvested without a
sales charge in shares of the same class as of the ex-dividend date using the
net asset value determined on the date, and are credited to a shareholder's
account on the payment date.
Sales Without Sales Charges or Contingent Deferred Sales Charges.
The Fund may sell Class A shares without a sales charge or CDSC to:
(i) registered representatives and other employees of broker dealers
having sales agreements with NSI; employees of financial
institutions having sales agreements with NSI or otherwise having an
arrangement with any such broker dealer or financial institution
with respect to sales of Fund shares; and their spouses and children
under age 21; and
(ii) "wrap accounts" maintained for clients of broker dealers, financial
institutions or financial intermediaries who have entered into
agreements with NSI with respect to such accounts, which in all
cases shall be subject to a wrap fee economically comparable to a
sales charge. Fund shares offered pursuant to this waiver may not be
advertised as "no load," or otherwise offered for sale at NAV
without a wrap fee.
PAYMENTS TO BROKER DEALERS. NSI may, at its expense, make certain payments
to broker dealers and other financial institutions which satisfy certain
criteria established from time to time by NSI relating to increasing net sales
of shares of the Fund over prior periods, and certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A SHARES. The underwriter's commission
is the sales charge shown in the prospectus less any applicable dealer discount.
NSI will give dealers ten days' notice of any
11
<PAGE>
changes in the dealer discount. NSI retains the entire sales charge of any
retail sales made by it and monies sent to the Transfer Agent with no broker
assigned to the sale.
The public offering price of Class A shares is the net asset value plus a
sales charge that varies depending on the size of your purchase. The Fund
receives the net asset value. The sales charge is allocated between your broker
dealer and NSI as shown in the following table, except when NSI, in its
discretion, allocates the entire amount to your investment dealer.
<TABLE>
<CAPTION>
Sales Charge as a Sales Charge Reallowed to Dealers
Amount of Purchase at Offering Price Percentage of Offering Price as a Percentage of Offering Price
------------------------------------ ---------------------------- ---------------------------------
<S> <C> <C>
Under $50,000 .............................. 5.75% 5.00%
$50,000 but under $100,000 ................. 4.50 3.75
$100,000 but under $250,000 ................ 3.50 2.75
$250,000 but under $500,000 ................ 2.50 2.00
$500,000 but under $1,000,000 .............. 2.00 1.75
$1,000,000 and above ....................... NONE NONE
</TABLE>
COMBINED PURCHASE PRIVILEGE. The following persons may qualify for the
sales charge reductions or eliminations shown in the prospectus by combining
into a single transaction the purchase of Class A shares with other purchases of
any Class of shares:
(i) a "company" as defined in Section 2(a)(8) of the Investment Company
Act of 1940 (which includes corporations which are corporate
affiliates of each other);
(ii) an individual, his or her spouse and their children under
twenty-one, purchasing for his, her or their own account;
(iii) a trustee or other fiduciary purchasing for a single trust estate or
single fiduciary account (including a pension plan, profit-sharing
plan, or other employee benefit trust created pursuant to a plan
qualified under Section 401 of the Internal Revenue Code of 1986, as
amended (the "Code"));
(iv) tax-exempt organizations qualifying under Section 501(c)(3) of the
Code (not including tax-exempt organizations qualifying under
Section 403(b)(7) (a "403(b) plan") of the Code; and
(v) employee benefit plans of a single employer or of affiliated
employers, other than 403(b) plans.
CUMULATIVE QUANTITY DISCOUNT (RIGHT OF ACCUMULATION). A purchaser of Class
A shares may qualify for a cumulative quantity discount by combining a current
purchase (or combined purchases as described above) with certain other shares of
any class of the Fund already owned. The applicable sales charge is based on the
total of:
(i) the investor's current purchase;
(ii) the maximum public offering price (at the close of business on the
previous day) of all shares held by the investor in the Fund; and
(iii) the maximum public offering price of all shares described in
paragraph (ii) owned by another shareholder eligible to participate
with the investor in a "combined purchase" (see above).
To qualify for the combined purchase privilege or to obtain the cumulative
quantity discount on a purchase through a broker dealer, when each purchase is
made the investor or broker dealer must provide NSI with sufficient information
to verify that the purchase qualifies for the privilege or discount, the
shareholder must furnish this information to NSI when making direct cash
investments.
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<PAGE>
STATEMENT OF INTENTION. Investors also may obtain the reduced sales
charges for Class A shares shown in the prospectus for investment of a
particular amount by means of a written Statement of Intention, which expresses
the investor's intention to invest that amount including a period of 13 months
in shares of any class of the Fund. Each purchase of Class A shares under a
Statement of Intention will be make at the public offering price applicable at
the time of such purchase to a single transaction of the total dollar amount
indicated in the Statement of Intention. A Statement of Intention may include
purchases of shares made not more than 90 days prior to the date that an
investor signs a Statement; however, the 13-month period during which the
Statement of Intention is in effect will begin on the date of the earliest
purchase to be included.
An investor may receive a credit toward the amount indicated in the
Statement of Intention equal to the maximum public offering price as of the
close of business on the previous day of all shares he or she owns on the date
of the Statement of Intention which are eligible for purchase under a Statement
of Intention. Investors do not receive credit for shares purchased by the
reinvestment of distributions. Investors qualifying for the "combined purchase
privilege" (see above) may purchase shares under a single Statement of
Intention.
The Statement of Intention is not a binding obligation upon the investor
to purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount, and must be invested immediately.
Class A shares purchased with the first 5% of such amount will be held in escrow
to secure payment of the higher sales charge applicable to the shares actually
purchased if the full amount indicated is not purchased. When the full amount
indicated has been purchased, the escrow will be released. If an investor
desires to redeem escrowed shares before the full amount has been purchased, the
shares will be released from escrow only if the investor pays the sales charge
that, without regard to the Statement of Intention, would apply to the total
investment made to date.
The extent that an investor purchases more than the dollar amount
indicated on the Statement of Intention and qualifies for a further reduced
sales charge, the sales charge will be adjusted for the entire amount purchased
at the end of the 13-month period, upon recovery from the investor's broker
dealer of its portion of the sales charge adjustment. Once received from the
broker dealer, which may take a period of time or may never occur, the sales
charge adjustment will be used to purchase additional shares at the then current
offering price applicable to the actual amount of the aggregate purchases. These
additional shares will not be considered as part of the total investment for the
purpose of determining the applicable sales charge pursuant to the Statement of
Intention.
To the extent that an investor purchases less than the dollar amount
indicated on the Statement of Intention within the 13-month period, the sales
charge will be adjusted upward for the entire amount purchased at the end of the
13-month period. This will cover the additional sales charge, the proceeds of
which will be paid to the investor's broker dealer and NSI in accordance with
the prospectus. If the account exceeds an amount that would otherwise qualify
for a reduced sales charge, that reduced sales charge will be applied.
Statements of Intention are not available for certain employee benefit
plans. Statement of Intention forms may be obtained from NSI, the Transfer
Agent, your financial advisor or from broker dealers. Interested investors
should read the Statement of Intention carefully.
GROUP PURCHASES OF CLASS A SHARES. Under the Cumulative Quantity Discount,
all members of a group may combine their individual purchases of Class A shares
to potentially qualify for breakpoints in the sales charge schedule. This
feature is provided to any group which (i) has been in existence for more than
six months, (ii) has a legitimate purpose other than the purchase of mutual fund
shares at a discount for its members, (iii) utilizes salary deduction or similar
group methods of payment, and (iv) agrees to allow sales materials of the Fund
in its mailings to members at a reduced or no cost to NSI.
Interested groups should contact their financial advisor, broker dealer or
NSI. The Fund reserves the right to revise the terms of or to suspend or
discontinue group sales at any time.
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<PAGE>
QUALIFIED PLANS. An employer-sponsored retirement plan participating in a
"multi-fund" program approved by NSI may include amounts invested in the other
mutual funds participating in such program for purposes of determining whether
the plan may purchase Class A shares at net asset value based on the size of the
purchase. These investments also will be included for purposes of the discount
privileges and programs described above.
Additional information about qualified plans and individual account plans
is available from your financial advisor, broker dealers or from NSI.
Contingent Deferred Sales Charge
Class A shares purchased at net asset value, without a sales charge, by
any investors, including purchases pursuant to any Combined Purchase Privilege
or Statement of Intention, are subject to a CDSC of 1.00% if redeemed within the
first year after purchase, unless the dealer of record waived its commission
with NSI approval. The Class A CDSC is imposed on the lower of the cost or the
current value of the shares redeemed.
For sales of Class A shares, NSI pays broker dealers of record commissions
on sales of Class A shares of $1 million or more purchases pursuant to any
Combined Purchase Privilege or Statement of Intention except in the case of wrap
accounts.
Purchase orders of $1 million or more will not be subject to the front-end
sales charge. NSI may advance to broker dealers a commission from its own
resources in connection with these purchases based upon cumulative sales in each
year or portion thereof except when such orders are received from other
registered investment companies or investment funds. NSI will pay 1% of sales up
to $2 million; 0.80% on sales of $2 million up to $3 million; 0.50% on sales of
$3 million up to $50 million; and 0.25% on sales of $50 million and above.
No CDSC is imposed on shares of any class subject to a CDSC to the extent
that the CDSC shares redeemed are no longer subject to the holding period
thereof, and resulted from reinvestment of distributions on CDSC shares. In
determining whether the CDSC applies to each redemption of CDSC shares, CDSC
shares not subject to a CDSC are redeemed first.
The Fund will waive any CDSC on redemptions, in the case of individual,
joint or Uniform Gift/Transfers to Minors Act accounts, in the event of death or
post-purchase disability of a shareholder, for the purpose of paying benefits
pursuant to tax-qualified retirement plans ("Benefit Payments"), or, in the case
of living trust accounts, in the event of the death or post-purchase disability
of the settlor of the trust. Benefit Payments currently include, without
limitation, (i) distributions from an IRA due to death or disability, (ii) a
return of excess contributions to an IRA or 401(k) plan, and (iii) distributions
from retirement plans qualified under Section 401(a) of the Code or from a
403(b) plan due to death, disability, retirement or separation from service.
DISTRIBUTION PLANS
The Fund has adopted a distribution plan, the principal features of which
are described in the prospectus. This Statement of Additional Information
contains additional information which may be of interest to investors.
Continuance of a plan is subject to annual approval by a vote of the Board
of Directors, including a majority of the Board of Directors who are not
interested persons of the Fund and who have no direct or indirect interest in
the plan or related arrangements, cast in person at a meeting called for that
purpose. All material amendments to a plan must be likewise approved by the
Board of Directors, including a majority of the Board of Directors who are not
interested persons. No plan may be amended in order to increase materially the
costs which the Fund may bear for distribution pursuant to such plan without
also being approved by a majority of the outstanding voting securities of the
Fund or the relevant class of the Fund, as the case may be. A plan terminates
automatically in the event of its assignment and may be terminated without
penalty, at any time, by a vote of a majority of the Board of Directors or
14
<PAGE>
by a vote of a majority of the outstanding voting securities of the Fund or the
relevant class of the Fund, as the case may be.
NSI pays service fees to qualifying dealers at the rates set forth in the
prospectus. NSI will pay service fees to the dealer of record of up to 0.25% of
average net assets, depending on the level of services provided by the dealer of
record, and by third parties. Service fees are paid quarterly to the dealer of
record for that quarter.
Except as otherwise agreed between NSI and a broker dealer, for purposes
of determining the amounts payable to broker dealers for shareholder accounts
for which such dealers are designated as the broker dealer of record, "average
net asset value" means the product of (i) the average daily share balance in
such account (s) and (ii) the average daily net asset value of the relevant
class of shares over the quarter.
Financial institutions receiving payments from NSI as described above may
be required to comply with various state and federal regulatory requirements,
including among others those regulating the activities of broker dealers.
REDEMPTION OF FUND SHARES
Reference is made to "Selling Fund Shares" in the prospectus for certain
information as to the redemption and repurchase of Fund shares.
The Fund is required to redeem for cash all shares of the Fund upon
receipt of a written request in proper form. The redemption price is the net
asset value per share next determined after the initial receipt of proper notice
of redemption. Except for any CDSC that may be applicable, there will be no
charge for redemption if the redemption request is sent directly to the Transfer
Agent. Shareholders liquidating their holdings will receive upon redemption all
dividends reinvested through the date of redemption.
The right to redeem shares or receive payment with respect to any
redemption of shares may be suspended by the Fund for a period of up to seven
business days. Suspensions of more than seven days may not be made except (1)
for any period (a) during which the New York Stock Exchange is closed other than
customary weekend and holiday closings or (b) during which trading on the New
York Stock Exchange is restricted; (2) for any period during which an emergency
exists as a result of which (a) disposal by the Fund of securities owned by it
is not reasonably practicable or (b) it is not reasonably practicable for the
Fund fairly to determine the value of its net assets; or (3) for such other
periods as the Securities and Exchange Commission may by order permit for the
protection of securityholders of the Fund. The conditions under which (i)
trading shall be deemed to be restricted and (ii) an emergency shall be deemed
to exist within the meaning of clause (2) above will be determined pursuant to
the applicable rules and regulations of the Securities and Exchange Commission.
The value of shares at the time of redemption or repurchase may be more or
less than the shareholders' cost, depending on the market value of the
securities held by the Fund at such time.
Redemption
A shareholder wishing to redeem shares held with the Transfer Agent may do
so without charge by tendering the shares directly to the Transfer Agent at
State Street Bank and Trust Company, P.O. Box 8119, Boston, Massachusetts
02266-8119. Proper notice of redemption in the case of shares deposited with the
Transfer Agent may be accomplished by a written letter requesting redemption.
Proper notice of redemption in the case of shares for which certificates have
been issued may be accomplished by a written letter as noted above accompanied
by certificates for the shares to be redeemed. Redemption requests should not be
sent to the Fund. The redemption request in either event requires the
signature(s) of all persons in whose name(s) the shares are registered, signed
exactly as such name(s) appear(s) on the Transfer Agent's register. The
signature(s) on the redemption requests must be guaranteed by an "eligible
guarantor institution" as such is defined in Rule 17Ad-15 under Securities
Exchange Act of 1934, as amended, the existence and validity of which may be
verified by the Transfer Agent through the use of industry
15
<PAGE>
publications. Notarized signatures are not sufficient. In certain instances, the
Transfer Agent may require additional documents such as, but not limited to,
trust instruments, death certificates, appointments as executor or
administrator, or certificates of corporate authority. For shareholders
redeeming directly with the Transfer Agent, payments will be mailed within seven
business days of receipt of a proper notice of redemption.
At various times the Fund may be requested to redeem shares for which it
has not yet received good payment (e.g., cash, Federal funds or certified check
drawn on a U.S. bank). The Fund may delay or cause to be delayed the mailing of
a redemption check until such time as it has assured itself that good payment
(e.g., cash, Federal funds or certified check drawn on a U.S. bank) has been
collected for the purchase of such shares, which may take up to 15 business
days.
Repurchase
The Corporation also will repurchase Fund shares through a shareholder's
listed broker dealer. The Corporation normally will accept orders to repurchase
Fund shares by wire or telephone from broker dealers for their customers at the
net asset value next computed after the order is placed. Shares will be priced
at the net asset value calculated on the day the request is received, provided
that the request for repurchase is submitted to the broker dealer prior to the
close of business on the New York Stock Exchange (currently 4:00 p.m. Eastern
time) and such request is received by the Fund from such broker dealer not later
than 30 minutes after the close of business on the New York Stock Exchange on
the same day. Broker dealers have the responsibility of submitting such
repurchase requests to the Fund not later than 30 minutes after the close of
business on the New York Stock Exchange, in order to obtain that day's closing
price.
The foregoing repurchase arrangements are for the convenience of
shareholders and do not involve a charge by the Fund (other than any applicable
CDSC). Securities firms, however, may impose a transaction charge on the
shareholder for transmitting the notice of repurchase to the Fund.
Reinvestment Privilege
An investor who has redeemed shares of the Fund may reinvest (within one
year) the proceeds of such sale in shares of the same class of the Fund,
including, in the case of shares subject to a CDSC, the amount of CDSC charged
on the redemption. Any such reinvestment would be at the net asset value of the
shares of the Fund next determined after NSI receives a Reinstatement
Authorization. The time that the previous investment was held will be included
in determining any applicable CDSC due upon redemptions and, in the case of
Class B shares, the eight-year period for conversion to Class A shares.
Shareholders will receive from NSI the amount of any CDSC paid at the time of
redemption as part of the reinstated investment, which may be treated as capital
gains to the shareholder for tax purposes. Exercise of the Reinstatement
Privilege does not alter the Federal income tax treatment of any capital gains
realized on a sale of Fund shares, but to the extent that any shares are sold at
a loss and the proceeds are reinvested in shares of the Fund, some or all of the
loss may be disallowed as a deduction. Consult your tax adviser. Investors who
desire to exercise the Reinstatement Privilege should contact their financial
advisor, broker dealer or NSI.
PRICING OF FUND SHARES
Determination Of Net Asset Value
The net asset value per share of the shares of all classes of the Fund is
determined once daily after the close of business on the New York Stock Exchange
(currently, 4:00 p.m. Eastern time), on each day during which the New York Stock
Exchange is open for trading. Currently, the New York Stock Exchange is closed
Saturdays, Sundays and the following holidays: New Year's Day, Dr. Martin Luther
King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving and Christmas.
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<PAGE>
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
fees payable to the Manager and Distributor, are accrued daily.
Portfolio securities, including ADRs or EDRs 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 U.S.
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 values 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.
Generally, trading in non-U.S. securities, as well as U.S. Government
securities and money market instruments, is substantially completed each day at
various times prior to the close of business of the New York Stock Exchange. The
values of such securities used in computing the net asset value of the Fund's
shares are determined as of such times. Foreign currency exchange rates are also
generally determined prior to the close of business on the New York Stock
Exchange. Occasionally, events affecting the values of such securities and such
exchange rates may occur between the times at which they are determined and the
close of business on the New York Stock Exchange that may not be reflected in
the computation of the Fund's net asset value.
The net asset value per share of Class A and Class B shares generally will
be lower than the net asset value per share of Class Z shares, reflecting the
daily expense accrual of distribution fees applicable to Class A and Class B
shares. It is expected, however, that the per share net asset value of the three
classes will tend to converge (although not necessarily meet) immediately after
the payment of dividends or distributions, which will differ by approximately
the amount of distribution fee accrual differentials between the classes.
Computation of Offering Price Per Share
An illustration of the computation of the offering price for Class A,
Class B, and Class Z shares of the Fund based on the Fund's net asset value of
$11.63 per share on March 31, 1999. The net asset value of $11.63 represents the
net asset value of the Fund prior to the multi-class structure. The shares
outstanding prior to implementation of the multi-class structure were converted
to Class Z shares.
Class A Class B Class Z
------- ------- -------
Net Asset Value Per Share .................. $11.63 $11.63 $11.63
Sales Charge (for Class A: 5.75%
of offering price; 6.10% of net
asset value per share)* .................. 0.71 --** --
------ ------ ------
Offering Price ............................. $12.34 $11.63 $11.63
====== ====== ======
- ----------
* Rounded to the nearest one-hundredth percent; assumes maximum sales charge
is applicable
** Class B shares are not subject to an initial sales charge but may be
subject to a CDSC on redemption of shares. See "Purchase of Fund Shares".
17
<PAGE>
PORTFOLIO TRANSACTIONS AND BROKERAGE
Subject to policies established by the Board of Directors of the Fund, the
Manager is primarily responsible for the execution of the Fund's portfolio
transactions and the allocation of the brokerage. In executing such
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, difficulty of execution and
operational facilities of the broker dealer involved and the broker dealer's
risk in positioning a block of securities. While the Manager generally seeks
reasonably competitive commission rates, the Fund does not necessarily pay the
lowest commission or spread available. The Fund has no obligation to deal with
any broker or group of brokers in execution of transactions in portfolio
securities. The Fund contemplates that, consistent with the above policy of
obtaining the best net results, brokerage transactions may be conducted through
Nomura Securities and its affiliates, and the amount of such transactions may be
significant. Subject to obtaining the best net results for the Fund, broker
dealers which provide supplemental investment research to the Manager may
receive orders for transactions by the Fund. Information so received which
includes research reports as to particular industries and corporations will be
in addition to and not in lieu of the services required to be performed by the
Manager under its agreement with the Fund, and the expenses of the Manager will
not necessarily be reduced as a result of the receipt of such supplemental
information. It is possible that certain of the supplementary investment
research so received will primarily benefit one or more other investment
companies or other accounts for which investment discretion is exercised.
Conversely, the Fund may be the primary beneficiary of the research or services
received as a result of portfolio transactions effected for such other accounts
or investment companies. In addition, subject to obtaining the best net results
for the Fund's portfolio transactions, the Manager may consider sales of shares
of the Fund as a factor in the selection of securities companies to execute
portfolio transactions for the Fund.
In seeking to obtain the best net results for the Fund's portfolio
transactions, the Manager may aggregate orders for the purchase or sale of
securities on behalf of the Fund with those of the Manager's other clients.
Under procedures governing such transactions, the Manager will determine in
advance its proposed allocation of transactions among client accounts. At the
end of each day, each client account participating in an aggregated order will
participate at the average share price for all of the transactions of the
Manager's clients that day, with transaction costs allocated pro rata on the
basis of the client's participation in the transaction. If an aggregated order
is not executed in its entirety on the given day, securities purchased or sold
on that day will be allocated to clients on a pro rata basis.
The Fund anticipates that its brokerage transactions involving securities
of companies domiciled in Pacific Basin countries will be conducted primarily on
the principal stock exchanges of such countries. Brokerage commissions and other
transaction costs are generally higher than the U.S. Generally, the supervision
and regulation of foreign stock exchanges and brokers differ from, and in some
countries may be less than, the supervision and regulation of exchanges and
brokers in the U.S.
The Fund may invest in securities traded in over-the-counter markets and
intends to deal directly with the dealers who make markets in the securities
involved except in those circumstances where better prices and execution are
available elsewhere. Under the Investment Company Act of 1940, persons
affiliated with the Fund are prohibited from dealing with the Fund as principal
in the purchase and sale of securities. Since transactions in the
over-the-counter market usually involve transactions with dealers acting as
principal for their own account, the Fund will not deal with affiliated persons,
including Nomura Securities and its affiliates, in connection with such
transactions. See "Investment Objective and Policies--Investment Restrictions".
For the year ended March 31, 1997, the Fund incurred brokerage commission
of $235,409. Nomura Securities and its affiliates earned $5,943 or 2.5% of such
amount for effecting transactions involving 2.5% of the transactions in which
the Fund incurred brokerage commissions. For the year ended March 31, 1998, the
Fund incurred brokerage commission of $91,011. Nomura Securities and its
affiliates earned $538 or 0.6% of such amount for effecting transactions
involving 0.3% of the transactions in which the Fund incurred brokerage
commissions. For the year ended
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<PAGE>
March 31, 1999, the Fund incurred brokerage commissions of $48,464. Nomura
Securities and its affiliates earned $1,239 or 2.6% of such amount for effecting
transactions involving 4.3% of the transactions in which the Fund incurred
brokerage commissions.
The Board of Directors will from time to time consider the possibilities
of seeking to recapture for the benefit of the Fund brokerage commissions and
other expenses of possible portfolio transactions by conducting portfolio
transactions through affiliated entities. For example, brokerage commissions
received by affiliated brokers could be offset against the management fee paid
by the Fund.
Section 11(a) of the Securities Exchange Act of 1934 generally prohibits
members of U.S. national securities exchanges from executing exchange
transactions for their affiliates and institutional accounts which they manage
unless the member (i) has obtained prior express authorization from the account
to effect such transactions, (ii) at least annually furnishes the account with a
statement disclosing the aggregate compensation received by the member in
effecting such transactions, and (iii) complies with any rules the Securities
and Exchange Commission has prescribed with respect to the requirements of
clauses (i) and (ii). To the extent Section 11(a) would apply to NSI acting as a
broker for the Fund in any of its portfolio transactions executed on any such
securities exchange of which it is a member, appropriate consents have been
obtained from the Fund, and annual statements as to aggregate compensation will
be provided to the Fund.
SHAREHOLDER SERVICES
The Fund offers a number of shareholder services described below which are
designed to facilitate investment in its shares. Full details as to each of such
services and copies of the various plans described below may be obtained from
the Fund or NSI.
Investment Accounts
Each shareholder whose account is maintained at the Transfer Agent has an
Investment Account and will receive statements from the Transfer Agent after
each dividend payment and capital gains distribution showing the cumulative
activity in the account since the beginning of the year.
Share certificates are issued only for full shares and only upon the
request of the shareholder. Issuance of certificates representing all or only
part of the full shares in an Investment Account may be requested by a
shareholder directly from the Transfer Agent.
Reinvestment of Dividends and Capital Gains Distributions
Unless specific instructions to the contrary are given as to method of
payment of dividends and capital gains distributions, dividends and
distributions will automatically be reinvested in additional shares of the Fund.
Such reinvestment 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 ordinary income dividends or capital 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 as to
subsequent payments.
Retirement Plans
Shares of the Fund may be purchased in connection with individual
retirement accounts. Copies of plans to establish such accounts are available
from First Trust Corporation (800) 525-2124.
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<PAGE>
Capital gains and ordinary income received in each of the plans referred
to above are generally exempt from Federal taxation until distributed from the
plans. However, as described under "Dividends, Distributions and Taxes", there
are withholding taxes on dividends and interest received on portfolio securities
which shareholders of the Fund may offset either by claiming a deduction
therefor, or, as an alternative, use as a foreign tax credit against their U.S.
income taxes. However, because the retirement plans are exempt from U.S. 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.
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 at least annually. All
net realized capital gains, if any, will be distributed to the Fund's
shareholders at least annually. Dividends and distributions may be automatically
reinvested in shares of the Fund at net asset value without sales charge.
Shareholders may elect 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 dividends per share on Class A and Class B shares
will be lower than the dividend per share on Class Z shares as a result of the
distribution fee applicable to Class A and Class B shares. (See "Determination
of Net Asset Value").
The Fund intends to continue to qualify for the special tax treatment
afforded a regulated investment company ("RIC") under 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 Class A, Class B and Class Z shareholders (together, the
"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 a shareholder has owned Fund shares. Any loss upon the
sale of Fund shares held for six months or less will be treated as long-term
capital loss to the extent of any long-term 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). Certain categories of
capital gains are taxable at different rates. Generally 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 capital gain dividends as well
as any amount of capital gain dividends in the different categories of capital
gain referred to above.
Dividends are taxable to shareholders even though they are reinvested in
additional shares of the Fund. 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 by the Fund to shareholders who are
nonresident aliens or foreign entities will be subject to a 30% U.S. 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 U.S.
withholding tax.
20
<PAGE>
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.
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 U.S. may reduce or eliminate such taxes. Shareholders may be
able to claim U.S. foreign tax credits with respect to such taxes, subject to
certain 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. In addition, recent legislation permits a foreign
tax credit to be claimed with respect to withholding tax on a dividend only if
the shareholder meets certain holding period requirements. The Fund also must
meet these holding period requirements, and if the Fund fails to do so, it will
not be able to "pass through" to shareholders the ability to claim a credit or a
deduction for the related foreign taxes paid by the Fund. If the Fund satisfies
the holding period requirements and 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 may 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 U.S. income tax returns as gross income, treat such proportionate shares
as taxes paid by them directly, and deduct such proportionate shares in
computing their taxable incomes or, alternatively, use them as foreign tax
credits against their U.S. income taxes. No deductions for foreign taxes,
moreover, 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 U.S. withholding tax on the income resulting from
the Fund's election described in this paragraph but not be able to claim a
credit or deduction against such U.S. tax for 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 and other information needed to
claim the foreign tax credit. For this purpose, the Fund will allocate foreign
taxes and foreign source income among the Class A, Class B and Class Z
shareholders according to a method (which it believes is consistent with the
Securities and Exchange Commission rule permitting the issuance and sale of
multiple classes of stock) that is based on the gross income allocable to the
Class A, Class B and Class Z shareholders during the taxable year or such other
method as the Internal Revenue Service may prescribe.
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
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 Code requires a RIC to pay a nondeductible 4% excise tax to the extent
the Fund does not distribute, during each calendar year, the sum of 98% of its
ordinary income, determined on a calendar year basis, and 98% of its capital
gains, determined, in general, on an October 31 year end, plus certain
undistributed amounts from previous years. While the Fund intends to distribute
its income and capital gains in the manner necessary to minimize imposition of
the 4% excise tax, there can be no assurance that a sufficient amount of the
Fund's taxable income and capital gains will be distributed to avoid entirely
the imposition of the tax. In such event, the Fund will be liable for the tax
only on the amount by which it does not meet the foregoing distribution
requirements.
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 distribution 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
21
<PAGE>
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 PFICs. Alternatively, under recent legislation the Fund could
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 over their adjusted basis and as
ordinary loss any decrease in such value to the extent it did not exceed prior
increases. 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 disposition of
PFIC stock.
Any dividends paid shortly after a purchase of Fund shares by an investor
may have the effect of reducing the per share net asset value of the investor's
shares by the per share amount of the dividends. Furthermore, such dividends,
although in effect a return of capital, are subject to Federal income taxes.
Therefore, prior to purchasing shares of the Fund, the investor should carefully
consider the impact of dividends, including capital gain dividends, which are
expected to be or have been announced.
Special Rules for Certain Foreign Currency Transactions
In general, gains from foreign currencies and from foreign currency
options, foreign currency futures and forward foreign exchange contracts
relating to investments in stock, securities or foreign currencies will be
qualifying income for purposes of determining whether the Fund qualifies as a
RIC. It is currently unclear, however, who will be treated as the issuer of a
foreign currency instrument or how foreign currency options, futures and forward
foreign currency contracts will be valued for purposes of the RIC
diversification requirements applicable to the Fund.
Under Code Section 988, special rules are provided for certain
transactions in a foreign currency other than the taxpayer's functional currency
(i.e., unless certain rules apply, currencies other than the U.S. dollar). In
general, 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 be treated as ordinary income
or loss under Code Section 988. In certain circumstances, the Fund may elect
capital gain or loss treatment for such transactions. In general, however, such
Code Section 988 gains or losses will 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 all or a
portion of 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 basis in the Fund shares
(assuming the shares were held as a capital asset). These rules, however, will
not apply to certain transactions entered into by the Fund solely to reduce the
risk of currency fluctuations with respect to its investments.
The Fund may effect forward foreign exchange transactions that are subject
to the provisions of Code Section 1256. Such forward foreign exchange contracts
that are "Section 1256 contracts" will be "marked to market" for Federal income
tax purposes at the end of each taxable year, i.e., each forward foreign
exchange contract will be treated as sold for its fair market value on the last
day of the taxable year. In general, if the Fund is eligible to make and does
make a special election, gain or loss from transactions in forward foreign
exchange contracts subject to Code Section 1256 will be 60% long-term and 40%
short-term capital gain or loss. Application of these rules to Section 1256
contracts held by the Fund may alter the timing and character of distributions
to shareholders. The mark-to-market rules outlined above, however, will not
apply to certain transactions entered into by the Fund solely to reduce the risk
of changes in price or interest rates with respect to its investments.
Code Section 1092, which applies to certain "straddles," may affect the
taxation of the Fund's sales of securities and transactions in forward foreign
exchange contracts. Under Section 1092, the Fund may be required to postpone
recognition for tax purposes of losses incurred in certain sales of securities
and certain closing transactions in forward foreign exchange contracts.
22
<PAGE>
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 U.S. Government obligations. State law varies
as to whether dividend income attributable to U.S. Government obligations is
exempt from state income tax.
Shareholders are urged to consult their own tax advisers regarding
specific questions as to Federal, foreign, state or local taxes. Foreign
investors also should consider applicable foreign taxes in their evaluation of
an investment in the Fund.
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 separately for Class A shares, Class B shares, and Class Z shares in
accordance with a formula specified by the Securities and Exchange Commission.
Average annual total return quotations for the specified periods are
computed by finding the average compounded rates of return (based upon net
investment income and any realized or unrealized 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 is computed assuming all dividends and distributions
are reinvested and taking into account all applicable recurring and nonrecurring
expenses, including the maximum sales charge in the case of Class A shares and
the contingent deferred sales charge for Class B shares that would be applicable
to a complete redemption of the investment at the end of the specified period.
Change in foreign currency exchange rates have affected the Fund's performance
for certain of the specified periods. 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, net of expense reimbursement (see page
10), changes in foreign currency exchange rates and the amount of net capital
gains or losses realized and unrealized by the Fund during this 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.
Set forth below is the Fund's average annual total return information for
the periods indicated:
<TABLE>
<CAPTION>
One Year Five Years Ten Years July 8, 1985 (a)
Ended Ended Ended to
Average Annual Total Return March 31, 1999 March 31, 1999 March 31, 1999 March 31, 1999
--------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class A ..................... N/A N/A N/A N/A
Class B ..................... N/A N/A N/A N/A
Class Z+ .................... 9.6% (3.1%) 2.5% 10.9%
</TABLE>
- ----------
(a) Commencement of operations
+ Does not include an initial sales charge. Class Z shares represent the
performance of the original no-loads shares of the Fund prior to the
multi-class conversion (June 17, 1999). Shares issued and outstanding at
the time of the multi-class conversion were converted into Class Z shares.
23
<PAGE>
GENERAL INFORMATION
Organization of the Fund
The Fund is the only existing series of the Corporation, a series-type
investment company incorporated under Maryland law on March 14, 1985. The
Corporation has an authorized capital of 200,000,000 shares of common stock, par
value $0.10 per share, of which 150,000,000 shares are initially classified as
one series, namely the Fund, consisting of three classes, designated Class A,
Class B and Class Z common stock, each of which consists of 50,000,000 shares
and the remainder of 50,000,000 shares are not classified as to any class or
series. Shares of Class A, Class B and Class Z common stock represent interests
in the same assets of the Fund and are identical in all respects, except that
o Class A shares are subject to an initial sales charge and bear
certain expenses related to the shareholder services and
distribution associated with such shares;
o Class B shares are subject to a contingent deferred sales charge,
and bear certain expenses related to the 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; and
o Class Z shares are not subject to either an initial sales charge or
on-going shareholder services and distribution expenses.
Class A and Class B shareholders have exclusive voting rights with respect
to matters relating to that class' shareholder services and distribution
expenditures, as applicable. See the "Purchase of Fund Shares." The Board of
Directors of the Corporation may classify and reclassify the shares of the Fund
and of the Corporation into additional classes or series of common stock at a
future date.
Shareholders are entitled to one vote for each share held and fractional
votes for fractional shares held and will vote on the election of the Board of
Directors of the Corporation and any other matter submitted to a shareholder
vote. The Fund does not intend to hold meetings of shareholders in any year in
which the Investment Company Act of 1940 does not require shareholders to act
upon (i) the election of directors, (ii) the approval of management and
investment advisory agreements, (iii) the approval of a distribution agreement,
and (iv) the ratification of the selection of independent auditors. Also, the
By-laws of the Corporation require that a special meeting of stockholders be
held upon the written request of shareholders of the Fund as required by
Maryland corporate law and the Investment Company Act of 1940. Voting rights for
each Director are not cumulative. Shares issued are fully paid and nonassessable
and have no preemptive rights. Shares have the conversion features described in
this Statement of Additional Information. Each share of common stock is entitled
to participate equally in dividends and distributions declared by the Fund and
in the net assets of the Fund upon liquidation or dissolution after satisfaction
of outstanding liabilities except, as noted above, the Class A and Class B
shares bear certain additional expenses.
As of July __, 1999, ________, owned______% of the Class Z shares of the
Fund and, therefore, may, for certain purposes, be deemed to control the Fund
and be able to affect the outcome of certain matters presented for a vote of
shareholders.
Independent Accountants
PricewaterhouseCoopers LLP has been selected as the independent
accountants of the Fund. The selection of independent accountants is subject to
the approval by the non-interested Directors of the Fund. The independent
accountants audit the annual financial statements of the Fund and provide tax
accounting services to the Fund.
24
<PAGE>
Custodian and Transfer Agent
State Street Bank and Trust Company (the "Custodian" or "Transfer Agent")
acts as custodian of the Fund's assets and as its transfer agent. The Custodian,
under its contract with the Fund, is authorized to establish separate accounts
in foreign currencies and to cause securities of the Fund to be held in separate
accounts with sub-custodians outside of the U.S. The sub-custodians include
certain foreign banks and securities depositories. The Custodian and
sub-custodians are responsible for safeguarding the Fund's cash and securities,
handling the receipt and delivery of securities and collecting dividends on the
Fund's investments. The Transfer Agent is responsible for the issuance, transfer
and redemption of shares and the opening, maintenance and servicing of
shareholder accounts.
Legal Counsel
Brown & Wood LLP, New York, New York, is counsel for the Fund.
Reports to Shareholders
The fiscal year of the Fund ends on March 31 each year. The Fund sends to
its shareholders at least semi-annually reports showing the Fund's portfolio and
other information. An annual report, containing financial statements together
with the report of independent accountants, is sent to shareholders each year.
After the end of each calendar year, the shareholders will receive Federal
income tax information regarding any dividends and capital gains distributions.
Additional Information
The Prospectus and this Statement of Additional Information do not contain
all of the information set forth in the Registration Statement and the exhibits
relating thereto, which the Fund has filed with the Securities and Exchange
Commission, Washington, D.C., under the Securities Act of 1933 and the
Investment Company Act of 1940, to which reference is hereby made.
FINANCIAL STATEMENTS
The Fund's audited financial statements are incorporated in this Statement
of Additional Information by reference to its 1999 annual report to
shareholders. You may request a copy of the annual report at no charge by
calling 1-800-833-0018 between 9:00 a.m. and 5:00 p.m. on any business day.
25
<PAGE>
================================================================================
TABLE OF CONTENTS
Page
----
Investment Objective and Policies ....................................... 2
Special Considerations and Risks .................................... 4
Investment Restrictions ............................................. 5
Portfolio Turnover .................................................. 7
Management of the Fund .................................................. 7
Directors and Officers .............................................. 7
Compensation of Directors ........................................... 8
Management and Investment Advisory Arrangements ..................... 8
Purchase of Fund Shares ................................................. 10
Sales Without Sales Charges or Contingent Deferred Sales Charges .... 11
Contingent Deferred Sales Charge .................................... 14
Distribution Plans ...................................................... 14
Redemption of Fund Shares ............................................... 15
Redemption .......................................................... 15
Repurchase .......................................................... 16
Reinvestment Privilege .............................................. 16
Pricing of Fund Shares .................................................. 16
Determination of Net Asset Value .................................... 16
Computation of Offering Price Per Share ............................. 17
Portfolio Transactions and Brokerage .................................... 18
Shareholder Services .................................................... 19
Investment Accounts ................................................. 19
Reinvestment of Dividends and Capital Gains Distributions ........... 19
Retirement Plans .................................................... 19
Dividends, Distributions and Taxes ...................................... 20
Special Rules for Certain Foreign Currency Transactions ............. 22
Performance Data ........................................................ 23
General Information ..................................................... 24
Organization of the Fund ............................................ 24
Independent Accountants ............................................. 24
Custodian and Transfer Agent ........................................ 25
Legal Counsel ....................................................... 25
Reports to Shareholders ............................................. 25
Additional Information .............................................. 25
Financial Statements .................................................... 25
================================================================================
================================================================================
Nomura Pacific Basin
Fund, Inc.
Statement of Additional
Information
July , 1999
================================================================================
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
Exhibit
Number Description
------- -----------
1(a) --Amended and Restated Articles of Incorporation.
(b) --Articles Supplementary.
2 --By-Laws of Registrant.
3 --Copies of all instruments defining the rights of holders of the
securities being registered, including relevant portions of the
Registrant's Articles of Incorporation and By-Laws. (a)
4(a) --Form of Management Agreement between Registrant and Nomura Asset
Management U.S.A. Inc.
(b) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Co., Ltd.
(c) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Singapore Ltd.
5 --Form of Distribution Agreement between Registrant and Nomura
Securities International, Inc.
6 --Expense Reimbursement Agreement between the Registrant and Nomura
Asset Management U.S.A. Inc.
7(a) --Custody Agreement between Registrant and State Street Bank and
Trust Company.
(b) --Amendment to the Custodian Contract dated April 1997.
(c) --Amendment to the Custodian Contract dated April 12, 1989.
(d) --Amendment to the Custodian Contract, executed in 1987.
(e) --Amendment to the Custodian Contract dated March 7, 1986.
(f) --Data Access Services Addendum to Custodian Contract.
8 --Transfer Agency Agreement between Registrant and State Street Bank
and Trust Company.
9 --Opinion and Consent of Brown & Wood LLP, counsel to the Registrant.
10 --Consent of PricewaterhouseCoopers LLP, independent accountants for
the Registrant.
11 --None.
12 --Certificate of Nomura Securities International, Inc.
13 --Form of Distribution Plan.
14 --Financial Data Schedule.
15 --Multiple Class Plan pursuant to Rule 18f-3.
- ----------
(a) Reference is made to Article IV, Article V (Section 3), Article VI, and
Article VII of the Registrant's Amended and Restated Articles of
Incorporation, as amended and supplemented, filed as Exhibits 1(b) and
1(c) to this Registration Statement; Article II, Article III (Sections 1,
2, 3, 5, and 6), Article VI, Article VII, Article XII, Article XIII, and
Article XIV of the Registrant's By-Laws filed as Exhibit 2 to this
Registration Statement.
Item 24. Persons Controlled by or under Common Control with Registrant.
None.
C-1
<PAGE>
Item 25. Indemnification.
Reference is made to Article VI of Registrant's Articles of Incorporation,
Article VI of Registrant's By-Laws, Section 2-418 of the Maryland General
Corporation Law and Section 9 of the form of Distribution Agreement.
Article VI of the By-Laws provides that each officer and director of the
Registrant shall be indemnified by the Registrant to the full extent permitted
under the General Laws of the State of Maryland, subject to the provisions of
the Investment Company Act of 1940. The Registrant has been advised that such
indemnity shall not protect any such person against any liability to the
Registrant or any stockholder thereof to which such person would otherwise be
subject by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office. Absent a
court determination that an officer or director seeking indemnification was not
liable on the merits or guilty of willful misfeasance bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office, the decision by the Registrant to indemnify such person must be based
upon the reasonable determination of independent counsel of non-party
independent directors, after review of the facts, that such officer or director
is not guilty of willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of his office.
The Registrant may purchase insurance on behalf of an officer or director
protecting such person, to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his activities as officer or
director of the Registrant. The Registrant, however, may not purchase insurance
on behalf of any officer or director of the Registrant that protects or purports
to protect such person from liability to the Registrant or to its stockholders
to which such officer or director would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his office.
Insofar as the conditional advancing of indemnification moneys for actions
based upon the Investment Company Act of 1940 may be concerned, such payments
will be made only on the following conditions: (i) the advances must be limited
to amounts used, or to be used, for the preparation or presentation of a defense
to the action, including costs connected with the preparation of a settlement;
(ii) advances may be made only upon receipt of a written promise by, or on
behalf of, the recipient to repay that amount of the advance which exceeds the
amount to which it is ultimately determined that he is entitled to receive from
the Registrant by reason of indemnification; and (iii) (a) such promise must be
secured by a surety bond, other suitable insurance or an equivalent form of
security which assures that any repayments may be obtained by the Registrant
without delay or litigation, which bond, insurance or other form of security
must be provided by the recipient of the advance, or (b) a majority of a quorum
of the Registrant's disinterested, non-party Directors, or an independent legal
counsel in a written opinion, shall determine, based upon a review of readily
available facts, that the recipient of the advance ultimately will be found
entitled to indemnification.
In Section 9 of the Distribution Agreement relating to the securities
being offered hereby, the Registrant agrees to indemnify the Distributor and
each person, if any, who controls the Distributor within the meaning of the
Securities Act of 1933, against certain types of civil liabilities arising in
connection with the Registration Statement or Prospectus.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to Directors, officers and controlling persons of
the Registrant and the principal underwriter pursuant to the foregoing
provisions or otherwise, the Registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a Director, officer,
or controlling person of the Registrant and the principal underwriter in
connection with the successful defense of any action, suit or proceeding) is
asserted by such Director, officer or controlling person or the principal
underwriter in connection with the shares being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by the
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
C-2
<PAGE>
Item 26. Business and Other Connections of Investment Advisers.
Pursuant to the management and advisory arrangements described in the
Prospectus constituting Part A of the Registration Statement and in the
Statement of Additional Information constituting Part B of the Registration
Statement, the Registrant's Manager, Nomura Asset Management U.S.A. Inc.
("NAM-U.S.A."), is responsible for providing the Registrant with advisory
services. The Manager has entered into Investment Advisory Agreements with
Nomura Asset Management Co., Ltd. ("NAM") and Nomura Asset Management Singapore
Ltd. ("NAM-Singapore").
(a) NAM-U.S.A. provides investment advisory services both to United States
and foreign clients. NAM-U.S.A. also acts as an investment adviser to Jakarta
Growth Fund, Inc., Japan OTC Equity Fund, Inc. and Korea Equity Fund, Inc.,
registered closed-end investment companies. The principal address of NAM-U.S.A.
is 180 Maiden Lane, New York, New York 10038.
Set forth below is a list of each executive officer and director of
NAM-U.S.A. indicating each business, profession, vocation or employment of a
substantial nature in which each such person has been engaged since March 31,
1997 for his own account or in the capacity of director, officer, partner or
trustee.
<TABLE>
<CAPTION>
Other Substantial Business,
Name Position with NAM-U.S.A. Profession, Vocation or Employment
---- ------------------------ ----------------------------------
<S> <C> <C>
Haruo Sawada ................ President and Director General Manager of NAM from 1994 to 1996.
John F. Wallace ............. Senior Vice President, Treasurer, None.
Secretary and Director
Mitsutoyo Kohno ............. Senior Vice President and Director None.
Marti G. Subrahmanyam ....... Director Professor, Stern School of Business, New York
University since 1974.
Brian X. Fitzgibbon ......... Senior Vice President None.
Milton J. Ezrati ............ Senior Vice President None.
John J. Boretti ............. Senior Vice President None.
</TABLE>
(b) NAM provides investment advisory services to Japanese and
international clients. NAM is an investment adviser to Jakarta Growth Fund,
Inc., Japan OTC Equity Fund, Inc. and Korea Equity Fund, Inc., registered
closed-end investment companies. The principal address of NAM is 2-1-14,
Nihonbashi, Chuo-ku, Tokyo 103-0027, Japan.
C-3
<PAGE>
Set forth below is a list of the principal officers and directors of NAM
indicating each business, profession, vocation or employment of a substantial
nature in which each such person has been engaged since March 31, 1997 for his
own account or in the capacity of director, officer, partner or trustee.
<TABLE>
<CAPTION>
Other Substantial Business,
Name Position with NAM Profession, Vocation or Employment
---- ----------------- ----------------------------------
<S> <C> <C>
Hitoshi Tonomura ............ Chairman and President President of NAM in 1997, Adviser to the
Nomura Securities Co., Ltd. ("Nomura")
in 1997, Chairman of Nomura International
p.l.c. from 1996 to 1997, Executive Vice
president of Nomura from 1993 to 1997.
Katsuya Takanashi ........... Executive Vice President Adviser to Nomura in 1997, Executive
Managing Director of Nomura from 1993
to 1997.
Naoki Santo ................. Executive Managing Director None.
Atsushi Kinebuchi ........... Executive Managing Director None.
Takanori Tanabe ............. Executive Managing Director None.
Kenjiro Hayashi ............. Director Executive Vice President of Nomura Research
Institute from 1992 to present.
Hisaaki Hino ................ Senior Executive Officer Director of Morgan Trust Bank from
1993 to 1998.
Haruo Miyako ................ Senior Executive Officer Managing Director of NAM from 1996 to 1998,
Director of NAM from 1991 to 1996.
Yasuo Takebayashi ........... Senior Executive Officer Managing Director of NAM from 1996 to 1998,
Director of NAM from 1991 to 1996.
Takanori Shimizu ............ Senior Executive Officer Managing Director of NAM from 1997 to 1998,
Director of NAM from 1993 to 1997.
Akio Nakaniwa ............... Senior Executive Officer Director of Nomura from 1994 to 1998.
Tadashi Akimoto ............. Executive Officer Director of NAM from 1993 to 1998.
Hiromichi Tabata ............ Executive Officer Director of NAM from 1993 to 1998.
Hiroshi Tsujimura ........... Executive Officer Director of Nomura from 1997 to 1998, Co-
President of Nomura Holding America,
Inc. from 1996 to 1997, Co-Chief
Financial Officer, Executive Managing
Director and Director of Nomura Holding
America, Inc. from 1995 to 1997.
Mitsunori Minamio .......... Executive Officer Director of NAM from 1996 to 1998,
General Manager of Nomura from 1995 to 1996.
Naotake Hirasawa ............ Executive Officer Director of NAM from 1997 to 1998,
Statutory Auditor of NAM from 1995 to 1997.
Takashi Harino .............. Executive Officer Director of NAM from 1997 to 1998,
Director of Nomura Asset Management (U.S.A.)
Inc. from 1996 to 1997, General Manager
International Department of NAM from
1996 to 1997, President of Nomura
International (Hong Kong) Limited from
1995 to 1996.
</TABLE>
C-4
<PAGE>
<TABLE>
<CAPTION>
Other Substantial Business,
Name Position with NAM Profession, Vocation or Employment
---- ----------------- ----------------------------------
<S> <C> <C>
Takahide Mizuno ............. Executive Officer Director of NAM from 1997 to 1998, Chief
Investment Officer of NAM in 1997,
Senior Portfolio Manager of NAM from
1984 to 1997, Director of NAM-U.S.A.
and Nomura Capital Management (U.K.)
in 1997, Director of NAM-Singapore from
1994 to 1997.
Yuji Miyachi ................ Executive Officer Investment Officer of NAM in 1998,
Director of Research of The Sumitomo Trust
and Banking Co., Ltd. from 1995 to 1998.
</TABLE>
(c) NAM-Singapore provides investment advisory services relating to
Pacific Basin securities to institutional clients, including pension and profit
sharing plans. NAM-Singapore is an investment sub-adviser to Jakarta Growth
Fund, Inc., a registered closed-end investment company. The principal address of
NAM-Singapore is 6 Battery Road, Singapore 049909.
Set forth below is a list of each executive officer and director of
NAM-Singapore indicating each business, profession, vocation or employment of a
substantial nature in which each such person has been engaged since March 31,
1997 for his own account or in the capacity of director, officer, partner or
trustee.
<TABLE>
<CAPTION>
Position with Other Substantial Business,
Name NAM-Singapore Profession, Vocation or Employment
---- ------------- ----------------------------------
<S> <C> <C>
Koichi Suzuki ............... Managing Director None.
Reginald J. Frank ........... Director None.
Koji Deguchi ................ Director Manager of NAM-Singapore since 1997,
Manager of Nomura Capital Management (U.K.)
Limited from 1989 to 1997.
</TABLE>
Item 27. Principal Underwriters.
(a) Nomura Securities International, Inc. ("NSI") acts as the principal
underwriter for the Registrant.
(b) Set forth below is information concerning each director and senior
executive officer of NSI. The principal business address of each such person is
2 World Financial Center, New York, New York 10281. Except as indicated, no
officer of NSI is an officer or director of the Registrant.
<TABLE>
<CAPTION>
Positions and Offices
Name Position with NSI with Registrant
---- ----------------- ---------------
<S> <C> <C>
Joseph R. Schmuckler .......... Co-President, Co-Chief Executive Officer and Director None
Atsushi Yoshikawa ............. Co-President, Co-Chief Executive Officer and Director None
John E. Toffolon, Jr. ......... Chief Financial Officer and Director None
William T. Maitland ........... Chief Legal Officer, Secretary, Executive
Managing Director and Director None
Arthur S. Ainsberg ............ Director None
</TABLE>
(c) Not Applicable.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder are
maintained at the offices of the Registrant (180 Maiden Lane, New York, New York
10038) and State Street Bank and Trust Company (P.O. Box 1713, Boston,
Massachusetts 02105).
C-5
<PAGE>
Item 29. Management Services.
Other than as set forth under the caption "Management of the Fund" in the
Prospectus constituting Part A of the Registration Statement and under
"Management and Investment Advisory Arrangements" in the Statement of Additional
Information constituting Part B of the Registration Statement, Registrant is not
a party to any management-related service contract.
Item 30. Undertakings.
The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the Registrant's annual report to shareholders, upon request
and without charge.
C-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, and State of New York, on the 28th day of
May 1999.
NOMURA PACIFIC BASIN FUND, INC.
(REGISTRANT)
By /s/ HARUO SAWADA
...................................
(Haruo Sawada, President)
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
--------- ---- ----
/s/ HARUO SAWADA President and Director May 28, 1999
................................ (Principal Executive Officer)
(Haruo Sawada)
/s/ JOHN F. WALLACE Vice President and Director
................................ (Principal Financial and May 28, 1999
(John F. Wallace) Accounting Officer)
WILLIAM G. BARKER, JR.* Director
................................
(William G. Barker, Jr.)
GEORGE H. CHITTENDEN* Director
................................
(George H. Chittenden)
CHOR WENG TAN* Director
................................
(Chor Weng Tan)
ARTHUR R. TAYLOR* Director
................................
(Arthur R. Taylor)
- ----------
* This Amendment has been signed by each of the persons so indicated by the
undersigned as attorney-in-fact.
/s/ JOHN F. WALLACE May 28, 1999
..................................
(John F. Wallace, Attorney-in-Fact)
C-7
<PAGE>
Exhibit
Number Description
------- -----------
1(a) --Amended and Restated Articles of Incorporation.
(b) --Articles Supplementary.
2 --By-Laws of Registrant.
3 --Copies of all instruments defining the rights of holders of the
securities being registered, including relevant portions of the
Registrant's Articles of Incorporation and By-Laws. (a)
4(a) --Form of Management Agreement between Registrant and Nomura Asset
Management U.S.A. Inc.
(b) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Co., Ltd.
(c) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Singapore Ltd.
5 --Form of Distribution Agreement between Registrant and Nomura
Securities International, Inc.
6 --Expense Reimbursement Agreement between the Registrant and Nomura
Asset Management U.S.A. Inc.
7(a) --Custody Agreement between Registrant and State Street Bank and
Trust Company.
(b) --Amendment to the Custodian Contract dated April 1997.
(c) --Amendment to the Custodian Contract dated April 12, 1989.
(d) --Amendment to the Custodian Contract, executed in 1987.
(e) --Amendment to the Custodian Contract dated March 7, 1986.
(f) --Data Access Services Addendum to Custodian Contract.
8 --Transfer Agency Agreement between Registrant and State Street Bank
and Trust Company.
9 --Opinion and Consent of Brown & Wood LLP, counsel to the Registrant.
10 --Consent of PricewaterhouseCoopers LLP, independent accountants for
the Registrant.
11 --None.
12 --Certificate of Nomura Securities International, Inc.
13 --Form of Distribution Plan.
15 --Multiple Class Plan pursuant to Rule 18f-3.
27 --Financial Data Schedule.
Exhibit 1(a)
NOMURA PACIFIC BASIN FUND, INC.
ARTICLES OF AMENDMENT AND RESTATEMENT
NOMURA PACIFIC BASIN FUND, INC., a Maryland corporation (the
"Corporation"), does hereby certify to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The name of the Corporation is Nomura Pacific Basin Fund, Inc. The
Corporation desires to amend and restate its charter as currently in effect. The
original Articles of Incorporation were filed with the State Department of
Assessments and Taxation of Maryland on March 14, 1985.
SECOND: Pursuant to Section 2-609 of the Maryland Corporations and
Associations Code, these Articles of Amendment and Restatement restate and amend
the provisions of the Articles of Incorporation of the Corporation.
THIRD: The amendment to and restatement of the charter of the Corporation
as set forth below has been duly advised by a majority of the board of directors
and approved by the stockholders of the Corporation as required by law.
FOURTH: The current address of the principal office of the Corporation is
as set forth in Article III of the amendment and restatement of the charter.
FIFTH: The name and address of the Corporation's current resident agent is
as set forth in Article III of the amendment and restatement of the charter.
SIXTH: The number of directors of the Corporation and the names of those
currently in office are as set forth in Article V of the amendment and
restatement of the charter.
<PAGE>
SEVENTH: The text of the charter of the Corporation is hereby amended and
restated to read in its entirety as follows:
2
<PAGE>
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
NOMURA PACIFIC BASIN FUND, INC.
* * * *
ARTICLE I
NAME
The name of the Corporation is
NOMURA PACIFIC BASIN FUND, INC.
ARTICLE II
PURPOSES AND POWERS
The purpose or purposes for which the Corporation is formed and the
business or objects to be transacted, carried on and promoted by it are as
follows:
(1) To conduct and carry on the business of an investment company of
the management type.
(2) To hold, invest and reinvest its assets in securities, and in
connection therewith to hold part or all of its assets in cash.
(3) To issue and sell shares of its own capital stock in such
amounts and on such terms and conditions, for such purposes and for such amount
or kind of consideration now or hereafter permitted by the General Laws of the
State of Maryland and by these Articles of Incorporation, as its Board of
Directors may determine.
<PAGE>
(4) To redeem, purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or consent of the
stockholders of the Corporation) shares of its capital stock of any class or
series, as its Board of Directors may determine, in any manner and to the extent
now or hereafter permitted by the General Laws of the State of Maryland and by
these Articles of Incorporation.
(5) To do any and all such further acts or things and to exercise
any and all such further powers or rights as may be necessary, desirable or
appropriate for or incidental, related or conducive to the accomplishment,
carrying out or attainment of all or any of the foregoing purposes or objects.
The Corporation shall be authorized to exercise and enjoy all of the
powers, rights and privileges granted to, or conferred upon, corporations by the
General Laws of the State of Maryland now or hereafter in force, and the
enumeration of the foregoing shall not be deemed to exclude any powers, rights
or privileges so granted or conferred.
ARTICLE III
PRINCIPAL OFFICE AND RESIDENT AGENT
The post-office address of the principal office of the Corporation
in the State of Maryland is c/o The Corporation Trust Incorporated, 300 E.
Lombard Street, Baltimore, Maryland 21202. The name of the resident agent of the
Corporation in this State is The Corporation Trust Incorporated, a corporation
of this State, and the post-office address of the resident agent is 300 E.
Lombard Street, Baltimore, Maryland 21202.
2
<PAGE>
ARTICLE IV
CAPITAL STOCK
(1) The total number of shares of capital stock which the
Corporation shall have authority to issue is Two Hundred Million (200,000,000)
shares of Common Stock, of the par value of ten cents ($.10) per share, and of
the aggregate par value of Twenty Million Dollars ($20,000,000). The capital
stock initially is classified into one series, which consists of two classes of
Common Stock, as follows:
Class A Class Y
Common Stock Common Stock
------------------ -----------------
Pacific Basin Portfolio 50,000,000 shares 50,000,000 shares
The remainder of the Corporation's capital stock, One Hundred Million
(100,000,000) shares of Common Stock, is not initially classified as to any
class or series. All shares of the capital stock of the Corporation issued and
outstanding as of the date hereof shall be classified initially as Class Y
Common Stock of the Pacific Basin Portfolio.
(2) The Board of Directors may classify and reclassify any unissued
shares of capital stock, of any class or series, into one or more additional or
other classes or series as may be established from time to time by setting or
changing in any one or more respects the designations, preferences, conversion
or other rights, voting powers, restrictions, limitations as to dividends,
qualifications or terms or conditions of redemption of such shares of stock and
3
<PAGE>
pursuant to such classification or reclassification to increase or decrease the
number of authorized shares of any existing class or series.
(3) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, the holders of each class or series of capital stock shall be
entitled to dividends and distributions in such amounts and at such times as may
be determined by the Board of Directors, and the dividends and distributions
paid with respect to the various classes or series of capital stock may vary
among such classes and series. Dividends on a class or series may be declared or
paid only out of the net assets of that class or series. Expenses related to the
distribution of, and other identified expenses that should properly be allocated
to, the shares of a particular class or series of capital stock may be charged
to and borne solely by such class or series and the bearing of expenses solely
by a class or series of capital stock may be appropriately reflected (in a
manner determined by the Board of Directors) and cause differences in the net
asset value attributable to, and the dividend, redemption and liquidation rights
of, the shares of each class or series of capital stock.
(4) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, on each matter submitted to a vote of stockholders, each
holder of a share of capital stock of the Corporation shall be entitled to one
vote for each share standing in such holder's name on the books of the
Corporation, irrespective of the class or series thereof, and all shares of all
classes and series shall vote together as a single class; provided, however,
that (a) as to any matter with respect to which a separate vote of any class or
series is required by the Investment Company Act of 1940, as amended (the
"Investment Company Act"), as in effect from time to time, or any rules,
4
<PAGE>
regulations or orders issued thereunder, or by the Maryland General Corporation
Law, such requirement as to a separate vote by that class or series shall apply
in lieu of a general vote of all classes and series as described above, (b) in
the event that the separate vote requirements referred to in (a) above apply
with respect to one or more classes or series, then, subject to paragraph (c)
below, the shares of all other classes and series not entitled to a separate
class vote shall vote as a single class, and (c) as to any matter which does not
affect the interest of a particular class or series, such class or series shall
not be entitled to any vote and only the holders of shares of the affected
classes and series, if any, shall be entitled to vote.
(5) Notwithstanding any provision of the Maryland General
Corporation Law requiring a greater proportion than a majority of the votes of
all classes or series of capital stock of the Corporation (or of any class or
series entitled to vote thereon as a separate class or series) to take or
authorize any action, the Corporation is hereby authorized (subject to the
requirements of the Investment Company Act as in effect from time to time, and
any rules, regulations and orders issued thereunder) to take such action upon
the concurrence of a majority of the votes entitled to be cast by holders of
capital stock of the Corporation (or a majority of the votes entitled to be cast
by holders of a class or series entitled to vote thereon as a separate class or
series).
(6) Unless otherwise expressly provided in the charter of the
Corporation, including any Articles Supplementary creating any class or series
of capital stock, in the event of any liquidation, dissolution or winding up of
the Corporation, whether voluntary or involuntary, the holders of each class or
series of capital stock of the Corporation shall be entitled, after payment or
provision for payment of the debts and other liabilities of the Corporation, to
share ratably in the remaining net assets of the Corporation applicable to that
class or series.
5
<PAGE>
(7) Any fractional shares shall carry proportionately all the rights
of a whole share, excepting any right to receive a certificate evidencing such
fractional share, but including, without limitation, the right to vote and the
right to receive dividends.
(8) The presence in person or by proxy of the holders of shares
entitled to cast one-third of the votes entitled to be cast shall constitute a
quorum at any meeting of stockholders, except with respect to any matter which
requires approval by a separate vote of one or more classes or series of stock,
in which case the presence in person or by proxy of the holders of shares
entitled to cast one-third of the votes entitled to be cast by each class or
series entitled to vote as a separate class or series shall constitute a quorum.
(9) All persons who shall acquire stock in the Corporation, of any
class or series, shall acquire the same subject to the provisions of these
Articles of Incorporation and the By-Laws of the Corporation.
(10)(a) Each series of capital stock of the Corporation shall relate
to a separate portfolio of investments. All shares of stock in each series shall
be identical except that there may be variations among and within the different
classes comprising the series as to the purchase price, determination of net
asset value, designations, preferences, conversion or other rights, voting
powers, restrictions, special and relative rights and limitations as to
dividends and on liquidation, qualifications or terms or conditions of
redemption of such shares of stock.
(b) Subject to the power of the Board of Directors to reclassify
unissued shares of stock, each series of stock of the Corporation shall have the
following powers, preferences, conversion and other rights, voting powers,
restrictions, limitations as to dividends, and terms and conditions of
redemption:
6
<PAGE>
(i) All consideration received by the Corporation for
the issue or sale of stock of each series, together with all assets in
which such consideration is invested or reinvested, all income, earnings,
profits and proceeds received thereon, including any proceeds derived from
the sale, exchange or liquidation thereof, and any assets, funds or
payments derived from any reinvestment of such proceeds in whatever form
the same may be, shall irrevocably belong to the series of stock with
respect to which such assets, payments or funds were received by the
Corporation for all purposes, subject only to the rights of creditors, and
shall be so handled in the books of account of the Corporation. Such
assets, payments and funds, including any proceeds derived from the sale,
exchange or liquidation thereof, and any assets, funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be,
are herein referred to as "assets belonging to" such series. In the event
that there are any assets, income, earnings, profits and proceeds thereof,
funds or payments that are not readily identifiable as belonging to any
particular series, the Board of Directors of the Corporation shall
allocate them among any one or more of the series established and
designated from time to time in such manner and on such basis as the Board
of Directors, in their sole discretion, deem fair and equitable. Each
allocation by the Board of Directors shall be conclusive and binding on
the shareholders of the Corporation of all series for all purposes.
(ii) The assets belonging to each series of stock shall
be charged with the liabilities in respect to such series, and also shall
be charged with their share of the general liabilities of the Corporation,
in proportion to the relative asset values of the respective series
determined in accordance with the charter of the Corporation or in
7
<PAGE>
such other manner as may be determined by the Board of Directors in
accordance with law. The determination of the Board of Directors shall be
conclusive as to the amount of liabilities, including accrued expenses and
reserves, as to the allocation of the same to a given series, and as to
whether the same or general assets of the Corporation are allocable to one
or more series.
(11) At such times (which may vary within a class of stock) as may
be determined by the Board of Directors (or with the authorization of the Board
of Directors, by the officers of the Corporation) in accordance with the
Investment Company Act as in effect from time to time, applicable rules and
regulations thereunder and applicable rules of the National Association of
Securities Dealers, Inc. and reflected in the Corporation's pertinent
registration statement, shares of a particular class of stock of the Corporation
may be automatically converted into shares of another class of stock of the
Corporation within the same series based on the relative net asset values of
such classes at the time of conversion, subject, however, to any conditions of
conversion that may be imposed by the Board of Directors (or with the
authorization of the Board of Directors, by the officers of the Corporation) and
reflected in the Corporation's pertinent registration statement as aforesaid.
ARTICLE V
PROVISIONS FOR DEFINING, LIMITING AND
REGULATING CERTAIN POWERS OF THE
CORPORATION AND OF THE DIRECTORS
AND STOCKHOLDERS
(1) The number of directors of the Corporation shall be six (6),
which number may be increased pursuant to the By-Laws of the Corporation but
shall never be less than three
8
<PAGE>
(3). The names of the current directors who shall act until the next annual
meeting or until their successors are duly elected and qualify are:
William G. Barker, Jr.
George H. Chittenden
Haruo Sawada
Chor Weng Tan
Arthur R. Taylor
John F. Wallace
(2) The Board of Directors of the Corporation is hereby empowered to
authorize the issuance from time to time of shares of capital stock, of any
class or series, and securities convertible into shares of capital stock of the
Corporation, whether now or hereafter authorized, for such consideration as the
Board of Directors may deem advisable, subject to such limitations as may be set
forth in these Articles of Incorporation or in the By-Laws of the Corporation or
in the General Laws of the State of Maryland.
(3) No holder of stock of the Corporation shall, as such holder,
have any right to purchase or subscribe for any shares of the capital stock of
the Corporation or any other security of the Corporation which it may issue or
sell (whether out of the number of shares authorized by these Articles of
Incorporation, or out of any shares of the capital stock of the Corporation, of
any class or series, acquired by it after the issue thereof, or otherwise) other
than such right, if any, as the Board of Directors, in its discretion, may
determine.
(4) Each director and each officer of the Corporation shall be
indemnified by the Corporation to the full extent permitted by the General Laws
of the State of Maryland, subject to the requirements of the Investment Company
Act.
9
<PAGE>
(5) The Board of Directors of the Corporation may make, alter or
repeal from time to time any of the By-Laws of the Corporation except any
particular By-Law which is specified as not subject to alteration or repeal by
the Board of Directors, subject to the requirements of the Investment Company
Act.
ARTICLE VI
REDEMPTION
Each holder of shares of capital stock of the Corporation shall be
entitled to require the Corporation to redeem all or any part of the shares of
capital stock of the Corporation standing in the name of such holder on the
books of the Corporation, and all shares of capital stock issued by the
Corporation shall be subject to redemption by the Corporation, at the redemption
price of such shares as in effect from time to time as may be determined by the
Board of Directors of the Corporation in accordance with the provisions hereof,
subject to the right of the Board of Directors of the Corporation to suspend the
right of redemption of shares of capital stock of the Corporation or postpone
the date of payment of such redemption price in accordance with provisions of
applicable law. The redemption price of shares of capital stock of the
Corporation shall be the net asset value thereof as determined by the Board of
Directors of the Corporation from time to time in accordance with the provisions
of applicable law, less such redemption fee or other charge, if any, as may be
fixed by resolution of the Board of Directors of the Corporation. Payment of the
redemption price shall be made in cash by the Corporation at such time and in
such manner as may be determined from time to time by the Board of Directors of
the Corporation.
10
<PAGE>
ARTICLE VII
DETERMINATION BINDING
Any determination made in good faith, so far as accounting matters are
involved, in accordance with accepted accounting practice by or pursuant to the
direction of the Board of Directors, as to the amount of assets, obligations or
liabilities of the Corporation, as to the amount of net income of the
Corporation from dividends and interest for any period or amounts at any time
legally available for the payment of dividends, as to the amount of any reserves
or charges set up and the propriety thereof, as to the time of or purpose for
creating reserves or as to the use, alteration or cancellation of any reserves
or charges (whether or not any obligation or liability for which such reserves
or charges shall have been created, shall have been paid or discharged or shall
be then or thereafter required to be paid or discharged), as to the price of any
security owned by the Corporation or as to any other matters relating to the
issuance, sale, redemption or other acquisition or disposition of securities or
shares of capital stock of the Corporation, and any reasonable determination
made in good faith by the Board of Directors as to whether any transaction
constitutes a purchase of securities on "margin," a sale of securities "short,"
or an underwriting or the sale of, or a participation in any underwriting or
selling group in connection with the public distribution of, any securities,
shall be final and conclusive, and shall be binding upon the Corporation and all
holders of its capital stock, past, present and future, and shares of the
capital stock of the Corporation are issued and sold on the condition and
understanding, evidenced by the purchase of shares of capital stock or
acceptance of share certificates, that any and all such determinations shall be
binding as aforesaid. No provision of these Articles of Incorporation shall be
effective to (a) require a waiver of compliance with any provision of the
Securities Act of 1933, as amended, or the Investment Company Act, or of any
11
<PAGE>
valid rule, regulation or order of the Securities and Exchange Commission
thereunder or (b) protect or purport to protect any director or officer of the
Corporation against any liability to the Corporation or its security holders to
which he would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his office.
ARTICLE VIII
PERPETUAL EXISTENCE
The duration of the Corporation shall be perpetual.
ARTICLE IX
AMENDMENT
The Corporation reserves the right from time to time to make any
amendment of its Charter, now or hereafter authorized by law, including any
amendment which alters the contract rights, as expressly set forth in its
Charter, of any outstanding stock.
* * * *
EIGHTH: The foregoing amendment and restatement does not increase the
authorized stock of the Corporation.
NINTH: These Articles of Amendment and Restatement shall be effective at
the very beginning of the day on June 17, 1999.
12
<PAGE>
IN WITNESS WHEREOF, NOMURA PACIFIC BASIN FUND, INC. has caused
these presents to be signed in its name and on its behalf by its President
and attested to by its Secretary as of the 19th day of May, 1999.
ATTEST: NOMURA PACIFIC BASIN FUND, INC.
(a Maryland corporation)
By:______________________________ By:___________________________________
John J. Boretti Haruo Sawada
Secretary President
THE UNDERSIGNED, President of NOMURA PACIFIC BASIN FUND, INC., a Maryland
corporation, who executed on behalf of the Corporation the foregoing Articles of
Amendment and Restatement of which this certificate is made a part, hereby
acknowledges in the name and on behalf of the Corporation the foregoing Articles
of Amendment and Restatement to be the corporate act of the Corporation and
hereby certifies that to the best of his knowledge, information and belief the
matters and facts set forth therein with respect to the authorization and
approval thereof are true in all material respects under the penalties for
perjury.
By:___________________________________
Haruo Sawada
President
13
Exhibit 1(b)
NOMURA PACIFIC BASIN FUND, INC.
ARTICLES SUPPLEMENTARY TO ARTICLES OF INCORPORATION
CREATING ADDITIONAL CLASSES OF COMMON STOCK
NOMURA PACIFIC BASIN FUND, INC., a Maryland corporation having its
principal Maryland office c/o The Corporation Trust Incorporated, 32 South
Street, Baltimore, Maryland 21202 (hereinafter called the "Corporation"), hereby
certifies to the State Department of Assessments and Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by its charter, the Board of Directors, at a meeting duly
convened and held on May 11, 1999, has duly redesignated all of the authorized
and unissued and all of the issued and outstanding Class Y Common Stock of the
Pacific Basin Portfolio as Class Z Common Stock of the Pacific Basin Portfolio.
SECOND: Except to change the designation of the Class Y Common Stock of
the Pacific Basin Portfolio, the preferences, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications, or terms or
conditions of redemption of Class Z Common Stock of the Pacific Basin Portfolio
remain as stated in Article IV of the charter of the Corporation.
THIRD: Pursuant to authority expressly vested in the Board of Directors of
the Corporation by its charter, the Board of Directors, at a meeting duly
convened and held on May 11, 1999, has reclassified Fifty Million (50,000,000)
authorized and unissued shares of common stock of the Corporation as Class B
Common Stock of the Pacific Basin Portfolio.
FOURTH: The preferences, designations, conversion or other rights, voting
powers, restrictions, limitations as to dividends, qualifications or terms or
conditions of redemption of Class B Common Stock of the Pacific Basin Portfolio
are as follows:
The Class B Common Stock of the Pacific Basin Portfolio shall represent
the same interest in the Corporation and have identical preferences,
designations, conversion or other rights, voting powers, restrictions,
limitations as to dividends, qualifications, or terms or conditions of
redemption as the Class A Common Stock of the Pacific Basin Portfolio and Class
Z Common Stock of the Pacific Basin Portfolio as of the date of these Articles
Supplementary, except as otherwise set forth in the Corporation's charter and
further except that:
(i) Expenses related to the distribution of the Class B Common Stock of
the Pacific Basin Portfolio shall be borne solely by such class and such class
shall have exclusive voting rights with respect to matters relating to the
expenses being borne solely by such class; and
(ii) Such distribution expenses borne solely by Class B Common Stock of
the Pacific Basin Portfolio shall be appropriately reflected (in the manner
determined by the Board of Directors) in the net asset value, dividends,
distribution and liquidation rights of the shares of such class; and
<PAGE>
(iii) Approximately eight years after issuance, Class B Common Stock of
the Pacific Basin Portfolio will convert automatically into Class A Common Stock
of the Pacific Basin Portfolio in accordance with the Corporation's charter.
FIFTH: These Articles Supplementary shall be effective on June 17, 1999
immediately after the Corporation's Amended and Restated Articles of
Incorporation, which were filed on May 19, 1999, are effective.
SIXTH: The undersigned, President of NOMURA PACIFIC BASIN FUND, INC.,
acknowledges these Articles Supplementary to be the corporate act of said
Corporation and further and as to all matters or facts required to be verified
under oath, the undersigned President acknowledges that, to the best of his
knowledge, information and belief, the matters and facts are true in all
material respects, and that this statement is made under the penalties for
perjury.
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IN WITNESS WHEREOF, NOMURA PACIFIC BASIN, INC. has caused these Articles
Supplementary to be signed in its name and on its behalf by its President and
attested by its Secretary on May 19, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:__________________________________
Haruo Sawada
President
Attest:
By:__________________________
John J. Boretti
Secretary
3
Exhibit 2
BY-LAWS
OF
NOMURA PACIFIC BASIN FUND, INC.
ARTICLE I
Offices
Section 1. Principal Office. The principal office of the Corporation shall
be in the City of Baltimore, State of Maryland.
Section 2. Principal Executive Office. The principal executive office of
the Corporation shall be at 180 Maiden Lane, New York, New York 10038.
Section 3. Other Offices. The Corporation may have such other offices in
such places as the Board of Directors may from time to time determine.
ARTICLE II
Meetings of Stockholders
Section 1. Annual Meeting. The annual meeting of the stockholders of the
Corporation for the election of directors and for the transaction of such other
business as may properly be brought before the meeting shall be held on such day
in August of each year as shall be designated annually by the Board of
Directors.
Section 2. Special Meetings. Special meetings of the stockholders, unless
otherwise provided by law or by the Articles of Incorporation, may be called for
any purpose or purposes by a majority of the Board of Directors, the President,
or on the written request of the holders of at least 25% of the outstanding
capital stock of the Corporation entitled to vote at such meeting.
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Section 3. Place of Meetings. The annual meeting and any special meeting
of the stockholders shall be held at such place within the United States as the
Board of Directors may from time to time determine.
Section 4. Notice of Meetings; Waiver of Notice. Notice of the place, date
and time of the holding of each annual and special meeting of the stockholders
and the purpose or purposes of each special meeting shall be given personally or
by mail, not less than ten nor more than ninety days before the date of such
meeting, to each stockholder entitled to vote at such meeting and to each other
stockholder entitled to notice of the meeting. Notice by mail shall be deemed to
be duly given when deposited in the United States mail addressed to the
stockholder at his address as it appears on the records of the Corporation, with
postage thereon prepaid.
Notice of any meeting of stockholders shall be deemed waived by any
stockholder who shall attend such meeting in person or by proxy, or who shall,
either before or after the meeting, submit a signed waiver of notice which is
filed with the records of the meeting. When a meeting is adjourned to another
time and place, unless the Board of Directors, after the adjournment, shall fix
a new record date for an adjourned meeting, or the adjournment is for more than
one hundred and twenty days after the original record date, notice of such
adjourned meeting need not be given if the time and place to which the meeting
shall be adjourned were announced at the meeting at which the adjournment is
taken.
Section 5. Quorum. At all meetings of the stockholders, the holders of a
majority of the shares of stock of the Corporation entitled to vote at the
meeting, present in person or by proxy, shall constitute a quorum for the
transaction of any business, except as otherwise provided by statute or by the
Articles of Incorporation. In the absence of a quorum no business may be
transacted, except that the holders of a majority of the shares of stock present
in person or by
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proxy and entitled to vote may adjourn the meeting from time to time, without
notice other than announcement thereat except as otherwise required by these
By-Laws, until the holders of the requisite amount of shares of stock shall be
so present. At any such adjourned meeting at which a quorum may be present any
business may be transacted which might have been transacted at the meeting as
originally called. The absence from any meeting, in person or by proxy, of
holders of the number of shares of stock of the Corporation in excess of a
majority thereof which may be required by the laws of the State of Maryland, the
Investment Company Act of 1940, as amended, or other applicable statute, the
Articles of Incorporation, or these By-Laws, for action upon any given matter
shall not prevent action at such meeting upon any other matter or matters which
may properly come before the meeting, if there shall be present thereat, in
person or by proxy, holders of the number of shares of stock of the Corporation
required for action in respect of such other matter or matters.
Section 6. Organization. At each meeting of the stockholders, the Chairman
of the Board (if one has been designated by the Board), or in his absence or
inability to act, the President, or in the absence or inability to act of the
Chairman of the Board and the President, a Vice President, shall act as chairman
of the meeting. The Secretary, or in his absence or inability to act, any person
appointed by the chairman of the meeting, shall act as secretary of the meeting
and keep the minutes thereof.
Section 7. Order of Business. The order of business at all meetings of the
stockholders shall be as determined by the chairman of the meeting.
Section 8. Voting. Except as otherwise provided by statute or the Articles
of Incorporation, each holder of record of shares of stock of the Corporation
having voting power shall be entitled at each meeting of the stockholders to one
vote for every share of such stock
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standing in his name on the record of stockholders of the Corporation as of the
record date determined pursuant to Section 9 of this Article or if such record
date shall not have been so fixed, then at the later of (i) the close of
business on the day on which notice of the meeting is mailed or (ii) the
thirtieth day before the meeting.
Each stockholder entitled to vote at any meeting of stockholders may
authorize another person or persons to act for him by a proxy signed by such
stockholder or his attorney-in-fact. No proxy shall be valid after the
expiration of eleven months from the date thereof, unless otherwise provided in
the proxy. Every proxy shall be revocable at the pleasure of the stockholder
executing it, except in those cases where such proxy states that it is
irrevocable and where an irrevocable proxy is permitted by law. Except as
otherwise provided by statute, the Articles of Incorporation or these By-Laws,
any corporate action to be taken by vote of the stockholders shall be authorized
by a majority of the total votes cast at a meeting of stockholders by the
holders of shares present in person or represented by proxy and entitled to vote
on such action.
If a vote shall be taken on any question other than the election of
directors, which shall be by written ballot, then unless required by statute or
these By-Laws, or determined by the chairman of the meeting to be advisable, any
such vote need not be by ballot. On a vote by ballot, each ballot shall be
signed by the stockholder voting, or by his proxy, if there be such proxy, and
shall state the number of shares voted.
Section 9. Fixing of Record Date. The Board of Directors may set a record
date for the purpose of determining stockholders entitled to vote at any meeting
of the stockholders. The record date, which may not be prior to the close of
business on the day the record date is fixed, shall be not more than ninety nor
less than ten days before the date of the meeting of the
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stockholders. All persons who were holders of record of shares at such time, and
no others, shall be entitled to vote at such meeting and any adjournment
thereof.
Section 10. Inspectors. The Board may, in advance of any meeting of
stockholders, appoint one or more inspectors to act at such meeting or any
adjournment thereof. If the inspectors shall not be so appointed or if any of
them shall fail to appear or act, the chairman of the meeting may, and on the
request of any stockholder entitled to vote thereat shall, appoint inspectors.
Each inspector, before entering upon the discharge of his duties, shall take and
sign an oath to execute faithfully the duties of inspector at such meeting with
strict impartiality and according to the best of his ability. The inspectors
shall determine the number of shares outstanding and the voting power of each,
the number of shares represented at the meeting, the existence of a quorum, the
validity and effect of proxies, and shall receive votes, ballots or consents,
hear and determine all challenges and questions arising in connection with the
right to vote, count and tabulate all votes, ballots or consents, determine the
result, and do such acts as are proper to conduct the election or vote with
fairness to all stockholders. On request of the chairman of the meeting or any
stockholder entitled to vote thereat, the inspectors shall make a report in
writing of any challenge, request or matter determined by them and shall execute
a certificate of any fact found by them. No director or candidate for the office
of director shall act as inspector of an election of directors. Inspectors need
not be stockholders.
Section 11. Consent of Stockholders in Lieu of Meeting. Except as
otherwise provided by statute or the Articles of Incorporation, any action
required to be taken at any annual or special meeting of stockholders, or any
action which may be taken at any annual or special meeting of such stockholders,
may be taken without a meeting, without prior notice and without a vote, if the
following are filed with the records of stockholders meetings: (i) a unanimous
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written consent which sets forth the action and is signed by each stockholder
entitled to vote on the matter and (ii) a written waiver of any right to dissent
signed by each stockholder entitled to notice of the meeting but not entitled to
vote thereat.
ARTICLE III
Board of Directors
Section 1. General Powers. Except as otherwise provided in the Articles of
Incorporation, the business and affairs of the Corporation shall be managed
under the direction of the Board of Directors. All powers of the Corporation may
be exercised by or under authority of the Board of Directors except as conferred
on or reserved to the stockholders by law or by the Articles of Incorporation or
these By-Laws.
Section 2. Number of Directors. The number of directors shall be fixed
from time to time by resolution of the Board of Directors adopted by a majority
of the Directors then in office; provided, however, that the number of directors
shall in no event be less than three nor more than fifteen. Any vacancy created
by an increase in Directors may be filled in accordance with Section 6 of this
Article III. No reduction in the number of directors shall have the effect of
removing any director from office prior to the expiration of his term unless
such director is specifically removed pursuant to Section 5 of this Article III
at the time of such decrease. Directors need not be stockholders.
Section 3. Election and Term of Directors. Directors shall be elected
annually, by written ballot at the annual meeting of stockholders or a special
meeting held for that purpose. The term of office of each director shall be from
the time of his election and qualification until the annual election of
directors next succeeding his election and until his successor shall have been
elected and shall have qualified, or until his death, or until he shall have
resigned, or have
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been removed as hereinafter provided in these By-Laws, or as otherwise provided
by statute or the Articles of Incorporation.
Section 4. Resignation. A director of the Corporation may resign at any
time by giving written notice of his resignation to the Board or the Chairman of
the Board or the President or the Secretary. Any such resignation shall take
effect at the time specified therein or, if the time when it shall become
effective shall not be specified therein, immediately upon its receipt; and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
Section 5. Removal of Directors. Any director of the Corporation may be
removed by the stockholders by a vote of a majority of the votes entitled to be
cast for the election of directors.
Section 6. Vacancies. Subject to the provisions of the Investment Company
Act of 1940, as amended, any vacancies in the Board, whether arising from death,
resignation, removal, an increase in the number of directors or any other cause,
shall be filled by a vote of the majority of the Board of Directors then in
office even though such majority is less than a quorum, provided that no
vacancies shall be filled by action of the remaining directors, if after the
filling of said vacancy or vacancies, less than two-thirds of the directors then
holding office shall have been elected by the stockholders of the Corporation.
In the event that at any time there is a vacancy in any office of a director
which vacancy may not be filled by the remaining directors, a special meeting of
the stockholders shall be held as promptly as possible and in any event within
sixty days, for the purpose of filling said vacancy or vacancies. Any directors
elected or appointed to fill a vacancy shall hold office only until the next
annual meeting of stockholders of the
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Corporation and until a successor shall have been chosen and qualifies or until
his earlier resignation or removal.
Section 7. Place of Meetings. Meetings of the Board may be held at such
place as the Board may from time to time determine or as shall be specified in
the notice of such meeting.
Section 8. Regular Meetings. Regular meetings of the Board may be held
without notice at such time and place as may be determined by the Board of
Directors.
Section 9. Special Meetings. Special meetings of the Board may be called
by two or more directors of the Corporation or by the Chairman of the Board or
the President.
Section 10. Annual Meeting. The annual meeting of each newly elected Board
of Directors shall be held as soon as practicable after the meeting of
stockholders at which the directors were elected. No notice of such annual
meeting shall be necessary if held immediately after the adjournment, and at the
site, of the meeting of stockholders. If not so held, notice shall be given as
hereinafter provided for special meetings of the Board of Directors.
Section 11. Notice of Special Meetings. Notice of each special meeting of
the Board shall be given by the Secretary as hereinafter provided, in which
notice shall be stated the time and place of the meeting. Notice of each such
meeting shall be delivered to each director, either personally or by telephone
or any standard form of telecommunication, at least twenty-four hours before the
time at which such meeting is to be held, or by first-class mail, postage
prepaid, addressed to him at his residence or usual place of business, at least
three days before the day on which such meeting is to be held.
Section 12. Waiver of Notice of Meetings. Notice of any special meeting
need not be given to any director who shall, either before or after the meeting,
sign a written waiver of notice which is filed with the records of the meeting
or who shall attend such meeting. Except as
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otherwise specifically required by these By-Laws, a notice or waiver of notice
of any meeting need not state the purposes of such meeting.
Section 13. Quorum and Voting. One-third, but not less than two, of the
members of the entire Board shall be present in person at any meeting of the
Board in order to constitute a quorum for the transaction of business at such
meeting, and except as otherwise expressly required by statute, the Articles of
Incorporation, these By-Laws, the Investment Company Act of 1940, as amended, or
other applicable statute, the act of a majority of the directors present at any
meeting at which a quorum is present shall be the act of the Board; provided,
however, that the approval of any contract with an investment adviser or
principal underwriter, as such terms are defined in the Investment Company Act
of 1940, as amended, which the Corporation enters into or any renewal or
amendment thereof, the approval of the fidelity bond required by the Investment
Company Act of 1940, as amended, and the selection of the Corporation's
independent public accountants shall each require the affirmative vote of a
majority of the directors who are not interested persons, as defined in the
Investment Company Act of 1940, as amended, of the Corporation. In the absence
of a quorum at any meeting of the Board, a majority of the directors present
thereat may adjourn such meeting to another time and place until a quorum shall
be present thereat. Notice of the time and place of any such adjourned meeting
shall be given to the directors who were not present at the time of the
adjournment and, unless such time and place were announced at the meeting at
which the adjournment was taken, to the other directors. At any adjourned
meeting at which a quorum is present, any business may be transacted which might
have been transacted at the meeting as originally called.
Section 14. Organization. The Board may, by resolution adopted by a
majority of the entire Board, designate a Chairman of the Board, who shall
preside at each meeting of the Board.
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In the absence or inability of the Chairman of the Board to preside at a
meeting, the President, or, in his absence or inability to act, another director
chosen by a majority of the directors present, shall act as chairman of the
meeting and preside thereat. The Secretary (or, in his absence or inability to
act, any person appointed by the chairman) shall act as secretary of the meeting
and keep the minutes thereof.
Section 15. Written Consent of Directors in Lieu of a Meeting. Subject to
the provisions of the Investment Company Act of 1940, as amended, any action
required or permitted to be taken at any meeting of the Board of Directors or of
any committee thereof may be taken without a meeting if all members of the Board
or committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of the proceedings of the Board or
committee.
Section 16. Compensation. Directors may receive compensation for services
to the Corporation in their capacities as directors or otherwise in such manner
and in such amounts as may be fixed from time to time by the Board.
Section 17. Investment Policies. It shall be the duty of the Board of
Directors to ensure that the purchase, sale, retention and disposal of portfolio
securities and the other investment practices of the Corporation are at all
times consistent with the investment policies and restrictions with respect to
securities investments and otherwise of the Corporation, as recited in the
current Prospectus of the Corporation filed from time to time with the
Securities and Exchange Commission and as required by the Investment Company Act
of 1940, as amended. The Board, however, may delegate the duty of management of
the assets and the administration of its day to day operations to an individual
or corporate management company and/or investment adviser pursuant to a written
contract or contracts which have obtained the requisite
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approvals, including the requisite approvals of renewals thereof, of the Board
of Directors and/or the stockholders of the Corporation in accordance with the
provisions of the Investment Company Act of 1940, as amended.
ARTICLE IV
Committees
Section 1. Executive Committee. The Board may, by resolution adopted by a
majority of the entire board, designate an Executive Committee consisting of two
or more of the directors of the Corporation, which committee shall have and may
exercise all the powers and authority of the Board with respect to all matters
other than:
(a) the submission to stockholders of any action requiring authorization
of stockholders pursuant to statute or the Articles of Incorporation;
(b) the filling of vacancies on the Board of Directors;
(c) the fixing of compensation of the directors for serving on the Board
or on any committee of the Board, including the Executive Committee;
(d) the approval or termination of any contract with an investment adviser
or principal underwriter, as such terms are defined in the Investment Company
Act of 1940, as amended, or the taking of any other action required to be taken
by the Board of Directors by the Investment Company Act of 1940, as amended;
(e) the amendment or repeal of these By-Laws or the adoption of new
By-Laws;
(f) the amendment or repeal of any resolution of the Board which by its
terms may be amended or repealed only by the Board;
(g) the declaration of dividends and the issuance of capital stock of the
Corporation; and
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(h) the approval of any merger or share exchange which does not require
stockholder approval.
The Executive Committee shall keep written minutes of its proceedings and
shall report such minutes to the Board. All such proceedings shall be subject to
revision or alteration by the Board; provided, however, that third parties shall
not be prejudiced by such revision or alteration.
Section 2. Other Committees of the Board. The Board of Directors may from
time to time, by resolution adopted by a majority of the whole Board, designate
one or more other committees of the Board, each such committee to consist of two
or more directors and to have such powers and duties as the Board of Directors
may, by resolution, prescribe.
Section 3. General. One-third, but not less than two, of the members of
any committee shall be present in person at any meeting of such committee in
order to constitute a quorum for the transaction of business at such meeting,
and the act of a majority present shall be the act of such committee. The Board
may designate a chairman of any committee and such chairman or any two members
of any committee may fix the time and place of its meetings unless the Board
shall otherwise provide. In the absence or disqualification of any member of any
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member. The Board shall
have the power at any time to change the membership of any committee, to fill
all vacancies, to designate alternate members to replace any absent or
disqualified member, or to dissolve any such committee. Nothing herein shall be
deemed to prevent the Board from appointing one or more committees consisting in
whole or in part of persons who are not
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directors of the Corporation; provided, however, that no such committee shall
have or may exercise any authority or power of the Board in the management of
the business or affairs of the Corporation.
ARTICLE V
Officers, Agents and Employees
Section 1. Number and Qualifications. The officers of the Corporation
shall be a President, who shall be a director of the Corporation, a Secretary
and a Treasurer, each of whom shall be elected by the Board of Directors. The
Board of Directors may elect or appoint one or more Vice Presidents and may also
appoint such other officers, agents and employees as it may deem necessary or
proper. Any two or more offices may be held by the same person, except the
offices of President and Vice President, but no officer shall execute,
acknowledge or verify any instrument in more than one capacity. Such officers
shall be elected by the Board of Directors each year at its first meeting held
after the annual meeting of stockholders, each to hold office until the meeting
of the Board following the next annual meeting of the stockholders and until his
successor shall have been duly elected and shall have qualified, or until his
death, or until he shall have resigned, or have been removed, as hereinafter
provided in these By-Laws. The Board may from time to time elect, or delegate to
the President the power to appoint, such officers (including one or more
Assistant Vice Presidents, one or more Assistant Treasurers and one or more
Assistant Secretaries) and such agents, as may be necessary or desirable for the
business of the Corporation. Such other officers and agents shall have such
duties and shall hold their offices for such terms as may be prescribed by the
Board or by the appointing authority.
Section 2. Resignations. Any officer of the Corporation may resign at any
time by giving written notice of his resignation to the Board, the Chairman of
the Board, the President or
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the Secretary. Any such resignation shall take effect at the time specified
therein or, if the time when it shall become effective shall not be specified
therein, immediately upon its receipt; and, unless otherwise specified therein,
the acceptance of such resignation shall not be necessary to make it effective.
Section 3. Removal of Officer, Agent or Employee. Any officer, agent or
employee of the Corporation may be removed by the Board of Directors with or
without cause at any time, and the Board may delegate such power of removal as
to agents and employees not elected or appointed by the Board of Directors. Such
removal shall be without prejudice to such person's contract rights, if any, but
the appointment of any person as an officer, agent or employee of the
Corporation shall not of itself create contract rights.
Section 4. Vacancies. A vacancy in any office, whether arising from death,
resignation, removal or any other cause, may be filled for the unexpired portion
of the term of the office which shall be vacant, in the manner prescribed in
these By-Laws for the regular election or appointment to such office.
Section 5. Compensation. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, but this power may be
delegated to any officer in respect of other officers under his control.
Section 6. Bonds or Other Security. If required by the Board, any officer,
agent or employee of the Corporation shall give a bond or other security for the
faithful performance of his duties, in such amount and with such surety or
sureties as the Board may require.
Section 7. President. The President shall be the chief executive officer
of the Corporation. In the absence of the Chairman of the Board (or if there be
none), he shall preside at all meetings of the stockholders and of the Board of
Directors. He shall have, subject to the
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control of the Board of Directors, general charge of the business and affairs of
the Corporation. He may employ and discharge employees and agents of the
Corporation, except such as shall be appointed by the Board, and he may delegate
these powers.
Section 8. Vice President. Each Vice President shall have such powers and
perform such duties as the Board of Directors or the President may from time to
time prescribe.
Section 9. Treasurer. The Treasurer shall
(a) have charge and custody of, and be responsible for, all the funds and
securities of the Corporation, except those which the Corporation has placed in
the custody of a bank or trust company or member of a national securities
exchange (as that term is defined in the Securities Exchange Act of 1934)
pursuant to a written agreement designating such bank or trust company or member
of a national securities exchange as custodian of the property of the
Corporation;
(b) keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation;
(c) cause all moneys and other valuables to be deposited to the credit of
the Corporation;
(d) receive, and give receipts for, moneys due and payable to the
Corporation from any source whatsoever;
(e) disburse the funds of the Corporation and supervise the investment of
its funds as ordered or authorized by the Board, taking proper vouchers
therefor; and
(f) in general, perform all the duties incident to the office of Treasurer
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 10. Secretary. The Secretary shall
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(a) keep or cause to be kept in one or more books provided for the
purpose, the minutes of all meetings of the Board, the committees of the Board
and the stockholders;
(b) see that all notices are duly given in accordance with the provisions
of these By-Laws and as required by law;
(c) be custodian of the records and the seal of the Corporation and affix
and attest the seal to all stock certificates of the Corporation (unless the
seal of the Corporation on such certificates shall be a facsimile, as
hereinafter provided) and affix and attest the seal to all other documents to be
executed on behalf of the Corporation under its seal;
(d) see that the books, reports, statements, certificates and other
documents and records required by law to be kept and filed are properly kept and
filed; and
(e) in general, perform all the duties incident to the office of Secretary
and such other duties as from time to time may be assigned to him by the Board
or the President.
Section 11. Delegation of Duties. In case of the absence of any officer of
the Corporation, or for any other reason that the Board may deem sufficient, the
Board may confer for the time being the powers or duties, or any of them, of
such officer upon any other officer or upon any director.
ARTICLE VI
Indemnification
Each officer and director of the Corporation shall be indemnified by the
Corporation to the full extent permitted under the General Laws of the State of
Maryland, except that such indemnity shall not protect any such person against
any liability to the Corporation or any stockholder thereof to which such person
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office. Absent a court determination that an officer or director seeking
indemnification was not liable on the merits or guilty of willful misfeasance,
bad faith, gross negligence or reckless disregard of the duties involved in the
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conduct of his office, the decision by the Corporation to indemnify such person
must be based upon the reasonable determination of independent counsel or
non-party independent directors, after review of the facts, that such officer or
director is not guilty of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his office.
The Corporation may purchase insurance on behalf of an officer or director
protecting such person to the full extent permitted under the General Laws of
the State of Maryland, from liability arising from his activities as officer or
director of the Corporation. The Corporation, however, may not purchase
insurance on behalf of any officer or director of the Corporation that protects
or purports to protect such person from liability to the Corporation or to its
stockholders to which such officer or director would otherwise be subject by
reason of willful misfeasance, bad faith, gross negligence, or reckless
disregard of the duties involved in the conduct of his office.
The Corporation may indemnify or purchase insurance to the extent provided
in this Article VI on behalf of an employee or agent who is not an officer or
director of the Corporation.
ARTICLE VII
Capital Stock
Section 1. Stock Certificates. Each holder of stock of the Corporation
shall be entitled upon request to have a certificate or certificates, in such
form as shall be approved by the Board, representing the number of shares of
stock of the Corporation owned by him, provided, however, that certificates for
fractional shares will not be delivered in any case. The certificates
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representing shares of stock shall be signed by or in the name of the
Corporation by the President or a Vice President and by the Secretary or an
Assistant Secretary or the Treasurer or an Assistant Treasurer and sealed with
the seal of the Corporation. Any or all of the signatures or the seal on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate shall be issued, it may be issued by the Corporation with the same
effect as if such officer, transfer agent or registrar were still in office at
the date of issue.
Section 2. Books of Account and Record of Stockholders. There shall be
kept at the principal executive office of the Corporation correct and complete
books and records of account of all the business and transactions of the
Corporation. There shall be made available upon request of any stockholder, in
accordance with Maryland law, a record containing the number of shares of stock
issued during a specified period not to exceed twelve months and the
consideration received by the Corporation for each such share.
Section 3. Transfers of Shares. Transfers of shares of stock of the
Corporation shall be made on the stock records of the Corporation only by the
registered holder thereof, or by his attorney thereunto authorized by power of
attorney duly executed and filed with the Secretary or with a transfer agent or
transfer clerk, and on surrender of the certificate or certificates, if issued,
for such shares properly endorsed or accompanied by a duly executed stock
transfer power and the payment of all taxes thereon. Except as otherwise
provided by law, the Corporation shall be entitled to recognize the exclusive
right of a person in whose name any share or shares stand on the record of
stockholders as the owner of such share or shares for all purposes, including,
without limitation, the rights to receive dividends or other distributions, and
to vote as such
18.
<PAGE>
owner, and the Corporation shall not be bound to recognize any equitable or
legal claim to or interest in any such share or shares on the part of any other
person.
Section 4. Regulations. The Board may make such additional rules and
regulations, not inconsistent with these By-Laws, as it may deem expedient
concerning the issue, transfer and registration of certificates for shares of
stock of the Corporation. It may appoint, or authorize any officer or officers
to appoint, one or more transfer agents or one or more transfer clerks and one
or more registrars and may require all certificates for shares of stock to bear
the signature or signatures of any of them.
Section 5. Lost, Destroyed or Mutilated Certificates. The holder of any
certificates representing shares of stock of the Corporation shall immediately
notify the Corporation of any loss, destruction or mutilation of such
certificate, and the Corporation may issue a new certificate of stock in the
place of any certificate theretofore issued by it which the owner thereof shall
allege to have been lost or destroyed or which shall have been mutilated, and
the Board may, in its discretion, require such owner or his legal
representatives to give to the Corporation a bond in such sum, limited or
unlimited, and in such form and with such surety or sureties, as the Board in
its absolute discretion shall determine, to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate, or issuance of a new certificate. Anything
herein to the contrary notwithstanding, the Board, in its absolute discretion,
may refuse to issue any such new certificate, except pursuant to legal
proceedings under the laws of the State of Maryland.
Section 6. Fixing of a Record Date for Dividends and Distributions. The
Board may fix, in advance, a date not more than ninety days preceding the date
fixed for the payment of any dividend or the making of any distribution or the
allotment of rights to subscribe for securities of
19.
<PAGE>
the Corporation, or for the delivery of evidences of rights or evidences of
interests arising out of any change, conversion or exchange of common stock or
other securities, as the record date for the determination of the stockholders
entitled to receive any such dividend, distribution, allotment, rights or
interests, and in such case only the stockholders of record at the time so fixed
shall be entitled to receive such dividend, distribution, allotment, rights or
interests.
Section 7. Information to Stockholders and Others. Any stockholder of the
Corporation or his agent may inspect and copy during usual business hours the
Corporation's By-Laws, minutes of the proceedings of its stockholders, annual
statements of its affairs, and voting trust agreements on file at its principal
office.
ARTICLE VIII
Seal
The seal of the Corporation shall be circular in form and shall bear,
in addition to any other emblem or device approved by the Board of Directors,
the name of the Corporation, the year of its incorporation and the words
"Corporate Seal" and "Maryland". Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner
reproduced.
ARTICLE IX
Fiscal Year
Unless otherwise determined by the Board, the fiscal year of the
Corporation shall end on the 31st day of December in each year.
ARTICLE X
Depositories and Custodians
20.
<PAGE>
Section 1. Depositories. The funds of the Corporation shall be deposited
with such banks or other depositories as the Board of Directors of the
Corporation may from time to time determine.
Section 2. Custodians. All securities and other investments shall be
deposited in the safekeeping of such banks or other companies as the Board of
Directors of the Corporation may from time to time determine. Every arrangement
entered into with any bank or other company for the safekeeping of the
securities and investments of the Corporation shall contain provisions complying
with the Investment Company Act of 1940, as amended, and the general rules and
regulations thereunder.
ARTICLE XI
Execution of Instruments
Section 1. Checks, Notes, Drafts, etc. Checks, notes, drafts, acceptances,
bills of exchange and other orders or obligations for the payment of money shall
be signed by such officer or officers or person or persons as the Board of
Directors by resolution shall from time to time designate.
Section 2. Sale or Transfer of Securities. Stock certificates, bonds or
other securities at any time owned by the Corporation may be held on behalf of
the Corporation or sold, transferred or otherwise disposed of subject to any
limits imposed by these By-Laws and pursuant to authorization by the Board and,
when so authorized to be held on behalf of the Corporation or sold, transferred
or otherwise disposed of, may be transferred from the name of the Corporation by
the signature of the President or a Vice President or the Treasurer or pursuant
to any procedure approved by the Board of Directors, subject to applicable law.
21.
<PAGE>
ARTICLE XII
Independent Public Accountants
The firm of independent public accountants which shall sign or certify the
financial statements of the Corporation which are filed with the Securities and
Exchange Commission shall be selected annually by the Board of Directors and
ratified by the stockholders in accordance with the provisions of the Investment
Company Act of 1940, as amended.
ARTICLE XIII
Annual Statement
The books of account of the Corporation shall be examined by an
independent firm of public accountants at the close of each annual period of the
Corporation and at such other times as may be directed by the Board. A report to
the stockholders based upon each such examination shall be mailed to each
stockholder of the Corporation of record on such date with respect to each
report as may be determined by the Board, at his address as the same appears on
the books of the Corporation. Such annual statement shall also be available at
the annual meeting of stockholders and be placed on file at the Corporation's
principal office in the State of Maryland. Each such report shall show the
assets and liabilities of the Corporation as of the close of the annual or
quarterly period covered by the report and the securities in which the funds of
the Corporation were then invested. Such report shall also show the
Corporation's income and expenses for the period from the end of the
Corporation's preceding fiscal year to the close of the annual or quarterly
period covered by the report and any other information required by the
Investment Company Act of 1940, as amended, and shall set forth such other
matters as the Board or such firm of independent public accountants shall
determine.
22.
<PAGE>
ARTICLE XIV
Amendments
These By-Laws or any of them may be amended, altered or repealed at any
regular meeting of the stockholders or at any special meeting of the
stockholders at which a quorum is present or represented, provided that notice
of the proposed amendment, alteration or repeal be contained in the notice of
such special meeting. These By-Laws may also be amended, altered or repealed by
the affirmative vote of a majority of the Board of Directors at any regular or
special meeting of the Board of Directors, except any particular By-Law which is
specified as not subject to alteration or repeal by the Board of Directors',
subject to the requirements of the Investment Company Act of 1940, as amended.
23.
Exhibit 4(a)
MANAGEMENT AGREEMENT
AGREEMENT made this day of , by and between NOMURA
PACIFIC BASIN FUND, INC., a Maryland corporation (hereinafter referred to as the
"Corporation"), and NOMURA ASSET MANAGEMENT U.S.A. INC., a New York corporation
(hereinafter referred to as the "Manager").
WITNESSETH:
WHEREAS, the Corporation is engaged in business as an open-end, management
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Manager is engaged in the business of rendering management
and investment advisory services and is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended; and
WHEREAS, the Corporation desires to retain the Manager to render
investment advisory and management services to the Corporation in the manner and
on the terms hereinafter set forth; and
WHEREAS, the Manager is willing to provide management and investment
advisory services to the Corporation on the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
ARTICLE I
DUTIES OF THE MANAGER
The Corporation hereby retains the Manager to act as the manager for the
Corporation or, if the Corporation becomes a series investment company, for each
of the portfolios of the Corporation that executes a "Management Fee Exhibit" to
this Agreement (each a "Fund", which term refers to the Corporation if it does
not become a series investment company), and to furnish each Fund with the
management and investment advisory services described below, subject to the
policies of, review by and overall control of the Board of Directors of the
Corporation, for the period and on the terms and conditions set forth in this
Agreement. The Manager hereby accepts such employment and agrees during such
period, at its own expense, to render, to arrange for the rendering of, such
services and to assume the obligations herein set forth for the compensation
provided for herein.
(a) Management and Administrative Services. The Manager shall perform, or
supervise the performance of, the management and administrative services
necessary for the operation of each Fund, including administering shareholder
accounts and handling shareholder relations. The Manager shall provide each Fund
with office space, equipment and facilities and such other services as the
Manager, subject to review by the Board of Directors of the
<PAGE>
Corporation, shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement. The Manager shall also, on behalf
of each Fund, conduct relations with custodians, depositories, transfer agents,
dividend disbursing agents, other shareholder servicing agents, accountants,
attorneys, underwriters, brokers and dealers, corporate fiduciaries, insurers,
banks and such other persons in any such other capacity deemed to be necessary
or desirable. The Manager shall monitor each Fund's compliance with investment
policies and restrictions as set forth in the currently effective prospectus and
statement of additional information relating to the shares of such Fund under
the Securities Act of 1933, as amended (the "Prospectus" and "Statement of
Additional Information," respectively). The Manager shall make reports to the
Board of Directors of the Corporation of the performance of obligations
hereunder with respect to each Fund and furnish advice and recommendations with
respect to such other aspects of the business and affairs of the Funds as it
shall determine to be desirable. The Manager, and its affiliates, shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Corporation in any way or otherwise be deemed an agent of the
Corporation or any Fund.
(b) Investment Advisory Services. The Manager shall provide each Fund
with such investment research, advice and supervision as the latter may from
time to time consider necessary for the proper supervision of the assets of such
Fund. The Manager shall act as investment adviser to each Fund and as such shall
furnish continuously an investment program for such Fund and shall determine
from time to time which securities shall be purchased, sold or exchanged and
what portion of the assets of such Fund shall be held in the various securities
in which such Fund invests, options, futures, options on futures or in cash,
subject always to the restrictions of the Articles of Incorporation and By-Laws
of the Corporation, as amended from time to time, the provisions of the
Investment Company Act and the statements relating to the respective Fund's
investment objective, investment policies and investment restrictions as the
same are set forth in such Fund's Prospectus and Statement of Additional
Information. The Manager shall make decisions for each Fund as to foreign
currency matters and make determinations as to foreign exchange contracts. The
Manager shall make recommendations as to the manner in which voting rights,
rights to consent to corporate action and any other rights pertaining to each
Fund's portfolio securities shall be exercised. Should the Board of Directors of
the Corporation at any time, however, make any definite determination as to
investment policy and notify the Manager thereof in writing, the Manager shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked. The
Manager shall take, on behalf of the applicable Fund, all actions which it deems
necessary to implement the investment policies determined as provided above, and
in particular to place all orders for the purchase or sale of portfolio
securities for such Fund's account with brokers or dealers selected by it, and
to that end, the Manager is authorized as the agent of such Fund to give
instructions to the Custodian of such Fund as to deliveries of securities and
payments of cash for the account of such Fund. In connection with the selection
of such brokers or dealers and the placing of such orders, the Manager is
directed at all times to seek to obtain executions and price within the policy
guidelines determined by the Board of Directors of the Corporation and set forth
in the applicable Fund's Prospectus and Statement of Additional Information.
Subject to this requirement and the provisions of the Investment Company Act,
the Securities Exchange Act of 1934, as amended, and other applicable provisions
<PAGE>
of law, the Manager may select brokers or dealers with which it, or the
Corporation or any Fund, is affiliated.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Manager. The Manager assumes and shall pay for maintaining the staff
and personnel necessary to perform its obligations under this Agreement and
shall, at its own expense, provide the office space, equipment and facilities
which it is obligated to provide under Article I hereof, and shall pay all
compensation of officers of the Corporation and all directors of the Corporation
who are "affiliated persons" (as defined in the Investment Company Act) of the
Manager.
The Corporation and the Funds. Each Fund assumes and shall pay or cause to
be paid all expenses attributable to or incurred by such Fund (except for the
expenses incurred by the Distributor), as well as its allocable share of the
Corporation's expenses, including, without limitation: taxes, expenses for legal
and auditing services, costs of printing proxies, stock certificates,
shareholder reports, prospectuses and statements of additional information,
charges of the Custodian, any sub-Custodian and Transfer and Dividend Disbursing
Agent, expenses of redemption of such Fund's shares, Securities and Exchange
Commission fees, expenses of registering such Fund's shares under federal, state
and foreign laws, fees and actual out-of-pocket expenses of directors who are
not affiliated persons of the Manager, accounting and pricing costs (including
the daily calculation of the net asset value), insurance, interest, brokerage
costs, litigation and other extraordinary or non-recurring expenses, and other
like expenses properly payable by such Fund. The Distributor pays certain of the
expenses of each Fund incurred in connection with the continuous offering of
such Fund's shares.
ARTICLE III
COMPENSATION OF THE MANAGER
For the services rendered, the equipment and facilities furnished and
expenses assumed by the Manager, each Fund shall pay to the Manager the fees set
forth in such Fund's Management Fee Exhibit hereto. If this Agreement becomes
effective subsequent to the first day of a month or shall terminate before the
last day of a month, compensation for that part of the month for which this
Agreement is in effect shall be prorated in a manner consistent with the
calculation of the fee as set forth in the applicable Fund's Management Fee
Exhibit. During any period when the determination of net asset value is
suspended by the Board of Directors of the Corporation, the net asset value of a
share of any Fund as of the last business day prior to such suspension shall for
this purpose be deemed to be the net asset value at the close of each succeeding
business day until it is again determined.
ARTICLE IV
INVESTMENT ADVISORY AGREEMENTS
The Manager may enter into Investment Advisory Agreements with Nomura
Asset Management Co., Ltd. and/or Nomura Asset Management Singapore Ltd.
(together, the "Investment Advisers") in the forms attached hereto as Exhibits A
and B, respectively, in which
<PAGE>
the Manager may contract for advisory services and pay the Investment Advisers
compensation for their services out of the compensation received hereunder
pursuant to Article III. Such Investment Advisory Agreements will be coterminous
with this Management Agreement.
ARTICLE V
LIMITATION OF LIABILITY OF THE MANAGER
The Manager shall not be liable for any error of judgment or mistake of
law or for any loss arising out of any investment or for any act or omission in
the execution and management of the Corporation or any Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder. As used
in this Article V, the term "Manager" shall include any affiliates of the
Manager performing services for the Corporation or any Fund contemplated hereby
and directors, officers and employees of the Manager as well as that corporation
itself.
ARTICLE VI
ACTIVITIES OF THE MANAGER
The services of the Manager to the Corporation are not to be deemed to be
exclusive, the Manager and any person controlled by or under common control with
the Manager (for purposes of this Article VI referred to as "affiliates") being
free to render services to others. It is understood that directors, officers,
employees and shareholders of the Corporation are or may become interested in
the Manager and its affiliates, as directors, officers, employees, partners, and
shareholders or otherwise and that directors, officers, employees, partners, and
shareholders of the Manager, and its affiliates are or may become similarly
interested in the Corporation, and that the Manager is or may become interested
in the Corporation as shareholder or otherwise.
ARTICLE VII
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective and binding on the parties hereto
upon execution of the attached exhibits. This Agreement shall remain in force
with respect to each Fund named in a Management Fee Exhibit attached hereto, for
a period of two years from the date of first execution of such Management Fee
Exhibit and thereafter, but only so long as such continuance is specifically
approved at least annually by (i) the Board of Directors of the Corporation, or
by the vote of a majority of the outstanding voting securities of the
Corporation, and (ii) a majority of those directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Board of Directors of the Corporation or by vote of a majority
of the outstanding voting securities of the Corporation, or by the Manager, on
sixty days' written notice to the other party. This Agreement shall
automatically terminate in the event of its assignment.
<PAGE>
ARTICLE VIII
AMENDMENTS OF THE AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) a majority of those directors who are not parties
to this Agreement or interested persons of any such party cast in person at a
meeting called for the purpose of voting on such approval; (ii) the vote of a
majority of outstanding voting securities of the Corporation; and (iii) with
respect to amendments affecting an individual Fund, by the vote of majority of
outstanding voting securities of such Fund.
ARTICLE IX
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act and the rules and regulations thereunder, subject, however, to such
exemptions as may be granted by the Securities and Exchange Commission under
said Act.
ARTICLE X
GOVERNING LAW
This Agreement shall be construed in accordance with the laws of the State
of New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
NOMURA PACIFIC BASIN FUND, INC.
By________________________________________
NOMURA ASSET MANAGEMENT U.S.A. INC.
By________________________________________
<PAGE>
MANAGEMENT FEE EXHIBIT
WITH RESPECT TO
PACIFIC BASIN PORTFOLIO
The following provisions are hereby incorporated and made part of the
Management Agreement dated (the "Management Agreement") between
Nomura Pacific Basin Fund, Inc. (the "Corporation") and Nomura Asset Management
U.S.A. Inc. (the "Manager") with respect to the Pacific Basin Portfolio series
of the Corporation (the "Fund").
For all services rendered by the Manager hereunder, the Fund shall pay to
the Manager and the Manager agrees to accept as full compensation for all
services rendered hereunder, at the end of each calendar month a fee based upon
the average daily value of the net assets of the Fund, as determined and
computed in accordance with the description of the determination of net asset
value contained in the Fund's Prospectus and Statement of Additional
Information, at the annual rate of .75 of 1% (.75%) of the average daily net
assets of the Fund, commencing on the day following effectiveness hereof.
In consideration of the mutual covenants set forth in the Management
Agreement, the Corporation executes and delivers this Management Fee Exhibit on
behalf of the Fund.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Management Fee Exhibit as of the date first above written.
NOMURA PACIFIC BASIN FUND, INC.
By________________________________________
NOMURA ASSET MANAGEMENT U.S.A. INC.
By________________________________________
Exhibit 4(b)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , by and between NOMURA
ASSET MANAGEMENT U.S.A. INC., a New York corporation (hereinafter referred to as
the "Manager"), and NOMURA ASSET MANAGEMENT CO., LTD., a Japanese corporation
(hereinafter referred to as the "Investment Adviser").
WITNESSETH:
WHEREAS, the Pacific Basin Portfolio (the "Fund") of Nomura Pacific Basin
Fund, Inc. (the "Corporation") is engaged in business as a diversified open-end
investment company registered under the Investment Company Act of 1940, as
amended (hereinafter referred to as the "Investment Company Act"); and
WHEREAS, the Manager and the Investment Adviser are engaged in business as
registered investment advisers under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Manager has entered into a Management Agreement with the
Corporation with respect to the Fund of even date herewith (the "Management
Agreement"); and
WHEREAS, the Manager desires to retain the Investment Adviser to render
investment advisory services to the Manager in connection with the Fund's
operations in the manner and on the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide investment advisory
services to the Manager in connection with the Fund's operations on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
ARTICLE I
DUTIES OF THE INVESTMENT ADVISER
Subject to the broad supervision of the Manager and the Corporation, the
Investment Adviser shall provide the Manager with advice as to allocation of the
Fund's assets among various Pacific Basin markets in which the Fund may invest.
The Investment Adviser will also provide economic research and securities
analysis relating to issuers of securities domiciled or based in Japan and other
Pacific Basin jurisdictions, other than Singapore, as the Manager may request.
The Investment Adviser shall continuously review the Fund's holdings of such
securities and shall make recommendations as to which such securities shall be
purchased, sold or exchanged, and what portion of the assets of the Fund shall
be held in the various securities in which the Fund invests, subject always to
the restrictions of the Articles of Incorporation and By-Laws of the
Corporation, as amended from time to time, the provisions of the Investment
Company Act and the statements relating to the Fund's investment objective,
investment policies and investment restrictions as the same are set forth in the
Fund's currently effective prospectus
<PAGE>
and statement of additional information relating to the shares of the Fund under
the Securities Act of 1933, as amended (the "Prospectus" and "Statement of
Additional Information", respectively). The Investment Adviser shall make
recommendations as to foreign currency matters and the advisability of entering
into foreign exchange contracts. The Investment Adviser shall also make
recommendations as to the manner in which voting rights, rights to consent to
corporate action and any other rights pertaining to the Fund's securities shall
be exercised.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Investment Adviser shall furnish, at its own expense, all
administrative services, office space, equipment and facilities, investment
advisory, statistical and research services, and executive, supervisory and
clerical personnel necessary to carry out its obligations under this Agreement.
ARTICLE III
COMPENSATION OF THE INVESTMENT ADVISER
For the services to be rendered as provided herein, the Manager shall pay
to the Investment Adviser at the end of each calendar month a fee based upon the
average daily value of the net assets of the Fund, as determined and computed in
accordance with the description of the determination of net asset value
contained in the Prospectus and Statement of Additional Information, at the
annual rate of .26125 of 1% (.26125%) of the average daily net assets of the
Fund, less the Investment Adviser's pro rata portion of amounts paid by the
Manager in connection with distribution or shareholder servicing for the Fund,
commencing on the day following effectiveness hereof. For this purpose, the
Investment Adviser's pro rata portion of the amount paid by the Manager in
connection with distribution or shareholder servicing shall be determined based
on the relationship of the fee payable to the Investment Adviser by the Manager
under this Article III to the management fee payable by the Fund to the Manager
under the Management Agreement. During any period when the determination of net
asset value is suspended by the Board of Directors of the Corporation, the net
asset value of a share as of the last business day prior to such suspension
shall for this purpose be deemed to be the net asset value at the close of each
succeeding business day until it is again determined. If the Investment Adviser
shall serve for less than the whole of any period specified in this Article III,
the compensation to the Investment Adviser shall be prorated.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER
The Investment Adviser shall not be liable for any error of judgment or
mistake of law or for any loss arising out of any investment or for any act or
omission in the execution and management of the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder. As used
in this Article IV, the term "Investment Adviser" shall include any affiliates
of the Investment Adviser performing services for the Fund contemplated hereby
and directors, officers, partners and employees of the Investment Adviser and
such affiliates.
<PAGE>
ARTICLE V
ACTIVITIES OF THE INVESTMENT ADVISER
The services of the Investment Adviser to the Fund are not to be deemed to
be exclusive, the Investment Adviser and any person controlled by or under
common control with the Investment Adviser (for purpose of this Article V
referred to as "affiliates") being free to render services to others. It is
understood that directors, officers, employees and shareholders of the Manager
are or may become interested in the Investment Adviser and its affiliates, as
directors, officers, employees, partners and shareholders or otherwise and that
directors, officers, employees, partners and shareholders of the Investment
Adviser and its affiliates are or may become similarly interested in the Manager
or the Fund, and that the Investment Adviser is or may become interested in the
Manager, the Corporation or the Fund as shareholder or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THE AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until , and thereafter, but only so long as the
Management Agreement remains in force and provided that such continuance is
specifically approved at least annually by (i) the Board of Directors of the
Corporation or by the vote of a majority of the outstanding voting securities of
the Fund, and (ii) a majority of those directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Manager or by vote of a majority of the outstanding voting
securities of the Fund or by the Investment Adviser, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE IX
GOVERNING LAW
<PAGE>
This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
NOMURA ASSET MANAGEMENT U.S.A. INC.
By________________________________________
NOMURA ASSET MANAGEMENT CO., LTD.
By________________________________________
Exhibit 4(c)
INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this day of , by and between NOMURA
ASSET MANAGEMENT U.S.A. INC., a New York corporation (hereinafter referred to as
the "Manager), and NOMURA ASSET MANAGEMENT SINGAPORE LTD., a Singapore
corporation (hereinafter referred to as the "Investment Adviser").
WITNESSETH:
WHEREAS, the Pacific Basin Portfolio (the "Fund") of Nomura Pacific Basin
Fund, Inc. (the "Corporation") is engaged in business as a diversified,
open-end, management investment company registered under the Investment Company
Act of 1940, as amended (hereinafter referred to as the "Investment Company
Act"); and
WHEREAS, the Manager and the Investment Adviser are engaged in business as
registered investment advisers under the Investment Advisers Act of 1940, as
amended; and
WHEREAS, the Manager has entered into a Management Agreement with the
Corporation with respect to the Fund of even date herewith (the "Management
Agreement"); and
WHEREAS, the Manager desires to retain the Investment Adviser to render
investment advisory services to the Manager in connection with the Fund's
operations in the manner and on the terms hereinafter set forth; and
WHEREAS, the Investment Adviser is willing to provide investment advisory
services to the Manager in connection with the Fund's operations on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
ARTICLE I
DUTIES OF THE INVESTMENT ADVISER
Subject to the broad supervision of the Manager and the Corporation, the
Investment Adviser shall provide the Manager with such economic research and
securities analysis relating to investments in Singapore and other Pacific Basin
countries, other than Japan, as the Manager may request. The Investment Adviser
shall continuously review the Fund's holdings of securities of issuers domiciled
or based in Pacific Basin countries other than Japan, as the Manager may
request, and shall make recommendations as to which such securities shall be
purchased, sold or exchanged and what portion of the assets of the Fund shall be
held in the various securities in which the Fund invests, subject always to the
restrictions of the Articles of Incorporation and By-Laws of the Corporation, as
amended from time to time, the provisions of the Investment Company Act and the
statements relating to the Fund's investment objective, investment policies and
investment restrictions as the same are set forth in the Fund's currently
effective prospectus and statement of additional information relating to the
shares of the Fund under the Securities
<PAGE>
Act of 1933, as amended (the "Prospectus" and "Statement of Additional
Information", respectively). The Investment Adviser shall make recommendations
as to foreign currency matters and the advisability of entering into foreign
exchange contracts. The Investment Adviser shall also make recommendations as to
the manner in which voting rights, rights to consent to corporate action and any
other rights pertaining to the Fund's investments in Pacific Basin countries
other than Japan shall be exercised.
ARTICLE II
ALLOCATION OF CHARGES AND EXPENSES
The Investment Adviser shall furnish, at its own expense, all
administrative services, office space, equipment and facilities, investment
advisory, statistical and research services, and executive, supervisory and
clerical personnel necessary to carry out its obligations under this Agreement.
ARTICLE III
COMPENSATION OF THE INVESTMENT ADVISER
For the services to be rendered as provided herein, the Manager shall pay
to the Investment Adviser at the end of each calendar month a fee based upon the
average daily value of the net assets of the Fund, as determined and computed in
accordance with the description of the determination of net asset value
contained in the Prospectus and Statement of Additional Information, at the
annual rate of .0275 of 1% (.0275%) of the average daily net assets of the Fund,
less the Investment Adviser's pro rata portion of amounts paid by the Manager in
connection with distribution or shareholder servicing for the Fund, commencing
on the day following effectiveness hereof. For this purpose, the Investment
Adviser's pro rata portion of the amount paid by the Manager in connection with
distribution or shareholder servicing shall be determined based on the
relationship of the fee payable to the Investment Adviser by the Manager under
this Article III to the management fee payable by the Fund to the Manager under
the Management Agreement. During any period when the determination of net asset
value is suspended by the Board of Directors of the Corporation, the net asset
value of a share as of the last business day prior to such suspension shall for
this purpose be deemed to be the net asset value at the close of each succeeding
business day until it is again determined. If the Investment Adviser shall serve
for less than the whole of any period specified in this Article III, the
compensation to the Investment Adviser shall be prorated.
ARTICLE IV
LIMITATION OF LIABILITY OF THE INVESTMENT ADVISER
The Investment Adviser shall not be liable for any error of judgement or
mistake of law or for any loss arising out of any investment or for any act or
omission in the execution and management of the Fund, except for willful
misfeasance, bad faith or gross negligence in the performance of its duties, or
by reason of reckless disregard of its obligations and duties hereunder. As used
in this Article IV, the term "Investment Adviser" shall include any affiliates
of the Investment Adviser performing services for the Fund contemplated hereby
and directors, officers, partners and employees of the Investment Adviser and
such affiliates.
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ARTICLE V
ACTIVITIES OF THE INVESTMENT ADVISER
The services of the Investment Adviser to the Fund are not to be deemed to
be exclusive, the Investment Adviser and any person controlled by or under
common control with the Investment Adviser (for purpose of this Article V
referred to as "affiliates") being free to render services to others. It is
understood that directors, officers, employees and shareholders of the Manager
are or may become interested in the Investment Adviser and its affiliates, as
directors, officers, employees, partners and shareholders or otherwise and that
directors, officers, employees, partners and shareholders of the Investment
Adviser and its affiliates are or may become similarly interested in the Manager
or the Fund, and that the Investment Adviser is or may become interested in the
Manager, the Corporation or the Fund as shareholder or otherwise.
ARTICLE VI
DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date first above written
and shall remain in force until and thereafter, but only so long as the
Management Agreement remains in force and provided that such continuance is
specifically approved at least annually by (i) the Board of Directors of the
Corporation or by the vote of a majority of the outstanding voting securities of
the Fund and (ii) a majority of those directors who are not parties to this
Agreement or interested persons of any such party cast in person at a meeting
called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Manager or by vote of a majority of the outstanding voting
securities of the Fund or by the Investment Adviser, on sixty days' written
notice to the other party. This Agreement shall automatically terminate in the
event of its assignment.
ARTICLE VII
AMENDMENTS OF THIS AGREEMENT
This Agreement may be amended by the parties only if such amendment is
specifically approved by (i) the vote of a majority of outstanding voting
securities of the Fund, and (ii) a majority of those directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
ARTICLE VIII
DEFINITIONS OF CERTAIN TERMS
The terms "vote of a majority of the outstanding voting securities,"
"assignment," "affiliated person" and "interested person," when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act of 1940 and the Rules and Regulations thereunder, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act.
ARTICLE IX
GOVERNING LAW
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This Agreement shall be construed in accordance with laws of the State of
New York and the applicable provisions of the Investment Company Act. To the
extent that the applicable laws of the State of New York or any of the
provisions herein conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the date first above written.
NOMURA ASSET MANAGEMENT U.S.A. INC.
By________________________________________
NOMURA ASSET MANAGEMENT SINGAPORE LTD.
By________________________________________
Exhibit 5
NOMURA PACIFIC BASIN FUND, INC.
DISTRIBUTION AGREEMENT
AGREEMENT made as of the __day of __________, 1999 between NOMURA PACIFIC
BASIN FUND, INC., a Maryland corporation (the "Corporation"), and NOMURA
SECURITIES INTERNATIONAL, INC., a New York corporation (the "Distributor").
W I T N E S S E T H:
WHEREAS, the Corporation is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end investment
company, and it is affirmatively in the interest of the Corporation to offer its
shares for sale continuously; and
WHEREAS, the Distributor is a securities firm engaged in the business of
selling shares of investment companies either directly to purchasers or through
other securities dealers; and
WHEREAS, the Corporation and the Distributor wish to enter into an
agreement with each other with respect to the continuous offering of the shares
of common stock of the Corporation which may be offered in one or more series
(each a "Fund") consisting of one or more classes (the "Classes") of shares (the
"Shares").
NOW, THEREFORE, the parties agree as follows:
Section 1. Appointment of the Distributor. The Corporation hereby appoints
the Distributor as its agent to offer to the public Shares of the Corporation,
as described and set forth in one or more exhibits to this Agreement.
Section 2. Offering of Shares of the Corporation.
a. The Corporation will commence an offering of its Shares, and thereafter
the Distributor shall offer those Shares of the Corporation necessary to fill
unconditional orders for such Shares placed with the Distributor by eligible
investors or securities dealers. Investors eligible to purchase Shares shall be
those persons so identified in the currently effective prospectus and statement
of additional information of each Fund (the "prospectus" and "statement of
additional information," respectively) under the Securities Act of 1933, as
amended (the "Securities Act"), relating to such Shares.
b. The Shares are to be offered by the Distributor to investors at the
public offering price, as set forth in Section 2(c) hereof, and by securities
dealers having agreements with the Distributor (the "selected dealers") upon the
terms and conditions set forth in Section 6 hereof.
c. The public offering price(s) of the Shares, i.e., the price per Share
at which the Distributor or selected dealers may offer Shares to the public,
shall be the public offering price as set forth in the prospectus and statement
of additional information relating to such Shares, but not to exceed the net
asset value, plus any sales charge which may be approved by the Board of
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Directors of Corporation and set forth in the prospectus. Shares may be sold to
certain Directors, officers and employees of the Corporation and its affiliates,
and to certain other persons described in the prospectus and statement of
additional information, without a sales charge or at a reduced sales charge,
upon terms and conditions set forth in the prospectus and statement of
additional information relating to such Shares. If the public offering price
does not equal an even cent, the public offering price may be adjusted to the
nearest cent. All payments to the Corporation hereunder shall be made in the
manner set forth in Section 2(f).
d. The net asset value of Shares shall be determined by the Corporation or
any agent of the Corporation in accordance with the method set forth in the
prospectus and statement of additional information of the Corporation and
guidelines established by the Directors.
e. The Corporation shall have the right to suspend the sale of its Shares
at times when redemption is suspended pursuant to the conditions set forth in
Section 3(b) hereof. The Corporation shall also have the right to suspend the
sale of its Shares if trading on the New York Stock Exchange shall have been
suspended, if a banking moratorium shall have been declared by Federal or New
York authorities, or if there shall have been some other event, which, in the
judgment of the Corporation, makes it impracticable or inadvisable to sell the
Shares.
f. The Corporation, or any agent of the Corporation designated in writing
by the Corporation, shall be promptly advised of all purchase orders for Shares
received by the Distributor. Any order may be rejected by the Corporation;
provided, however, that the Corporation will not arbitrarily or without
reasonable cause refuse to accept or confirm orders for the purchase of Shares.
The Corporation (or its agent) will confirm orders upon their receipt, will make
appropriate book entries and, upon receipt by the Corporation (or its agent) of
payment therefor, will deliver deposit receipts or certificates for such Shares
pursuant to the instructions of the Distributor. Payment shall be made to the
Corporation in New York Clearing House funds. The Distributor agrees to use its
commercially reasonable best efforts to cause such payment and such instructions
to be delivered promptly to the Corporation (or its agent). In the event that
payment is not received after an order is accepted and Shares have been issued,
and payment has not been received from the selected dealer that placed the
order, the Distributor agrees that it will be responsible for any resulting loss
suffered by the Corporation. Unless the Distributor and the Corporation agree
otherwise in writing, no securities dealer may serve as a selected dealer for
the Corporation unless such dealer is a member in good standing of the National
Securities Clearing Corporation (the "NSCC").
Section 3. Repurchase or Redemption of Shares by the Corporation.
a. Any of the outstanding Shares may be tendered for redemption at any
time, and the Corporation agrees to repurchase or redeem the Shares so tendered
in accordance with its obligations as set forth in its Articles of
Incorporation, as amended from time to time, and in accordance with the
applicable provisions set forth in the prospectus and statement of additional
information. The price to be paid to redeem or repurchase the Shares shall be
equal to the net asset value calculated in accordance with the provisions of
Section 3(e) hereof, less any contingent deferred sales charge ("CDSC"),
redemption fee or other charge(s), if any, set forth in the prospectus and
statement of additional information relating to such Shares. All payments by the
Corporation hereunder shall be made in the manner set forth below. The
redemption or
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repurchase by the Corporation of any of the Shares purchased through the
Distributor will not affect the sales charge secured by the Distributor or any
selected dealer in the course of the original sale except that, consistent with
the requirements of Section 2830(h) of the Conduct Rules of the National
Association of Securities Dealers, Inc. (the "NASD"), if (i) any Shares sold by
the Distributor are tendered for redemption or repurchase within seven business
days after the date of the confirmation of the original purchase, or (ii) the
Distributor is notified that shares sold by a selected dealer have been tendered
for redemption or repurchased within seven business days after the date of the
confirmation of the original purchase, the Distributor shall forthwith refund to
the applicable Fund the Distributor's share of the sales charges on the original
sale plus the full concession, if any, allowed to the selected dealer on the
original sale and refunded to the Distributor.
The Corporation shall pay the total amount of the redemption price as
defined in the above paragraph in New York Clearing House funds on or before the
seventh business day subsequent to its having received the notice of redemption
in proper form. The proceeds of any redemption of shares shall be paid by the
Corporation as follows: (i) any applicable CDSC shall be paid to the
Distributor, and (ii) the balance shall be paid to or for the account of the
shareholder, in each case in accordance with the applicable provisions of the
prospectus and statement of additional information.
b. Redemption of Shares or payment may be suspended at times when the New
York Stock Exchange is closed, when trading on said Exchange is suspended, when
trading on said Exchange is restricted, when an emergency exists as a result of
which disposal by the Corporation of securities owned by it is not reasonably
practicable or it is not reasonably practicable for the Corporation fairly to
determine the value of its net assets, or during any other period when the
Securities and Exchange Commission, by order, so permits.
Section 4. Duties of the Corporation.
a. The Corporation shall furnish to the Distributor copies of all
information, financial statements and other papers which the Distributor may
reasonably request for use in connection with the distribution of Shares of the
Corporation, and this information shall include, upon request by the
Distributor, one certified copy of all financial statements prepared for the
Corporation by independent public accountants. The Corporation shall make
available to the Distributor such number of copies of the prospectus and
statement of additional information as the Distributor shall reasonably request.
b. The Corporation shall take, from time to time, but subject to any
necessary approval of the shareholders, all necessary action to fix the number
of authorized Shares and such steps as may be necessary to register the same
under the Securities Act, to the end that there will be available for sale such
number of Shares as reasonably may be expected to be offered through the
Distributor.
c. The Corporation shall use its best efforts to qualify and maintain the
qualification of an appropriate number of its Shares for sale under the
securities laws of such states as the Distributor and the Corporation may
approve. Any such qualification may be withheld, terminated or withdrawn by the
Corporation at any time in its discretion. As provided in Section
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8(c) hereof, the expense of qualification and maintenance of qualification shall
be borne by the Corporation. The Distributor shall furnish such information and
other material relating to its affairs and activities as may be required by the
Corporation in connection with such qualification.
d. The Corporation will furnish, in reasonable quantities upon request by
the Distributor, copies of annual and interim reports of the Corporation.
Section 5. Duties of the Distributor.
a. The services of the Distributor to the Corporation hereunder are not to
be deemed exclusive, and nothing herein contained shall prevent the Distributor
from entering into like arrangements with other investment companies so long as
the performance of its obligations hereunder is not impaired thereby. It is
understood and agreed that the Distributor shall act as agent of the Corporation
under this Agreement, and that the Distributor is in no way responsible for the
Corporation's conduct or for any of its acts or omissions in connection
therewith.
b. Neither the Distributor nor any selected dealer, as defined in Section
6 hereof, nor any other person is authorized by the Corporation to give any
information or to make any representations, other than those contained in the
registration statement or related prospectus and statement of additional
information and any sales literature specifically approved by the Corporation
(including, without limitation, information provided by the Corporation under
Section 4(a) of this Agreement).
c. The Distributor shall adopt and follow procedures for the confirmation
of sales to investors and selected dealers, the collection of amounts payable by
investors and selected dealers on such sales, and the cancellation of unsettled
transactions, as may be necessary to comply with the requirements of the NASD,
as such requirements may from time to time exist.
Section 6. Selected Dealer Agreements. The Distributor shall have the
right to enter into dealer agreements with selected dealers of its choice
(providing that they are members in good standing of the NSCC) for the sale of
Shares and fix therein the portion of the sales charge which may be allocated to
the selected dealers; provided that the Corporation shall approve the forms of
agreements with selected dealers and the dealer compensation set forth therein.
The form of agreement with selected dealers to be used in the continuous
offering of the Shares is attached hereto as Exhibit A.
Section 7. Payment of Expenses.
a. The Corporation shall bear all costs and expenses of the Corporation,
including fees and disbursements of its counsel and auditors, in connection with
the preparation and filing of any required registration statements and/or
prospectuses and statements of additional information under the Investment
Company Act, the Securities Act, and all amendments and supplements thereto, and
preparing and mailing annual and interim reports and proxy materials to
shareholders (including, but not limited to, the expense of setting in type any
such registration statements, prospectuses, statements of additional
information, annual or interim reports or proxy materials).
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b. The Distributor shall be responsible for any payments made to selected
dealers as reimbursement for their expenses associated with payments of sales
commissions to financial consultants. In addition, after the prospectuses,
statements of additional information and annual and interim reports have been
prepared and set in type, the Distributor shall bear the costs and expenses of
printing and distributing any copies thereof which are to be used in connection
with the offering of Shares to selected dealers or investors pursuant to this
Agreement. The Distributor shall bear the costs and expenses of preparing,
printing and distributing any other literature used by the Distributor or
furnished by it for use by selected dealers in connection with the offering of
the Shares to the public and any expenses of advertising incurred by the
Distributor in connection with such offering. It is understood and agreed that
so long as a Distribution Plan pursuant to Rule 12b-1 under the Investment
Company Act relating to a Class of Shares remains in effect, any expenses
incurred by the Distributor hereunder in connection with account maintenance
activities relating to such Shares may be paid from amounts recovered by the
Distributor from the Corporation under such plan.
c. The Corporation shall bear the cost and expenses of qualification of
the Shares for sale pursuant to this Agreement and, if necessary or advisable in
connection therewith, of qualifying the Corporation as a broker or dealer in
such states of the United States or other jurisdictions as shall be selected by
the Corporation and the Distributor pursuant to Section 4(c) hereof and the cost
and expenses payable to each such state or jurisdiction for continuing
qualification therein until the Corporation decides to discontinue such
qualification pursuant to Section 4(c) hereof.
Section 8. Indemnification and Contribution.
a. The Corporation shall indemnify and hold harmless the Distributor and
each person, if any, who controls the Distributor against any loss, liability,
claim, damage or expense (including the cost of investigating or defending any
alleged loss, liability, claim, damage or expense and counsel fees incurred in
connection therewith), as incurred, which may be based upon the Securities Act,
or on any other statute or at common law, on the ground that the registration
statement or related prospectus and statement of additional information, as from
time to time amended and supplemented, or an annual or interim report to
shareholders of the Corporation, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, unless such statement or
omission was made in reliance upon, and in conformity with, information
furnished to the Corporation in writing in connection therewith by the
Distributor specifically for use therein; provided, however, that in no case (i)
is the indemnity of the Corporation in favor of the Distributor and any such
controlling persons to be deemed to protect such Distributor or any such
controlling persons thereof against any liability to the Corporation or its
security holders to which the Distributor or any such controlling persons would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of their duties or by reason of the reckless
disregard of their obligations and duties under this Agreement; or (ii) is the
Corporation to be liable under its indemnity agreement contained in this
paragraph with respect to any claim made against the Distributor or any such
controlling persons, unless the Distributor or such
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controlling persons, as the case may be, shall have notified the Corporation in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon the
Distributor or such controlling persons (or after the Distributor or such
controlling persons shall have received notice of such service on any designated
agent), but failure to notify the Corporation of any such claim shall not
relieve it from any liability which it may have to the person against whom such
action is brought otherwise than on account of its indemnity agreement contained
in this paragraph. The Corporation will be entitled to participate at its own
expense in the defense or, if it so elects, to assume the defense of any suit
brought to enforce any such liability, but if the Corporation elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to, and in the sole discretion of, the Distributor or such
controlling person or persons, defendant or defendants in the suit. In the event
the Corporation elects to assume the defense of any such suit and retain such
counsel, the Distributor or such controlling person or persons, defendant or
defendants in the suit shall bear the fees and expenses of any additional
counsel retained by them (other than local counsel), but in case the Corporation
does not elect to assume the defense of any such suit, it will reimburse the
Distributor or such controlling person or persons, defendant or defendants in
the suit, for the reasonable fees and expenses of any counsel retained by them.
The Corporation shall promptly notify the Distributor of the commencement of any
litigation or proceedings against the Corporation, any Fund or Class or any of
the Corporation's officers or Directors in connection with the issuance or sale
of any of the Shares.
b. The Distributor shall indemnify and hold harmless the Corporation and
each of its Directors and officers and each person, if any, who controls the
Corporation against any loss, liability, claim, damage or expense described in
the foregoing indemnity contained in subsection (a) of this Section, but only
with respect to statements or omissions made in reliance upon, and in conformity
with, information furnished to the Corporation in writing by the Distributor
specifically for use in the registration statement or related prospectus and
statement of additional information, as from time to time amended, or the annual
or interim reports to shareholders. In case any action shall be brought against
the Corporation or any person so indemnified, in respect of which indemnity may
be sought against the Distributor, the Distributor shall have the rights and
duties given to the Corporation, and the Corporation and each person so
indemnified shall have the rights and duties given to the Distributor, by the
provisions of subsection (a) of this Section 8.
c. If the indemnification provided for in this Section 8 is unavailable
to, or insufficient to, hold harmless an indemnified party under subsection (a)
or (b) of this Section 8 in respect of any losses, claims, damages, liabilities
or expenses referred to therein, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to the amount paid
or payable by each indemnified party as a result of such losses, claims,
damages, liabilities or expenses in such proportion as is appropriate to reflect
the relative benefits received by the Corporation on the one hand and the
Distributor on the other hand from the offering of the Shares. The relative
benefits received by the Corporation on the one hand and the Distributor on the
other hand shall be deemed to be in the same proportion as the total proceeds
from the offering of the Shares to which the losses, claims, damages,
liabilities or expenses relate received by the Corporation bear to the sales
charges retained by the Distributor in connection with the sale of such Shares.
The amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above shall be deemed to include,
subject to the limitations set forth in subsections (a) and (b) of this Section
8, any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending
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any such action or claim. Notwithstanding the foregoing, in no event will the
Distributor be liable for an amount in excess of the portion of the front-end
sales charge retained by the Distributor on the sale of the Shares which gave
rise to the action.
Section 9. Standard of Care. Except to the extent a more stringent
standard is required by the Investment Company Act or the rules, regulations or
interpretations thereunder, the Distributor shall not be liable to the
Corporation for any act or omission by the Distributor except for acts or
omissions involving willful misfeasance, bad faith, gross negligence or reckless
disregard of the duties imposed by this Agreement.
Section 10. Duration and Termination of this Agreement. This Agreement
shall become effective as of the date first above written and shall remain in
force for two years from such date and thereafter, but only for so long as such
continuance is specifically approved at least annually by (i) the Directors or
by the vote of a majority of the outstanding voting securities of the
Corporation and (ii) by the vote of a majority of those Directors who are not
parties to this Agreement or interested persons of any such party cast in person
at a meeting called for the purpose of voting on such approval.
This Agreement may be terminated at any time, without the payment of any
penalty, by the Directors or by vote of a majority of the outstanding voting
securities of the Corporation, or by the Distributor, on sixty (60) days'
written notice to the other party. This Agreement shall automatically terminate
in the event of its assignment.
The terms "vote of a majority of the outstanding voting securities",
"assignment", "affiliated person" and "interested person", when used in this
Agreement, shall have the respective meanings specified in the Investment
Company Act.
Section 11. Amendments of this Agreement. This Agreement may be amended by
the parties only if such amendment is specifically approved by (i) the Directors
or by the vote of a majority of outstanding voting securities of the Corporation
and (ii) by the vote of a majority of those Directors of the Corporation who are
not parties to this Agreement or interested persons of any such party cast in
person at a meeting called for the purpose of voting on such approval.
Section 12. Governing Law. The provisions of this Agreement shall be
construed and interpreted in accordance with the laws of the State of New York
as at the time in effect and the applicable provisions of the Investment Company
Act. To the extent that the applicable law of the State of New York, or any of
the provisions herein, conflict with the applicable provisions of the Investment
Company Act, the latter shall control.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
NOMURA PACIFIC BASIN FUND, INC.
By ________________________________
Name:
Title:
NOMURA SECURITIES INTERNATIONAL, INC.
By ________________________________
Name:
Title:
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NOMURA SECURITIES INTERNATIONAL, INC.
2 World Financial Center
New York, NY 10281-1198
Dealer Agreement
Ladies and Gentlemen:
We act as Distributor for the open-end investment companies (hereinafter
referred to collectively as the "Funds" and individually as a "Fund") that are
or will be series of NOMURA PACIFIC BASIN FUND, INC. (the "Corporation"), and
act as principal underwriter, as defined in the Investment Company Act of 1940,
as amended (the "Investment Company Act"), for such Funds. We hereby invite you
to act as dealer to distribute shares of the Funds, as a member of the
Corporation's selling group (the "Selling Group"), on the following terms:
1. NASD Membership and Broker-Dealer Registration. This agreement (the
"Agreement") is conditioned upon your representation and warranty that you are a
member of the National Association of Securities Dealers, Inc. (the "NASD") and
that you will continue to maintain membership in the NASD, and that you are
registered as a broker-dealer under the Securities Exchange Act of 1934, as
amended. You agree to abide by the rules and regulations of the Securities and
Exchange Commission and the NASD, including, without limitation, Section 2830 of
the NASD's Conduct Rules, all of which are incorporated herein as if set forth
in full. You and we further understand and agree that you will not be entitled
to any compensation during any period in which you have been suspended or
expelled from membership in the NASD.
2. Offering Procedures. You and we understand and agree that you will
offer and sell shares of a Fund only in accordance with the terms and conditions
of that Fund's then current prospectus, statement of additional information and
any authorized supplemental material supplied by us, and no person is authorized
to make any representation relating to the shares of any Fund, except those
contained in the Fund's then current prospectus, statement of additional
information or any authorized supplemental material supplied by us. Additional
copies of a Fund's then current prospectus and statement of additional
information are and will be available on written request. You and we further
understand and agree that you will use your best efforts in the development and
promotion of sales of shares of a Fund or Funds, and you will be responsible for
the proper instruction and training of all sales personnel employed by you in
order that the shares of the Funds will be offered in accordance with the terms
and conditions of this Agreement and all applicable laws, rules and regulations.
3. Order Procedures. Orders received from you will be accepted only at the
public offering price applicable to each order, as described in the current Fund
prospectus at the time of
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the acceptance of the order. Procedures relating to the handling of orders will
be subject to instructions which we shall forward from time to time to you. All
orders are subject to acceptance or rejection by the Corporation in its sole
discretion. No conditional order will be accepted on any basis other than a
definite price. You and we understand and agree that you are acting as agent of
the Corporation and the Funds under this Agreement and you are in no way
responsible for the manner of our performance or for any of our acts or
omissions in connection therewith.
You agree to place orders received from your customers as soon as
practicable after your receipt of such orders. You further agree that you will
not withhold placement of orders in order to profit from such withholding; e.g.,
by a change in the net asset value from that used in determining the public
offering price to your customers.
4. Sales Charges and Dealer Concessions. You and we agree that the
applicable sales charge (whether assessed on a front-end or deferred basis) and
dealer concession pertaining to any sale of Fund shares will be in an amount as
set forth in the then current prospectus of that Fund. Additionally, you and we
agree that the applicable sales charge and dealer concession pertaining to sales
of any Fund shares pursuant to a right of accumulation, a letter of intention,
or other circumstance permitting a reduction or waiver of any applicable sales
charge or dealer concession will be in an amount as set forth in the then
current prospectus of such Fund.
5. Rule 12b-1 Plan Payments. The provisions of this Paragraph 5 are
applicable to each of the Funds which have adopted or which may, in the future,
adopt a plan or plans pursuant to Rule 12b-1 under the Investment Company Act
(each a "Plan"). With respect to each such Fund whose shares are sold pursuant
to this Agreement:
a. The provisions of this Paragraph 5 have been approved by a
majority of the Directors of the Fund, including a majority of the
Directors who are not interested persons of the Fund and who have no
direct or indirect financial interest in the operation of any Plan
or any of its related agreements (the "non-interested Directors"),
cast in person at a meeting called for the purpose of voting
thereon. Such approval included a determination that in the exercise
of reasonable business judgment and in light of their fiduciary
duties, there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders whose shares are subject to that Plan.
b. The Plan has been approved by a vote of at least a majority of
the Fund's outstanding voting securities, as defined in the
Investment Company Act, which securities are subject to that Plan.
c. As agent of each such Fund, we agree to pay you, or to arrange
for payment to you, pursuant to the Fund's applicable Plan.
A-2
<PAGE>
d. You shall furnish us (or our designee) and the relevant Fund with
such information as shall reasonably be requested by the Directors
of the Fund with respect to the fees paid to you pursuant to this
Paragraph 5.
e. You understand and agree that a written report of the amounts
expended under the Plan by us, including any payments made to you,
and the purposes for which such expenditures were made, will be
furnished to the Directors of the Fund, for their review, on a
quarterly basis.
f. The provisions of this Paragraph 5 may be terminated by the vote
of a majority of the non-interested Directors, or by a vote of a
majority of the Fund's outstanding shares, on sixty (60) days'
written notice without payment of any penalty. Such provisions will
be terminated by any act which terminates either the Corporation's
Distribution Agreement with us or this Dealer Agreement and shall
terminate immediately in the event of the assignment, as that term
is defined in the Investment Company Act, of this Dealer Agreement.
g. The provisions of the Distribution Agreement between the
Corporation, on behalf of the Funds, and us, insofar as they relate
to any Plan, are incorporated herein by reference. The provisions of
this Paragraph 5 shall continue in full force and effect only so
long as the continuance of the relevant Plan and these provisions
are approved at least annually by a vote of the Directors, including
a majority of the non-interested Directors, cast in person at a
meeting called for the purpose of voting thereon.
6. Required Payment for Shares. Payment for shares of a Fund sold through
you shall be made on or before the settlement date specified in our confirmation
by federal funds wire or by check payable to "Nomura Pacific Basin Fund, Inc.",
c/o State Street Bank and Trust Company, P.O. Box 8119, Boston, MA 02266-8119,
telephone number 1-800-680-1836, transfer agent for the Corporation (the
"Transfer Agent"). The Corporation has reserved the right to delay payment of
redemption proceeds until the earlier of (i) seven (7) days from the date of
payment by wire or check of the purchase price of the Shares being redeemed or
(ii) the date the Corporation receives notification from the Transfer Agent such
wire is received or such check has cleared. If such payment for Shares is not
received, we and the Corporation reserve the right, without notice, forthwith
either to cancel the sale, or, at our option, to sell the shares ordered back to
that Fund, and in either case, we may hold you responsible for any loss,
including loss of profit, suffered by us or by that Fund resulting from your
failure to make payment as aforesaid.
7. Redemption of Shares Within Seven Days of Purchase. If any shares sold
through you under the terms of this Agreement are repurchased or liquidated by a
Fund, or are tendered for liquidation by a Fund, within seven (7) business days
after confirmation of the original order, then, consistent with the requirements
of Section 2830(h) of the NASD's Conduct Rules, you will forthwith refund to the
applicable Fund your share of the sales charges on the original sale, and we
will forthwith refund to that Fund our share of the full concession allowed to
us on the
A-3
<PAGE>
original sale. You will notify us of such repurchase or liquidation within ten
(10) days from the day on which written redemption requests and, if applicable,
share certificates are delivered to us or to the Fund.
8. Limitation on Authority as Selected Dealer. You and we understand and
agree that, except as expressly provided in this Agreement, in no transaction
will you have any authority to take any action or make any representation
binding upon the Corporation, any Fund, us or any other member of the Selling
Group.
9. Funds Offering Multiple Classes of Shares. With respect to Funds
offering multiple classes of shares subject to differing sales charges, you and
we understand and agree that you are solely responsible for the recommendation
by your sales personnel to your customers of the purchase or sale of shares of
any class of shares of any Fund and the suitability of such purchase or sale for
the customer involved.
10. State Securities Qualification. You will not offer shares of any Fund
for sale in any state where such Fund is not qualified for sale under the blue
sky laws and regulations of such state or where you are not qualified to act as
a dealer, except for states in which the Fund or you are exempt from
qualification.
11. Taxpayer Identification Numbers. In order to enable the implementation
of any required backup withholding, you agree to obtain any taxpayer
identification number certification from your customers required by the Internal
Revenue Code and to provide the Transfer Agent with timely written notice of any
failure to obtain such certification.
12. Amendments. The Corporation reserves the right in its discretion and
we reserve the right, in our discretion and without notice to you or to any
members of the Selling Group, to suspend sales of any Fund, to withdraw the
offering of any Fund, to change the offering price of any Fund, or to amend,
modify or cancel this Agreement and concessions, discounts or commissions at any
time payable or allowable hereunder (including, without limitation, concessions
or commissions on future periodic investments or reinvestments). This Agreement
supersedes any prior agreement between us regarding these shares.
13. Termination. This Agreement may be terminated by either of us, at any
time, upon 30 days' written notice.
14. Communications. All communications will be sent to us at our offices
at Two World Financial Center, New York, New York 10281-1198, Attn:
____________________________. Any notice to you will be duly given if mailed or
telegraphed to you at the address shown on this Agreement.
15. Effectiveness. This Agreement will become effective as of the date it
is executed and dated by you below.
A-4
<PAGE>
16. Governing Law. This Agreement and all the rights and obligations of
the parties hereunder will be governed by and construed under the laws of the
State of New York.
NOMURA SECURITIES INTERNATIONAL, INC.
Dated: _____________ By:______________________________________
Name:
Title:
Agreed and Accepted:
Dated: _____________ ______________________________________
Firm Name
By:______________________________________
Authorized Signature
Print Name________________________
Title_____________________________
Address___________________________
Insurance Company? __________________________________
City State Zip Code
|_|yes |_|no
__________________________________
Telephone
__________________________________
NASD Broker/Dealer No.
__________________________________
Clear Trades through
Broker/Dealer
A-5
<PAGE>
NOMURA PACIFIC BASIN FUND, INC.
Pacific Basin Portfolio
Class A Shares
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated ______________, 1999, between Nomura Pacific Basin
Fund, Inc. (the "Corporation") and Nomura Securities International, Inc. (the
"Distributor") with respect to the above-designated class of shares (the
"Class"):
1. The Corporation hereby appoints the Distributor to engage in activities
principally intended to result in the sale of shares of the Class (the
"Shares"). Pursuant to this appointment, the Distributor is authorized to
select a group of dealers (the "selected dealers") to offer Shares at the
current offering price thereof as described and set forth in the
prospectus and statement of additional information of the Corporation
relating to such Shares.
2. During the term of this Agreement, the Corporation will pay the
Distributor for services pursuant to this Agreement, a monthly fee
computed at the annual rate of 1/4 of 1% of the average daily net asset
value of the Shares held during the month. For the month in which this
Agreement becomes effective or terminates, there shall be an appropriate
proration of any fee payable on the basis of the number of days that the
Agreement is in effect during the month.
3. The Distributor may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent the Class expenses
exceed such lower expense limitation as the Distributor may, by notice to
the Corporation, voluntarily declare to be effective.
4. The Distributor will enter into separate written agreements with
various selected dealers, a form of which is attached to the
Distribution Agreement as Exhibit A, to provide certain of the services
set forth in Paragraph 1 herein. The Distributor, in its sole
discretion, may pay selected dealers a periodic fee in respect of
Shares owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by the Distributor in its sole
discretion.
5. The Distributor will prepare and deliver, or arrange for the preparation
and delivery of, reports to the Board of Directors of the Corporation on a
quarterly basis showing amounts expended hereunder, including amounts paid
to selected dealers, if any, and the purpose for such expenditures.
B-1
<PAGE>
In consideration of the mutual covenants set forth in the Distribution
Agreement, each party executes and delivers this Exhibit with respect to the
above-designated Class as of the ____ day of _______, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_____________________________________
Name:
Title:
NOMURA SECURITIES INTERNATIONAL, INC.
By:_____________________________________
Name:
Title:
B-2
<PAGE>
NOMURA PACIFIC BASIN FUND, INC.
Pacific Basin Portfolio
Class B Shares
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated _______________, 1999, between Nomura Pacific
Basin Fund, Inc. (the "Corporation") and Nomura Securities International,
Inc. (the "Distributor") with respect to the above-designated class of shares
(the "Class"):
1. The Corporation hereby appoints the Distributor to engage in activities
principally intended to result in the sale of shares of the Class (the
"Shares"). Pursuant to this appointment, the Distributor is authorized to
select a group of dealers (the "selected dealers") to offer Shares at the
current offering price thereof as described and set forth in the
prospectus and statement of additional information of the Corporation
relating to such Shares.
2. During the term of this Agreement, the Corporation will pay the
Distributor for services pursuant to this Agreement, a monthly fee
computed at the annual rate of 1% of the average daily net asset value of
the Shares held during the month. For the month in which this Agreement
becomes effective or terminates, there shall be an appropriate proration
of any fee payable on the basis of the number of days that the Agreement
is in effect during the month.
3. The Distributor may from time to time and for such periods as it deems
appropriate reduce its compensation to the extent the Class expenses
exceed such lower expense limitation as the Distributor may, by notice to
the Corporation, voluntarily declare to be effective.
4. The Distributor will enter into separate written agreements with
various selected dealers, a form of which is attached to the
Distribution Agreement as Exhibit A, to provide certain of the services
set forth in Paragraph 1 herein. The Distributor, in its sole
discretion, may pay selected dealers a periodic fee in respect of
Shares owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by the Distributor in its sole
discretion.
5. The Distributor will prepare and deliver, or arrange for the preparation
and delivery of, reports to the Board of Directors of the Corporation on a
quarterly basis showing amounts expended hereunder, including amounts paid
to selected dealers, if any, and the purpose for such expenditures.
C-1
<PAGE>
In consideration of the mutual covenants set forth in the Distribution
Agreement, each party executes and delivers this Exhibit with respect to the
above-designated Class as of the ____ day of ________, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_____________________________________
Name:
Title:
NOMURA SECURITIES INTERNATIONAL, INC.
By:_____________________________________
Name:
Title:
C-2
<PAGE>
NOMURA PACIFIC BASIN FUND, INC.
Pacific Basin Portfolio
Class Z Shares
The following provisions are hereby incorporated and made part of the
Distribution Agreement dated _______________, 1999, between Nomura Pacific Basin
Fund, Inc. (the "Corporation") and Nomura Securities International, Inc. (the
"Distributor") with respect to the above-designated class of shares (the
"Class"):
1. The Corporation hereby appoints the Distributor to engage in activities
principally intended to result in the sale of shares of the Class (the
"Shares"). Pursuant to this appointment, the Distributor is authorized to
select a group of dealers (the "selected dealers") to offer Shares at the
current offering price thereof as described and set forth in the
prospectus and statement of additional information of the Corporation
relating to such Shares.
2. The Distributor will enter into separate written agreements with
various selected dealers, a form of which is attached to the
Distribution Agreement as Exhibit A, to provide certain of the services
set forth in Paragraph 1 herein. The Distributor, in it sole
discretion, may pay selected dealers a periodic fee in respect of
Shares owned from time to time by their clients or customers. The
schedules of such fees and the basis upon which such fees will be paid
shall be determined from time to time by the Distributor in its sole
discretion.
In consideration of the mutual covenants set forth in the Distribution
Agreement, each party executes and delivers this Exhibit with respect to the
above-designated Class as of the ____ day of __________, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_____________________________________
Name:
Title:
NOMURA SECURITIES INTERNATIONAL, INC.
By:_____________________________________
Name:
Title:
D-1
Exhibit 6
AGREEMENT
AGREEMENT made this ___ day of June, 1999, between Nomura Pacific Basin
Fund, Inc., a Maryland corporation (hereinafter called "Corporation"), and
Nomura Asset Management U.S.A. Inc., a New York corporation (hereinafter called
"NAM-U.S.A.").
W I T N E S S E T H
WHEREAS, NAM-U.S.A. has entered into a Management Agreement with the
Corporation, pursuant to which NAM-U.S.A. agrees to provide, or arrange for
the provision of, investment advisory and management services to the
Corporation; and
WHEREAS, the Corporation and NAM-U.S.A. believe that capping the total
expenses of each class of shares of the Pacific Basin Portfolio (the "Fund") of
the Corporation will enable the Fund to target niches within the load and
no-load product market and will benefit the Fund;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Expense Reimbursement by NAM-U.S.A. NAM-U.S.A. agrees to reduce all or a
portion its management fee and, if necessary, to bear certain other expenses
(including all expenses allocated pro-rata among the various classes of shares
of the Fund, but not including transfer agency fees, distribution-related
charges and any other expenses not allocated pro-rata among the various classes
of shares of the Fund) associated with operating the Fund to the extent
necessary to limit the Fund's annualized expenses to the annual rate of 1.90% of
average daily net assets for Class A shares, 2.65% of average daily net assets
for Class B shares, and 1.65% of average daily net assets for Class Z shares for
the period from August 1, 1999 to March 31, 2000.
2. Duty of Fund to Reimburse. The Fund agrees to reimburse NAM-U.S.A. such
deferred fees (but not expenses borne) in later periods to the extent the Fund's
expenses fall below the annualized rates of 1.90% of average daily net assets
for Class A shares, 2.65% of average daily net assets for Class B shares, and
1.65% of average daily net assets for Class Z shares; provided, however, that
the Fund is not obligated to pay any such deferred fees more than two years
after the end of the fiscal year in which the fee was deferred.
3. Assignment. No assignment of this Agreement shall be made by NAM-U.S.A.
without the prior consent of the Corporation.
4. Duration and Termination. This Agreement shall be effective for the period
from August 1, 1999 to March 31, 2000, and shall continue in effect thereafter
unless terminated by either of the parties hereto upon written notice to the
other of not less than five (5) days. This Agreement shall automatically
terminate upon the termination of the Management Agreement.
5. Choice of Law. This Agreement shall be construed in accordance with the laws
of New York.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
NOMURA PACIFIC BASIN FUND, INC.
By______________________________________
Name:
Title:
NOMURA ASSET MANAGEMENT U.S.A. INC.
By______________________________________
Name:
Title:
2
Exhibit 7(a)
CUSTODIAN CONTRACT
Between
NOMURA PACIFIC BASIN FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Employment of Custodian and Property to be Held by It..................1
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian.......................................................2
2.1 Holding Securities...............................................2
2.2 Delivery of Securities...........................................2
2.3 Registration of Securities.......................................5
2.4 Bank Accounts....................................................5
2.5 Payments for Shares..............................................6
2.6 Investment and Availability of Federal Funds.....................6
2.7 Collection of Income.............................................7
2.8 Payment of Fund Moneys...........................................7
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased........................................................9
2.10 Payments for Repurchases or Redemptions of Shares of the
Fund............................................................10
2.11 Appointment of Agents...........................................10
2.12 Deposit of Fund Assets in Securities Systems....................10
2.13 Segregated Account..............................................12
2.14 Ownership Certificates for Tax Purposes.........................13
2.15 Proxies.........................................................14
2.16 Communications Relating to Fund Portfolio Securities............14
2.17 Reports to Fund by Independent Public Accountants...............14
3. Foreign Sub-Custodians................................................15
3.1 Appointment of Foreign Sub-Custodians...........................15
3.2 Assets to be Held...............................................15
3.3 Foreign Securities Depositories.................................16
3.4 Segregation of Securities.......................................16
3.5 Agreements with Foreign Banking Institutions....................16
3.6 Access of Independent Accountants of the Fund...................17
3.7 Reports by Custodian............................................17
3.8 Transactions in Foreign Custody Account.18
3.9 Liability of Foreign Sub-Custodians.............................19
3.10 Monitoring Responsibilities.....................................19
3.11 Branches of U.S. Banks..........................................20
4. Proper Instructions...................................................20
5. Actions Permitted without Express Authority...........................20
6. Evidence of Authority.................................................21
7. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.........................21
<PAGE>
8. Records...............................................................22
9. Opinion of Fund's Independent Accountant..............................23
10. Compensation of Custodian.............................................23
11. Responsibility of Custodian...........................................23
12. Effective Period, Termination and Amendment...........................25
13. Successor Custodian...................................................26
14. Interpretive and Additional Provisions................................27
15. Massachusetts Law to Apply............................................27
16. Prior Contracts.......................................................27
<PAGE>
CUSTODIAN CONTRACT
This Contract between Nomura Pacific Basin Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal place of
business at 180 Maiden Lane, New York, New York 10038, hereinafter called the
"Fund", and State Street Bank and Trust Company, a Massachusetts trust company,
having its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities it desires to be held in places within the United States
("domestic securities") and securities it desires to be held outside the United
States ("foreign securities") pursuant to the provisions of the Articles of
Incorporation. The Fund agrees to deliver to the Custodian all securities and
cash owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of capital stock, $.10 par value, ("Shares") of the Fund as may
be issued or sold from time to time. The Custodian shall not be responsible for
any property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 4),
the Custodian shall from time to time employ one or more sub-custodians located
in the United States, but only in accordance with an applicable vote by the
Board of Directors of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any
<PAGE>
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The Custodian may employ as sub-custodians
for the Fund's securities and other assets the foreign banking institutions and
foreign securities depositories designated in Schedule "A" hereto but only in
accordance with the provisions of Article 3.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States, including all domestic securities owned by the Fund, other
than securities which are maintained pursuant to Section 2.12 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System".
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian only upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
<PAGE>
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
6) To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the
Custodian or into the name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or nominee name of any
sub-custodian appointed pursuant to Article 1; or for exchange for a
different number of bonds, certificates or other evidence
representing the same aggregate face amount or number of units;
provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) To the broker selling the same for examination in accordance with
the "street delivery" custom;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to
the Custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the
<PAGE>
Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for
which collateral is to be credited to the Custodian's account in the
book-entry system authorized by the U.S. Department of the Treasury,
the Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the receipt of
such collateral;
11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian and a broker-dealer registered under
the securities Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities Dealers, Inc.
("NASD"), relating to compliance with the rules of The Options
Clearing Corporation and of any registered national securities
exchange, or of any similar organization or organizations, regarding
escrow or other arrangements in connection with transactions by the
Fund;
13) For delivery in accordance with the provisions of any agreement
among the Fund, the Custodian, and a Futures Commission merchant
registered under the Commodity Exchange Act, relating to compliance
with the rules of the Commodity Futures Trading Commission and/or
any Contract Market, or any similar organization or organizations,
regarding account deposits in connection with transactions by the
Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection
<PAGE>
with distributions in kind, as may be described from time to time in
the Fund's currently effective prospectus and statement of
additional information ("prospectus"), in satisfaction of requests
by holders of Shares for repurchase or redemption; and
15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purposes to be proper corporate purposes, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.11 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities accepted
by the Custodian on behalf of the Fund under the terms of this Contract
shall be in "street name" or other good delivery form.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund, subject
only to draft or order by
<PAGE>
the Custodian acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the provisions hereof, all
cash received by it from or for the account of the Fund, other than cash
maintained by the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company Act of 1940. Funds
held by the Custodian for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall
be qualified to act as a custodian under the Investment Company Act of
1940 and that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be approved by vote
of a majority of the Board of Directors of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the distributor for
the Fund's Shares or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are received for Shares of the Fund
issued or sold from time to time by the Fund. The Custodian will provide
timely notification to the Fund and the Transfer Agent of any receipt by
it of payments for Shares of the Fund.
2.6 Investment and Availability of Federal Funds. Upon mutual agreement
between the Fund and the Custodian, the Custodian shall, upon the receipt
of Proper Instructions,
1) invest in such instruments as may be set forth in such instructions
on the same day as received all federal funds received after a time
agreed upon between the Custodian and the Fund; and
<PAGE>
2) make federal funds available to the Fund as of specified times
agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Shares of the Fund which
are deposited into the Fund's account.
2.7 Collection of Income. The Custodian shall collect on a timely basis all
income and other payments with respect to United States registered
securities held hereunder to which the Fund shall be entitled either by
law or pursuant to custom in the securities business, and shall collect on
a timely basis all income and other payments with respect to United States
bearer securities if, on the date of payment by the issuer, such
securities are held by the Custodian or agent thereof and shall credit
such income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach and
present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when
due on securities held hereunder. Income due the Fund on securities loaned
pursuant to the provisions of Section 2.2(10) shall be the responsibility
of the Fund. The Custodian will have no duty or responsibility in
connection therewith, other than to provide the Fund with such information
or data as may be necessary to assist the Fund in arranging for the timely
delivery to the Custodian of the income to which the Fund is properly
entitled.
2.8 Payment of Fund Moneys. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties,, the
Custodian shall pay out moneys of the Fund in the following cases only:
1) Upon the purchase of domestic securities, futures contracts or
options on futures contracts for the account of the Fund but only
(a) against the delivery of such securities, or evidence of title to
futures contracts or options on futures contracts,
<PAGE>
to the Custodian (or any bank, banking firm or trust company doing
business in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a custodian
and has been designated by the Custodian as its agent for this
purpose) registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in
proper form for transfer; (b) in the case of a purchase effected
through a Securities System, in accordance with the conditions set
forth in Section 2.12 hereof or (c) in the case of repurchase
agreements entered into between the Fund and the Custodian, or
another bank, or a broker-dealer which is a member of NASD, (i)
against delivery of the securities either in certificate form or
through an entry crediting the Custodian's account at the Federal
Reserve Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Fund of securities owned by the
Custodian along with written evidence of the agreement by the
Custodian to repurchase such securities from the Fund;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section 2.10 hereof;
4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or in part capitalized or treated
as deferred expenses;
<PAGE>
5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee of the Fund signed
by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made, declaring
such purpose to be a proper purpose, and naming the person or
persons to whom such payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities Purchased. In
any and every case where payment for purchase of domestic securities for
the account of the Fund is made by the Custodian in advance of receipt of
the securities purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the
securities had been received by the Custodian, except that in the case of
repurchase agreements entered into by the Fund with a bank which is a
member of the Federal Reserve System, the Custodian may transfer funds to
the account of such bank prior to the receipt of written evidence that the
securities subject to such repurchase agreement have been transferred by
book-entry into a segregated non-proprietary account of the Custodian
maintained with the Federal Reserve Bank of Boston or of the safe-keeping
receipt, provided that such securities have in fact been so transferred by
book-entry.
<PAGE>
2.10 Payments for Repurchases or Redemptions of Shares of the Fund. From such
funds as may be available for the purpose but subject to the limitations
of the Articles of Incorporation and any applicable votes of the Board of
Directors of the Fund pursuant thereto, the Custodian shall, upon receipt
of instructions from the Transfer Agent, make funds available for payment
to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the
redemption or repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer Agent to wire
funds to or through a commercial bank designated by the redeeming
shareholders. In connection with the redemption or repurchase of Shares of
the Fund, the Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the Fund to the
holder of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the Investment Company Act of
1940, as amended, to act as a custodian, as its agent to carry out such of
the provisions of this Article 2 as the Custodian may from time to time
direct; provided, however, that the appointment of any agent shall not
relieve the Custodian of its responsibilities or liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may deposit
and/or maintain domestic securities owned by the Fund in a clearing agency
registered with the Securities and Exchange Commission under Section 17A
of the Securities Exchange Act
<PAGE>
of 1934, which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and certain
federal agencies, collectively referred to herein as "Securities System"
in accordance with applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and subject to the
following provisions:
1) The Custodian may keep domestic securities of the Fund in a
Securities System provided that such securities are represented in
an account ("Account") of the Custodian in the Securities System
which shall not include any assets of the Custodian other than
assets held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic securities of
the Fund which are maintained in a Securities System shall identify
by book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund upon (i) receipt of advice from the Securities
System that such securities have been transferred to the Account,
and (ii) the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the Fund. The
Custodian shall transfer domestic securities sold for the account of
the Fund upon (i) receipt of advice from the Securities System that
payment for such securities has been transferred to the Account, and
(ii) the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the Fund.
Copies of all advice's from the Securities System of transfers of
domestic securities for the account of the Fund shall identify the
<PAGE>
Fund, be maintained for the Fund by the Custodian and be provided to
the Fund at its request. Upon request, the Custodian shall furnish
the Fund confirmation of each transfer to or from the account of the
Fund in the form of a written advice or notice and shall furnish to
the Fund copies of daily transaction sheets reflecting each day's
transactions in the Securities System for the account of the Fund.
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding domestic
securities deposited in the Securities System;
5) The Custodian shall have received the initial or annual certificate,
as the case may be, required by Article 13 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such
loss or damage if and to the extent that the Fund has not been made
whole for any such loss or damage.
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which
<PAGE>
account or accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to Section
2.12 hereof, (i) in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the Exchange
Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with
the rules of The Options Clearing Corporation and of any registered
national securities exchange (or the Commodity Futures Trading Commission
or any registered contract market), or of any similar organization or
organizations, regarding escrow or other arrangements in connection with
transactions by the Fund, (ii) for purposes of segregating cash or
government securities in connection with options purchased, sold or
written by the Fund or commodity futures contracts or options thereon
purchased or sold by the Fund, (iii) for the purposes of compliance by the
Fund with the procedures required by Investment Company Act Release No.
10666, or any subsequent release or releases of the Securities and
Exchange Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of the
Board of Directors or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring
such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with
<PAGE>
receipt of income or other payments with respect to domestic securities of
the Fund held by it and in connection with transfers of such securities.
2.15 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver
to the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities. The Custodian shall
transmit promptly to the Fund all written information (including, without
limitation, pendency of calls and maturities of domestic securities and
expirations of rights in connection therewith and notices of exercise of
call and put options written by the Fund and the maturity of futures
contracts purchased or sold by the Fund) received by the Custodian from
issuers of the domestic securities being held for the Fund. With respect
to tender or exchange offers, the Custodian shall transmit promptly to the
Fund all written information received by the Custodian from issuers of the
domestic securities whose tender or exchange is sought and from the party
(or his agents) making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange offer or any
other similar transaction, the Fund shall notify the Custodian at least
three business days prior to the date on which the Custodian is to take
such action.
2.17 Reports to Fund by Independent Public Accountants. The Custodian shall
provide the Fund, at such times as the Fund may reasonably require, with
reports by independent public accountants on the accounting system,
internal
<PAGE>
accounting control and procedures for safeguarding securities, future
contracts and options on futures contracts, including domestic securities
deposited and/or maintained in a Securities System, relating to the
services provided by the Custodian under this Contract; such reports,
which shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund, to provide reasonable assurance that
any material inadequacies would be disclosed by such examination, and, if
there are no such inadequacies, shall so state.
3. Foreign Sub-Custodians
3.1 Appointment of Foreign Sub-Custodians.
The Custodian is authorized and instructed to employ as sub-custodians for
the Fund's securities and other assets maintained outside of the United
States the foreign banking institutions and foreign securities
depositories designated on Schedule A hereto ("foreign sub-custodians").
Upon receipt of "Proper Instructions", together with a certified
resolution of the Fund's Board of Directors, the Custodian and the Fund
may agree to amend Schedule A hereto from time to time to designated
additional foreign banking institutions and foreign securities
depositories to act as sub-custodians. Upon receipt of Proper Instructions
from the Fund the Custodian shall cease the employment of any one or more
of such sub-custodians for maintaining custody of the Fund's assets.
3.2 Assets to be Held.
The Custodian shall limit the securities and other assets maintained in
the custody of the foreign sub-custodians to: (a) "foreign securities", as
defined in paragraph (c)(1) of Rule 17f-5 under the Investment Company Act
of 1940, and (b) cash and cash equivalents in
<PAGE>
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions.
3.3 Foreign Securities Depositories.
Except as may otherwise be agreed upon in writing by the Custodian and the
Fund, assets of the Fund shall be maintained in foreign securities
depositories only through arrangements implemented by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof.
3.4 Segregation of Securities.
The Custodian shall identify on its books as belonging to the Fund, the
foreign securities of the Fund held by each foreign sub-custodian. Each
agreement pursuant to which the Custodian employs a foreign banking
institution shall require that such institution establish a custody
account for the Custodian on behalf of the Fund and physically segregate
in that account, securities and other assets of the Fund, and, in the
event that such institutions deposit the Fund's securities in a foreign
securities depository, that it shall identify on its books as belonging to
the Custodian, as agent for the Fund, the securities so deposited.
3.5 Agreements with Foreign Banking Institutions.
Each agreement with a foreign banking institution shall be substantially
in the form set forth in Exhibit I hereto and shall provide that: (a) the
Fund's assets will not be subject to any right, charge, security interest,
lien or claim of any kind in favor of the foreign banking institutions or
its creditors, except a claim of payment for their safe custody or
administration; (b) beneficial ownership for the Fund's assets will be
freely transferable without the payment of money or value other than for
custody or administration;
<PAGE>
(c) adequate records will be maintained identifying the assets as
belonging to the Fund; (d) officers of or auditors employed by, or other
representatives of the Custodian, including to the extent permitted under
applicable law the independent public accounts for the Fund, will be given
access to the books and records of the foreign banking institution
relating to its actions under its agreement with the Custodian; and (e)
assets of the Fund held by the foreign sub-custodian will be subject only
to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund.
Upon request of the Fund, the Custodian will use its best efforts to
arrange for the independent accountants of the Fund to be afforded access
to the books and records of any foreign banking institution employed as a
foreign any sub-custodian insofar as such books and records relate to the
performance of such foreign banking institutions under its agreement with
the Custodian.
3.7 Reports by Custodian.
The Custodian will supply to the Fund from time to time, as mutually
agreed upon, statements in respect of the securities and other assets of
the Fund held by foreign sub-custodians, including but not limited to an
identification of entities having possession of the Fund's securities and
other assets and advices or notifications of any transfers of securities
to or from each custodial account maintained by a foreign banking
institution for the Custodian on behalf of the Fund indicating, as to
securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
<PAGE>
3.8 Transactions in Foreign Custody Account.
(a) Upon receipt of Proper Instructions, which may be continuing
instructions when deemed appropriate by the parties, the Custodian shall
make or cause foreign sub-custodians to transfer, exchange or deliver
foreign securities owned by the Fund, but except to the extent explicitly
provided herein only in one of the circumstances specified in Section 2.2.
(b) Upon receipt of Proper Instructions, which may be continuing
instructions deemed appropriate by the parties the Custodian shall pay out
or cause its foreign sub-custodians to pay out monies of the Fund, but
except to the extent explicitly provided herein only in one of the
circumstances specified in Section 2.8.
(c) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the Fund
and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary or established securities
trading or securities processing practices and procedures in the
jurisdiction or market in which the transaction occurs, including, without
limitation, delivering securities to the purchaser thereof or to a dealer
therefor (or an agent for such purchaser or dealer) against a receipt with
the exception of receiving later payment for such securities from such
purchaser or dealer.
(d) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities.
<PAGE>
3.9 Liability of Foreign Sub-Custodians.
Each agreement pursuant to which the Custodian employs a foreign banking
institution as a foreign sub-custodian shall require the institution to
exercise reasonable care in the performance of its duties and to
indemnify, and hold harmless, the Custodian and each Account from and
against any loss, damage, cost, expense, liability or claim arising out of
or in connection with the institution's performance of such obligations.
At the election of the Fund, it shall be entitled to be subrogated to the
rights of the Custodian with respect to any claims against a foreign
banking institution as a consequence of any such loss, damage, cost,
expense, liability or claim if and to the extent that the Fund has not
been made whole for any such loss, damage, cost, expense, liability or
claim.
3.10 Monitoring Responsibilities.
The Custodian shall furnish annually to the Fund, during the month of
______________, information concerning the foreign sub-custodians employed
by the Custodian. Such information shall be similar in kind and scope to
that furnished to the Fund in connection with the initial approval of this
Contract. In addition, the Custodian will promptly inform the Fund in the
event that the Custodian learns of a material adverse change in the
financial condition of a foreign sub-custodian or is notified by a foreign
banking institution employed as a foreign sub-custodian that there appears
to be a substantial likelihood that its shareholders' equity will decline
below $200 million (U.S. dollars or the equivalent thereof) or that its
shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting
principles).
<PAGE>
3.11 Branches of U.S. Banks.
Except as otherwise set forth in this Contract, the provisions hereof
shall not apply where the custody of the Fund assets maintained in a
foreign branch of a banking institution which is a "bank" as defined by
Section 2(a) (5) of the Investment Company Act of 1940 which meets the
qualification set forth in Section 26(a) of said Act. The appointment of
any such branch as a sub-custodian shall be governed by Article 1 of this
Contract.
4. Proper Instructions
Proper Instructions as used herein means a writing signed or initialed by
one or more person or persons as the Board of Directors shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in writing.
Upon receipt of a certificate of the Secretary or an Assistant Secretary as to
the authorization by the Board of Directors of the Fund accompanied by a
detailed description of procedures approved by the Board of Directors, Proper
Instructions may include communications effected directly between
electro-mechanical or electronic devices provided that the Board of Directors
and the Custodian are satisfied that such procedures afford adequate safeguards
for the Fund's assets.
5. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
<PAGE>
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
6. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper believed by it to be
genuine and to have been properly executed by or on behalf of the Fund. The
Custodian may receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of any person
to act in accordance with such vote or (b) of any determination or of any action
by the Board of Directors pursuant to the Articles of Incorporation as described
in such vote, and such vote may be considered as in full force and effect until
receipt by the Custodian of written notice to the contrary.
7. Duties of Custodian with Respect to the Books of Account and Calculation
of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep the
books of account of the Fund
<PAGE>
and/or compute the net asset value per share of the outstanding shares of the
Fund or, if directed in writing to do so by the Fund, shall itself keep such
books of account and/or compute such net asset value per share. If so directed,
the Custodian shall also calculate daily the net income of the Fund as described
in the Fund's currently effective prospectus and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective prospectus.
8. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 3la-1 and 3la-2 thereunder,
applicable federal and state tax laws and any other law or administrative rules
or procedures which may be applicable to the Fund. All such records shall be the
property of the Fund and shall at all times during the regular business hours of
the Custodian be open for inspection by duly authorized officers, employees or
agents of the Fund and employees and agents of the Securities and Exchange
Commission. The Custodian shall, at the Fund's request, supply the Fund with a
tabulation of securities owned by the Fund and held by the Custodian and shall,
when requested to do so by the Fund and for such compensation as shall be agreed
upon between the Fund and the Custodian, include certificate numbers in such
tabulations.
<PAGE>
9. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
10. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between the
Fund and the Custodian.
11. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties.
The Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and shall be
without liability to the Fund for any action taken or omitted by it in good
faith without negligence. It shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice. Notwithstanding the foregoing, the responsibility of the Custodian with
respect to redemptions effected by check shall be in accordance with a separate
Agreement entered into between the Custodian and the Fund.
<PAGE>
The Custodian shall be liable for the acts or omissions of a foreign
banking institution to the same extent as set forth with respect to
sub-custodians generally in this Contract and, regardless of whether assets are
maintained in the custody of a foreign banking institution, a foreign securities
depository or a branch of a U.S. bank as contemplated by paragraph 3.11 hereof,
the Custodian shall not be liable for any loss, damage, cost, expense, liability
or claim resulting from, or caused by, the direction of or authorization by the
Fund to maintain custody or any securities or cash of the Fund in a foreign
country including, but not limited to, losses resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action may, in
the opinion of the Custodian, result in the Custodian or its nominee assigned to
the Fund being liable for the payment of money or incurring liability of some
other form, the Fund, as a prerequisite to requiring the Custodian to take such
action, shall provide indemnity to the Custodian in an amount and form
satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the performance of this Contract, except such as may arise from
its or its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall be
security therefor and should the Fund fail to repay the Custodian promptly, the
Custodian shall be entitled to utilize available cash and to dispose of the Fund
assets to the extent necessary to obtain reimbursement.
<PAGE>
12. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.12 hereof in the
absence of receipt of an initial certificate of the Secretary or an Assistant
Secretary that the Board of Directors of the Fund have approved the initial use
of a particular Securities System and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of Directors have
reviewed the use by the Fund of such Securities System, as required in each case
by Rule 17f-4 under the Investment Company Act of 1940, as amended; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Articles of Incorporation, and further provided, that the Fund may at any
time by action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of a
conservator or receiver for the Custodian by the Comptroller of the Currency or
upon the happening of a like event at the direction of an appropriate regulatory
agency or court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements.
<PAGE>
13. Successor Custodian
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of
Directors of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940,
doing business in Boston, Massachusetts, of its own selection, having an
aggregate capital, surplus, and undivided profits, as shown by its last
published report, of not less than $25,000,000, all securities, funds and other
properties held by the Custodian and all instruments held by the Custodian
relative thereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's securities
held in any Securities System. Thereafter, such bank or trust company shall be
the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the
<PAGE>
certified copy of vote referred to or of the Board of Directors to appoint a
successor custodian, the Custodian shall be entitled to fair compensation for
its services during such period as the Custodian retains possession of such
securities, funds and other properties and the provisions of this Contract
relating to the duties and obligations of the Custodian shall remain in full
force and effect.
14. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federa1 or state regulations or any provision of
the Articles of Incorporation of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
15. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts.
16. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the 1st day of June, 1985.
ATTEST: NOMURA PACIFIC BASIN FUND, INC.
_______________________ BY:_________________________________
ATTEST: STATE STREET BANK AND TRUST COMPANY
_______________________ BY:_________________________________
Assistant Secretary Vice President
Exhibit 7(b)
AMENDMENT TO CUSTODIAN CONTRACT
Agreement made by and between State Street Bank and Trust Company (the
"Custodian") and Nomura Pacific Basin Fund, Inc. (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a custodian contract
dated June 1, 1985 as amended April 12, 1989, , 1987 and March 7, 1986 (the
"Custodian Contract") governing the terms and conditions under which the
Custodian maintains custody of the securities and other assets of the Fund; and
WHEREAS, the Custodian and the Fund desire to amend the terms and
conditions under which the Custodian maintains the Fund's securities and other
non-cash property in the custody of certain foreign sub-custodians in conformity
with the requirements of Rule 17f-5 under the Investment Company Act of 1940, as
amended;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the Custodian Contract by the
addition of the following terms and provisions;
1. Notwithstanding any provisions to the contrary set forth in the
Custodian Contract, the Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a foreign
sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided, however, that (i) the
records of the Custodian with respect to securities and other non-cash property
of the Fund which are maintained in such account shall identify by book-entry
those securities and other non-cash property belonging to the Fund and (ii) the
Custodian shall require that securities and other non-cash property so held by
the foreign sub-custodian be held separately from any assets of the foreign
sub-custodian or of others.
2. Except as specifically superseded or modified herein, the terms and
provisions of the Custodian Contract shall continue to apply with full force and
effect.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed as a sealed instrument in its name and behalf by its duly authorized
representative this day of April, 1997.
NOMURA PACIFIC BASIN FUND, INC.
By: ______________________________________
Title: ___________________________________
STATE STREET BANK AND TRUST COMPANY
By: ______________________________________
Title: ___________________________________
Exhibit 7(c)
AMENDMENT TO THE
CUSTODIAN CONTRACT
AGREEMENT made this 12th day of April, 1989 by and between STATE STREET
BANK AND TRUST COMPANY ("Custodian") and NOMURA PACIFIC BASIN FUND, INC. (the
"Fund").
WITNESSETH THAT:
WHEREAS, the Custodian and the Companies are parties to a Custodian
Contract dated June 1, 1985 (as amended to date, the "Contract") which governs
the terms and conditions under which the Custodian maintains custody of the
securities and other assets of the Fund:
NOW THEREFORE, the Custodian and the Fund hereby amend the terms of the
Custodian Contract and mutually agree to the following:
Replace subsection 7 entitled Delivery of Securities with the following
new subsection 7:
(i) 7) Upon the sale of such securities for the account of the
Fund, to the broker or its clearing agent, against a receipt,
for examination in accordance with "street delivery" custom;
the Custodian shall have no responsibility or liability for
any loss arising from the delivery of such securities prior to
receiving payment for such securities except as may arise from
the Custodian's own negligence or willful misconduct;
IN WITNESS WHEREOF, each of the parties has caused this Amendment to be
executed in its name and on its behalf by a duly authorized officer as of the
day and year first above written.
ATTEST NOMURA PACIFIC BASIN FUND, INC.
__________________________ _________________________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ _________________________________________
Assistant Secretary Vice President
Exhibit 7(d)
AMENDMENT TO CUSTODIAN CONTRACT
AGREEMENT made by and between State Street Bank and Trust Company (the
"Custodian") and Nomura Pacific Basin Fund (the "Fund").
WHEREAS, the Custodian and the Fund are parties to a Custodian Contract
dated June 1, 1985 (the "Custodian Contract") governing the terms and conditions
under which the Custodian maintains custody of the securities and other assets
of the Fund; and
WHEREAS, the terms of the Custodian Contract provide for the maintenance
of the Fund's foreign securities, and cash incidental to transactions in such
securities, in the custody of certain foreign banking institutions and foreign
securities depositories; and
WHEREAS, the parties hereto desire to amend the Custodian Contract to
provide for the maintenance of certain of the Fund's foreign securities and
other assets in the custody of State Street London Limited (the "Trust
Company"), a company incorporated under the laws of the United Kingdom with the
power to act as a trustee and as a custodian of securities;
NOW THEREFORE, in consideration of the premises and covenants contained
herein, the Custodian and the Fund hereby amend the terms of the Custodian
Contract and agree to the following terms and conditions:
1. The Fund hereby authorizes and instructs the Custodian to employ the
services of the Trust Company, as the sub-custodian in the United Kingdom, to
hold securities and other assets of the Fund, subject to the terms of the
Custodian Contract, as heretofore amended, and to the terms and conditions
hereof.
<PAGE>
2. The securities to be held by the Trust Company shall be limited to
"foreign securities" as defined by paragraph (c)(1) of Rule 17f-5 under the
Investment Company Act of 1940 (the "1940 Act").
3. Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's London
Branch, which account shall be subject to the direction of the Custodian, the
Trust Company, or both.
4. The Custodian represents that it has obtained an order from the
Securities and Exchange Commission, pursuant to Section 6(c) of the 1940 Act,
exempting the Custodian and the Fund from the provisions of Section 17(f) of
said Act, to the extent necessary to permit the securities and other assets of
the Fund to be maintained in the custody of the Trust Company.
5. In delegating custody duties and obligations to the Trust Company as
permitted hereunder, the Custodian agrees that it shall not be relieved of any
responsibility to the Fund for any loss due to such delegation to the Trust
Company, except such loss as may result from: (a) political risk (including, but
not limited to, exchange control restrictions, confiscation, expropriation,
nationalization, insurrection, civil strife or armed hostilities) or (b) other
risk of loss (excluding bankruptcy or insolvency of the Trust Company not caused
by a political risk) for which neither the Custodian nor the Trust Company would
be liable (including, but not limited to, losses due to Acts of God, nuclear
incident and other losses under circumstances where the Custodian and the Trust
Company have exercised reasonable care).
6. Except as specifically superseded or modified herein, the terms and
conditions of the Custodian Contract, as heretofore amended, shall continue to
apply with full force and effect.
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<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day of , 1987.
ATTEST NOMURA PACIFIC BASIN FUND
__________________________ By:________________________________________
(Title)
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By:________________________________________
Assistant Secretary Vice President
-3-
Exhibit 7(e)
AMENDMENT TO THE
CUSTODIAN CONTRACT
THIS Amendment made between Nomura Pacific Basin Fund, Inc. ("Fund") and
State Street Bank and Trust Company ("State Street");
WHEREAS, the parties hereto have entered into a written contract dated
June 1, 1985 wherein State Street has agreed to act as Depository, Custodian and
Agent for the Fund under certain terms and conditions ("Contract"); and
WHEREAS, the parties hereto desire to amend the Contract;
NOW, THEREFORE, the parties hereto, intending to be legally bound, hereby
agree as follows:
Insert on Page 25 new Paragraph 3.10, renumbering old Paragraphs 3.10 and
3.11 as 3.11 and 3.12.
3.10 Liability of Custodian. The Custodian shall be liable for the acts
or omissions of a foreign banking institution to the same extent as
set forth with respect to sub-custodians generally in Section 1 of
the Custodian Contract and, regardless of whether assets are
maintained in the custody of a foreign banking institution, a
foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 12 hereof, the Custodian shall not be
liable for any loss, damage, cost, expense, liability or claim
resulting from, or caused by, the direction of or authorization by
the Fund to maintain custody of any securities or cash of the Fund
in a foreign country including, but not limited to, losses resulting
from nationalization, expropriation, currency restrictions, or acts
of war or terrorism.
WITNESS the due execution hereof this ____ day of _____________, 1986.
ATTEST: NOMURA PACIFIC BASIN FUND, INC.
__________________________ By:________________________________________
(Title)
ATTEST: STATE STREET BANK AND TRUST COMPANY
__________________________ By:________________________________________
Assistant Secretary Vice President
Exhibit 7(f)
DATA ACCESS SERVICES ADDENDUM TO CUSTODIAN AGREEMENT
AGREEMENT between Nomura Pacific Basin Fund, Inc. (the "Customer") and
State Street Bank and Trust Company ("State Street").
PREAMBLE
WHEREAS, State Street has been appointed as custodian of certain assets of
the Customer pursuant to a certain Custodian Agreement (the "Custodian
Agreement") dated as of March 13, 1990;
WHEREAS, State Street has developed and utilizes proprietary accounting
and other systems, including State Street's proprietary Multicurrency HORIZONR
Accounting System, in its role as custodian of the Customer, and maintains
certain Customer-related data ("Customer Data") in databases under the control
and ownership of State Street (the "Data Access Services"); and
WHEREAS, State Street makes available to the Customer certain Data Access
Services solely for the benefit of the Customer, and intends to provide
additional services, consistent with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, and for other good and valuable consideration, the parties
agree as follows:
1. SYSTEM AND DATA ACCESS SERVICES
a. System. Subject to the terms and conditions of this Agreement, State
Street hereby agrees to provide the Customer with access to State Street's
Muliticurrency HORIZONR Accounting System and the other information systems
(collectively, the "System") as described in Attachment A, on a remote basis for
the purpose of obtaining reports, solely on computer hardware, system software
and telecommunication links of the Customer, as listed in Attachment B (the
"Designated Configuration") of the Customer, or certain third parties approved
by State Street that serve as investment advisors or investment managers of the
Customer (the "Investment Advisor") and solely with respect to the Customer or
on any designated substitute or back-up equipment configuration with State
Street's written consent, such consent not to be unreasonably withheld.
b. Data Access Services. State Street agrees to make available to the
Customer the Data Access Services subject to the terms and conditions of this
Agreement and data access operating standards and procedures as may be issued by
State Street from time to time. The ability of the Customer to originate
electronic instructions to State Street on behalf of the Customer in order to
(i) effect the transfer or movement of cash or securities held under custody by
State Street or (ii) transmit accounting or other information (such transactions
are referred to herein as "Client Originated Electronic Financial
Instructions"), and (iii) access data for the purpose of reporting and analysis,
shall be deemed to be Data Access Services for purposes of this Agreement.
c. Additional Services. State Street may from time to time agree to make
available to the Customer additional Systems that are not described in the
attachments to this Agreement. In
<PAGE>
the absence of any other written agreement concerning such additional systems,
the term "System" shall include, and this Agreement shall govern, the Customer's
access to and use of any additional System made available by State Street and/or
accessed by the Customer.
2. NO USE OF THIRD PARTY SOFTWARE
State Street and the Customer acknowledge that in connection with the Data
Access Services provided under this Agreement, the Customer will have access,
through the Data Access Services, to Customer Data and to functions of State
Street's proprietary systems; provided, however that in no event will the
Customer have direct access to any third party systems-level software that
retrieves data for, stores data from, or otherwise supports the System.
3. LIMITATION ON SCOPE OF USE
a. Designated Equipment; Designated Location. The System and the Data
Access Services shall be used and accessed solely on and through the Designated
Configuration at the offices of the Customer or the Investment Advisor located
in New York, New York ("Designated Location").
b. Designated Configuration; Trained Personnel. State Street shall be
responsible for supplying, installing and maintaining the Designated
Configuration at the Designated Location. State Street and the Customer agree
that each will engage or retain the services of trained personnel to enable both
parties to perform their respective obligations under this Agreement. State
Street agrees to use commercially reasonable efforts to maintain the System so
that it remains serviceable, provided, however, that State Street does not
guarantee or assure uninterrupted remote access use of the System.
c. Scope of Use. The Customer will use the System and the Data Access
Services only for the processing of securities transactions, the keeping of
books of account for the Customer and accessing data for purposes of reporting
and analysis. The Customer shall not, and shall cause its employees and agents
not to (i) permit any third party to use the System or the Data Access Services,
(ii) sell, rent, license or otherwise use the System or the Data Access Services
in the operation of a service bureau or for any purpose other than as expressly
authorized under this Agreement, (iii) use the System or the Data Access
Services for any fund, trust or other investment vehicle without the prior
written consent of State Street, (iv) allow access to the System or the Data
Access Services through terminals or any other computer or telecommunications
facilities located outside the Designated Locations, (v) allow or cause any
information (other than portfolio holdings, valuations of portfolio holdings,
and other information reasonably necessary for the management or distribution of
the assets of the Customer) transmitted from State Street's databases, including
data from third party sources, available through use of the System or the Data
Access Services to be redistributed or retransmitted to another computer,
terminal or other device for other than use for or on behalf of the Customer or
(vi) modify the System in any way, including without limitation, developing any
software for or attaching any devices or computer programs to any equipment,
system, software or database which forms a part of or is resident on the
Designated Configuration.
-2-
<PAGE>
d. Other Locations. Except in the event of an emergency or of a planned
System shutdown, the Customer's access to services performed by the System or to
Data Access Services at the Designated Location may be transferred to a
different location only upon the prior written consent of State Street. In the
event of an emergency or System shutdown, the Customer may use any back-up site
included in the Designated Configuration or any other back-up site agreed to by
State Street, which agreement will not be unreasonably withheld. The Customer
may secure from State Street the right to access the System or the Data Access
Services through computer and telecommunications facilities or devices complying
with the Designated Configuration at additional locations only upon the prior
written consent of State Street and on terms to be mutually agreed upon by the
parties.
e. Title. Title and all ownership and proprietary rights to the System,
including any enhancements or modifications thereto, whether or not made by
State Street, are and shall remain with State Street.
f. No Modification. Without the prior written consent of State Street, the
Customer shall not modify, enhance or otherwise create derivative works based
upon the System, nor shall the Customer reverse engineer, decompile or otherwise
attempt to secure the source code for all or any part of the System.
g. Security Procedures. The Customer shall comply with data access
operating standards and procedures and with user identification or other
password control requirements and other security procedures as may be issued
from time to time by State Street for use of the System on a remote basis and to
access the Data Access Services. The Customer shall have access only to the
Customer Data and authorized transactions agreed upon from time to time by State
Street and, upon notice from State Street, the Customer shall discontinue remote
use of the System and access to Data Access Services for any security reasons
cited by State Street; provided, that, in such event, State Street shall, for a
period not less than 180 days (or such other shorter period specified by the
Customer) after such discontinuance, assume responsibility to provide accounting
services under the terms of the Custodian Agreement.
h. Inspections. State Street shall have the right to inspect the use of
the System and the Data Access Services by the Customer and the Investment
Advisor to ensure compliance with this Agreement. The on-site inspections shall
be upon prior written notice to Customer and the Investment Advisor and at
reasonably convenient times and frequencies so as not to result in an
unreasonable disruption of the Customer's or the Investment Advisor's business.
4. PROPRIETARY INFORMATION
a. Proprietary Information. The Customer acknowledges and State Street
represents that the System and the databases, computer programs, screen formats,
report formats, interactive design techniques, documentation and other
information made available to the Customer by State Street as part of the Data
Access Services and through the use of the System constitute copyrighted, trade
secret, or other proprietary information of substantial value to State Street.
Any and all such information provided by State Street to the Customer shall be
deemed proprietary and confidential information of State Street (hereinafter
"Proprietary Information"). The Customer agrees that it will hold such
Proprietary Information in confidence and secure and
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<PAGE>
protect it in a manner consistent with its own procedures for the protection of
its own confidential information and to take appropriate action by instruction
or agreement with its employees who are permitted access to the Proprietary
Information to satisfy its obligations hereunder. The Customer further
acknowledges that State Street shall not be required to provide the Investment
Advisor with access to the System unless it has first received from the
Investment Advisor an undertaking with respect to State Street's Proprietary
Information in the form of Attachment C to this Agreement. The Customer shall
use all commercially reasonable efforts to assist State Street in identifying
and preventing any unauthorized use, copying or disclosure of the Proprietary
Information or any portions thereof or any of the logic, formats or designs
contained therein.
b. Cooperation. Without limitation of the foregoing, the Customer shall
advise State Street immediately in the event the Customer learns or has reason
to believe that any person to whom the Customer has given access to the
Proprietary Information, or any portion thereof, has violated or intends to
violate the terms of this Agreement, and the Customer will, at its expense,
co-operate with State Street in seeking injunctive or other equitable relief in
the name of the Customer or State Street against any such person.
c. Injunctive Relief. The Customer acknowledges that the disclosure of any
Proprietary Information, or of any information which at law or equity ought to
remain confidential, will immediately give rise to continuing irreparable injury
to State Street inadequately compensable in damages at law. In addition, State
Street shall be entitled to obtain immediate injunctive relief against the
breach or threatened breach of any of the foregoing undertakings, in addition to
any other legal remedies which may be available.
d. Survival. The provisions of this Section 4 shall survive the
termination of this Agreement.
5. LIMITATION ON LIABILITY
a. Limitation on Amount and Time for Bringing Action. The Customer agrees
any liability of State Street to the Customer or any third party arising out of
State Street's provision of Data Access Services or the System under this
Agreement shall be limited to the amount paid by the Customer for the preceding
24 months for such services. In no event shall State Street be liable to the
Customer or any other party for any special, indirect, punitive or consequential
damages even if advised of the possibility of such damages. No action,
regardless of form, arising out of this Agreement may be brought by the Customer
more than two years after the Customer has knowledge that the cause of action
has arisen.
b. NO OTHER WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE, ARE MADE BY STATE STREET. IN NO EVENT WILL STATE STREET BE
LIABLE TO THE CUSTOMER OR ANY OTHER PARTY FOR ANY CONSEQUENTIAL OR INCIDENTAL
DAMAGES WHICH MAY ARISE FROM THE CUSTOMER'S ACCESS TO THE SYSTEM OR USE OF
INFORMATION OBTAINED THEREBY.
-4-
<PAGE>
c. Third-Party Data. Organizations from which State Street may obtain
certain data included in the System or the Data Access Services are solely
responsible for the contents of such data, and State Street shall have no
liability for claims arising out of the contents of such third-party data,
including, but not limited to, the accuracy thereof.
d. Regulatory Requirements. As between State Street and the Customer, the
Customer shall be solely responsible for the accuracy of any accounting
statements or reports produced using the Data Access Services and the System and
the conformity thereof with any requirements of law.
e. Force Majeure. Neither party shall be liable for any costs or damages
due to delay or nonperformance under this Agreement arising out of any cause or
event beyond such party's control, including without limitation, cessation of
services hereunder or any damages resulting therefrom to the other party, or the
Customer as a result of work stoppage, power or other mechanical failure,
computer virus, natural disaster, governmental action, or communication
disruption.
6. INDEMNIFICATION
The Customer agrees to indemnify and hold State Street harmless from any
loss, damage or expense including reasonable attorney's fees (a "loss") suffered
by State Street arising from (i) the negligence or willful misconduct in the use
by the Customer of the Data Access Services or the System, including any loss
incurred by State Street resulting from a security breach at the Designated
Location or committed by the Customer's employees or agents of the Customers and
(ii) any loss resulting from incorrect Client Originated Electronic Financial
Instructions. State Street shall be entitled to rely on the validity and
authenticity of Client Originated Electronic Financial Instructions without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by State Street from time to
time.
7. FEES
Fees and charges for the use of the System and the Data Access Services
and related payment terms shall be as set forth in the Custody Fee Schedule in
effect from time to time between the parties (the "Fee Schedule"). Any tariffs,
duties or taxes imposed or levied by any government or governmental agency by
reason of the transactions contemplated by this Agreement, including, without
limitation, federal, state and local taxes, use, value added and personal
property taxes (other than income, franchise or similar taxes which may be
imposed or assessed against State Street) shall be borne by the Customer. Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.
8. TRAINING, IMPLEMENTATION AND CONVERSION
a. Training. State Street agrees to provide training, at a designated
State Street training facility or at the Designated Location, to the Customer's
personnel in connection with the use of the System on the Designated
Configuration. The Customer agrees that it will set aside, during regular
business hours or at other times agreed upon by both parties, sufficient time to
enable all
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<PAGE>
operators of the System and the Data Access Services, designated by the
Customer, to receive the training offered by State Street pursuant to this
Agreement.
b. Installation and Conversion. State Street shall be responsible for the
technical installation and conversion ("Installation and Conversion") of the
Designated Configuration. The Customer shall have the following responsibilities
in connection with Installation and Conversion of the System:
(i) The Customer shall be solely responsible for the timely acquisition
and maintenance of the hardware and software that attach to the
Designated Configuration in order to use the Data Access Services at
the Designated Location.
(ii) State Street and the Customer each agree that they will assign
qualified personnel to actively participate during the Installation
and Conversion phase of the System implementation to enable both
parties to perform their respective obligations under this
Agreement.
9. SUPPORT
a. During the term of this Agreement, State Street agrees to provide the
support services set out in Attachment D to this Agreement.
10. TERM OF AGREEMENT
a. Term of Agreement. This Agreement shall become effective on the date of
its execution by State Street and shall remain in full force and effect until
terminated as herein provided.
b. Termination of Agreement. Either party may terminate this Agreement (i)
for any reason by giving the other party at least one-hundred and eighty days'
prior written notice in the case of notice of termination by State Street to the
Customer or thirty days' notice in the case of notice from the Customer to State
Street of termination; or (ii) immediately for failure of the other party to
comply with any material term and condition of the Agreement by giving the other
party written notice of termination. In the event the Customer shall cease doing
business, shall become subject to proceedings under the bankruptcy laws (other
than a petition for reorganization or similar proceeding) or shall be
adjudicated bankrupt, this Agreement and the rights granted hereunder shall, at
the option of State Street, immediately terminate with notice to the Customer.
This Agreement shall in any event terminate as to any Customer within 90 days
after the termination of the Custodian Agreement applicable to such Customer.
c. Termination of the Right to Use. Upon termination of this Agreement for
any reason, any right to use the System and access to the Data Access Services
shall terminate and the Customer shall immediately cease use of the System and
the Data Access Services. Immediately upon termination of this Agreement for any
reason, the Customer shall return to State Street all copies of documentation
and other Proprietary Information in its possession; provided, however, that in
the event that either party terminates this Agreement or the Custodian Agreement
for any
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<PAGE>
reason other than the Customer's breach, State Street shall provide the Data
Access Services for a period of time and at a price to be agreed upon by the
parties.
11. MISCELLANEOUS
a. Assignment; Successors. This Agreement and the rights and obligations
of the Customer and State Street hereunder shall not be assigned by either party
without the prior written consent of the other party, except that State Street
may assign this Agreement to a successor of all or a substantial portion of its
business, or to a party controlling, controlled by, or under common control with
State Street.
b. Survival. All provisions regarding indemnification, warranty, liability
and limits thereon, and confidentiality and/or protection of proprietary rights
and trade secrets shall survive the termination of this Agreement.
c. Entire Agreement. This Agreement and the attachments hereto constitute
the entire understanding of the parties hereto with respect to the Data Access
Services and the use of the System and supersedes any and all prior or
contemporaneous representations or agreements, whether oral or written, between
the parties as such may relate to the Data Access Services or the System, and
cannot be modified or altered except in a writing duly executed by the parties.
This Agreement is not intended to supersede or modify the duties and liabilities
of the parties hereto under the Custodian Agreement or any other agreement
between the parties hereto except to the extent that any such agreement
specifically refers to the Data Access Services or the System. No single waiver
or any right hereunder shall be deemed to be a continuing waiver.
d. Severability. If any provision or provisions of this Agreement shall be
held to be invalid, unlawful, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired.
e. Governing Law. This Agreement shall be interpreted and construed in
accordance with the internal laws of The Commonwealth of Massachusetts without
regard to the conflict of laws provisions thereof.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
effective as of the date hereof.
STATE STREET BANK AND TRUST COMPANY
By: _________________________________________
Title: ______________________________________
Date: _______________________________________
NOMURA PACIFIC BASIN FUND, INC.
By: _________________________________________
Title: ______________________________________
Date: _______________________________________
-8-
<PAGE>
ATTACHMENT A
Multicurrency HORIZON(R) Accounting System
System Product Description
I. The Multicurrency HORIZON(R) Accounting System is designed to provide lot
level portfolio and general ledger accounting for SEC and ERISA type
requirements and includes the following services: 1) recording of general ledger
entries; 2) calculation of daily income and expense; 3) reconciliation of daily
activity with the trial balance; and 4) appropriate automated feeding mechanisms
to (i) domestic and international settlement systems, (ii) daily, weekly and
monthly evaluation services, (iii) portfolio performance and analytic services,
(iv) customer's internal computing systems and (v) various State Street provided
information services products.
II. GlobalQuest(R) GlobalQuest(R) is designed to provide customer access to the
following information maintained on The Multicurrency HORIZON(R) Accounting
System: 1) cash transactions and balances; 2) purchases and sales; 3) income
receivables; 4) tax refund receivables; 5) daily priced positions; 6) open
trades; 7) settlement status; 8) foreign exchange transactions; 9) trade
history; and 10) daily, weekly and monthly evaluation services.
III. SaFIRe(SM). SaFIRe(SM) is designed to provide the customer with the ability
to prepare its own financial reports by permitting the customer to access
customer information maintained on the Multicurrency HORIZON(R) Accounting
System, to organize such information in a flexible reporting format and to have
such reports printed on the customer's desktop or by its printing provider.
<PAGE>
ATTACHMENT B
<PAGE>
ATTACHMENT C
Undertaking
The undersigned understands that in the course of its employment as
Investment Advisor to Nomura Pacific Basin Fund, Inc. (the "Customer") it will
have access to State Street Bank and Trust Company's ("State Street")
Multicurrency HORIZON Accounting System and other information systems
(collectively, the "System").
The undersigned acknowledges that the System and the databases, computer
programs, screen formats, report formats, interactive design techniques,
documentation, and other information made available to the Undersigned by State
Street as part of the Data Access Services provided to the Customer and through
the use of the System constitute copyrighted, trade secret, or other proprietary
information of substantial value to State Street. Any and all such information
provided by State Street to the Undersigned shall be deemed proprietary and
confidential information of State Street (hereinafter "Proprietary
Information"). The Undersigned agrees that it will hold such Proprietary
Information in confidence and secure and protect it in a manner consistent with
its own procedures for the protection of its own confidential information and to
take appropriate action by instruction or agreement with its employees who are
permitted access to the Proprietary Information to satisfy its obligations
hereunder.
The Undersigned will not attempt to intercept data, gain access to data in
transmission, or attempt entry into any system or files for which it is not
authorized. It will not intentionally adversely affect the integrity of the
System through the introduction of unauthorized code or data, or through
unauthorized deletion.
Upon notice by State Street for any reason, any right to use the System
and access to the Data Access Services shall terminate and the Undersigned shall
immediately cease use of the System and the Data Access Services. Immediately
upon notice by State Street for any reason, the Undersigned shall return to
State Street all copies of documentation and other Proprietary Information in
its possession.
NOMURA CAPITAL MANAGEMENT, INC.
By: _________________________________________
Title: ______________________________________
Date: _______________________________________
<PAGE>
ATTACHMENT D
Support
During the term of this Agreement, State Street agrees to provide the
following on-going support services:
a. Telephone Support. The Customer Designated Persons may contact State
Street's HORIZON(R) Help Desk and Customer Assistance Center between the hours
of 8 a.m. and 6 p.m. (Eastern time) on all business days for the purpose of
obtaining answers to questions about the use of the System, or to report
apparent problems with the System. From time to time, the Customer shall provide
to State Street a list of persons, not to exceed five in number, who shall be
permitted to contact State Street for assistance (such persons being referred to
as "the Customer Designated Persons").
b. Technical Support. State Street will provide technical support to
assist the Customer in using the System and the Data Access Services. The total
amount of technical support provided by State Street shall not exceed 10
resource days per year. State Street shall provide such additional technical
support as is expressly set forth in the fee schedule in effect from time to
time between the parties (the "Fee Schedule"). Technical support, including
during installation and testing, is subject to the fees and other terms set
forth in the Fee Schedule.
c. Maintenance Support. State Street shall use commercially reasonable
efforts to correct system functions that do not work according to the System
Product Description as set forth on Attachment A in priority order in the next
scheduled delivery release or otherwise as soon as is practicable.
d. System Enhancements. State Street will provide to the Customer any
enhancements to the System developed by State Street and made a part of the
System; provided that, sixty (60) days prior to installing any such enhancement,
State Street shall notify the Customer and shall offer the Customer reasonable
training on the enhancement. Charges for system enhancements shall be as
provided in the Fee Schedule. State Street retains the right to charge for
related systems or products that may be developed and separately made available
for use other than through the System.
e. Custom Modifications. In the event the Customer desires custom
modifications in connection with its use of the System, the Customer shall make
a written request to State Street providing specifications for the desired
modification. Any custom modifications may be undertaken by State Street in its
sole discretion in accordance with the Fee Schedule.
f. Limitation on Support. State Street shall have no obligation to support
the Customer's use of the System: (1) for use on any computer equipment or
telecommunication facilities which does not conform to the Designated
Configuration or (ii) in the event the Customer has modified the System in
breach of this Agreement.
Exhibit 8
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NOMURA PACIFIC BASIN FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
Table of Contents
Page
----
Article 1 Term of Appointment; Duties of the Bank..........................1
Article 2 Fees and Expenses................................................3
Article 3 Representations and Warranties of the Bank.......................4
Article 4 Representations and Warranties of the Fund.......................4
Article 5 Indemnification..................................................5
Article 6 Covenants of the Fund and the Bank...............................7
Article 7 Termination of Agreement.........................................8
Article 8 Assignment.......................................................8
Article 9 Amendment........................................................9
Article 10 Massachusetts Law to Apply.......................................9
Article 11 Merger of Agreement..............................................9
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 3rd day of June, 1985, by and between NOMURA
PACIFIC BASIN FUND, INC., a Maryland corporation, having its principal office
and place of business at 180 Maiden Lane, New York, New York 10038 (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts corporation having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer agent,
dividend disbursing agent and agent in connection with certain other activities,
and the Bank desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
the parties hereto agree as follows:
Article 1 Term of Appointment; Duties of the Bank
1.01. Subject to the terms and conditions set forth in this
Agreement, the Fund hereby employs and appoints the Bank to act as, and the Bank
agrees to act as its transfer agent for the Fund's authorized and issued shares
of its common stock ("Shares"), dividend disbursing agent and agent in
connection with any accumulation, open-account or similar plans provided to the
shareholders of the Fund ("Shareholders") and set out in the currently effective
prospectus of the Fund, including without limitation any periodic investment
plan or periodic withdrawal program.
1.02. The Bank agrees that it will perform the following services:
(a) In accordance With procedures established from time to time by
agreement between the Fund and the Bank, the Bank shall:
(i) receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation
therefor to the Custodian
<PAGE>
of the Fund authorized pursuant to the Articles of
Incorporation of the Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) receive for acceptance, redemption requests and redemption
directions and deliver the appropriate documentation therefor
to the Custodian;
(iv) at the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over
or cause to be paid over in the appropriate manner such monies
as instructed by the redeeming Shareholders;
(v) effect transfers of Shares by the registered owners thereof
upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and distributions
declared by the Fund; and
(vii) maintain records of account for and advise the Fund and its
Shareholders as to the foregoing.
(b) In addition to and not in lieu of the services set forth in the
above paragraph (a), the Bank shall: (i) perform all of the customary services
of a transfer agent, dividend disbursing agent and, as relevant, agent in
connection with accumulation, open-account or similar plans (including without
limitation any periodic investment plan or periodic withdrawal program),
including but not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, receiving and tabulating proxies,
mailing Shareholder reports and prospectuses to current Shareholders,
withholding taxes on non-resident alien accounts, preparing and filing U.S.
Treasury Department Forms 1099 and other appropriate forms required with respect
to dividends and distributions by federal authorities for all
<PAGE>
Shareholders, preparing and mailing confirmation forms and statements of account
to Shareholders for all purchases and redemptions of Shares and other
confirmable transactions in Shareholder accounts, preparing and mailing activity
statements for Shareholders, and providing Shareholder account information and
(ii) provide a system which will enable the Fund to monitor the total number of
Shares sold in each State. The Fund shall (i) identify to the Bank in writing
those transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for each State
on the system prior to activation and thereafter monitor the daily activity for
each State. The responsibility of the Bank for the Fund's blue sky State
registration status is solely limited to the initial establishment of
transactions subject to blue sky compliance by the Fund and the reporting of
such transactions to the Fund as provided above.
Procedures applicable to certain of these services may be established from
time to time by agreement between the Fund and the Bank.
Article 2 Fees and Expenses
2.01. For performance by the Bank pursuant to this Agreement, the
Fund agrees to pay the Bank an annual maintenance fee for each Shareholder
account as set out in the initial fee schedule attached hereto. Such fees and
out-of-pocket expenses and advances identified under Section 2.02 below may be
changed from time to time subject to mutual written agreement between the Fund
and the Bank.
2.02. In addition to the fee paid under Section 2.01 above, the Fund
agrees to reimburse the Bank for out-of-pocket expenses or advances incurred by
the Bank for the items set out in the fee schedule attached hereto. In addition,
any other expenses incurred by the Bank at the request or with the consent of
the Fund, will be reimbursed by the Fund.
2.03. The Fund agrees to pay all fees and reimbursable expenses
within five days following the mailing of the respective billing notice. Postage
for mailing of dividends, proxies, Fund reports and other mailings to ALL
shareholder accounts shall be advanced to the Bank by the Fund at least seven
(7) days prior to the mailing date of such materials.
<PAGE>
Article 3 Representations and Warranties of the Bank
The Bank represents and warrants to the Fund that:
3.01. It is a corporation duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts.
3.02. It is duly qualified to carry on its business in the
Commonwealth of Massachusetts.
3.03. It is empowered under applicable laws and by its charter and
by-laws to enter into and perform this Agreement.
3.04. All requisite corporate proceedings have been taken to
authorize it to enter into and perform this Agreement.
3.05. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and obligations under
this Agreement.
Article 4 Representations and Warranties of the Fund
The Fund represents and warrants to the Bank that:
4.01. It is a corporation duly organized and existing and in good
standing under the laws of.
4.02. It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
4.03. All corporate proceedings required by said Articles of
Incorporation and By-Laws have been taken to authorize it to enter into and
perform this Agreement.
4.04. It is an open-end and diversified management investment
company registered under the Investment Company Act of 1940.
<PAGE>
4.05. A registration statement under the Securities Act of 1933 is
currently effective and will remain effective, and appropriate state securities
law filings have been made and will continue to be made, with respect to all
Shares of the Fund being offered for sale.
Article 5 Indemnification
5.01. The Bank shall not be responsible for, and the Fund shall
indemnify and hold the Bank harmless from and against, any and all losses,
damages, costs, charges, counsel fees, payments, expenses and liability arising
out of or attributable to:
(a) All actions of the Bank or its agents or subcontractors required
to be taken pursuant to this Agreement, provided that such actions are taken in
good faith and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the terms of this
Agreement, or which arise out of the Fund's lack of good faith, negligence or
willful misconduct or which arise out of the breach of any representation or
warranty of the Fund hereunder.
(c) The reliance on or use by the Bank or its agents or
subcontractors of information, records and documents which (i) are received by
the Bank or its agents or subcontractors and furnished to it by or on behalf of
the Fund, and (ii) have been prepared and/or maintained by the Fund or any other
person or firm on behalf of the Fund.
(d) The reliance on, or the carrying out by the Bank or its agents
or subcontractors of any instructions or requests of the Fund.
(e) The offer or sale of Shares in violation of any requirement
under the federal securities laws or regulations or the securities laws or
regulations of any state that such Shares be registered in such state or in
violation of any stop order or other determination or ruling by any federal
agency or any state with respect to the offer or sale of such Shares in such
state.
<PAGE>
5.02. The Bank shall indemnify and hold the Fund harmless from and
against any and all losses, damages, costs, charges, counsel fees, payments,
expenses and liability arising out of or attributable to any action or failure
or omission to act by the Bank as a result of the Bank's lack of good faith,
negligence or willful misconduct.
5.03. At any time the Bank may apply to any officer of the Fund for
instructions, and may consult with legal counsel with respect to any matter
arising in connection with the services to be performed by the Bank under this
Agreement, and the Bank and its agents or subcontractors shall not be liable and
shall be indemnified by the Fund for any action taken or omitted by it in
reliance upon such instructions or upon the opinion of such counsel. The Bank,
its agents and subcontractors shall be protected and indemnified in acting upon
any paper or document furnished by or on behalf of the Fund, reasonably believed
to be genuine and to have been signed by the proper person or persons, or upon
any instruction, information, data, records or documents provided the Bank or
its agents or subcontractors by machine readable input, telex, CRT data entry or
other similar means authorized by the Fund, and shall not be held to have notice
of any change of authority of any person, until receipt of written notice
thereof from the Fund. The Bank, its agents and subcontractors shall also be
protected and indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers of
the Fund, and the proper countersignature of any former transfer agent or
registrar, or of a co-transfer agent or co-registrar.
5.04. In the event either party is unable to perform its obligations
under the terms of this Agreement because of acts of God, strikes, equipment or
transmission failure or damage reasonably beyond its control, or other causes
reasonably beyond its control, such party shall not be liable for damages to the
other for any damages resulting from such failure to perform or otherwise from
such causes.
5.05. Neither party to this Agreement shall be liable to the other
party for consequential damages under any provision of this Agreement or for any
act or failure to act hereunder.
<PAGE>
5.06. In order that the indemnification provisions contained in this
Article 5 shall apply, upon the assertion of a claim for which either party may
be required to indemnify the other, the party seeking indemnification shall
promptly notify the other party of such assertion, and shall keep the other
party advised with respect to all developments concerning such claim. The party
who may be required to indemnify shall have the option to participate with the
party seeking indemnification in the defense of such claim. The party seeking
indemnification shall in no case confess any claim or make any compromise in any
case in which the other party may be required to indemnify it except with the
other party's prior written consent.
Article 6 Covenants of the Fund and the Bank
6.01. The Fund shall promptly furnish to the Bank the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of the Bank and the execution and delivery
of this Agreement.
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto.
6.02. The Bank hereby agrees to establish and maintain facilities
and procedures reasonably acceptable to the Fund for safekeeping of stock
certificates, check forms and facsimile signature imprinting devices, if any;
and for the preparation or use, and for keeping account of, such certificates,
forms and devices.
6.03. The Bank shall keep records relating to the services to be
performed hereunder, in the form and manner as it may deem advisable. To the
extent required by Section 31 of the Investment Company Act of 1940, as amended,
and the Rules thereunder, the Bank agrees that all such records prepared or
maintained by the Bank relating to the services to be performed by the Bank
hereunder are the property of the Fund and will be preserved, maintained and
made available in accordance with such Section and Rules, and will be
surrendered promptly to the Fund on and in accordance with its request.
<PAGE>
6.04. The Bank and the Fund agree that all books, records,
information and data pertaining to the business of the other party which are
exchanged or received pursuant to the negotiation or the carrying out of this
Agreement shall remain confidential, and shall not be voluntarily disclosed to
any Other person, except as may be required by law.
6.05. In case of any requests or demands for the inspection of the
Shareholder records of the Fund, the Bank will endeavor to notify the Fund and
to secure instructions from an authorized officer of the Fund as to such
inspection. The Bank reserves the right, however, to exhibit the Shareholder
records to any person whenever it is advised by its counsel that it may be held
liable for the failure to exhibit the Shareholder records to such person.
Article 7 Termination of Agreement
7.01. This Agreement may be terminated by either party upon one
hundred twenty (120) days written notice to the other.
7.02. Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and material will
be borne by the Fund. Additionally, the Bank reserves the right to charge for
any other reasonable expenses associated with such termination and/or a charge
equivalent to the average of three (3) months' fees.
Article 8 Assignment
8.01. Except as provided in Section 8.03 below, neither this
Agreement nor any rights or obligations hereunder may be assigned by either
party without the written consent of the other party.
8.02. This Agreement shall inure to the benefit of and be binding
upon the parties and their respective permitted successors and assigns.
8.03. The Bank may, without further consent on the part of the Fund,
subcontract for the performance hereof with (i) Boston Financial Data Services,
Inc., a Massachusetts corporation ("BFDS") which is duly registered as a
transfer agent pursuant to
<PAGE>
Section 17A(c)(1) of the Securities Exchange Act of 1934 ("Section 17A(c)(l)"),
or (ii) a BFDS subsidiary duly registered as a transfer agent pursuant to
Section 17A(c)(1); provided, however, that the Bank shall be as fully
responsible to the Fund for the acts and omissions of any subcontractor as it is
for its own acts and omissions.
Article 9 Amendment
9.01. This Agreement may be amended or modified by a written
agreement executed by both parties and authorized or approved by a resolution of
the Board of Directors of the Fund.
Article 10 Massachusetts Law to Apply
10.01. This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the Commonwealth of
Massachusetts.
Article 11 Merger of Agreement
11.01. This Agreement constitutes the entire agreement between the
parties hereto and supersedes any prior agreement with respect to the subject
matter hereof whether oral or written.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in their names and on their behalf under their seals by and through
their duly authorized officers, as of the day and year first above written.
NOMURA PACIFIC BASIN FUND, INC.
BY:_________________________________
ATTEST:
_______________________
STATE STREET BANK AND TRUST COMPANY
BY:_________________________________
Vice President
ATTEST:
_______________________
Assistant Secretary
EXHIBIT 9
BROWN & WOOD LLP
ONE WORLD TRADE CENTER
NEW YORK, NEW YORK 10048-0557
TELEPHONE: 212-839-5300
FACSIMILE: 212-839-5599
May 28, 1999
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane
New York, NY 10038
Ladies and Gentlemen:
This opinion is furnished in connection with the registration by Nomura
Pacific Basin Fund, Inc., a Maryland corporation (the "Fund"), of an indefinite
number of shares of its common stock, designated Class A, Class B, and Class Z,
par value $.10 per share (the "Shares"), under the Securities Act of 1933, as
amended, pursuant to a registration statement on Form N-1A (File No. 2-96612),
as amended (the "Registration Statement").
As counsel for the Fund, we are familiar with the proceedings taken by it
in connection with the authorization, issuance and sale of the Shares. In
addition, we have examined and are familiar with the Amended and Restated
Articles of Incorporation of the Fund, the By-Laws of the Fund and such other
documents as we have deemed relevant to the matters referred to in this opinion.
Based upon the foregoing, we are of the opinion that the Shares, upon
issuance and sale in the manner referred to in the Registration Statement for
consideration not less than the par value thereof, will be legally issued, fully
paid and non-assessable shares of common stock of the Fund.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name in the prospectus and
statement of additional information constituting parts thereof.
Very truly yours,
/s/ Brown & Wood LLP
EXHIBIT 10
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 15 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated May 11, 1999, relating to the financial
statements and financial highlights appearing in the March 31, 1999 Annual
Report to Shareholders of the Nomura Pacific Basin Fund, Inc., which also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Independent Accountants" in the Statement of Additional
Information.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, NY 10036
May 26, 1999
Exhibit 12
CERTIFICATE OF SOLE STOCKHOLDER
Nomura Securities International, Inc., the holder of 10,000 shares of
Common Stock, par value $0.10 per share, of Nomura Pacific Basin Fund, Inc., a
Maryland corporation (the "Fund"), does hereby confirm to the Fund its
representation that it purchased such shares for investment purposes, with no
present intention of redeeming or reselling any portion thereof, and does
further agree that if it redeems any portion of such shares prior to the
amortization of the Fund's prepaid registration fees and organizational
expenses, the proceeds thereof will be reduced by the proportionate amount that
the total unamortized balance bears to the number of initial shares outstanding
at the time of redemption.
NOMURA SECURITIES INTERNATIONAL, INC.
By: /s/ John F. Wallace
-------------------------------
Dated: June 3, 1985
Exhibit 13
NOMURA PACIFIC BASIN FUND, INC.
DISTRIBUTION PLAN
This Distribution Plan ("Plan") is adopted as of ___________, 1999, by the
Board of Directors of Nomura Pacific Basin Fund, Inc. (the "Corporation"), a
Maryland corporation with respect to certain classes of shares ("Classes") of
the portfolios of the Corporation (the "Funds") set forth in exhibits hereto.
1. This Plan is adopted pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Act") so as to permit the Corporation to make payments
as contemplated herein, in conjunction with the distribution of Classes of the
Funds ("Shares").
2. This Plan is designed to finance (i) activities of Nomura Securities
International, Inc. ("NSI") principally intended to result in the sale of Shares
and (ii) ongoing shareholder servicing and account maintenance activities. These
activities include: (a) providing incentives to dealers ("Dealers") to sell
Shares; (b) advertising and marketing of Shares, including preparing, printing
and distributing prospectuses and sales literature to prospective shareholders
and Dealers; and (c) implementing and operating the Plan. As compensation for
services provided pursuant to this Plan, NSI will be paid a fee in respect of
the Classes set forth in the applicable exhibit.
3. Any payment to NSI in accordance with this Plan will be made pursuant
to the Distribution Agreement entered into by the Corporation and NSI. Any
payments made by NSI to Dealers with funds received as compensation under this
Plan will be made pursuant to the Dealer Agreement entered into by NSI and the
Dealer.
4. NSI has the right to select, in its sole discretion, the Dealers to
participate in the Plan and to terminate without cause and in its sole
discretion any Dealer Agreement.
5. Quarterly in each year that this Plan remains in effect, NSI shall
prepare, or cause to be prepared, and furnish to the Board of Directors of the
Corporation, and the Board of Directors shall review, a written report of the
amounts expended under the Plan and the purpose for which such expenditures were
made.
6. This Plan shall become effective with respect to each Class (i) after
approval by majority votes of (a) the Corporation's Board of Directors, (b) the
members of the Board of the Corporation who are not interested persons of the
Corporation and have no direct or indirect financial interest in the operation
of the Corporation's Plan or in any related documents to the Plan
("Disinterested Directors"), cast in person at a meeting called for the purpose
of voting on the Plan, and (c) if required by applicable law, the outstanding
voting securities of the particular Class, as defined in Section 2(a)(42) of the
Act, and (ii) upon execution of an exhibit adopting this Plan with respect to
such Class.
<PAGE>
7. This Plan shall remain in effect with respect to each Class presently
set forth on an exhibit and any subsequent Classes added pursuant to an exhibit
during the initial year of this Plan for the period of one year from the date
set forth above and may be continued thereafter if this Plan is approved with
respect to each Class at least annually by a majority of the Corporation's Board
of Directors and a majority of the Disinterested Directors, cast in person at a
meeting called for the purpose of voting on such Plan. If this Plan is adopted
with respect to a Class after the first annual approval by the Directors as
described above, this Plan will be effective as to that Class upon execution of
the applicable exhibit pursuant to the provisions of paragraph 6(ii) above and
will continue in effect until the next annual approval of this Plan by the
Directors and thereafter for successive periods of one year subject to approval
as described above.
8. All material amendments to this Plan must be approved by a vote of the
Board of Directors of the Corporation and of the Disinterested Directors, cast
in person at a meeting called for the purpose of voting on it.
9. This Plan may not be amended in order to increase materially the costs
which the Classes may bear for distribution pursuant to the Plan without being
approved by a majority vote of the outstanding voting securities of the Classes
as defined in Section 2(a)(42) of the Act.
10. This Plan may be terminated with respect to a particular Class at any
time by (a) a majority vote of the Disinterested Directors, or (b) a vote of a
majority of the outstanding voting securities of the particular Class as defined
in Section 2(a)(42) of the Act, or (c) by NSI on 60 days' notice to the
Corporation.
11. While this Plan shall be in effect, the selection and nomination of
Disinterested Directors of the Corporation shall be committed to the discretion
of the Disinterested Directors then in office.
12. All agreements with any person relating to the implementation of this
Plan shall be in writing and any agreement related to this Plan shall be subject
to termination, without penalty, pursuant to the provisions of Paragraph 10
herein.
13. This Plan shall be construed in accordance with and governed by the
laws of the State of New York.
2
<PAGE>
Nomura Pacific Basin Fund, Inc.
Pacific Basin Portfolio
Class A Shares
The following provisions are incorporated and made part of the
Distribution Plan, dated __________, 1999, of Nomura Pacific Basin Fund, Inc.
This Distribution Plan is adopted by Nomura Pacific Basin Fund, Inc. with
respect to the class of shares set forth above.
As compensation for the services provided pursuant to this Plan, NSI will
be paid a monthly fee computed at the annual rate of 1/4 of 1% of the average
aggregate net asset value of the Class A Shares of the Pacific Basin Portfolio
outstanding during the month.
Witness the due execution hereof this ___day of ________, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_____________________________________
Haruo Sawada
President
A-1
<PAGE>
Nomura Pacific Basin Fund, Inc.
Pacific Basin Portfolio
Class B Shares
The following provisions are incorporated and made part of the
Distribution Plan, dated __________, 1999, of Nomura Pacific Basin Fund, Inc.
This Distribution Plan is adopted by Nomura Pacific Basin Fund, Inc. with
respect to the class of shares set forth above.
As compensation for the services provided pursuant to this Plan, NSI will
be paid a monthly fee computed at the annual rate of 1% of the average aggregate
net asset value of the Class B Shares of the Pacific Basin Portfolio outstanding
during the month. Of this amount, 1/4 of 1% shall constitute a service fee for
ongoing shareholder servicing and account maintenance activities.
Witness the due execution hereof this ___day of __________, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_____________________________________
Haruo Sawada
President
B-1
Exhibit 15
NOMURA PACIFIC BASIN FUND, INC.
MULTIPLE CLASS PLAN
This Multiple Class Plan ("Plan") is adopted by NOMURA PACIFIC BASIN FUND, INC.
(the "Corporation"), a Maryland corporation, with respect to the classes of
shares ("Classes") of the portfolios of the Corporation (the "Funds") set forth
in Exhibits attached hereto.
1. Purpose
This Plan is adopted pursuant to Rule 18f-3 (the "Rule") under the
Investment Company Act of 1940 (the "1940 Act") in connection with the
issuance by the Corporation of more than one class of shares of any or all
of the Funds the Corporation may create from time to time in reliance on
the Rule and to make payments as contemplated herein. At the initial
effective date of this Plan, the Corporation offers one Fund, the Pacific
Basin Portfolio.
2. Separate Arrangements/Class Differences
a. Designation of Classes: The Fund or Funds set forth in Exhibits
attached hereto offer three classes of shares: Class A Shares, Class B
Shares and Class Z Shares.
b. Categories/Types of Investors Eligible to Purchase Each Class of
Shares: Class Z Shares are sold only to certain qualified investors and
other entities as defined in the statement of additional information.
c. Sales Charges:
(i) A maximum front-end sales charge of 5.75% as a percentage of
offering price is imposed on purchases of Class A Shares under
$50,000, 4.50% for purchases of at least $50,000 but under $100,000,
3.50% for purchases of at least $100,000 but under $250,000, 2.50%
for purchases of at least $250,000 but under $500,000, 2.00% for
purchases of at least $500,000 but under $1,000,000. No front-end
sales charge is imposed on purchases of $1,000,000 and above.
(ii) Class B Shares are offered at net asset value without a
front-end sales charge. A deferred sales charge of up to 5% is
imposed if an investor sells Fund shares within 6 years after
purchasing the shares.
(iii) Class Z Shares are offered at net asset value without a
front-end sales charge to shareholders in the Pacific Basin
Portfolio at the time of the 1999 multi-class conversion. Class Z
Shares also are offered to current and retired Directors of the
Corporation and to directors and current and retired employees of
Nomura
<PAGE>
Asset Management U.S.A. Inc. and Nomura Securities International,
Inc. Shareholders of the Corporation at the time of the conversion
to a multiple-class structure will have their outstanding shares
converted to Class Z Shares of the Pacific Basin Portfolio.
(iv) Specific shareholders within a Class may be subject to
contingent deferred sales charges as set forth in each Fund's
current prospectus and statement of additional information
(together, the "Prospectus").
d. Distribution (Rule 12b-1) Fees: Under the applicable Distribution Plan
adopted pursuant to Rule 12b-1 of the 1940 Act as amended, the Funds are
authorized to pay distribution fees of up to 1/4 of 1% of the average
daily net assets of Class A Shares to finance any activity which is
principally intended to result in the sale of Class A Shares.
The Funds are authorized to pay distribution fees of up to 1% of the
average daily net assets of Class B Shares to finance any activity which
is principally intended to result in the sale of Class B Shares.
Expenses incurred pursuant to the Rule 12b-1 Plan will be borne solely by
the Class A Shares and Class B Shares of the Funds.
e. Account Maintenance Fees: Class A Shares and Class B Shares bear the
expenses of the ongoing account maintenance fees applicable to the
particular Class.
f. Transfer Agency Expenses: Each Class shall bear any incremental
transfer agency cost applicable to the particular Class.
g. Other Expenses: Each Class shall bear any incremental other cost
applicable to the particular Class.
h. Minimum Investments: The minimum initial purchase for all Classes is
$2,000 and the minimum subsequent purchase is $250.
i. Voting Rights: Shareholders of each Class are entitled to one vote for
each share held and fractional votes for each fractional share held on the
record date for the election of Directors and any other matter requiring a
shareholder vote. Shareholders of the Corporation will vote in the
aggregate and not by Fund or Class except (i) as otherwise expressly
required by law or when the Directors determine that the matter to be
voted upon affects only the interests of the shareholders of a particular
Fund or Class, and (ii) only holders of Class A Shares and Class B Shares
will be entitled to vote on matters submitted to shareholder vote with
respect to the Rule 12b-1 Plan applicable to such Class.
j. Dividends: Dividends paid on each Class will be calculated in the same
manner at the same time and will differ only to the extent that any
account maintenance fee, any distribution fee and any incremental transfer
agency or other cost relates to a particular Class.
2
<PAGE>
k. Conversion Features: Holders of Class B Shares will have such
conversion features to Class A Shares as set forth in each Fund's current
Prospectus. Conversion features may vary among holders of Class B Shares.
l. Exchange Privileges: Holders of Class A Shares, Class B Shares and
Class Y Shares shall have such exchange privileges as set forth in each
Fund's current Prospectus. Exchange privileges may vary among Classes and
among holders of a Class.
m. Allocation of Income, Gains, Losses and Fundwide Expenses. Allocation
of income, gains, losses and Fundwide expenses of each Fund shall be
allocated pro rata according to the net assets of each class. Allocation
of expenses not allocated to a specific class of each Fund shall be
allocated according to the net assets or number of shareholder accounts,
each on a pro rata basis, of each class
n. Other Rights and Obligations: Except as otherwise described above, in
all respects, each Class shall have the same rights and obligations as
each other Class
3. Effectiveness
This Plan shall become effective with respect to each Class (i) to the
extent required by the 1940 Act after approval by a majority vote of (a)
the Corporation's Board of Directors and (b) the members of the Board of
Directors of the Corporation who are not interested persons of the
Corporation and have no direct or indirect financial interest in the
operation of the Corporation's Plan, and (ii) upon execution of an exhibit
adopting this Plan with respect to such Class.
4. Amendment
Any material amendment to this Plan will be effective after approval by a
majority vote of (a) the Corporation's Board of Directors and (b) the
members of the Board of the Corporation who are not interested persons of
the Corporation and have no direct or indirect financial interest in the
operation of the Corporation's Plan.
3
<PAGE>
EXHIBIT A
NOMURA PACIFIC BASIN FUND, INC.
Pacific Basin Portfolio
Class A Shares
Class B Shares
Class Z Shares
This Multiple Class Plan is adopted by Nomura Pacific Basin Fund, Inc.
with respect to the Classes of Shares of the Pacific Basin Portfolio of the
Corporation set forth above.
Witness the due execution hereof this _________ day of
____________________, 1999.
NOMURA PACIFIC BASIN FUND, INC.
By:_________________________________________
Haruo Sawada
President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<NAME> NOMURA PACIFIC BASIN FUND, INC.
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