As filed with the Securities and Exchange Commission on July 30, 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. 16 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 17 |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 10038-4936
(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. 10038-4936
(Name and Address of Agent for Service)
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Copy to:
Brown & Wood LLP
One World Trade Center
New York, N.Y. 10048-0557
Attention: John A. MacKinnon, Esq.
It is proposed that this filing will become effective (check appropriate box):
|X| immediately upon filing pursuant to paragraph (b)
|_| on (date) pursuant to paragraph (b)
|_| 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>
PROSPECTUS
Nomura Pacific Basin Fund, Inc. [GRAPHIC OMITTED]
180 Maiden Lane, New York, New York 10038-4936
(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 Advisor
Nomura Asset Management Singapore Limited--Investment Advisor
July 30, 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 ......................................... 5
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
Contingent Deferred Sales Charges for Class B Shares .................... 19
You May be Eligible for Reductions and Waivers of Contingent Deferred
Sales Charges ......................................................... 19
Distribution (12b-1) Plans .............................................. 20
Selling Fund Shares ....................................................... 20
Selling Shares Through Your Financial Advisor ........................... 20
Selling Shares Directly to the Fund ..................................... 20
Fund Distributions and Taxes .............................................. 22
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.
Principal Investment Strategies
In trying to meet its investment objective, the Fund primarily invests 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. Fund management selects the companies in which
the Fund invests using a research-driven value oriented investment approach.
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. Some of the companies in which
the Fund invests are located in markets generally considered to be emerging
markets.
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 fluctuate. These changes may occur because a
particular stock market is going down in value. At other times, there are
specific factors that may affect the value of a particular investment. The
investments that Fund management selects may underperform the stock market or
other funds with similar investment objectives and strategies. 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. Some 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 if you:
o Are investing 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 returns.
o Are not looking for a significant amount of current income.
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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 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 12.9%.
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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
---- ----- ----- -----------------
Pacific Basin Portfolio-Class A* ..... N/A N/A N/A N/A
Pacific Basin Portfolio-Class B* ..... N/A N/A N/A N/A
Pacific Basin Portfolio-Class Z+ ..... 0.4% (4.5%) 1.3% 10.3%
MSCI Pacific Basin Index** ........... 2.7% (4.0%) (3.7%) 8.8%
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* The initial subscription period for Class A and Class B shares will start
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
contingent 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 contingent 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 initial or contingent deferred 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. The Fund anticipates that its
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.
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 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, broker dealers 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 initial 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 initial sales charge for investments of $50,000 or more.
o No contingent 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 $250,000 or more are treated as orders for
Class A shares or refused.
o Contingent 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.
18
<PAGE>
Initial Sales Charges For Class A Shares
<TABLE>
<CAPTION>
Class A initial sales charges as a percentage of:
-------------------------------------------------
Amount of purchase at offering price Net amount invested Offering price*
- ------------------------------------ ------------------- ---------------
<S> <C> <C>
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**
</TABLE>
- ----------
* Offering price includes initial sales charge.
** Shares are purchased at NAV. However, a contingent 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.
Contingent 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 contingent 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%
Contingent deferred sales charges are based on the lower of the shares' cost or
current value. Shares not subject to any contingent 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 Contingent Deferred Sales
Charges. Contingent deferred sales charges may be reduced or waived under
certain circumstances and for certain groups. Information about reductions and
waivers of contingent deferred sales charges is included in the Statement of
Additional Information. As described in the Statement of Additional Information,
Class A shares may be sold without an initial sales charge or a contingent
deferred sales charge to fee-based brokerage or advisory accounts maintained for
clients of broker dealers, financial institutions, investment advisers or other
financial intermediaries. You may consult your financial advisor or Funds
Distributor, Inc. ("FDI") 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 contingent 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 contingent 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 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 will begin 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 10038-4936
Investment Advisors
Nomura Asset Management Co., Ltd.
2-1-14, Nihonbashi, Chuo-ku,
Tokyo 103-8260, Japan
Nomura Asset Management
Singapore Limited
6 Battery Road
Singapore 049909
Distributor
Funds Distributor, Inc.
60 State Street
Boston, Massachusetts 02109
Custodian
State Street Bank and Trust Company
P.O. Box 1713
Boston, Massachusetts 02105-1713
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>
State Street Bank and Trust Company ACCOUNT APPLICATION
P.O. Box 8119 NOMURA PACIFIC BASIN FUND, INC.
Boston, MA 02266-8119 PACIFIC BASIN PORTFOLIO
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 Broker 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* |_| U.S.
|_| Non-resident alien |_| Resident alien
_________________________________________
Country of citizenship (if not U.S.)
*A W-8 Form is required for non-resident
alien
- --------------------------------------------------------------------------------
2. ESTABLISHING YOUR INVESTMENT ACCOUNT
- --------------------------------------------------------------------------------
SHARE CLASS TO BE PURCHASED |_| A 1676 |_| B 1677 |_| Z 294
|_| 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 Broker
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 and 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 do not want 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 |_| ACH or |_| 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 the 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. BROKER DEALER AUTHORIZATION (FOR BROKER DEALER COMPLETION ONLY)
- --------------------------------------------------------------------------------
_______________________________________ _____________________________________
Representative Name Rep Number Branch Number
________________________________________________________________________________
Branch Office Address City State Zip Code
_______________________________________
Representatives Phone Number
_______________________________________ _____________________________________
Broker Dealer Name Broker Dealer Number
________________________________________________________________________________
Broker Dealer Main Office Address City State Zip Code
_______________________________________ _____/_____/_____
Broker Dealers Authorized Signature Date
- --------------------------------------------------------------------------------
9. 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 Funds Distributor, Inc., 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 (if any) Date
<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 10038-4936
1-800-833-0018
No broker 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 Advisors 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 30, 1999
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Nomura Pacific Basin Fund, Inc. [GRAPHIC OMITTED]
180 Maiden Lane, New York, New York 10038-4936
(Telephone: 1-800-833-0018)
- --------------------------------------------------------------------------------
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 Advisors for the Fund. The Manager and the Investment Advisors 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 Advisor
Nomura Asset Management Singapore Limited--Investment Advisor
July 30, 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 Corporation anticipates that under normal conditions at least 70% of
the Fund's 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. The Fund
anticipates that its 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. dollar. (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, broker dealers 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, broker dealers 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
Co-operation 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 broker dealer's commission or profit, other than customary broker
dealer'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 broker, 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 who are not 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 the Manager with The Nomura Securities Co.,
Ltd. ("Nomura Securities"), the Fund is prohibited from engaging in certain
transactions with Nomura Securities 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 Nomura Securities 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 Nomura
Securities 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 10038-4936.
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 Advisors act
as investment advisors.
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 contingent 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 10038-4936, is a majority-owned
subsidiary of Nomura Asset Management Co., Ltd. ("NAM"). 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 advisors to six other investment companies,
three of which are registered investment companies.
Under its management agreement with the Corporation (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 Corporation. 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 Corporation 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 Funds Distributor, Inc. ("FDI") or the Manager);
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, either FDI or the Manager 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 advisors for the Fund. NAM and NAM-Singapore
are referred to together as the "Investment Advisors".
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 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 the
years ended 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 from, or reimbursed expenses to, the Fund of
$77,926 and $98,715 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
all or 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
Corporation 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 an initial sales charge payable at
the time of purchase. The prospectus contains a table of applicable initial
sales charges. Certain purchases of Class A shares may be exempt from an initial
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 an initial 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.
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 initial sales charge, if any. No initial 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 broker 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 broker dealer receives the order before the
close of regular trading on the New York Stock Exchange (currently, 4:00 p.m.
Eastern time). Broker 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 broker 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 an
initial 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 Initial Sales Charges or Contingent Deferred Sales Charges.
The Fund may sell Class A shares without an initial sales charge or CDSC
to:
(i) registered representatives and other employees of broker dealers
having sales agreements with FDI; employees of financial
institutions having sales agreements with FDI 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" or other fee-based brokerage or advisory accounts
maintained for clients of broker dealers, financial institutions,
investment advisors or financial intermediaries who have entered
into agreements with FDI with respect to such accounts, which in all
cases shall be subject to a wrap or other fee economically
comparable to an initial 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. FDI at its expense or at the expense of the
Manager, may make certain payments to broker dealers and other financial
institutions which satisfy certain criteria established from time to time by FDI
or the Manager relating to increasing net sales of shares of the Fund over prior
periods, and certain other factors.
ADDITIONAL INFORMATION ABOUT CLASS A SHARES. The Distributor's commission
is the initial sales charge shown in the prospectus less any applicable broker
dealer discount. FDI will give broker dealers ten days' notice of any
11
<PAGE>
changes in the broker dealer discount. FDI retains the entire initial sales
charge of any retail sales made by it and monies sent to the Transfer Agent with
no broker dealer assigned to the sale.
The public offering price of Class A shares is the net asset value plus an
initial sales charge that varies depending on the size of your purchase. The
Fund receives the net asset value. The initial sales charge is allocated between
your broker dealer and FDI as shown in the following table, except when FDI, in
its discretion, allocates the entire amount to your broker dealer.
<TABLE>
<CAPTION>
Initial Sales Charge as a Sales Charge Reallowed to Broker 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
initial 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 initial 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 FDI with sufficient information
to verify that the purchase qualifies for the privilege or discount, the
shareholder must furnish this information to FDI when making direct cash
investments.
12
<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 initial 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 initial 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
initial sales charge, the initial 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 initial 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 initial 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 initial sales charge, the
proceeds of which will be paid to the investor's broker dealer and FDI in
accordance with the prospectus. If the account exceeds an amount that would
otherwise qualify for a reduced initial sales charge, that reduced initial sales
charge will be applied.
Statements of Intention are not available for certain employee benefit
plans. Statement of Intention forms may be obtained from FDI, 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 initial 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 FDI.
Interested groups should contact their financial advisor, broker dealer or
FDI. The Fund reserves the right to revise the terms of or to suspend or
discontinue group sales at any time.
13
<PAGE>
QUALIFIED PLANS. An employer-sponsored retirement plan participating in a
"multi-fund" program approved by FDI 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 FDI.
Contingent Deferred Sales Charge
CDSCs on Class A Purchases Orders of $1 million. Purchase orders of Class
A shares of $1 million or more will not be subject to an initial sales charge.
Class A shares purchased at net asset value, without an initial 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 broker dealer of record waived its
commission with FDI 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, FDI 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. FDI 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. FDI 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.
General. 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 Individual Retirement Account ("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 Corporation 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 Corporation 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
Corporation or the relevant class of the Corporation, 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.
FDI pays service fees to qualifying broker dealers at the rates set forth
in the prospectus. FDI will pay service fees to the broker dealer of record of
up to 0.25% of average net assets, depending on the level of services provided
by the broker dealer of record, and by third parties. Service fees are paid
quarterly to the broker dealer of record for that quarter.
Except as otherwise agreed between FDI and a broker dealer, for purposes
of determining the amounts payable to broker dealers for shareholder accounts
for which such broker 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 FDI 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.
Reinstatement Privilege
An investor who has redeemed shares of the Fund may reinstate (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 reinstatement would be at the net asset value of the
shares of the Fund next determined after FDI 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 FDI 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 reinstated in shares of the Fund, some or all of the
loss may be disallowed as a deduction. Consult your tax advisor. Investors who
desire to exercise the Reinstatement Privilege should contact their financial
advisor, broker dealer or FDI.
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.
16
<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 Corporation. 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
Initial 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 initial
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
Corporation, 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 broker 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 Corporation does
not necessarily pay the lowest commission or spread available. The Corporation
has no obligation to deal with any broker dealer or group of broker dealers in
execution of transactions in portfolio securities. The Corporation 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 broker dealers differ from, and in
some countries may be less than, the supervision and regulation of exchanges and
broker dealers in the U.S.
The Fund may invest in securities traded in over-the-counter markets and
intends to deal directly with the broker 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 Corporation are prohibited from dealing with the
Corporation as principal in the purchase and sale of securities. Since
transactions in the over-the-counter market usually involve transactions with
broker dealers acting as principal for their own account, the Corporation 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 commissions
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
18
<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 broker dealers 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 an affiliate of
the Manager acting as a broker dealer for the Corporation 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 Corporation, and annual
statements as to aggregate compensation will be provided to the Corporation.
SHAREHOLDER SERVICES
The Corporation 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 Corporation or FDI.
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
an initial 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 IRAs and Money
Purchased and Profit Plans. Copies of plans to establish such accounts are
available from First Trust Corporation (800) 525-2124.
19
<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
advisors with respect to the establishment and maintenance of any such plan.
DIVIDENDS, DISTRIBUTIONS AND TAXES
It is the Corporation's intention to distribute substantially all of the
Fund's 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 an
initial 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 Corporation intends to continue to qualify for the special tax
treatment afforded a regulated investment company ("RIC") under the Code. If it
so qualifies, the Corporation (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 Corporation intends to distribute
substantially all of such income.
Dividends paid by the Corporation from the Fund's 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 advisors 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 Corporation 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 Corporation may be eligible to make an
election with respect to certain PFICs in which the Fund 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
Corporation 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
Corporation 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 the Fund 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 advisors 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 Corporation may from time to time include the Fund's 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 initial 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 June 30, 1999, Ms. Barbara H. Stanton, 133 East 64 St New York, N.Y.
10021-7045, owned 6.9% and Charles Schwab & Co. Inc., 101 Montgomery Street, San
Francisco, CA 94104-4122, special Custody Account for the exclusive benefit of
customers owned 6.7% of the Class Z shares of the Fund and, therefore, are
deemed to be "affiliated persons" of the Fund.
Independent Accountants
PricewaterhouseCoopers LLP has been selected as the independent
accountants of the Fund. The selection of the 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 Corporation ends on March 31 each year. The
Corporation 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 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 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 Initial 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
Reinstatement 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.
[GRAPHIC OMITTED]
Statement of Additional
Information
July 30, 1999
================================================================================
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits.
Exhibit
Number Description
------- -----------
1(a) --Amended and Restated Articles of Incorporation. (a)
(b) --Articles Supplementary. (a)
2 --By-Laws of Registrant. (a)
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. (b)
4(a) --Form of Management Agreement between Registrant and Nomura Asset
Management U.S.A. Inc. (a)
(b) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Co., Ltd. (a)
(c) --Form of Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Singapore Ltd.
(a)
5(a) --Form of Distribution Agreement between Registrant and Funds
Distributor, Inc.
(b) --Form of Selling Agreement.
6 --None.
7(a) --Custodian Contract between Registrant and State Street Bank and
Trust Company. (a)
(b) --Amendment to the Custodian Contract dated April 1997. (a)
(c) --Amendment to the Custodian Contract dated April 12, 1989. (a)
(d) --Amendment to the Custodian Contract, executed in 1987. (a)
(e) --Amendment to the Custodian Contract dated March 7, 1986. (a)
(f) --Data Access Services Addendum to Custodian Contract. (a)
8(a) --Transfer Agency Agreement between Registrant and State Street Bank
and Trust Company.
(b) --Expense Reimbursement Agreement between the Registrant and Nomura
Asset Management U.S.A. Inc. (a)
(c) --Form of Services Agreement between the Registrant and Funds
Distributor, Inc.
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. (a)
13 --Form of Distribution Plan.
14 --Financial Data Schedule.
15 --Multiple Class Plan pursuant to Rule 18f-3. (a)
- ----------
(a) Filed as an Exhibit to Post-Effective Amendment No. 15 to the Registrants
Registration Statement on Form N-1A filed on May 28, 1999.
(b) 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 Advisors.
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 advisor 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 10038-4936.
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>
Nobuo Katayama .............. President and Director Marketing Officer of NAM from 1997 to 1999.
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.
Michael A. Morrongiello ..... Senior Vice President Vice President of Bankers Trust Company from
1988 to 1998.
</TABLE>
(b) NAM provides investment advisory services to Japanese and
international clients. NAM is an investment advisor 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 103-8260, 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 President of NAM from 1997 to 1999, Advisor 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.
Akira Kiyokawa .............. President President of The Nomura Trust and Banking
Co. Ltd. from 1993 to 1999.
Atsushi Kinebuchi ........... Executive Managing Director None.
Takanori Tanabe ............. Executive Managing Director None.
Hisaaki Hino ................ Executive Managing Director Director of Morgan Trust Bank from
1993 to 1998.
Kenjiro Hayashi ............. Director Executive Vice President of Nomura Research
Institute from 1992 to present.
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.
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.
Yukio Suzuki ................ Executive Officer Director of Nomura from 1997 to 1999.
Mitsunori Minamio .......... Executive Officer Director of NAM from 1996 to 1998,
General Manager of Nomura from 1995 to 1996.
Yasunobu Watase ............. Executive Officer Director of Nomura from 1997 to 1999.
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 Miyaji ................. Executive Officer Investment Officer of NAM in 1998,
Director of Research of The Sumitomo Trust
and Banking Co., Ltd. from 1995 to 1998.
Masato Tanaka ............... Executive Officer General Manager of Nomura from 1996 to 1999.
Takahisa Matsuura ........... Executive Officer Senior Investment Officer of NAM from 1998
to 1999 and General Manager of Nomura from
1996 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-advisor 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>
Hajime Kobayashi ............ Managing Director Managing Director of Nomura Asset Management
Australia Pty. Ltd. since 1996.
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) Funds Distributor, Inc. (the "Distributor") acts as principal
underwriter for the following investment companies (other than the Fund).
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick Investment Trust
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Orbitex Group of Funds
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
SoGen Funds, Inc.
SoGen Variable Funds. Inc.
St. Clair Funds, Inc.
The Skyline Funds
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
Funds Distributor, Inc. is registered with the Securities and Exchange
Commission as a broker-dealer and is a member of the National Association of
Securities Dealers. Funds Distributor, Inc. is located at 60 State Street, Suite
1300, Boston, Massachusetts 02109. Funds Distributor, Inc. is an indirect
wholly-owned subsidiary of Boston Institutional Group, Inc., a holding company
all of whose outstanding shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of Funds Distributor, Inc.
Director, President and Chief ................. Marie E. Connolly
Executive Officer
Executive Vice President ...................... George A. Rio
Executive Vice President ...................... Donald R. Roberson
Executive Vice President ...................... William S. Nichols
Senior Vice President, General ................ Margaret W. Chambers
Counsel, Chief Compliance Officer,
Secretary and Clerk
Director, Senior Vice President, .............. Joseph F. Tower, III
Treasurer and Chief Financial
Officer
Senior Vice President ......................... Paula R. David
Senior Vice President ......................... Gary S. MacDonald
Senior Vice President ......................... Judith K. Benson
Chairman of the Board ......................... William J. Nutt
(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
10038-4936) and State Street Bank and Trust Company (P.O. Box 1713, Boston,
Massachusetts 02105-1713).
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 certifies that it meets all of
the requirements for effectiveness of this Amendment to its Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and 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 30th day of July 1999.
NOMURA PACIFIC BASIN FUND, INC.
(REGISTRANT)
By /s/ NOBUO KATAYAMA
...................................
(Nobuo Katayama, 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/ NOBUO KATAYAMA President and Director July 30, 1999
................................ (Principal Executive Officer)
(Nobuo Katayama)
/s/ JOHN F. WALLACE Vice President and Director
................................ (Principal Financial and July 30, 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 July 30, 1999
..................................
(John F. Wallace, Attorney-in-Fact)
C-7
<PAGE>
Exhibit
Number EXHIBIT INDEX
------- -------------
5(a) --Form of Distribution Agreement between Registrant and Funds
Distributor Inc.
(b) --Form of Selling Agreement.
8(a) --Transfer Agency and Servicing Agreement between Registrant and
State Street Bank and Trust Company.
(b) --Form of Services Agreement between Registrant and Funds
Distributor, Inc.
9 --Opinion and Consent of Brown & Wood LLP, counsel to the Registrant.
10 --Consent of PricewaterhouseCoopers LLP, independent accountants for
the Registrant.
13 --Form of Distribution Plan.
14 --Financial Data Schedule.
Exhibit 5(a)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 29th day of July, 1999 by and between the
open-end management investment company listed on Schedule A, attached hereto,
together with all other open-end management investment companies subsequently
established and made subject to this Agreement in accordance with Section 4.3
below (each a "Fund", collectively the "Funds") and Funds Distributor, Inc., a
Massachusetts corporation ("FDI").
WHEREAS, the common stock of the Fund is currently divided into a number
of separate series of shares, or funds, each corresponding to a distinct
portfolio of securities (each a "Series"), and many of which are also divided
into multiple classes of shares. For purposes of this Agreement the term
"Shares" shall mean the authorized shares of the relevant Series, if any, and
otherwise shall mean the Fund's authorized shares;
WHEREAS, FDI is registered as a broker-dealer with the Securities and
Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (the "1934
Act") and is a member of the National Association of Securities Dealers, Inc.
(the "NASD");
WHEREAS, Nomura Asset Management U.S.A. Inc. (the "Manager") is the
registered investment adviser to the Fund pursuant to the Management Agreement
between the Manager and the Fund;
WHEREAS, the Board of Directors of the Fund wishes to engage FDI to act as
the distributor for the Fund and FDI is willing to render such service;
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
set forth below, the parties agree as follows:
1. Services as Distributor
1.1 FDI will act as agent for the distribution of Shares covered by, and
in accordance with, the registration statement and prospectus then in effect
under the Securities Act of 1933, as amended (the "1933 Act"), and will transmit
promptly any orders received by FDI for purchase or redemption of Shares to the
Transfer and Dividend Disbursing Agent for the Fund of which the Fund has
notified FDI in writing.
1.2 FDI agrees to use its best efforts to solicit orders for the sale of
Shares. It is contemplated that FDI may enter into sales or servicing agreements
with securities dealers, financial institutions and other industry
professionals, such as investment advisers, accountants and estate planning
firms, and in so doing FDI will act only on its own behalf as principal.
1.3 FDI shall act as distributor of Shares in compliance with all
applicable laws, rules and regulations, including, without limitations, the
Investment Company Act of 1940, as amended (the "1940 Act"), the 1933 Act, 1934
Act and the Rules of the NASD, the Fund's Articles of Incorporation and By-Laws.
FDI represents and warrants that it is a broker-dealer registered with the SEC
and that it is registered with the relevant securities regulatory agencies in
all fifty states, the District of Columbia and Puerto Rico. FDI also represents
and warrants that it is a member of the NASD.
1
<PAGE>
1.4 FDI shall file Fund advertisements, sales literature and other
marketing and sales related materials with the appropriate regulatory agencies
and shall obtain such approvals for their use as may be required by the SEC, the
NASD and/or state securities administrators.
1.5 Whenever in their judgment such action is warranted by unusual market,
economic or political conditions, or by abnormal circumstances of any kind
deemed by the parties hereto to render sales of a Fund's Shares not in the best
interest of the Fund, the parties hereto may decline to accept any orders for,
or make any sales of, any Shares until such time as those parties deem it
advisable to accept such orders and to make such sales and each party shall
advise promptly the other party of any such determination.
1.6 The Fund agrees to pay all costs and expenses in connection with the
registration of Shares under the 1933 Act and all expenses in connection with
maintaining facilities for the issue and transfer of Shares and for supplying
information, prices and other data to be furnished by the Fund hereunder, and
all expenses in connection with the preparation and printing of the Fund's
prospectuses and statements of additional information for regulatory purposes
and for distribution to shareholders; provided however, that the Fund shall not
pay any of the costs of advertising or promotion for the sale of Shares, except
as authorized by a plan adopted pursuant to Rule 12b-1 under the 1940 Act. FDI
shall also be entitled to compensation for FDI's services as provided in any
Distribution Plan adopted as to any Series and class of the Fund's Shares
pursuant to Rule 12b-1.
1.7 The Fund agrees to execute any and all documents and to furnish any
and all information and otherwise to take all actions which may be reasonably
necessary in the discretion of the Fund's officers in connection with the
qualification of Shares for sale in such states as FDI may designate to the Fund
and the Fund may approve, and the Fund agrees to pay all expenses which may be
incurred in connection with such qualification. FDI shall pay all expenses
connected with its own qualification as a dealer under state or Federal laws
and, except as otherwise specifically provided in this Agreement, all other
expenses incurred by FDI in connection with the sale of Shares as contemplated
in this Agreement.
1.8 The Fund shall furnish FDI from time to time, for use in connection
with the sale of Shares, such information with respect to the Fund or any
relevant Series and the Shares as FDI may reasonably request, all of which shall
be signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such information, when so signed
by the Fund's officers, shall be true and correct. The Fund also shall furnish
FDI upon request with: (a) semi-annual reports and annual audited reports of the
Fund's books and accounts made by independent public accountants regularly
retained by the Fund, (b) quarterly earnings statements prepared by the Fund,
(c) a monthly itemized list of the securities in the Fund's or, if applicable,
each Series' portfolio, (d) monthly balance sheets as soon as practicable after
the end of each month, and (e) from time to time such additional information
regarding the Fund's financial condition as FDI may reasonably request.
1.9 The Fund represents to FDI that all registration statements and
prospectuses filed by the Fund with the SEC under the 1933 Act and under the
1940 Act with respect to the Shares have been carefully prepared in conformity
with the requirements of said Acts and rules and regulations of the SEC
thereunder. As used in this Agreement the terms "registration statement" and
"prospectus" shall mean any registration statement and prospectus, including the
statement
2
<PAGE>
of additional information incorporated by reference therein, filed with the SEC
and any amendments and supplements thereto which at any time shall have been
filed with said Commission. The Fund represents and warrants to FDI that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Acts and the rules and regulations of said Commission; that
all statements of fact contained in any such registration statement and
prospectus will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus when
such registration statement becomes effective will include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading. The Fund
may, but shall not be obligated to, propose from time to time such amendment or
amendments to any registration statement and such supplement or supplements to
any prospectus as, in the light of future developments, may, in the opinion of
the Fund's counsel, be necessary or advisable. If the Fund shall not propose
such amendment or amendments and/or supplement or supplements within fifteen
days after receipt by the Fund of a written request from FDI to do so, FDI may,
at its option, terminate this Agreement or decline to make offers of the Fund's
securities until such amendments are made. The Fund shall not file any amendment
to any registration statement or supplement to any prospectus without giving FDI
reasonable notice thereof in advance; provided, however, that nothing contained
in this Agreement shall in any way limit the Fund's right to file at any time
such amendments to any registration statement and/or supplements to any
prospectus, of whatever character, as the Fund may deem advisable, such right
being in all respects absolute and unconditional.
1.10 The Fund authorizes FDI and any dealers with whom FDI has entered
into dealer agreements to use any prospectus in the form furnished by the Fund
in connection with the sale of Shares. The Fund agrees to indemnify, defend and
hold FDI, its several officers and directors, and any person who controls FDI
within the meaning of Section 15 of the 1933 Act free and harmless from and
against any and all claims, demands, liabilities and expenses (including the
reasonable cost of investigating or defending such claims, demands or
liabilities and any reasonable counsel fees incurred in connection therewith)
which FDI, its officers and directors, or any such controlling persons, may
incur under the 1933 Act, the 1940 Act, or common law or otherwise, arising out
of or on the basis of any untrue statement, or alleged untrue statement, of a
material fact required to be stated in either any registration statement or any
prospectus or any statement of additional information, or arising out of or
based upon any omission, or alleged omission, to state a material fact required
to be stated in any registration statement, any prospectus or any statement of
additional information or necessary to make the statements in any of them not
misleading, except that the Fund's agreement to indemnify FDI, its officers or
directors, and any such controlling person will not be deemed to cover any such
claim, demand, liability or expense to the extent that it arises out of or is
based upon any such untrue statement, alleged untrue statement, omission or
alleged omission made in any registration statement, any prospectus or any
statement of additional information in reliance upon information furnished by
FDI, its officers, directors or any such controlling person to the Fund or its
representatives for use in the preparation thereof, and except that the Fund's
agreement to indemnify FDI and the Fund's representations and warranties set out
in paragraph 1.9 of this Agreement will not be deemed to cover any liability to
the Fund or its shareholders to which FDI would otherwise be subject by reason
of willful misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and duties
under this Agreement ("Disqualifying Conduct"). The Fund's agreement to
indemnify FDI, its officers and directors, and any such controlling person, as
aforesaid, is expressly conditioned upon the Fund's being
3
<PAGE>
notified of any action brought against FDI, its officers or directors, or any
such controlling person, such notification to be given by letter, by facsimile
or by telegram addressed to the Fund at its address set forth above within a
reasonable period of time after the summons or other first legal process shall
have been served. The failure so to notify the Fund of any such action shall not
relieve the Fund from any liability which the Fund may have to the person
against whom such action is brought by reason of any such untrue, or alleged
untrue, statement or omission, or alleged omission, otherwise than on account of
the Fund's indemnity agreement contained in this paragraph 1.10. The Fund will
be entitled to assume the defense of any suit brought to enforce any such claim,
demand or liability, but, in such case, such defense shall be conducted by
counsel of good standing chosen by the Fund and approved by FDI. In the event
the Fund elects to assume the defense of any such suit and retain counsel of
good standing approved by FDI, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them;
but in case the Fund does not elect to assume the defense of any such suit, the
Fund will reimburse FDI, its officers and directors, or the controlling person
or persons named as defendant or defendants in such suit, for the reasonable
fees and expenses of any counsel retained by FDI or them. The Fund's
indemnification agreement contained in this paragraph 1.10 and the Fund's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
FDI, its officers and directors, or any controlling person, and shall survive
the delivery of any Shares. This agreement of indemnity will inure exclusively
to FDI's benefit, to the benefit of FDI's several officers and directors, and
their respective estates, and to the benefit of any controlling persons and
their successors. The Fund agrees promptly to notify FDI of the commencement of
any litigation or proceedings against the Fund or any of its officers or Board
members in connection with the issue and sale of Shares.
1.11 FDI agrees to indemnify, defend and hold the Fund, its several
officers and Board members, and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act free and harmless from and against any and
all claims, demands, liabilities and expenses (including the reasonable cost of
investigating or defending such claims, demands or liabilities and any
reasonable counsel fees incurred in connection therewith) which the Fund, its
officers or Board members, or any such controlling person, may incur under the
1933 Act, the 1940 Act, or under common law or otherwise, but only to the extent
that such liability or expense incurred by the Fund, its officers or Board
members, or such controlling person resulting from such claims or demands, (a)
shall arise out of or be based upon any unauthorized sales literature,
advertisements, information, statements or representations or any Disqualifying
Conduct in connection with the offering and sale of any Shares, or (b) shall
arise out of or be based upon any untrue, or alleged untrue, statement of a
material fact contained in information furnished in writing by FDI to the Fund
specifically for use in the Fund's registration statement and used in the
answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus or statement of additional
information, or shall arise out of or be based upon any omission, or alleged
omission, to state a material fact in connection with such information furnished
in writing by FDI to the Fund and required to be stated in such answers or
necessary to make such information not misleading. FDI's agreement to indemnify
the Fund, its officers and Board members, and any such controlling person, as
aforesaid, is expressly conditioned upon FDI being notified of any action
brought against the Fund, its officers or Board members, or any such controlling
person, such notification to be given by letter, by facsimile or by telegram
addressed to FDI at its address set forth above within a reasonable period of
time after the summons or other first legal process shall have been served. FDI
shall have the right to control the defense of such action, with counsel of its
own choosing, satisfactory to the Fund, if
4
<PAGE>
such action is based solely upon such alleged misstatement or omission on FDI's
part, and in any other event the Fund, its officers or Board members, or such
controlling person shall each have the right to participate in the defense or
preparation of the defense of any such action. The failure so to notify FDI of
any such action shall not relieve FDI from any liability which FDI may have to
the Fund, its officers or Board members, or to such controlling person by reason
of any such untrue, or alleged untrue, statement or omission, or alleged
omission, otherwise than on account of FDI's indemnity agreement contained in
this paragraph 1.11. This agreement of indemnity will inure exclusively to the
Fund's benefit, to the benefit of the Fund's officers and Board members, and
their respective estates, and to the benefit of any controlling persons and
their successors. FDI agrees promptly to notify the Fund of the commencement of
any litigation or proceedings against FDI or any of its officers or directors in
connection with the issue and sale of Shares.
1.12 No Shares shall be offered by either FDI or the Fund under any of the
provisions of this Agreement and no orders for the purchase or sale of such
Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 10 of said
Act, as amended, is not on file with the SEC; provided, however, that nothing
contained in this paragraph 1.12 shall in any way restrict or have an
application to or bearing upon the Fund's obligation to repurchase any Shares
from any shareholder in accordance with the provisions of the Fund's prospectus
or charter documents.
1.13 The Fund agrees to advise FDI immediately in writing:
(a) of any request by the SEC for amendments to the registration
statement or prospectus then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the registration statement or prospectus
then in effect or the initiation of any proceeding for that purpose;
(c) of the happening of any event which makes untrue any statement
of a material fact made in the registration statement or prospectus then
in effect or which requires the making of a change in such registration
statement or prospectus in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect to any amendments to any
registration statement or prospectus which may from time to time be filed
with the SEC.
2. Offering Price
Shares of any class of the Fund offered for sale by FDI shall be offered
at a price per share (the "Offering Price") approximately equal to (a) the net
asset value (determined in the manner set forth in the Fund's charter documents)
plus (b) a sales charge, if any and except to those persons set forth in the
then-current prospectus, which shall be the percentage of the Offering Price of
such Shares as set forth in the Fund's then-current prospectus. The Offering
Price, if not an exact multiple of one cent, shall be adjusted to the nearest
cent. In addition, Shares of any class of the Fund offered for sale by FDI may
be subject to a contingent deferred
5
<PAGE>
sales charge as set forth in the Fund's then-current prospectus. FDI shall be
entitled to receive any sales charge or contingent deferred sales charge in
respect of the Shares. Any payments to dealers shall be governed by a separate
agreement between FDI and such dealer and the Fund's then-current prospectus.
3. Term
This Agreement shall become effective with respect to the Fund as of the
date hereof and will continue for an initial two-year term and will continue
thereafter so long as such continuance is specifically approved at least
annually (i) by the Fund's Board or (ii) by a vote of a majority of the Shares
of the Fund or the relevant Series, as the case may be, provided that in either
event its continuance also is approved by a majority of the Board members who
are not "interested persons" of any party to this Agreement, by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable with respect to a Fund, without penalty, on not less
than sixty days' notice, by the Fund's Board of Directors, by vote of a majority
of the outstanding voting securities of such Fund, or by FDI. This Agreement
will automatically and immediately terminate in the event of its "assignment."
(As used in this Agreement, the terms "majority of the outstanding voting
securities," "interested person" and "assignment" shall have the same meanings
as such terms have in the 1940 Act). FDI agrees to notify the Fund immediately
upon the event of its expulsion or suspension by the NASD. This Agreement will
automatically and immediately terminate in the event of FDI's expulsion or
suspension by the NASD.
4. Miscellaneous
4.1 The Fund recognizes that, except to the extent otherwise agreed to by
the parties hereto, FDI's directors, officers and employees may from time to
time serve as directors, trustees, officers and employees of corporations and
business trusts (including other investment companies), and that FDI or FDI's
affiliates may enter into distribution or other agreements with other
corporations and trusts.
4.2 No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
4.3 This Agreement and the Schedules forming a part hereof may be amended
at any time by a writing signed by each of the parties hereto. In the event that
the Board members of any additional funds indicate by vote that such funds are
to be made parties to this Agreement, whether such funds were in existence at
the time of the effective date of this Agreement or subsequently formed,
Schedule A hereto shall be amended to reflect the addition of such new funds and
such new funds shall thereafter become parties hereto. In the event that any of
the Funds listed on Schedule A terminates its registration as a management
investment company, or otherwise ceases operations, Schedule A shall be amended
to reflect the deletion of such Fund and its various classes.
4.4 This Agreement shall be governed by the internal laws of The
Commonwealth of Massachusetts without giving effect to principles of conflicts
of laws.
6
<PAGE>
4.5 If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors.
IN WITNESS WHEREOF, the parties have executed this Agreement by a duly
authorized representative of the parties hereto.
NOMURA PACIFIC BASIN FUND, INC.
By: ____________________________
Name: John F. Wallace
Title: Vice President
FUNDS DISTRIBUTOR, INC.
By: ________________________________
Name: _____________________________
Title: ______________________________
7
<PAGE>
SCHEDULE A
FUNDS
NOMURA PACIFIC BASIN FUND, INC.
(Pacific Basin Portfolio)
8
SELLING AGREEMENT
Dear Sirs:
As the principal underwriter of shares of certain registered
investment companies presently or hereafter managed, advised or administered by
Nomura Asset Management U.S.A. Inc., shares of which companies are distributed
by us at their respective net asset values plus sales charges as applicable,
pursuant to our Distribution Agreements with such companies (the "Funds"), we
invite you to participate as a non-exclusive principal in the distribution of
shares of any and all of the Funds upon the following terms and conditions:
1. You are to offer and sell such shares only at the public offering prices
that shall be currently in effect, in accordance with the terms of the then
current prospectuses and statements of additional information of the Funds
subject in each case to the delivery prior to or at the time of such sales
of the then current prospectus. You agree to act only as agent in such
transactions and nothing in this Agreement shall constitute either of us
the agent of the other or shall constitute you or the Funds the agent of
the other. In all transactions in these shares between you and us, we are
acting as agent for the Funds and not as principal. All orders are subject
to acceptance by us and become effective only upon confirmation by us. We
reserve the right in our sole discretion to reject any order. The minimum
dollar purchase of shares of the Funds shall be the applicable minimum
amounts described in the then current prospectuses and statements of
additional information and no order for less than such amounts will be
accepted, unless such purchase shall be expressly approved by the Funds in
accordance with the then current prospectuses.
2. On each purchase of shares by you from us, the total sales charges and
discount to selected dealer, if any, shall be as stated in each Fund's then
current prospectus.
Such sales charges and discount to selected dealers are subject to
reductions under a variety of circumstances as described in each Fund's
then current prospectus and statement of additional information. To obtain
these reductions, we must be notified when the sale takes place which would
qualify for the reduced charge.
There is no sales charge or discount to selected dealers on the
reinvestment of any dividends or distributions.
3. All purchases of shares of a Fund made under any cumulative purchase
privilege as set forth in a Fund's then current effective Prospectus shall
be considered an individual transaction for the purpose of determining the
concession from the public offering price to which you are entitled as set
forth in paragraph 2 hereof.
4. As an authorized agent to sell shares of the Funds, you agree to purchase
shares of the Funds only through us or from your customers. Purchases
through us shall be made only for your own investment purposes or for the
purpose of covering purchase orders already received from your customers,
and we agree that we will not place orders for the purchase of shares from
a Fund except to cover purchase orders already received by us. Purchases
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<PAGE>
from your customers shall be at a price not less than the net asset value
quoted by each such Fund at the time of such purchase. Nothing herein
contained shall prevent you from selling any shares of a Fund for the
account of a record holder to us or to such Fund at the net asset value
quoted by us and charging your customer a fair commission for handling the
transaction.
5. You agree that you will not withhold placing customers' orders so as to
profit yourself as a result of such withholding.
6. You agree to sell shares of the Funds only (a) to your customers at the
public offering prices then in effect or (b) to us as agent for the Funds
or to each such Fund itself at the redemption price, as described in each
Fund's then current effective Prospectus.
7. Settlement shall be made promptly, but in no case later than the time
customary for such payments after our acceptance of the order or, if so
specified by you, we will make delivery by draft on you, the amount of
which draft you agree to pay on presentation to you. If payment is not so
received or made, the right is reserved forthwith to cancel the sale or at
our option to resell the shares to the applicable Fund, at the then
prevailing net asset value in which latter case you agree to be responsible
for any loss resulting to such Fund or to us from your failure to make
payment as aforesaid.
8. If any shares sold to you under the terms of this Agreement are repurchased
by a Fund or by us as agent, or purchased for the account of that Fund or
tendered to that Fund for purchase at liquidating value under the terms of
the Declaration of Trust or other document governing such Fund within seven
(7) business days after the date of confirmation to you of your original
purchase order therefor, you agree to pay forthwith to us the full amount
of the concession allowed to you on the original sale and we agree to pay
such amount to the Fund when received by us. We shall notify you of such
repurchase within ten (10) days of the effective date of such repurchase.
9. All sales will be subject to receipt of shares by us from the Funds. We
reserve the right in our discretion, without notice to you, to suspend
sales or withdraw the offering of shares entirely, or to modify or cancel
this Agreement.
10. From time to time during the term of this Agreement we may make payments to
you pursuant to one or more of the distribution and/or service plans
adopted by certain of the Funds pursuant to Rule 12b-1 under the Investment
Company Act of 1940 (the "Act") in consideration of your furnishing
distribution and/or shareholder services hereunder with respect to each
such Fund. We have no obligation to make any such payments and you hereby
waive any such payments until we receive monies therefor from the Fund. Any
such payments made pursuant to this Section 10 shall be subject to the
following terms and conditions:
(a) Any such payments shall be in such amounts as we may from time to time
advise you in writing but in any event not in excess of the amounts
permitted by the plan in effect with respect to each particular Fund and
will be based on the dollar amount of Fund shares
2
<PAGE>
which are owned of record by your firm as nominee for your customers or
which are owned by those customers of your firm whose records, as
maintained by the Funds or their agents, designate your firm as the
customer's dealer of record. Any such payments shall be in addition to the
selling concession, if any, allowed to you pursuant to this Agreement. No
such fee will be paid to you with respect to shares purchased by you and
redeemed by the Funds or by us as agent within seven business days after
the dates of confirmation of such purchase.
(b) The provisions of this Section 10 relate to the plan adopted by a
particular Fund pursuant to Rule 12b-1. In accordance with Rule 12b-1, any
person authorized to direct the disposition of monies paid or payable by a
Fund pursuant to this Section 10 shall provide the Fund's Board, and the
Board shall review, at least quarterly, a written report of the amounts so
expended and the purposes for which such expenditures were made.
(c) The provisions of this Section 10 applicable to each Fund shall remain
in effect for not more than a year and thereafter for successive annual
periods only so long as such continuance is specifically approved at least
annually in conformity with Rule 12b-1 and the Act. The provisions of this
Section 10 shall automatically terminate with respect to a particular plan,
in the event such plan terminates or is not continued or in the event this
Agreement terminates or ceases to remain in effect. In addition, the
provisions of this Section 10 may be terminated at any time, without
penalty, with respect to any particular plan or not more than 60 days' nor
less than 30 days' written notice delivered or mailed by registered mail,
postage prepaid, to the other party.
11. No person is authorized to make any representations concerning the Funds or
shares of the Funds except those contained in each Fund's then current
effective prospectus or statement of additional information and any such
information as may be released by a Fund as information supplemental to
such prospectus or statement of additional information. In purchasing
shares through us you shall rely solely on the representations contained in
each Fund's then current effective prospectus or statement of additional
information and above-mentioned supplemental information.
12. 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.
13. Additional copies of each such prospectus or statement of additional
information and any printed information issued as supplemental to each such
prospectus or statement of additional information will be supplied by us to
you and your selling agents in reasonable quantities upon request.
14. We, our affiliates and the Funds (and their officers and directors) shall
not be liable for any loss, expenses, damages, costs or other claims
arising out of any redemption or exchange pursuant to telephone
instructions from any person, or our refusal to execute such instructions
for any reason.
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<PAGE>
15. All communications to us shall be sent to us at Funds Distributor, Inc., 60
State Street, Suite 1300, Boston, MA 02109. Any notice to you shall be duly
given if mailed or telegraphed to you at your address as registered from
time to time with the National Association of Securities Dealers, Inc.
16. This Agreement may be amended by us from time to time by the following
procedure. We will mail a copy of the amendment to you at your address as
registered from time to time with the National Association of Securities
Dealers, Inc. If you do not object to the amendment within fifteen (15)
days after its receipt, the amendment will become a part of the Agreement.
Your objection must be in writing and be received by us within such fifteen
days.
17. This Agreement may be terminated upon written notice by either party at any
time, and shall automatically terminate upon its attempted assignment by
you, whether by operation of law or otherwise, or by us otherwise than by
operation of law.
18. By accepting this Agreement, you represent that you are registered as a
broker-dealer under the Securities Exchange Act of 1934, are qualified to
act as a broker or dealer in the states or other jurisdictions where you
transact business, and are a member in good standing of the National
Association of Securities Dealers, Inc., and you agree that you will
maintain such registrations, qualifications, and membership in good
standing and in full force and effect throughout the term of this
Agreement. You further agree to comply with all applicable Federal laws,
the laws of the states or other jurisdictions concerned, and the rules and
regulations promulgated thereunder and with the Constitution, By-Laws and
Conduct Rules of the National Association of Securities Dealers, Inc., and
that you will not offer or sell shares of the Funds in any state or
jurisdiction where they may not lawfully be offered and/or sold.
If you are offering and selling shares of the Funds in jurisdictions
outside the several states, territories, and possessions of the United
States and are not otherwise required to be registered, qualified, or a
member of the National Association of Securities Dealers, Inc., as set
forth above you, you nevertheless agree to observe the applicable laws of
the jurisdiction in which such offer and/or sale is made, to comply with
the full disclosure requirements of the Securities Act of 1933 and the
regulations promulgated thereunder, to conduct your business in accordance
with the spirit of the Conduct Rules of the National Association of
Securities Dealers, Inc. You agree to indemnify and hold the Funds, their
investment advisor, and us harmless from loss or damage resulting from any
failure on your part to comply with applicable laws.
19. You agree to maintain records of all sales of shares made through you and
to furnish us with copies of each record on request.
20. This Agreement and all amendments to this Agreement shall take effect with
respect to and on the date of any orders placed by you after the date set
forth below or, as applicable, after the date of the notice of amendment
sent to you by the undersigned.
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<PAGE>
21. This Agreement shall be construed in accordance with the laws of The
Commonwealth of Massachusetts and shall be binding upon both parties hereto
when signed and accepted by you in the space provided below.
For Funds Distributor, Inc.
60 State Street, Suite 1300
Boston, MA 02109
________________________________________________________________________________
By: Date
For:
________________________________________________________________________________
________________________________________________________________________________
Address of Principal Office
________________________________________________________________________________
City State Zip Code
By: Its:
___________________________________ __________________________ _______________
Authorized Signature Title Date
___________________________________
Print Name
5
TRANSFER AGENCY AND SERVICE AGREEMENT
between
NOMURA PACIFIC BASIN FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
----
1. Terms of Appointment and Duties........................................1
2. Third Party Administrators for Defined Contribution Plans..............3
3. Fees and Expenses......................................................4
4. Representations and Warranties of the Transfer Agent...................5
5. Representations and Warranties of the Fund.............................5
6. Wire Transfer Operating Guidelines/Article 4A of the Uniform
Commercial Code........................................................6
7. Data Access and Proprietary Information................................7
8. Indemnification........................................................9
9. Standard of Care......................................................10
10. Year 2000.............................................................10
11. Confidentiality.......................................................11
12. Covenants of the Fund and the Transfer Agent..........................11
13. Termination of Agreement..............................................12
14. Assignment and Third Party Beneficiaries..............................12
15. Subcontractors........................................................13
16. Miscellaneous.........................................................13
17. Additional Funds......................................................14
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the ___ day of ____, 1999, 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 10038-4939 (the "Fund"), and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company having its
principal office and place of business at 225 Franklin Street, Boston,
Massachusetts 02110 (the "Transfer Agent").
WHEREAS, the Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and
WHEREAS, the Fund intends to initially offer shares in one (1) series, such
series shall be named in the attached Schedule A which may be amended by the
parties from time to time (each such series, together with all other series
subsequently established by the Fund and made subject to this Agreement in
accordance with Section 17, being herein referred to as a "Portfolio", and
collectively as the "Portfolios");
WHEREAS, the Fund on behalf of the Portfolios desires to appoint the Transfer
Agent as its transfer agent, dividend disbursing agent, custodian of certain
retirement plans and agent in connection with certain other activities, and the
Transfer Agent desires to accept such appointment;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
1. Terms of Appointment and Duties
1.1 Transfer Agency Services. Subject to the terms and conditions set
forth in this Agreement, the Fund, on behalf of the Portfolios, hereby
employs and appoints the Transfer Agent to act as, and the Transfer Agent
agrees to act as its transfer agent for the Fund's authorized and issued
shares of its common stock, $ par value ("Shares"), dividend disbursing
agent, custodian of certain retirement plans and agent in connection with
any accumulation, open-account or similar plan provided to the
shareholders of each of the respective Portfolios of the Fund
("Shareholders") and set out in the currently effective prospectus and
statement of additional information ("prospectus") of the Fund on behalf
of the applicable Portfolio, including without limitation any periodic
investment plan or periodic withdrawal program. In accordance with
procedures established from time to time by agreement between the Fund on
behalf of each of the Portfolios, as applicable and the Transfer Agent,
the Transfer Agent agrees that it will perform the following services:
(a) Receive for acceptance, orders for the purchase of Shares, and
promptly deliver payment and appropriate documentation thereof to
the Custodian of the Fund authorized pursuant to the Articles of
Incorporation of the Fund (the "Custodian");
(b) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder account;
<PAGE>
(c) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation thereof to the
Custodian;
(d) In respect to the transactions in items (a), (b) and (c) above,
the Transfer Agent shall execute transactions directly with
broker-dealers authorized by the Fund;
(e) 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;
(f) Effect transfers of Shares by the registered owners thereof upon
receipt of appropriate instructions;
(g) Prepare and transmit payments for dividends and distributions
declared by the Fund on behalf of the applicable Portfolio;
(h) Issue replacement certificates for those certificates alleged to
have been lost, stolen or destroyed upon receipt by the Transfer
Agent of indemnification satisfactory to the Transfer Agent and
protecting the Transfer Agent and the Fund, and the Transfer Agent
at its option, may issue replacement certificates in place of
mutilated stock certificates upon presentation thereof and without
such indemnity;
(i) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(j) Record the issuance of Shares of the Fund and maintain pursuant
to SEC Rule 17Ad-10(e) a record of the total number of Shares of the
Fund which are authorized, based upon data provided to it by the
Fund, and issued and outstanding. The Transfer Agent shall also
provide the Fund on a regular basis with the total number of Shares
which are authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Shares, to monitor the
issuance of such Shares or to take cognizance of any laws relating
to the issue or sale of such Shares, which functions shall be the
sole responsibility of the Fund.
1.2 Additional Services. In addition to, and neither in lieu nor in
contravention of, the services set forth in the above paragraph, the
Transfer Agent shall perform the following services:
(a) Other Customary Services. Perform the customary services of a
transfer agent, dividend disbursing agent, custodian of certain
retirement plans and, as relevant, agent in connection with
accumulation, open-account or similar plan (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 Shareholder
proxies, Shareholder reports and prospectuses to current
Shareholders, withholding taxes on U.S. resident and non-resident
alien accounts, preparing and filing U.S. Treasury
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Department Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal authorities for
all 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.
(b) Control Book (also known as "Super Sheet'). Maintain a daily
record and produce a daily report for the Fund of all transactions
and receipts and disbursements of money and securities and deliver a
copy of such report for the Fund for each business day to the Fund
no later than 9:00 AM Eastern Time, or such earlier time as the Fund
may reasonably require, on the next business day.
(c) "Blue Sky" Reporting. The Fund shall (i) identify to the
Transfer Agent 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 Transfer Agent 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 providing a system which will enable the Fund to
monitor the total number of Shares sold in each State.
(d) National Securities Clearing Corporation (the "NSCC'). (i)
accept and effectuate the registration and maintenance of accounts
through Networking and the purchase, redemption, transfer and
exchange of shares in such accounts through Fund/SERV (networking
and Fund/SERV being programs operated by the NSCC on behalf of
NSCC's participants, including the Fund), in accordance with the
instructions transmitted to and received by the Transfer Agent by
transmission from NSCC on behalf of broker-dealers and banks which
have been established by, or in accordance with the instructions of
authorized persons, as hereinafter defined on the dealer file
maintained by the Transfer Agent; (ii) issue instructions to Fund's
banks for the settlement of transactions between the Fund and NSCC
(acting on behalf of its broker-dealer and bank participants); (iii)
provide account and transaction information from the affected Fund's
records on DST Systems, Inc. computer system TA2000 ("TA2000
System") in accordance with NSCC's Networking and Fund/SERV rules
for those broker-dealers; and (iv) maintain Shareholder accounts on
TA2000 System through Networking.
(e) New Procedures. New procedures as to who shall provide certain
of these services in Section 1 may be established in writing from
time to time by agreement between the Fund and the Transfer Agent.
The Transfer Agent may at times perform only a portion of these
services and the Fund or its agent may perform these services the
Fund's behalf.
2. Third Party Administrators for Defined Contribution Plans
2.1 The Fund may decide to make available to certain of its customers, a
qualified plan program (the "Program") pursuant to which the
customers ("Employers")
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<PAGE>
may adopt certain plans of deferred compensation ("Plan" or "Plans")
for the benefit of the individual Plan participant (the "Plan
Participant"), such Plan(s) being qualified under Section 401 (a) of
the Internal Revenue Code of 1986, as amended ("Code") and
administered by third party administrators which may be plan
administrators as defined in the Employee Retirement Income Security
Act of 1974, as amended) (the "TPA(s)").
2.2 In accordance with the procedures established in the initial
Schedule 2.1 entitled "Third Party Administrator Procedures", as may
be amended by the Transfer Agent and the Fund from time to time
("Schedule 2.1"), the Transfer Agent shall:
(a) Treat Shareholder accounts established by the Plans in the
name of the Trustees, Plans or TPAs as the case may be as
omnibus accounts;
(b) Maintain omnibus accounts on its records in the name of the
TPA or its designee as the Trustee for the benefit of the
Plan; and
(c) Perform all services under Section 1 as transfer agent of the
Funds and not as a record-keeper for the Plans.
2.3 Transactions identified under Section 2 of this Agreement shall be
deemed exception services ("Exception Services") when such
transactions:
(a) Require the Transfer Agent to use methods and procedures other
than those usually employed by the Transfer Agent to perform
services under Section I of this Agreement;
(b) Involve the provision of information to the Transfer Agent
after the commencement of the nightly processing cycle of the
TA2000 System; or
(c) Require more manual intervention by the Transfer Agent, either
in the entry of data or in the modification or amendment of
reports generated by the TA2000 System than is usually
required by non-retirement plan and pre-nightly transactions.
3. Fees and Expenses
3.1 Fee Schedule. For the performance by the Transfer Agent pursuant to
this Agreement, the Fund agrees to pay the Transfer Agent an annual
maintenance fee for each Shareholder account as set forth in the
attached fee schedule ("Schedule 3.1"). Such fees and out-of-pocket
expenses and advances identified under Section 3.2 below may be
changed from time to time subject to mutual written agreement
between the Fund and the Transfer Age.
3.2 Out-of-Pocket Expenses. In addition to the fee paid under Section
3.1 above, the Fund agrees to reimburse the Transfer Agent for
out-of-pocket expenses, including but not limited to confirmation
production, postage, forms, telephone, microfilm, microfiche,
mailing and tabulating proxies, records storage, or
4
<PAGE>
advances incurred by the Transfer Agent for the items set out in
Schedule 3.1 attached hereto. In addition, any other expenses
incurred by the Transfer Agent at the request or with the consent of
the Furl will be reimbursed by the Fund.
3.3 Postage. Postage for mailing of dividends, proxies, Fund reports and
other mailings to all shareholder accounts shall be advanced to the
Transfer Agent by the Fund at least seven (7) days prior to the
mailing date of such materials.
3.4 Invoices. The Fund agrees to pay all fees and reimbursable expenses
within thirty (30) days following the receipt of the respective
billing notice, except for any fees or expenses which are subject to
good faith dispute. In the event of such a dispute, the Fund may
only withhold that portion of the fee or expense subject to the good
faith dispute. The Fund shall notify the Transfer Agent in writing
within twenty-one (21) calendar days following the receipt of each
billing notice if the Fund is disputing any amounts in good faith.
If the Fund does not provide such notice of dispute within the
required time, the billing notice will be deemed accepted by the
Fund.
4. Representations and Warranties of the Transfer Agent
The Transfer Agent represents and warrants to the Fund that:
4.1 It is a trust company duly organized and existing and in good
standing under the laws The Commonwealth of Massachusetts.
4.2 It is duly qualified to carry on its business in The Commonwealth of
Massachusetts.
4.3 It is empowered under applicable laws and by its Charter and By-Laws
to enter into and perform this Agreement.
4.4 All requisite corporate proceedings have been taken to authorize it
to enter into and perform this Agreement.
4.5 It has and will continue to have access to the necessary facilities,
equipment and personnel to perform its duties and obligations under
this Agreement.
5. Representations and Warranties of the Fund
The Fund represents and warrants to the Transfer Agent that:
5.1 It is a corporation duly organized and existing and in good standing
under the laws of the State of Maryland.
5.2 It is empowered under applicable laws and by its Articles of
Incorporation and By-Laws to enter into and perform this Agreement.
5.3 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.
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<PAGE>
5.4 It is an open-end and diversified management investment company
registered under the Investment Company Act of 1940, as amended.
5.5 A registration statement under the Securities Act of 1933, as
amended 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.
6. Wire Transfer Operating Guidelines/Article 4A of the Uniform Commercial
Code
6.1 The Transfer Agent is authorized to promptly debit the appropriate
Fund account(s) upon the receipt of a payment order in compliance
with the selected security procedure (the "Security Procedure")
chosen for funds transfer and in the amount of money that the
Transfer Agent has been instructed to transfer. The Transfer Agent
shall execute payment orders in compliance with the Security
Procedure and with the Fund instructions on the execution date
provided that such payment order is received by the custom deadline
for processing such a request, unless the payment order specifies a
later time. All payment orders and communications received after
this the customary deadline will be deemed to have been received the
next business day.
6.2 The Fund acknowledges that the Security Procedure it has designated
on the Fund Selection Form was selected by the Fund from security
procedures offered by the Transfer Agent. The Fund shall restrict
access to confidential information relating to the Security
Procedure to authorized persons as communicated to the Transfer
Agent in writing. The Fund must notify the Transfer Agent
immediately if it has reason to believe unauthorized persons may
have obtained access to such information or of any change in the
Fund's authorized personnel. The Transfer Agent shall verify the
authenticity of all Fund instructions according to the Security
Procedure.
6.3 The Transfer Agent shall process all payment orders on the basis of
the account number contained in the payment order. In the event of a
discrepancy between any name indicated on the payment order and the
account number, the account number shall take precedence and govern.
6.4 The Transfer Agent reserves the right to decline to process or delay
the processing of a payment order which (a) is in excess of the
collected balance in the account to be charged at the time of the
Transfer Agent's receipt of such payment order; (b) if initiating
such payment order would cause the Transfer Agent, in the Transfer
Agent's sole judgement to exceed any volume, aggregate dollar,
network, time, credit or similar limits which applicable to the
Transfer Agent; or (c) if the Transfer Agent, in good faith, is
unable to satisfy itself that the transaction has been properly
authorized.
6.5 The Transfer Agent shall use reasonable efforts to act on all
authorized requests to cancel or amend payment orders received in
compliance with the Security Procedure provided that such requests
are received in a timely manner affording
6
<PAGE>
the Transfer Agent reasonable opportunity to act. However, the
Transfer Agent assumes no liability if request for amendment or
cancellation cannot be satisfied.
6.6 The Transfer Agent shall assume no responsibility for failure to
detect any erroneous payment order provided that the Transfer Agent
complies with the payment order instructions as received and the
Transfer Agent complies with the Security Procedure. The Security
Procedure is established for the purpose of authenticating payment
orders only and not for the detection of errors in payment orders.
6.7 The Transfer Agent shall assume no responsibility for lost interest
with respect to the refundable amount of any unauthorized payment
order, unless the Transfer Agent is notified of the unauthorized
payment order within thirty (30) days of notification by the
Transfer Agent of the acceptance of such payment order. In no event
(including failure to execute a payment order) shall the Transfer
Agent be liable for special, indirect or consequential damages, even
if advised of the possibility of such damages.
6.8 When the Fund initiates or receives Automated Clearing House credit
and debit entries pursuant to these guidelines and the rules of the
National Automated Clearing House Association and the New England
Clearing House Association, the Transfer Agent will act as an
Originating Depository Financial Institution and/or receiving
depository Financial Institution, as the case may be, with respect
to such entries. Credits given by the Transfer Agent with respect to
an ACH credit entry are provisional until the Transfer Agent
receives final settlement for such entry from the Federal Reserve
Bank. If the Transfer Agent does not receive such final settlement,
the Fund agrees that the Transfer Agent shall receive a refund of
the amount credited to the Fund in connection with such entry, and
the party making payment to the Fund via such entry shall not be
deemed have paid the amount of the entry.
6.9 Confirmation of Transfer Agent's execution of payment orders shall
ordinarily be provided within twenty four (24) hours notice of which
may be delivered through the Transfer Agent's proprietary
information systems, or by facsimile or call-back. The Fund must
report any objections to the execution of an order within thirty
(30) days.
7. Data Access and Proprietary Information
7.1 The Fund acknowledges that the databases, computer programs, screen
formats, report formats, interactive design techniques, and
documentation manuals furnished to the Fund by the Transfer Agent as
part of the Fund's ability to access certain Fund-related data
("Customer Data") maintained by the Transfer Agent on databases
under the control and ownership of the Transfer Agent or other third
party ("Data Access Services") constitute copyrighted, trade secret,
or other proprietary information (collectively, "Proprietary
Information") of substantial value to the Transfer Agent or other
third party. In no event shall Proprietary Information be deemed
Customer Data. The Fund agrees to treat all Proprietary
7
<PAGE>
Information as proprietary to the Transfer Agent and further agrees
that it shall not divulge any Proprietary Information to any person
or organization except as may be provided hereunder. Without
limiting the foregoing, the Fund agrees for itself and its employees
and agents to:
(a) Use such programs and databases (i) solely on the Fund's
computers, or (ii) solely from equipment at the location agreed to
between the Fund and the Transfer Agent and (iii) solely in
accordance with the Transfer Agent's applicable user documentation;
(b) Refrain from copying or duplicating in any way (other than in
the normal course of performing processing on the Fund's
computer(s)), the Proprietary Information;
(c) Refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently
obtained, to inform in a timely manner of such fact and dispose of
such information in accordance with the Transfer Agent's
instructions;
(d) Refrain from causing or allowing information transmitted from
the Transfer Agent's computer to the Fund's terminal to be
retransmitted to any other computer terminal or other device except
as expressly permitted by the Transfer Agent (such permission not to
be unreasonably withheld);
(e) Allow the Fund to have access only to those authorized
transactions as agreed to between the Fund and the Transfer Agent;
and
(f) Honor all reasonable written requests made by the Transfer Agent
to protect at the Transfer Agent's expense the rights of the
Transfer Agent in Proprietary Information at common law, under
federal copyright law and under other federal or state law.
7.2 Proprietary Information shall not include all or any portion of any
of the foregoing items that: (i) are or become publicly available
without breach of this Agreement; (ii) are released for general
disclosure by a written release by the Transfer Agent; or (iii) are
already in the possession of the receiving party at the time or
receipt without obligation confidentiality or breach of this
Agreement.
7.3 The Fund acknowledges that its obligation to protect the Transfer
Agent's Proprietary Information is essential to the business
interest of the Transfer Agent and that the disclosure of such
Proprietary Information in breach of this Agreement would cause the
Transfer Agent immediate, substantial and irreparable harm, the
value of which would be extremely difficult to determine.
Accordingly, the parties agree that, in addition to any other
remedies that may be available in law, equity, or otherwise for the
disclosure or use of the Proprietary Information in breach of this
Agreement, the Transfer Agent shall be entitled to seek and obtain a
temporary restraining order, injunctive relief, or other equitable
relief against the continuance of such breach.
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<PAGE>
7.4 If the Fund notifies the Transfer Agent that any of the Data Access
Services do not operate in material compliance with the most
recently issued user documentation for such services, the Transfer
Agent shall endeavor in a timely manner to correct such failure.
Organizations from which the Transfer Agent may obtain certain data
included in the Data Access Services are solely responsible for the
contents of such data and the Fund agrees to make no claim against
the Transfer Agent arising out of the contents of such third-party
data, including, but not limited to, the accuracy thereof. DATA
ACCESS SERVICES AND ALL COMPUTER PROGRAMS AND SOFTWARE
SPECIFICATIONS USED IN CONNECTION THEREWITH ARE PROVIDED ON AN AS
IS, AS AVAILABLE BASIS. THE TRANSFER AGENT EXPRESS DISCLAIMS ALL
WARRANTIES EXCEPT THOSE EXPRESSLY STATED HEREIN INCLUDING, BUT NOT
LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE.
7.5 If the transactions available to the Fund include the ability to
originate electronic instructions to the Transfer Agent in order to:
(i) effect the transfer or movement of cash or Shares; or (ii)
transmit Shareholder information or other information, then in such
event the Transfer Agent shall be entitled to rely on the validity
and authenticity of such instruction without undertaking any further
inquiry as long as such instruction is undertaken in conformity with
security procedures established by the Transfer Agent from time to
time.
7.6 Each party shall take reasonable efforts to advise its employees of
their obligations pursuant to this Section 7. The obligations of
this Section shall survive any earlier termination of this
Agreement.
8. Indemnification
8.1 The Transfer Agent shall not be responsible for, and the Fund shall
indemnify and hold the Transfer Agent 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 Transfer Agent 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 lack of good faith, negligence or willful misconduct;
(c) The reliance upon, and any subsequent use of or action taken or
omitted, by the Transfer Agent, or its agents or subcontractors on:
(i) any information, records, documents, data, stock certificates or
services, which are received by the Transfer Agent or its agents or
subcontractors by machine readable input, facsimile, CRT data entry,
electronic instructions or other similar means authorized by the
Fund, and which have been prepared, maintained or performed by the
Fund or any other person or firm on behalf of the Fund including but
not limited to any previous transfer agent or registrar; (ii) any
instructions or
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<PAGE>
requests of the Fund or any of its officers; (iii) any instructions
or opinions of legal counsel with respect to any matter arising in
connection with the services to be performed by the Transfer Agent
under this Agreement which are provided to the Transfer Agent after
consultation with such legal counsel; or (iv) any paper or document,
reasonably believed to be genuine, authentic, or signed by the
proper person persons;
(d) The offer or sale of Shares in violation of federal or state
securities laws or regulations requiring that such Shares be
registered or in violation of any stop order or other determination
or ruling by any federal or any state agency with respect to the
offer or sale of such Shares;
(e) The negotiation and processing of any checks including without
limitation for deposit into the Fund's demand deposit account
maintained by the Transfer Agent; or
(f) Upon the Fund's request entering into any agreements required by
the National Securities Clearing Corporation (the "NSCC") for the
transmission of Fund or Shareholder data through the NSCC clearing
systems.
8.2 In order that the indemnification provisions contained in this
Section 8 shall apply, upon the assertion of a claim for which the
Fund may be required to indemnify the Transfer Agent, the Transfer
Agent shall promptly notify the Fund of such assertion, and shall
keep the Fund advised with respect to all developments concerning
such claim. The Fund shall have the option to participate with the
Transfer Agent in the defense of such claim or to defend against
said claim in its own name or in the name of the Transfer Agent. The
Transfer Agent shall in no case confess any claim or make any
compromise in any case in which the Fund may be required to
indemnify the Transfer Agent except with the Fund's prior written
consent.
9. Standard of Care
9.1 The Transfer Agent shall at all times act in good faith and agrees
to use its best efforts within reasonable limits to insure the
accuracy of all services performed under this Agreement, but assumes
no responsibility and shall not be liable for loss or damage due to
errors unless said errors are caused by its negligence, bad faith,
or willful misconduct or that of its employees, except as provided
in Section 9.2 below.
9.2 In the case of Exception Services as defined in Section 2.3 herein,
the Transfer Agent shall be held to a standard of gross negligence
and encoding and payment processing errors shall not be deemed
negligence.
10. Year 2000
The Transfer Agent will take reasonable steps to ensure that its products
(and those of its third-party suppliers) reflect the available technology
to offer products that are Year 2000 ready, including, but not limited to,
century recognition of dates, calculations that
10
<PAGE>
correctly compute same century and multi century formulas and date values,
and interface values that reflect the date issues arising between now and
the next one-hundred years and if any changes are required, the Transfer
Agent will make the changes to its products at a price to be agreed upon
by the parties and in a commercially reasonable time frame and will
require third-party suppliers to do likewise.
11. Confidentiality
11.1 The Transfer Agent and the Fund agree that they will not, at any
time during the term of this Agreement or after its termination,
reveal, divulge, or make known to any person, firm, corporation or
other business organization, any customers' lists, trade secrets,
cost figures and projections, profit figures and projections, or any
other secret or confidential information whatsoever, whether of the
Transfer Agent or of the Fund, used or gained by the Transfer Agent
or the Fund during performance under this Agreement. The Fund and
the Transfer Agent further covenant and agree to retain all such
knowledge and information acquired during and after the term of this
Agreement respecting such lists, trade secrets, or any secret or
confidential information whatsoever in trust for the sole benefit of
the Transfer Agent or the Fund and their successors and assigns. In
the event of breach of the foregoing by either party, the remedies
provided by Section 7.3 shall be available to the party whose
confidential information is disclosed. The above prohibition of
disclosure shall not apply to the extent that the Transfer Agent
must disclose such data to its sub-contractor or Fund agent for
purposes of providing services under this Agreement.
11.2 In the event that any requests or demands are made for the
inspection of the Shareholder records of the Fund, other than
request for records of Shareholders pursuant to standard subpoenas
from state or federal government authorities (i.e., divorce and
criminal actions), the Transfer Agent will endeavor to notify the
Fund and to secure instructions from an authorized officer of the
Fund as to such inspection. The Transfer Agent expressly reserves
the right, however, to exhibit the Shareholder records to any person
whenever it is advised by counsel that it may be held liable for the
failure to exhibit the Shareholder records to such person or if
required by law or court order.
12. Covenants of the Fund and the Transfer Agent
12.1 The Fund shall promptly furnish to the Transfer Agent the following:
(a) A certified copy of the resolution of the Board of Directors of
the Fund authorizing the appointment of the Transfer Agent and the
execution and delivery of this Agreement; and
(b) A copy of the Articles of Incorporation and By-Laws of the Fund
and all amendments thereto.
12.2 The Transfer Agent 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
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<PAGE>
for the preparation or use, and for keeping account of, such
certificates, forms and devices.
12.3 The Transfer Agent 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
Transfer Agent agrees that all such records prepared or maintained
by the Transfer Agent relating to the services to be performed by
the Transfer Agent 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.
13. Termination of Agreement
13.1 This Agreement may be terminated by either party upon one hundred
twenty (120) days' written notice to the other.
13.2 Should the Fund exercise its right to terminate, all out-of-pocket
expenses or costs associated with the movement of records and
material will be borne by the Fund. Additionally, the Transfer Agent
reserves the right to charge for any other reasonable expenses
associated with such termination and a charge equivalent to the
average of three (3) months' fees. Payment of such expenses or costs
shall be in accordance with Section 3.4 of this Agreement.
13.3 Upon termination of this Agreement, each party shall return to the
other party all copies of confidential or proprietary materials or
information received from such other party hereunder, other than
materials or information required to be retained by such party under
applicable laws or regulations.
14. Assignment and Third Party Beneficiaries
14.1 Except as provided in Section 15.1, neither this Agreement nor any
rights or obligations hereunder may be assigned by either party
without the written consent of the other party. Any attempt to do so
in violation of this Section shall be void. Unless specifically
stated to the contrary in any written consent to an assignment, no
assignment will release or discharge the assignor from any duty or
responsibility under this Agreement.
14.2 Except as explicitly stated elsewhere in this Agreement, nothing
under this Agreement shall be construed to give any rights or
benefits in this Agreement to anyone other than the Transfer Agent
and the Fund, and the duties and responsibilities undertaken
pursuant to this Agreement shall be for the sole and exclusive
benefit of the Transfer Agent and the Fund. This Agreement shall
inure to the benefit of and be binding upon the parties and their
respective permitted successors and assigns.
14.3 This Agreement does not constitute an agreement for a partnership or
joint venture between the Transfer Agent and the Fund. Other than as
provided in
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<PAGE>
Section 15, neither party shall make any commitments with third
parties that are binding on the other party without the other
party's prior written consent.
15. Subcontractors
15.1 The Transfer Agent 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 Section
17A(c)(2) of the Securities Exchange Act of 1934, as amended, (ii) a
BFDS subsidiary duly registered as a transfer agent or (iii) a BFDS
affiliate duly registered as a transfer agent; provided, however,
that the Transfer Agent shall be fully responsible to the Fund for
the acts and omissions of BFDS or its subsidiary or affiliate as it
is for its own acts and omissions.
15.2 Nothing herein shall impose any duty upon the Transfer Agent in
connection with or make the Transfer Agent liable for the actions or
omissions to act of unaffiliated third parties such as by way of
example and not limitation, Airborne Services, Federal Express,
United Parcel Service, the U.S. Mails, the NSCC and
telecommunication companies, provided, if the Transfer Agent
selected such company, the Transfer Agent shall have exercised due
care in selecting the same.
16. Miscellaneous
16.1 Amendment. 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.
16.2 Massachusetts Law to Apply. This Agreement shall be construed and
the provisions thereof interpreted under and in accordance with the
laws of The Commonwealth of Massachusetts.
16.3 Force Majeure. 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.
16.4 Consequential Damages. Neither party to this Agreement shall be
liable to the other party for consequential damages under any
provision of this Agreement or for any consequential damages arising
out of any act or failure to act hereunder.
16.5 Survival. All provisions regarding indemnification, warranty,
liability, and limits thereon, and confidentiality and/or
protections of proprietary rights and trade secrets shall survive
the termination of this Agreement.
16.6 Severability. If any provision or provisions of this Agreement shall
be held invalid, unlawful, or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way
be affected or impaired.
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16.7 Priorities Clause. In the event of any conflict, discrepancy or
ambiguity between the terms and conditions contained in this
Agreement and any Schedules or attachments hereto, the terms and
conditions contained in this Agreement shall take precedence.
16.8 Waiver. No waiver by either party or any breach or default of any of
the covenants or conditions herein contained and performed by the
other party shall be construed as a waiver of any succeeding breach
of the same or of any other covenant or condition.
16.9 Merger of Agreement. 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.
16.10 Counterparts. This Agreement may be executed by the parties hereto
on any number of counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
16.11 Reproduction of documents. This Agreement and all schedules,
exhibits, attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm micro-card, miniature
photographic or other similar process. The parties hereto each agree
that any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding,
whether or not the original is in existence and whether or not such
reproduction was made by a party in the regular course of business,
and that any enlargement, facsimile or further reproduction shall
likewise be admissible in evidence.
16.12 Notices. All notices and other communications as required or
permitted hereunder shall be in writing and sent by first class
mail, postage prepaid, addressed as follows or to such other address
or addresses of which the respective party shall have notified the
other.
(a) If to State Street Bank and Trust Company, to:
State Street Bank and Trust Company
c/o Boston Financial Data Services, Inc.
Two Heritage Drive
Quincy, Massachusetts 02171
Attention: Legal Department
Facsimile: (617) 483-2287
(b) If to the Fund, to:
Attention:
17. Additional Funds
In the event that the Fund establishes one or more series of Shares in
addition to the attached Schedule A with respect to which it desires to
have the Transfer Agent render
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<PAGE>
services as transfer agent under the terms hereof, it shall so notify the
Transfer Agent in writing, and if the Transfer Agent agrees in writing to
provide such services, such series of Shares shall become a Portfolio
hereunder.
15
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in their names and on their behalf 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 Chairman
ATTEST:
__________________________
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<PAGE>
SCHEDULE A
Nomura Pacific Basin Fund (various classes)
NOMURA PACIFIC BASIN FUND, INC. STATE STREET BANK AND TRUST
COMPANY
BY:____________________________ BY:______________________________
17
<PAGE>
SCHEDULE 2.1
THIRD PARTY ADMINISTRATOR(S) PROCEDURES
Dated
1. On each Business Day, the TPA(s) shall receive, on behalf of and as agent
of the Fund(s), Instructions (as hereinafter defined) from the Plan.
Instructions shall mean as to each Fund (i) orders by the Plan for the
purchases of Shares, and (ii) requests by the Plan for the redemption of
Shares; in each case based on the Plan's receipt of purchase orders and
redemption requests by Participants in proper form by the time required by
the term of the Plan, but not later than the time of day at which the net
asset value of a Fund is calculated, as described from time to time in
that Fund's prospectus. Each Business Day on which the TPA receives
Instructions shall be a "Trade Date".
2. The TPA(s) shall communicate the TPA(s)'s acceptance of such Instructions,
to the applicable Plan.
3. On the next succeeding Business Day following the Trade Date on which it
accepted Instructions for the purchase and redemption of Shares (TD+1),
the TPA(s) shall notify the Transfer Agent of the net amount of such
purchases or redemptions, as the case may be, for each of the Plans. In
the case of net purchases by any Plan, the TPA(s) shall instruct the
Trustees of such Plan to transmit the aggregate purchase price for Shares
by wire transfer to the Transfer Agent on (TD+1). In the case of net
redemptions by any Plan, the TPA(s) shall instruct the Fund's custodian to
transmit the aggregate redemption proceeds for Shares by wire transfer to
the Trustees of such Plan on (TD+1). The times at which such notification
and transmission shall occur on (TD+1) shall be as mutually agreed upon
each Fund, the TPA(s), and the Transfer Agent.
4. The TPA(s) shall maintain separate records for each Plan, which record
shall reflect Shares purchased and redeemed, including the date and price
for all transactions, and Share balances. The TPA(s) shall maintain on
behalf of each of the Plans a single master account with the Transfer
Agent and such account shall be in the name of that Plan, the TPA(s) or
the nominee of either thereof as the record owner of Shares owned by such
Plan.
5. The TPA(s) shall maintain records of all proceeds of redemptions of Shares
and all other distributions not reinvested in Shares.
6. The TPA(s) shall prepare, and transmit to each of the Plans, periodic
account statements showing the total number of Shares owned by that Plan
as of the statement closing date, purchases and redemptions of Shares by
the Plan during the period covered by the statement, and the dividends and
other distributions paid to the Plan on Shares during the statement period
(whether paid in cash or reinvested in Shares).
7. The TPA(s) shall, at the request and expense of each Fund, transmit to the
Plans prospectuses, proxy materials, reports, and other information
provided by each Fund for delivery to its shareholders.
8. The TPA(s) shall, at the request of each Fund, prepare and transmit to
each Fund or any agent designated by it such periodic reports covering
Shares of each Plan as each Fund
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<PAGE>
shall reasonably conclude are necessary to enable the Fund to comply with
state Blue Sky requirements.
9. The TPA(s) shall transmit to the Plans confirmation of purchase orders and
redemption requests placed by the Plans.
10. The TPA(s) shall, with respect to Shares, maintain account balance
information for the Plan(s) and daily and monthly purchase summaries
expressed in Shares and dollar amounts.
11. Plan sponsors may request, or the law may require, that prospectuses,
proxy materials, periodic reports and other materials relating to each
Fund be furnished to Participants in which event the Transfer Agent or
each Fund shall mail or cause to be mailed such materials to Participants.
With respect to any such mailing, the TPA(s) shall, at the request of the
Transfer Agent or each Fund, provide at the TPA(s)'s expense complete and
accurate set of mailing labels with the name and address of each
Participant having an interest through the Plans in Shares.
NOMURA PACIFIC BASIN FUND, INC. STATE STREET BANK AND TRUST
COMPANY
BY:____________________________ BY:______________________________
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<PAGE>
SCHEDULE 3.1
FEES
Dated ____________
Annual Account Service Fees
Basic annual per account fee* $8.00
*This includes the processing of up to 4 dividend distributions per year and 4
share transactions per account on an average for the entire account base over
the year.
Any share transactions over 4 per year $1.50/each
Minimum per cusip** $3,000.00
**Each class is considered a fund and will be billed accordingly.
Annual Maintenance Charges
The fees are billable on a monthly basis at the rate of 1/12 of the annual fee.
A charge is made for an account in the month that an account opens or closes.
Account service fees are the higher of (i) open account charges plus closed
account charges or (ii) the fund minimum.
All fees and charges will be subject to an annual Cost of Living Adjustment
based on regional consumer price index.
Out-of-Pocket Expenses (Billed as Incurred)
Out-of-Pocket expenses include but are not limited to confirmation statements,
investor statements, postage, forms, audio response, telephone, records
retention, customized programming/enhancements, federal wire, transcripts,
microfilm, microfiche and expenses incurred at the specific direction of the
Fund.
NOMURA PACIFIC BASIN FUND, INC. STATE STREET BANK AND TRUST
COMPANY
BY:____________________________ BY:______________________________
20
SERVICES AGREEMENT
AGREEMENT made this ____ day of July, 1999 between Nomura Asset Management
U.S.A. Inc. ("Nomura"), a New York corporation, and Funds Distributor, Inc.
("FDI"), a Massachusetts corporation.
WHEREAS, Nomura serves as investment adviser to certain investment portfolios or
series of one or more open-end management investment companies registered under
the Investment Company Act of 1940, as amended (the " 1940 Act"), as listed on
Schedule A, as such Schedule may be amended from time to time (each a "Fund,"
collectively, the "Funds");
WHEREAS, the investment companies listed on Schedule A have entered into a
distribution agreement with FDI (the "Distribution Agreement") for the
distribution by FDI of certain classes of shares of common stock (the "Shares")
in the investment companies or in the Funds;
WHEREAS, certain employees of Nomura will be registered with the National
Association of Securities Dealers, Inc. ("NASD") as representatives of FDI (such
persons shall hereinafter be referred to as "Registered Representatives") and
will be wholesaling the Funds' shares;
WHEREAS, Nomura and FDI desire to enter into this Agreement pursuant to which
Nomura will perform certain services for FDI with respect to Shares of each Fund
and FDI will perform certain services for Nomura with respect to Shares of each
Fund; and
WIHEREAS, Nomura has agreed to enter into this Agreement as consideration for
FDI to enter into the Distribution Agreement;
NOW THEREFORE, in consideration of the foregoing and the mutual agreements
herein contained, the parties agree as follows:
1. Services provided by FDI. FDI will assist Nomura in providing services with
respect to each Fund as may be reasonably requested by Nomura from time to time.
At the direction of Nomura, specific assignments may include any of the
following:
(a) legal review and principal sign-off of all Fund marketing materials
and other sales related materials to ensure compliance with the
advertising rules of the relevant regulatory authorities and file such
materials, and obtain such approvals for their use as may be required by
the Securities and Exchange Commission ("SEC") or the NASD. FDI will
forward all NASD comments on marketing materials to Nomura;
(b) the forwarding of sales related complaints concerning the Funds to
Nomura;
(c) coordination of registration of the Funds with the National Securities
Clearing Corporation ("NSCC") and filing of required Fund/SERV reports
with the NSCC;
(d) the provision of advice and counsel to the Funds with respect to
regulatory matters regarding legal review and principal sign off of Fund
marketing material and other sales related materials, broker/dealer and
distribution related issues, including
<PAGE>
monitoring regulatory and legislative developments that may affect the
Funds and assisting the Funds in routine regulatory examinations or
investigations;
(e) assistance in the preparation of quarterly board materials with regard
to sales and other distribution related data reasonably requested by the
board;
(f) preparation of materials for the board supporting the annual renewal
of the Distribution Agreement;
(g) in connection with the foregoing activities, maintenance of an office
facility (which may be in the offices of Nomura or a corporate affiliate);
(h) in connection with the foregoing activities, the furnishing of
clerical services and internal executive and administrative services,
stationery and office supplies;
(i) pursuant to subsection 4(a)(1) below, the provision of officers to the
Funds including, but not limited to, President, Vice Presidents,
Secretary, Assistant Secretaries, Treasurer and Assistant Treasurers to
assume certain specified responsibilities, if applicable;
(j) coordinate the provision of all Blue Sky services with ClearSky, a
third-party provider, on behalf of Nomura. FDI will work with Nomura
personnel and ClearSky to ensure that the Funds are in full compliance
with any applicable state regulatory requirements; and
(k) FDI will keep and maintain all books and records relating to its
services in accordance with Rule 31a-1 under the 1940 Act.
2. Services Provided by Nomura. In furtherance of the responsibilities under
this Agreement Nomura will:
(a) cause the registration of the Shares under the Securities Act of 1933
(the "1933 Act") and the qualification for the Shares for sale in those
states that the Funds may designate;
(b) monitor or cause the Funds' transfer agent to monitor sales of the
Shares with respect to compliance with applicable state securities laws;
(c) provide consulting services with regard to such advertising, marketing
and promotional activities as Nomura believes reasonable, including but
not limited to (i) development of information, analyses and reports, (ii)
preparing, printing and distributing sales literature brochures, letters,
training materials and dealer guides and all similar materials and
advertisements as defined below, (iii) develop and implement audio and
video advertising programs, and (iv) arrange for the printing and
distribution of prospectuses and reports of the Funds to prospective
shareholders; provided that it is understood that FDI shall have no
responsibility for strategic planning or development with respect to such
matter. For purposes of this Agreement "sales literature" and
"advertisements" mean brochures, letters, electronic media, training
materials and
2
<PAGE>
dealers' guides, materials for oral presentations and all other similar
materials, whether transmitted directly to potential shareholders or
published in print or audio-visual media, but does not include generic
materials that do not mention the Funds or the Shares;
(d) submit all consulting related sales literature and advertisements
prepared pursuant to Section 2(c) above to FDI for legal/compliance review
in advance of use, and incorporate such changes as FDI may reasonably
request therein. FDI will file such materials and obtain such approvals
for their use as may be required by the SEC or NASD;
(e) to the extent applicable, cause the Funds' transfer agent to give
necessary information for the preparation of quarterly reports in a form
reasonably satisfactory to FDI regarding any Rule 12b-1 fees, front-end
sales loads, back-end sales loads and other data regarding sales and sales
loads as required by the 1940 Act or as requested by the board of
directors of the applicable investment companies listed on Schedule A;
(f) to the extent applicable, cause the Funds' transfer agent to provide
FDI with all necessary information so that FDI can calculate the maximum
sales charges payable by the Funds pursuant to the Conduct Rules of the
NASD and the actual sales charges paid by the Funds; and cause the Fund's
transfer agent to provide such information in a form satisfactory to FDI
no less often than monthly for every Fund and on a daily basis for any
Fund for which FDI determines that the remaining limit is approaching
zero;
(g) support or cause the Funds' transfer agent to support the servicing of
the shareholders; in connection therewith the Funds' transfer agent or
Nomura will provide one or more persons during normal business hours to
respond to telephone questions concerning the Funds;
(h) provide FDI with copies of, or access to, any documents that FDI may
reasonably request and notify FDI as soon as possible of any matter
materially affecting FDI's performance of services under this Agreement;
(i) (i) identify persons to enter into agreements with FDI for the
solicitation of Fund Shares, such as securities dealers, financial
institutions and other industry professionals such as investment advisers
and estate planning firms (collectively referred to herein as "Selling
Broker Dealers"); (ii) assist FDI in ascertaining that such persons meet
any requirements established for Selling Broker-Dealers by law, the Funds
or FDI; (iii) request that FDI enter into selling agreements with each
such Selling Broker-Dealer ("Selling Agreements") using a request form
(the "Selling Agent Request Form") substantially similar to the attached
Exhibit B signed by a duly authorized officer or employee of Nomura (who
shall be a person listed on Exhibit B until such time as Nomura amends or
supplements such list) and Nomura will assist in the performance of the
necessary due diligence to determine the qualification of the prospective
Selling Broker-Dealer pursuant to clause (ii) above; (iv) submit such
Selling Agent Request Form and all related due diligence materials that
Nomura may have to FDI; (v) assist FDI in coordinating the execution of
Selling Agreements between FDI and the Selling Broker-Dealers; and (vi)
use its best efforts to insure that no sales are executed or
3
<PAGE>
processed prior to obtaining an executed Selling Agreement from the
Selling Broker-Dealer making the sale;
(j) provide administrative support (e.g. telemarketing and fulfillment
services) with regard to, and use its best efforts to monitor the
performance of, the Selling Broker-Dealers in their solicitation and
execution of sales of the Shares and all activities related thereto,
including compliance with applicable law, the Selling Agreements, and the
multi-class procedures;
(k) use reasonable efforts to monitor the Selling Broker-Dealers in their
resolution of as of trades with respect to Shares of the Funds in order to
mitigate the risk of loss to FDI and the Funds from such as of trades;
(l) report to FDI, to the extent that Nomura is aware, any and all actions
or inactions by any Selling Broker-Dealer that (i) fail to comply with the
terms of any Selling Agreements, (ii) violate any applicable laws of any
governmental authorities, including the NASD's Conduct Rules, or (iii)
violate any other agreements or procedures with which such Selling
Broker-Dealer is required to comply; and
(m) (i) submit the form of confirmation statement to be used for sale of
the Shares to FDI for its approval and provide or cause to be provided to
customers of the Selling Broker-Dealers ("Customers") and to the Selling
Broker-Dealers such confirmations of all transactions in the Shares as may
be required by the 1934 Act and the Selling Agreements, and (ii) use
reasonable efforts to monitor the Fund's transfer agent in its preparation
and mailing of such confirmations regarding the sales of the Shares and
report to FDI any deficiencies of which Nomura is aware in the transfer
agent's performance of such activities.
3. Delivery of Documents. In order to assist FDI in the performance of its
duties, Nomura has caused each Fund to furnish FDI with, or provide FDI with
access to, each of the following:
(a) each Fund's most recent Post-Effective Amendment to its Registration
Statement on Form N-IA (the "Registration Statement") under the 1933 Act
and under the 1940 Act as filed with the SEC relating to each Fund's
shares;
(b) each Fund's most recent Prospectus(es);
(c) each Fund's most recent Statement(s) of Additional Information;
(d) each Fund's most recent annual and semi-annual financial statements;
(e) each Fund's most recent filing pursuant to Rule 24f-2 under the 1940
Act;
(f) each Fund's most recent SEC examination letter to the extent that such
information contained in the SEC letter: (i) materially affects FDI's
performance under this Agreement; or (ii) the issues identified in the
letter may result in FDI incurring any loss, claim, damage or liability or
action in respect thereof; and
4
<PAGE>
(g) the Fund's charter documents and by-laws.
Nomura will furnish FDI from time to time with copies of, or access to,
all amendments of or supplements to the foregoing. Furthermore, Nomura will
provide FDI with copies of, or access to, any other documents that FDI may
reasonably request and will notify FDI as soon as possible of any matter
materially affecting FDI's performance of its services under this Agreement.
4. Compensation; Reimbursement of Expenses.
(a) Nomura shall pay FDI for the services provided under this Agreement an
aggregate annual fee in the first year of $105,000, for the initial one
Fund, payable in equal monthly installments on the first business day of
each month. Such annual fee shall be increased to an annual fee of
$114,000 in the second year of the Agreement. Such annual fee may be
changed by mutual written agreement should the number of Funds and/or the
corresponding services provided by FDI under this Agreement change.
(b) The fee as stated above is subject to the following conditions: (i)
that FDI shall only sponsor 10 or fewer Registered Representatives
(additional sponsorships shall be subject to a $2,500 annual fee per
Registered Representative sponsored by FDI in excess of the 10 Registered
Representatives); and (ii) that advertising legal review shall be for the
lesser of 30 marketing pieces or 150 pages per calendar year (advertising
legal review in excess of 30 pieces or 150 pages for the relevant annual
contract period (the "Annual Period") shall be subject to a flat fee of
$10 per page thereafter for such piece).
(c) All fees to FDI for the services described in this Agreement are
exclusive of out-of-pocket costs. Nomura agrees to reimburse FDI for FDI's
reasonable out-of-pocket expenses incurred in providing the services
hereunder including but not limited to NASD/state securities registration
related expenses, including expenses related to sponsorship and
maintenance of Registered Representative licenses, the licenses of any and
all exclusively dedicated teleservicing representatives and NASD filing
fees for sales literature. Expenses incurred out of the ordinary course in
providing the services hereunder are subject to prior approval by Nomura.
(d) The amount of each monthly payment described in this Section 4 shall
be reduced by the amount, if any, paid to FDI by any Fund pursuant to that
Fund's Rule 12b-1 plan (a "Plan"), if any, as in effect from time to time,
to the extent that FDI has not used such amount paid pursuant to the Plan
to pay for sales, marketing or other activities or expenses in accordance
with the Plan ("Distribution Activities"), whether such payments were made
to unaffiliated third parties or retained by FDI in connection with the
Distribution Activities in which FDI has engaged on the Fund's behalf at
the request of Nomura. FDI shall have no obligation to make any payments
pursuant to a Plan until FDI has received monies therefor from the Funds
or Nomura.
(e) 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
5
<PAGE>
this Agreement is in effect shall be prorated in a manner consistent with
the calculation of the fees as set forth above.
5. Effective Date. This Agreement shall become effective with respect to a Fund
as of the date first written above (or, if a particular Fund is not in existence
on that date, on the date FDI becomes the distributor of the shares of such
Fund; Schedule A to this Agreement shall be deemed amended to include such Fund
and any classes of Shares of such Fund from and after such date).
6. Term.
(a) This Agreement shall continue for an initial two-year period and shall
continue thereafter for successive one-year terms unless terminated
pursuant to the provision of sub-section (b) of this Section 6.
(b) This Agreement shall automatically terminate as it relates to any Fund
upon termination of the Distribution Agreement between such Fund and FDI
or this Agreement may be terminated with respect to any Fund at any time
without payment of any penalty, upon 60 days' written notice, by vote of a
majority of the Board of Directors of a Fund. In any event, the provisions
of Sections 7 and 8 shall survive termination of this Agreement and
continue in full force and effect. Compensation due FDI and unpaid by
Nomura upon such termination shall be immediately due and payable upon and
notwithstanding such termination.
7. Standard of Care and Indemnification.
(a) Nomura shall indemnify and hold FDI, its officers, directors,
employees, shareholders, affiliated persons (as such term is defined in
the 1940 Act) and agents (collectively the "FDI Indemnified Parties" and
each individually an "FDI Indemnified Party") harmless from and against
any and all losses, claims, damages, expenses and liabilities, joint or
several (including, but not limited to, any reasonable investigation,
legal and other expenses incurred in connection with, and any amount paid
in settlement of, any action, suit, proceeding or claim), which such FDI
Indemnified Party or FDI Indemnified Parties may be or become subject to
or liable for by reason of or in connection with this Agreement, FDI's
provision of services pursuant to this Agreement, or any other matter,
event or transaction in any way relating to or connected with this
Agreement or the subject matter hereof; provided, however, that an FDI
Indemnified Party shall not be entitled to indemnification hereunder to
the extent, but only to the extent, that such loss, claim, damage, expense
or liability was caused directly and proximately by action or omission of
FDI and that such action or omission involved bad faith, gross negligence
or intentional misconduct by FDI.
(b) FDI shall indemnify and hold Nomura, its officers, directors,
employees, shareholders, affiliated persons (as such term is defined in
1940 Act) and agents (collectively the "Nomura Indemnified Parties" and
each individually a "Nomura Indemnified Party") harmless from and against
any and all losses, claims, damages, expenses and liabilities, joint or
several (including, but not limited to, any reasonable
6
<PAGE>
investigation, legal and other expenses incurred in connection with, and
any amount paid in settlement of, any action, suit, proceeding or claim),
which such Nomura Indemnified Party or Nomura Indemnified Parties may be
or become subject to or incur by reason of this Agreement or under the
1933 Act, the 1934 Act, common law or otherwise, but only to the extent
that such loss, claim, damage, expense or liability incurred by a Nomura
Indemnified Party shall arise out of or be based on (i) any breach of any
covenant or obligation of FDI contained in this Agreement, (ii) any
failure by FDI to comply with any laws applicable with its performance of
services under this Agreement or (iii) a final determination by a court of
competent jurisdiction that such loss, claim, damage, expense or liability
was caused directly or proximately by an action or omission of FDI
involving bad faith, gross negligence or intentional misconduct by FDI;
provided that a Nomura Indemnified Party shall not be entitled to
indemnification hereunder to the extent, but only to the extent, that such
loss, claim, damage, expense or liability was caused directly and
proximately by action or omission of Nomura and that such action or
omission involved bad faith, gross negligence or intentional misconduct by
Nomura.
(c) In order to provide for just and equitable contribution in
circumstances in which the terms of Section 7(a) or 7(b) are applicable,
but for any reason the indemnification provided for therein is held to be
unavailable, Nomura and FDI shall contribute to the aggregate losses,
claims, damages, expenses and liabilities (including, but not limited to,
any reasonable investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit,
proceeding or claim) which any of the FDI Indemnified Parties or Nomura
Indemnified Parties (as defined above), respectively, may be subject to or
liable for in proportion to the relative fault of Nomura, on the one hand,
and FDI, on the other hand; provided, however, that in determining
relative fault, there shall be considered the relative benefits received
by each party from the transactions giving rise to the loss, claim,
damage, expense or liability, the parties' relative knowledge and access
to information concerning the matter with respect to which the claim was
asserted, the opportunity to correct and prevent any statement or
omission, and any other equitable considerations appropriate under the
circumstances; provided, further, that in no event shall FDI be required
to contribute in the aggregate hereunder any amount in excess of the
aggregate compensation received by it for its services during the
immediately preceding 12-month period. Neither Nomura nor FDI shall have
any other right of contribution in connection herewith.
(d) The applicable indemnified party, promptly and in any event within ten
(10) days after receipt of notice of commencement of any action, suit,
proceeding or claim in respect of which a claim for indemnification may be
made by it, shall notify the applicable indemnifying party in writing of
the commencement of such action, suit, proceeding or claim, enclosing a
copy of all papers served. However, the omission to so notify the
applicable indemnifying party of any such action, suit, proceeding or
claim shall not relieve such indemnifying party from any liability that it
may have under Section 7(a) or (b), as applicable, of this Agreement
except to the extent that the ability of such indemnifying party to defend
such action, suit, proceeding or claim is materially adversely affected.
7
<PAGE>
(e) In case any such action, suit, proceeding or claim for which indemnity
may be payable hereunder shall be brought against an FDI Indemnified Party
or Nomura Indemnified Party, as applicable (an "Indemnified Party"), and
such Indemnified Party shall notify the applicable indemnifying party of
the commencement thereof, such indemnifying party shall be entitled to
participate in, and to the extent that such indemnifying party shall wish
to assume the defense thereof, with counsel reasonably satisfactory to
such Indemnified Party, subject to the further provisions of this
paragraph. After written notice from such indemnifying party to such
Indemnified Party of its election to so assume the defense thereof, such
indemnifying party shall not be liable to the applicable Indemnified
Parties for any additional attorneys' fees or other expenses of
litigation, other than reasonable costs of investigation subsequently
incurred by such Indemnified Parties in connection with the defense
thereof, unless (i) the employment of counsel by such Indemnified Parties
has been authorized in writing by such indemnifying party, such
authorization not to be unreasonably withheld or delayed; (ii) such
Indemnified Parties shall have obtained a written opinion of counsel
reasonably acceptable to such indemnifying party that there exists a
conflict of interest between such Indemnified Parties and the relevant
party in the conduct of the defense of such action or that there are one
or more defenses available to such Indemnified Parties that are
unavailable to such indemnifying party (in which case such indemnifying
party shall not have the right to direct the defense of such action on
behalf of such Indemnified Parties); or (iii) such indemnifying party
shall not in fact have employed counsel reasonably satisfactory to such
Indemnified Parties to assume the defense of such action, in each of which
case the reasonable fees and expenses of counsel utilized by such
Indemnified Parties shall be at the expense of such indemnifying party, it
being understood, however, that such indemnifying party shall not, in
connection with any one such action or separate but substantially similar
or related actions in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the reasonable fees
and expenses of more than one separate firm of attorneys for an
Indemnified Party, which firm shall be designated in writing by the
Indemnified Party. Notwithstanding the foregoing, under the circumstances
described in clause (ii) above, the applicable Indemnified Parties shall
be entitled to retain an additional law firm, in any one such action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances,
provided such Indemnified Parties have obtained a written opinion of
counsel reasonably acceptable to the indemnifying party that a conflict of
interest exists that would preclude the use of a single law firm, in which
case the indemnifying party shall be liable for the reasonable fees and
expenses of counsel designated by the Indemnified Parties writing. All
such fees and expenses which are at the expense of an indemnifying party
hereunder shall be promptly paid by such indemnifying party.
(f) Nothing in this Agreement shall be construed as limiting an
Indemnified Party's rights to employ counsel at its own expense or to
obtain indemnification for amounts reasonably paid to adverse claimants in
satisfaction of any judgments or in settlement of any actions, suit,
proceeding or claims, except that no party hereto shall be liable for any
settlement of any action, suit, proceeding or claim
8
<PAGE>
effected without its written consent. None of the parties hereto shall
settle or compromise any action, suit, proceeding or claim if such
settlement or compromise provides for an admission of liability on the
part of an Indemnified Party without such Indemnified Party's written
consent.
8. Confidentiality. During the term of this Agreement, FDI and Nomura may have
access to confidential information relating to such matters as either party's
business, trade secrets, systems, procedures, manuals, products, contracts,
personnel, and clients. As used in this Agreement, "Confidential Information"
means information belonging to FDI or Nomura which is of value to FDI or Nomura
and the disclosure of which could result in a competitive or other disadvantage
to either party. Confidential Information includes, without limitation,
financial information, proposal and presentations, reports, forecasts;
inventions, improvements and other intellectual property; trade secrets;
know-how; designs, processes or formulae; software; market or sales information
or plans; customer lists; and business plans, prospects and opportunities (such
as possible acquisitions or dispositions of businesses or facilities).
Confidential Information includes information developed by either party in the
course of engaging in the activities provided for in this Agreement, unless: (i)
the information is or becomes publicly known through lawful means; (ii) at the
time of receipt the information was already actually known to the other party;
or (iii) the information is disclosed to the other party without a confidential
restriction by a third party who rightfully possesses the information and did
not obtain it, either directly or indirectly, from FDI or Nomura, as the case
may be, or any of their respective principals, employees, affiliated persons, or
affiliated entities. The parties understand and agree that all Confidential
Information shall be kept confidential by the other both during and after the
term of this Agreement. The parties further agree that they will not, without
the prior written approval by the other party, disclose such Confidential
Information, or use such Confidential Information in any way, either during the
term of this Agreement or at any time thereafter, except as required in the
course of this Agreement and as approved by the other party or as required by
law.
9. Record Retention and Confidentiality. FDI shall keep and maintain on behalf
of the Funds all books and records which the Funds and FDI are, or may be,
required to keep and maintain in connection with the services to be provided
hereunder pursuant to any applicable statutes, rules and regulations, including
without limitation Rules 31a- 1 and 31a-2 under the 1940 Act. FDI further agrees
that all such books and records shall be the property of the Funds and to make
such books and records available for inspection by or upon the request of the
Funds, by Nomura, or by the SEC at reasonable times and otherwise to keep
confidential all books and records and other information relative to the Funds
and its shareholders; except when requested to divulge such information by
duly-constituted authorities or court process.
10. Rights of Ownership. All computer programs and procedures developed to
perform the services to be provided by FDI under this Agreement are the property
of FDI. All records and other data except such computer programs and procedures
are the exclusive property of the Funds and all such other records and data will
be furnished to Nomura and/or the Funds in appropriate form as soon as
practicable after termination of this Agreement for any reason.
11. Return of Records. FDI may at its option at any time, and shall promptly
upon the demand of Nomura and/or the Funds, turn over to Nomura and/or the Funds
and cease to retain FDI's files, records and documents created and maintained by
FDI pursuant to this Agreement which are no longer needed by FDI in the
performance of its services or for its legal protection.
9
<PAGE>
If not so turned over to Nomura and/or the Funds, such documents and records
will be retained by FDI for six years from the year of creation. At the end of
such six-year period, such records and documents will be turned over to Nomura
and/or the applicable Fund unless the applicable Fund authorizes in writing the
destruction of such records and documents.
12. Representations of Nomura. Nomura represents and warrants that this
Agreement has been duly authorized by Nomura and, when executed and delivered by
Nomura, will constitute a legal, valid and binding obligation of Nomura,
enforceable against Nomura in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors and secured parties.
13. Representations of FDI. (a) FDI represents and warrants that this Agreement
has been duly authorized by FDI and, when executed and delivered by FDI, will
constitute a legal, valid and binding obligation of FDI, enforceable against FDI
in accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting the rights and
remedies of creditors and secured parties.
(b) FDI further represents and warrants that it is a member of the NASD and
agrees to abide by all of the rules and regulations of the NASD, including,
without limitation, its Conduct Rules. FDI agrees to comply with all applicable
federal and state laws, rules and regulations. FDI agrees to notify Nomura
immediately in the event of its expulsion or suspension by the NASD. Expulsion
of FDI by the NASD will automatically terminate this Agreement immediately
without notice. Suspension of FDI by the NASD will terminate this Agreement
effective immediately upon written notice of termination to FDI from Nomura.
14. Notices. Any notice provided hereunder shall be sufficiently given when sent
by registered or certified mail to Nomura at the following address: Nomura Asset
Management U.S.A. Inc., 180 Maiden Lane, New York, NY 10038-4939, Attention:
President; and to FDI at the following address: 60 State Street, Suite 1300,
Boston, MA 02109, Attention: President with a copy to General Counsel, or at
such other address as either party may from time to time specify in writing to
the other party pursuant to this Section.
15. Headings. Paragraph headings in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
16. Assignment. This Agreement and the rights and duties hereunder shall not be
assignable by either of the parties hereto except by the specific written
consent of the other party.
17. Governing Law. This Agreement shall be governed by and provisions shall be
construed in accordance with the laws of The Commonwealth of Massachusetts.
18. Use of Nomura Name. Nomura consents to FDI's non-exclusive use of the
"Nomura" name and "Nomura Pacific Basin Fund" name solely in connection with
FDI's website, trade advertisements, client lists and mutual fund industry
conferences and displays. FDI agrees and acknowledges that Nomura and Nomura
Pacific Basin Fund, Inc. and/or their affiliates own all right, title, and
interest in the name "Nomura" and "Nomura Pacific Basin Fund" and will only use
the "Nomura" name as stated herein.
10
<PAGE>
19. Services Not Exclusive. The Fund and Nomura hereby acknowledge that the
services provided hereunder by FDI are not exclusive. Nothing herein shall be
deemed to limit or restrict FDI's right, or the right of any of FDI's officers,
directors or employees to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to any other
corporation, fund, firm, individual or association, as well as provide
distribution services to any other mutual fund, including any fund which may
directly compete with or be similar to Nomura.
20. Severability. If any part, term or provision of this Agreement is held to be
illegal, in conflict with any law or otherwise invalid, the remaining portion or
portions shall be considered severable and not be affected, and the rights and
obligations of the parties shall be construed and enforced as if this Agreement
did not contain the particular part, term or provision held to be illegal or
invalid.
21. Counterparts. This Agreement may be executed by the parties hereto on any
number of counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
NOMURA ASSET MANAGEMENT U.S.A. INC.
By:
--------------------------------
Name: Nobuo Katayama
------------------------------
Title: President
-----------------------------
FUNDS DISTRIBUTOR, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
11
<PAGE>
Dated: July __, 1999
SCHEDULE A
TO THE SERVICES AGREEMENT
BETWEEN
NOMURA ASSET MANAGEMENT U.S.A. INC.
AND
FUNDS DISTRIBUTOR, INC.
FUNDS
Nomura Pacific Basin Fund, Inc.
NOMURA ASSET MANAGEMENT U.S.A. INC.
By:
--------------------------------
Name: Nobuo Katayama
------------------------------
Title: President
-----------------------------
FUNDS DISTRIBUTOR, INC.
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
12
<PAGE>
Exhibit B
SELLING AGREEMENT REQUEST FORM
To: Elissa Kaye Grebber
Fax Number: (617) 557-0711
Telephone: (617) 557-3438
E-Mail: [email protected]
From:_________________________________________
Telephone Number:_______________________
Fax Number:_____________________________
Date: _________________________________________
Proposed Selling Agent name and address:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone:____________________________________
Please indicate the desired method of delivery:
Mail:_______
FEDEX:_______
Facsimile - #( )_________
________________________________ ______________________________________
Authorized Nomura Representative Authorized FDI Representative
Elissa Kaye Grebber
(Attached hereto as Attachment 1 is a list of Authorized
Nomura Representatives.)
13
<PAGE>
Attachment 1
AUTHORIZED NOMURA REPRESENTATIVES
The following individuals are authorized to request the issuance of sales
agreements to clients and/or potential clients of Nomura:
14
<PAGE>
Exhibit C
Selling Agents That Have Entered Into Selling
Agreements With Funds Distributor, Inc.
15
BROWN & WOOD LLP
One World Trade Center
New York, New York 10048-0557
Telephone (212) 839-5300
Facsimile (212) 839-5599
July 30, 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
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. 16 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
July 21, 1999
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 the Corporation's
principal underwriter 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, the Corporation's principal underwriter
will be paid a fee in respect of the Classes set forth in the applicable
exhibit.
3. Any payment to the Corporation's principal underwriter in accordance
with this Plan will be made pursuant to the Distribution Agreement entered into
by the Corporation and the Corporation's principal underwriter. Any payments
made by the Corporation's principal underwriter to Dealers with funds received
as compensation under this Plan will be made pursuant to the Dealer Agreement
entered into by the Corporation's principal underwriter and the Dealer.
4. The Corporation's principal underwriter 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, the
Corporation's principal underwriter 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
<PAGE>
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.
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 the Corporation's principal
underwriter 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, the
Corporation's principal underwriter 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:
------------------------------------
Nobuo Katayama
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, the
Corporation's principal underwriter 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:
------------------------------------
Nobuo Katayama
B-1
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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