As filed with the Securities and Exchange Commission on July 27, 2000
Securities Act File No. 2-96612
Investment Company Act File No. 811-4269
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 17 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 18 |X|
(Check appropriate box or boxes)
--------------------
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) 509-1538
John J. Boretti
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane, New York, N.Y. 10038-4936
(Name and Address of Agent for Service)
--------------------
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.
--------------------
Title of Securities Being Registered: Common Stock, par value $.10 per
share.
================================================================================
<PAGE>
PROSPECTUS
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane, New York, New York 10038-4936
(Telephone: l-800-833-0018)
--------------------------------------------------------------------------------
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.
--------------------------------------------------------------------------------
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 27, 2000
<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
Fund Share Pricing .................................................. 15
Purchase of Fund Shares ............................................. 16
Class A Shares ................................................ 17
Class B Shares ................................................ 18
Class Z Shares ................................................ 18
Initial Sales Charges for Class A Shares ...................... 18
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 .................................... 19
Selling Fund Shares ................................................. 20
Selling Shares Through Your Financial Advisor ................. 20
Selling Shares Directly to the Fund ........................... 20
Fund Distributions and Taxes ........................................ 21
Financial Highlights ................................................ 23
2
<PAGE>
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, India, Indonesia, Malaysia, New Zealand, Pakistan, Singapore, South Korea,
Sri Lanka, 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 may invest up to 30% of its total
assets in equity securities of non-Pacific Basin companies and in fixed-income
obligations.
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
3
<PAGE>
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.
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.
4
<PAGE>
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.
[BAR CHART OMITTED]
The following was represented as a bar chart in the printed material.
1990 ........................................................... -15.3%
1991 ........................................................... 11.8%
1992 ........................................................... -12.7%
1993 ........................................................... 40.5%
1994 ........................................................... 4.2%
1995 ........................................................... 3.5%
1996 ........................................................... 3.1%
1997 ........................................................... -28.7%
1998 ........................................................... 0.4%
1999 ........................................................... 65.5%
During the period shown in the bar graph, the highest return for a quarter was
25.8% (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, 2000 was (7.0%).
5
<PAGE>
<TABLE>
<CAPTION>
Average Annual Total Returns
(for the calendar year
ended December 31, 1999)
----------------------------------
Past Past Past Since Inception
One Five Ten (July 8, 1985) to
Year Years Years December 31, 1999
---- ----- ----- -----------------
<S> <C> <C> <C> <C>
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+ ....... 65.5% 4.8% 4.3% 13.4%
MSCI Pacific Basin Index** ............. 58.0% 2.7% 0.5% 11.7%
</TABLE>
----------
* The initial subscription period for Class A and Class B shares started
August 2, 1999.
+ Does not include sales charge. Class Z shares were the only shares
outstanding during the periods for which performance figures are
presented. Class Z shares are the original shares of the Fund. However,
only Class A and Class B shares are generally offered to new investors.
The performance figures of the Class A and Class B shares would have been
lower than those presented for Class Z shares because of the initial and
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 started August 2, 1999. The expenses for these classes were
derived from Class Z shares which represent the Fund's no-load shares.
6
<PAGE>
Shareholder Fees
(Fees paid directly from your investment)
<TABLE>
<CAPTION>
Class A Class B Class Z
------- ------- -------
<S> <C> <C> <C>
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
</TABLE>
Annual Fund Operating Expenses
(Expenses that are deducted from Fund assets)
<TABLE>
<CAPTION>
Operating Expenses Class A Class B Class Z
------------------ ------- ------- -------
<S> <C> <C> <C>
Management Fees .......................................... 0.75% 0.75% 0.75%
Distribution (12b-1) Fees ................................ 0.25% 1.00% --
Other Expenses ........................................... 2.41% 2.41% 2.41%
---- ---- ----
Total Annual Fund Operating Expenses ..................... 3.41% 4.16% 3.16%
Less Expense Reimbursement ............................... 1.51% 1.51% 1.51%
---- ---- ----
Net Annual Fund Operating Expenses+ ...................... 1.90% 2.65% 1.65%
==== ==== ====
</TABLE>
----------
* 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, 2001, 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--3.41%; Class B shares--4.16%; and Class Z
shares--3.16%.
7
<PAGE>
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.
8
<PAGE>
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. The Fund
may invest up to 30% of its total assets in equity securities of non-Pacific
Basin companies, and in fixed-income obligations.
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.
9
<PAGE>
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.
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.
10
<PAGE>
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 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.
11
<PAGE>
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 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
12
<PAGE>
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
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.
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 invest as a hedge against possible variations in the foreign
exchange rates between these currencies. This is
13
<PAGE>
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.
14
<PAGE>
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 $185 billion in assets under management as of March 31,
2000.
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.
15
<PAGE>
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.
PURCHASE OF FUND SHARES
You may open a Fund account with as little as $2,000 and make additional
investments at any time with as little as $250. The Fund sells its shares at the
applicable offering price, which is the NAV plus any applicable sales charge.
Your financial advisor or State Street Bank and Trust Company (the "Transfer
Agent") generally must receive your completed buy order before the close of
regular trading on the New York Stock Exchange (currently 4:00 p.m. Eastern
time) for your shares to be purchased at that day's offering price.
The address of the Transfer Agent is
State Street Bank and Trust Company
P.O. Box 8119
Boston, Massachusetts 02266-8119
You may buy shares
o Through a financial advisor. Your financial advisor will be responsible
for furnishing all necessary documents to the Transfer Agent, and may
charge you for such services.
16
<PAGE>
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 Through an authorized broker or agent. You may purchase shares of the Fund
through an authorized broker or agent. You may be charged a fee for
transactions in Fund shares effected through an authorized broker or
agent.
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 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).
17
<PAGE>
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.
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.
18
<PAGE>
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 advisors 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
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.
19
<PAGE>
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.
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.
20
<PAGE>
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
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
21
<PAGE>
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 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.
22
<PAGE>
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, 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.
23
<PAGE>
FINANCIAL HIGHLIGHTS
Selected per share data and ratios for a share of common stock outstanding
throughout each period:
<TABLE>
<CAPTION>
August 2, 1999
(commencement of
Class share offering) Class Z shares
through March 31, 2000 For the Year Ended March 31,
------------------------ ---------------------------------------------------------
Class A Class B
shares shares 2000 1999 1998 1997 1996
------ ------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period: ........ $ 13.95 $ 13.95 $ 11.63 $ 10.61 $ 13.76 $ 16.52 $ 15.07
------- ------- ------- ------- ------- ------- -------
Income from investment operations:
Net investment loss ........................ (0.05)+ (0.14)+ (0.09)+ (0.03)+ (0.07)+ (0.14)+ (0.04)+
Net realized and unrealized gain (loss)
on investments and foreign currencies ... 3.19+ 3.23+ 5.57+ 1.05+ (3.01)+ (0.87)+ 2.07+
------- ------- ------- ------- ------- ------- -------
Total from investment operations ........... 3.14+ 3.09+ 5.48+ 1.02+ (3.08)+ (1.01)+ 2.03+
Distributions to shareholders from:
Net investment income ...................... -- -- -- -- (0.04) (0.28) --
Net realized capital gains ................. -- -- -- -- (0.03) (1.47) (0.58)
------- ------- ------- ------- ------- ------- -------
Total distributions .......................... -- -- -- -- (0.07) (1.75) (0.58)
------- ------- ------- ------- ------- ------- -------
Net asset value, end of period ............... $ 17.09 $ 17.04 $ 17.11 $ 11.63 $ 10.61 $ 13.76 $ 16.52
======= ======= ======= ======= ======= ======= =======
Total investment return ...................... 22.5% 22.2% 47.1% 9.6% (22.4%) (6.9%) 13.7%
Ratio to average net assets/supplemental data:
Net assets, end of period (000) ............ $ 12 $ 12 $18,679 $12,725 $13,736 $22,128 $34,022
Operating expenses, net of
reimbursement ............................ 1.80%* 2.27%* 1.89% 2.50% 2.49% 2.21% 1.78%
Total expenses ............................. 368.73%* 367.31%* 3.16% 3.35% 2.91% 2.21% 1.78%
Net investment loss ........................ (0.49%)* (1.32%)* (0.62%) (0.33%) (0.55%) (0.87%) (0.28%)
Portfolio turnover ......................... 83.0% 83.0% 83.0% 48% 45% 62% 45%
</TABLE>
----------
+ Based on average shares outstanding.
* Annualized
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.
1-14, 2-chome, 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>
ACCOUNT APPLICATION
NOMURA PACIFIC BASIN FUND, INC.
[LOGO]
1-(800)-833-0018
--------------------------------------------------------------------------------
1. ACCOUNT REGISTRATION (Please print or type. Check only one box)
--------------------------------------------------------------------------------
|_| Individual
|_| Joint Tenant (For Joint Owners, Rights of Survivorship is assumed unless
otherwise specified)
|_| Tenants in Common
|_| Uniform Gift to Minors Act (UGMA) or Uniform Transfer to Minors Act
(UTMA)-use the name of the adult custodian on the shareholder line and the
name of the child on the co-shareholder line. Use the child's Social
Security number.
|_| Trust Account-please indicate the name(s) of the trustee(s) authorized to
act on behalf of the trust on the shareholder line and the name of the
trust and date of the trust on the co-shareholder line.
|_| I am a Dealer Firm registered representative or employee entitled to NAV
purchases of Class A shares.
|_| Other form of ownership (please specify)__________________________________
_______________________________ ____________________________________________
Name of shareholder Social Security number or taxpayer ID number
(required by law) or submit W-8 Form.
_______________________________
Name of co-shareholder (if any)
_______________________________ ____________________________________________
Address Telephone number
_______________________________ ____________________________________________
City State Zip Code Citizenship
--------------------------------------------------------------------------------
2. ESTABLISHING YOUR ACCOUNT
--------------------------------------------------------------------------------
SHARE CLASS TO BE PURCHASED |_| A |_| B |_| Z
|_| A. A check in the amount of $_________________payable to Nomura Pacific
Basin Fund, Inc. is enclosed ($2,000 initial purchase or $250 subsequent
purchase)
|_| B. A purchase in the amount of $_________________was made through the
Dealer named below on Date _____/_____/_____, Confirmation
___________________.
|_| C. I/ We wish to authorize monthly investments from my/our checking
account in the amount of $_______________ (minimum $50) into Nomura
Pacific Basin Fund, Inc. I/We authorize State Street Bank & Trust Company
to debit my/our account via ACH for this amount on the |_| 10th or |_|
25th of each month and agree to the terms and conditions as set forth in
the Prospectus. ATTACH A "VOID" CHECK TO THIS APPLICATION.
--------------------------------------------------------------------------------
3. DISTRIBUTION OPTION (If not completed, Option A will be assigned)
--------------------------------------------------------------------------------
|_| A. Reinvest all dividends and capital gains.
|_| B. Dividends to be paid in cash; capital gains to be reinvested.
|_| C. Pay all dividends and capital gains in cash.
Cash distribution should be sent to: |_| Address of Record, or
|_| Special Payee, as follows:
________________________________________________________________________________
Name
________________________________________________________________________________
Address City State Zip Code
--------------------------------------------------------------------------------
4. TELEPHONE REDEMPTIONS
--------------------------------------------------------------------------------
THE PRIVILEGE AUTOMATICALLY APPLIES UNLESS BOX IS CHECKED.
|_| NO, I/We would not like the telephone redemption privilege.
NOTE: A SIGNATURE GUARANTEE LETTER IS REQUIRED FOR REDEMPTIONS OVER $25,000. See
Prospectus for details.
<PAGE>
--------------------------------------------------------------------------------
5. REDEMPTIONS TO A BANK ACCOUNT, if this section is not completed, proceeds
will be sent to the address in Section 1.
--------------------------------------------------------------------------------
Please send proceeds of redemptions requested to:
_______________________________________ ___________________________________
Name of Bank ABA Routing Number
________________________________________________________________________________
Address City State Zip Code
_______________________________________ ___________________________________
Registration of Bank Account Bank Account Number
I/We elect to utilize redemptions via o ACH or o Federal Wire to the bank
account named above. If Wire, please provide the bank's ABA Routing Number
above.
--------------------------------------------------------------------------------
6. RIGHT OF ACCUMULATION (Optional)
--------------------------------------------------------------------------------
|_| I/We own shares in more than one account, which may entitle a reduced sales
charge. Please link my/our account numbers to qualify (Attach an additional
sheet if necessary):
|_| The registrations of some of my accounts differ. Their account numbers are:
--------------------------- ------------------------ -------------------------
See Statement of Additional Information for details.
--------------------------------------------------------------------------------
7. STATEMENT OF INTENTION (Optional)
--------------------------------------------------------------------------------
I/We understand that through accumulated investments I/We can reduce the sales
charges on Class A Shares. I/We intend to invest over a 13-month period
beginning (date)______________in shares of one or more of the funds listed for
an aggregate amount of at least:
|_| $50,000 |_| $100,000 |_| $250,000 |_| $500,000 |_| $1,000,000
|_| amendment to existing Statement of Intention
I/We understand that by entering into a Statement of Intention, shares will be
escrowed to guarantee payment of any sales charge due if I/We invest less than
the agreed upon amount within 13 months. See Statement of Additional Information
for details.
--------------------------------------------------------------------------------
8. SIGNATURES AND CERTIFICATION
--------------------------------------------------------------------------------
I am of legal age and have read the current prospectus(es) and this application.
I agree to the terms thereof including any amendments thereto. I hold harmless
and indemnify NSI, the mutual fund for which it is distributor ("Nomura Pacific
Basin Fund, Inc.") and each of their respective partners, affiliates, directors,
officers, employees and agents from any losses, expenses, costs or liability
(including attorney fees) which I may incur in connection with my instructions
in this application and any other instructions given in writing, by telephone or
electronically reasonably believed to be genuine. Under the penalty of perjury,
I certify that (1) the Social Security Number or Taxpayer Identification Number
shown on this form is my correct Taxpayer Identification Number, and (2) I am
not subject to backup withholding either because I have not been notified by the
Internal Revenue Service (IRS) that I am subject to backup withholding as a
result of a failure to report all interest and dividends, or the IRS has
notified me that I am no longer subject to backup withholding. If I am
affiliated with, or work for, a NASD member firm, I will attach information
concerning my employment. This application shall apply to any Nomura Pacific
Basin Fund, Inc. account I establish at any later date unless specifically
changed in writing.
|_| Social Security/Tax I.D. Number applied for.
______________________ ____/____/____ ______________________ ____/____/____
Signature Date Signature of Co-Owner Date
(if any)
--------------------------------------------------------------------------------
9. DEALER AUTHORIZATION (FOR DEALER COMPLETION ONLY)
--------------------------------------------------------------------------------
_____________________________________ ________________________________________
Representative Name Rep Number Branch Number
________________________________________________________________________________
Branch Office Address City State Zip Code
_____________________________________ ________________________________________
Representatives Phone Number
_____________________________________ ________________________________________
Dealer Name Dealer Number
________________________________________________________________________________
Dealer Main Office Address City State Zip Code
_____________________________________ ____/____/____
Dealers Authorized Signature Date
--------------------------------------------------------------------------------
10. MAILING ADDRESS
--------------------------------------------------------------------------------
State Street Bank and Trust Company
P.O. Box 8119
Boston, MA 02266-8119
<PAGE>
================================================================================
More information about Nomura Pacific Basin Fund, Inc.
The Fund's Statement of Additional Information ("SAI") and annual and
semi-annual reports to shareholders include additional information about the
Fund. The SAI, and the report of the independent accountants and financial
statements included in the Fund's most recent annual report to its shareholders,
are incorporated by reference into this prospectus, which means they are part of
this prospectus for legal purposes. The Fund's annual report discusses the
market conditions and investment strategies that significantly affected the
Fund's performance during its last fiscal year. You may get free copies of these
materials, request other information about the Fund, or make shareholder
inquiries, by contacting your financial advisor or the Transfer Agent or by
calling the Manager toll free at 1-800-833-0018.
Internet Address www.nomura-asset.com
You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's public reference room in Washington, D.C.
You may call the Commission at 1-800-SEC-0330 for information about the
operation of the public reference room. You may also access reports and other
information about the Fund on the Commission's Internet site at
http://www.sec.gov. You may get copies of this information, with payment of a
duplication fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Fund's file number
which is 811-4269.
Nomura Pacific Basin Fund, Inc.
180 Maiden Lane
New York, New York 10038-4936
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.
[LOGO]
Prospectus
July 27, 2000
================================================================================
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
Nomura Pacific Basin Fund, Inc. [LOGO]
180 Maiden Lane, New York, New York 10038-4936
(Telephone: l-800-833-0018)
================================================================================
Nomura Pacific Basin Fund, Inc. (the "Corporation") is a series company
currently offering one portfolio, the Pacific Basin Portfolio (the "Fund"). The
Fund seeks long-term capital appreciation primarily through investments in
equity securities of corporations domiciled in Far Eastern and Western Pacific
("Pacific Basin") countries including, but not limited to Japan, Australia,
China, Hong Kong, India, Indonesia, Malaysia, New Zealand, Pakistan, Singapore,
South Korea, Sri Lanka, 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
2000 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 27, 2000
<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, India, Indonesia, Malaysia, New Zealand, Pakistan,
Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and the Philippines.
Current income from dividends and interest will not be an important
consideration in selecting portfolio securities. Reference is made to
"Summary--Investment Objective", "Principal Investment Strategies" and
"Investment Risks" in the prospectus.
The Fund anticipates that under normal conditions at least 70% of 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. The Fund may also invest up to 30% of its total assets in equity
securities of non-Pacific Basin Companies and in fixed-income obligations.
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.
2
<PAGE>
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
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.
3
<PAGE>
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.
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 a 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,
4
<PAGE>
the Fund will receive income on both the loaned securities and the collateral or
on the investment of any cash received as collateral and thereby increase its
yield. With respect to the lending of portfolio securities, there is the risk of
failure by the borrower to return the securities involved in such transactions,
in which event the Fund may incur a loss.
The operating expense ratio of the Fund can be expected to be higher than
that of an investment company investing exclusively in domestic securities since
the expenses of the Fund, such as custodial costs, 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.
5
<PAGE>
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 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
6
<PAGE>
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.
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, 1998, March 31, 1999
and March 31, 2000 were 45%, 48% and 83%, 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. (67)--Director(2)--111 Parsonage Road, Greenwich,
Connecticut 06830. Consultant to the television industry since 1991. Director of
What's For Free Technologies, Inc.
GEORGE H. CHITTENDEN (83)--Director(2)--155 Buffalo Bay Neck Road,
Madison, Connecticut 06443. Director of Bank Audi (USA).
NOBUO KATAYAMA (53)--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 (64)--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 (65)--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 (71)--Director(1)(2)--17 Rhoda Street, West Hempstead, New
York 11552. Senior Vice President of the Manager from 1981 to 2000, Secretary
thereof from 1976 to 2000, Treasurer thereof from 1984 to 2000 and Director
thereof from 1986 to 2000.
7
<PAGE>
KEISUKE HARUGUCHI (50)--Vice President(1)(2)--Senior Vice President and
Director of NAM-U.S.A. since 1999, Senior Manager of NAM from 1997 to 1998.
Manager of the Nomura Securities Co., Ltd. from 1994 to 1996.
DAVID G. STOEFFEL (41)--Vice President(1)(2)--Senior Vice President of
NAM-U.S.A. since 1999, Vice President since 1998. Eastern Division Manager of
Brinson Funds from 1997 to 1998. Northeast Region Funds Coordinator of
Prudential Investments from 1994 to 1997.
JOHN J. BORETTI (48)--Secretary and Treasurer(1)(2)--Senior Vice President
of the Manager since 1996 and Compliance Officer since 1997. 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, 2000, 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
$44,891 for the year ended March 31, 2000.
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, 2000 March 31, 2000 December 31, 1999*
---------------- -------------- -------------- ------------------
<S> <C> <C> <C>
William G. Barker, Jr....... $7,500 None $32,500
George H. Chittenden ....... $7,000 None $32,500
Nobuo Katayama** ........... -- None --
Chor Weng Tan............... $7,000 None $30,500
Arthur R. Taylor............ $7,500 None $32,500
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
8
<PAGE>
a wholly-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 five 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, 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 theManager);
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 1-14, 2-chome,
Nihonbashi, Chuo-ku, Tokyo 103-8260, Japan provides investment advisory services
for Japanese and international clients. NAM together with its affiliates, had
approximately $185 billion in assets under management as of March 31, 2000. At
March 31, 2000, Nomura Securities owns 74.5% of NAM. 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 wholly-owned subsidiary of NAM.
Mr. Nobuo Katayama, President of the Fund and President of the Manager, is
primarily responsible for the day-
9
<PAGE>
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, 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, 1998,
1999 and 2000, respectively, the Fund paid or accrued fees to the Manager of
$160,712, $87,968, and $123,471, portions of which were waived or reimbursed as
described below for the years ended March 31, 1998, 1999, and 2000,
respectively. For such years, the Manager paid fees of $24,616, $0, and $0,
respectively, to NAM, and fees of, $2,591, $0, and $0, respectively, to
NAM-Singapore.
The Manager waived fees from, or reimbursed expenses to the Fund of
$77,926, $98,715, $256,317 for the years ended March 31, 1998, 1999, and 2000.
For the years ended March 31, 1998, 1999, and 2000, 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
10
<PAGE>
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.
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.
The Fund has authorized one or more brokers to accept purchase orders on
the Fund's behalf. These brokers are authorized to designate intermediaries to
accept purchase orders on the Fund's behalf. Purchase orders placed through
authorized brokers will be deemed to have been received by the Fund when the
authorized broker or broker authorized designee accepts the order. Customer
orders placed through authorized brokers or their designees will be priced at
the Fund's NAV next computed after the orders are accepted by the authorized
broker or their designee.
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
11
<PAGE>
(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 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
Initial Sales Charge as a 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:
12
<PAGE>
(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.
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 made 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.
13
<PAGE>
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.
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.
14
<PAGE>
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 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.
15
<PAGE>
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 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.
The Fund has authorized one or more brokers to accept redemption orders on
the Fund's behalf. These brokers are authorized to designate intermediaries to
accept redemption orders on the Fund's behalf. Redemption orders placed through
authorized brokers will be deemed to have been received by the Fund when the
authorized broker or broker authorized designee accepts the order. Customer
orders placed through authorized brokers or their designees will be priced at
the Fund's NAV next computed after the redemption orders are accepted by the
authorized broker or their designee.
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
16
<PAGE>
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.
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.
17
<PAGE>
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 on March
31, 2000.
<TABLE>
<CAPTION>
Class A Class B Class Z
------- ------- -------
<S> <C> <C> <C>
Net Asset Value Per Share ................................. $17.09 $17.04 $17.11
Initial Sales Charge (for Class A: 5.75% of offering price;
6.10% of net asset value per share)* .................... 1.04 --** --
------ ------ ------
Offering Price ............................................ $18.13 $17.04 $17.11
====== ====== ======
</TABLE>
----------
* 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".
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.
18
<PAGE>
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, 1998, the Fund incurred brokerage commissions
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 March 31, 1999, the
Fund incurred brokerage commission 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. For the year ended March 31, 2000, the Fund incurred brokerage
commissions of $82,284. Nomura Securities and its affiliates earned $5,575 or
6.8% of such amount for effecting transactions involving 5.3% 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
19
<PAGE>
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.
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.
20
<PAGE>
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.
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.
21
<PAGE>
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 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.
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.
22
<PAGE>
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.
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. The performance of the Fund may be compared in
publications to the performance of various indices and investments for which
reliable performance data is available. The performance of the Fund may be
compared in publications to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services. 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.
23
<PAGE>
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, 2000 March 31, 2000 March 31, 2000 March 31, 2000
--------------------------- -------------- -------------- -------------- --------------
<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+ ....................... 47.1% 5.8% 6.6% 13.1%
</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.
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.
24
<PAGE>
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, 2000, Ms. Barbara H. Stanton, 133 East 64 Street, New York,
N.Y. 10021-7045, owned 8.3% of the Class Z shares of the Fund and Nomura Asset
Management U.S.A. Inc., 180 Maiden Lane, New York, N.Y. 10038-4936, owned 100%
of the Class A and Class B shares of the Fund, and therefore, may, for certain
purposes, be deemed to control the Fund and be able to affect the outcome of
certain matters presented for a vote of shareholders.
Independent Accountants
PricewaterhouseCoopers LLP has been selected as the independent
accountants of the Fund. The selection of 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.
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 2000 annual report to
shareholders. The annual report contains additional performance information and
will be made available to investors upon request and without charge. 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 ........................................................ 15
Redemption of Fund Shares ................................................. 15
Redemption ......................................................... 16
Repurchase ......................................................... 16
Reinstatement Privilege ............................................ 16
Pricing of Fund Shares .................................................... 17
Determination of Net Asset Value ................................... 17
Computation of Offering Price Per Share ............................ 18
Portfolio Transactions and Brokerage ...................................... 18
Shareholder Services ...................................................... 19
Investment Accounts ................................................ 19
Reinvestment of Dividends and Capital
Gains Distributions .............................................. 19
Retirement Plans ................................................... 20
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 ............................................ 25
Custodian and Transfer Agent ....................................... 25
Legal Counsel ...................................................... 25
Reports to Shareholders ............................................ 25
Additional Information ............................................. 25
Financial Statements ...................................................... 25
================================================================================
<PAGE>
================================================================================
Nomura Pacific Basin
Fund, Inc.
[LOGO]
Statement of Additional
Information
July 27, 2000
================================================================================
<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. (c)
4(a) --Form of Interim Management Agreement between Registrant and
Nomura Asset Management U.S.A. Inc.
(b) --Form of Interim Investment Advisory Agreement between Nomura
Asset Management U.S.A. Inc. and Nomura Asset Management Co.,
Ltd.
(c) --Form of Interim Investment Advisory Agreement between Nomura
Asset Management U.S.A. Inc. and Nomura Asset Management
Singapore Ltd.
5(a) --Form of Distribution Agreement between Registrant and Funds
Distributor, Inc. (b)
5(b) --Form of Selling Agreement (b)
6 --None.
7(a) --Custody 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)
(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. (b)
9 --Opinion and Consent of Brown & Wood LLP, counsel to the
Registrant. (b)
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. (b)
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 Registrant's
Registration Statement on Form N-1A filed on May 28, 1999.
(b) Filed as an Exhibit to Post-Effective Amendment No. 16 to the Registrant's
Registration Statement on Form N-1A Filed on July 30, 1999.
(c) 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,
1998 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.
Keisuke Haruguchi ........ Senior Vice President, Treasurer Senior Manager of NAM from 1997 to 1998.
and Director
Marti G. Subrahmanyam .... Director Professor, Stern School of Business, New York
University since 1974.
John J. Boretti .......... Senior Vice President and None.
Compliance Officer
Michael A. Morrongiello .. Senior Vice President Vice President of Bankers Trust Company from
1988 to 1998.
Kenneth L. Munt .......... Senior Vice President Senior Vice President of Middlesex Mutual
and Corporate Secretary Assurance Co. from 1996 to 1999.
David G. Stoeffel ........ Senior Vice President Eastern Division Manager of Brinson Funds from
1997 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 1-14, 2 chome,
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, 1998 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>
Akira Kiyokawa ............. President and Chief Executive President of NAM from 1999 to 2000. President of
Officer The Nomura Trust and Banking Co., Ltd. from 1993 to 1999.
Atsushi Kinebuchi .......... Executive Vice President Executive Managing Director of NAM from 1994 to 2000.
Takanori Tanabe ............ Director and Principal Executive Executive Managing Director of NAM from 1995 to 2000.
Officer
Hisaaki Hino ............... Director and Principal Executive Executive Managing Director of NAM from 1999 to 2000. Senior
Officer Executive Officer of NAM from 1998 to 1999. Director of
Morgan Trust Bank from 1993 to 1998.
Takanori Shimizu ........... Director and Senior Executive Senior Executive Officer of NAM from 1998 to
Officer 2000. Managing Director of NAM from 1997 to 1998.
Director of The Securities Investment Trust Mgmt. Co.,
Ltd. from 1993 to 1997.
Akio Nakaniwa .............. Director and Senior Executive Senior Executive Officer of NAM from 1998 to
Officer 2000. Director of Nomura Securities Co., Ltd. from 1994
to 1998.
Haruo Miyako ............... Senior Executive Officer Managing Director of NAM from 1997 to 1998.
Director of NAM from 1993 to 1997.
Takahide Mizuno ............ Senior Executive Officer Executive Officer of NAM from 1998 to 1999. 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.
Masato Tanaka .............. Director and Senior Executive Executive Officer of NAM from 1999 to 2000.
Officer General Manager of The Nomura Securities Co., Ltd. from
1996 to 1999.
Yukio Suzuki ............... Senior Executive Officer Executive Officer of NAM from 1999 to 2000.
Director of Nomura Securities from 1997 to 1999.
Yasunobu Watase ............ Senior Executive Officer Executive Officer of NAM from 1999 to 2000.
Director of Nomura Securities from 1997 to 1999.
Shigeru Fujinuma ........... Executive Officer General Manager of Nomura Securities from
1998 to 2000.
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>
Masami Kitaoka .............. Executive Officer Officer, Personnel Dept. of NAM from 1998 to 2000. Director of NAM
from 1997 to 1998.
Norio Kinoshita ............. Executive Officer Officer, Product Development Dept. of NAM from 1998 to 2000.
Director of NAM from 1996 to 1998.
Takahisa Matsuura ........... Executive Officer Senior Investment Officer of NAM from 1998 to 1999 and General
Manager of Nomura from 1996 to 1998.
Yuji Miyachi ................ Executive Officer Investment Officer of NAM in 1998, Director of Research of The
Sumitomo Trust and Banking Co., Ltd. from 1995 to 1998.
Mitsunori Minamio ........... Executive Officer Director of NAM from 1996 to 1998, General Manager of Nomura
from 1995 to 1996.
Hirokatsu Ogawa ............. Executive Officer General Manager of Nomura Research Institute Ltd. from 1993 to 2000.
Toshiki Sada ................ Executive Officer Director of Financial Research Center, The Nomura Securities Co.,
Ltd. from 1998 to 2000.
Hideyuki Suzuki ............. Executive Officer Senior Officer of NAM from 1999 to 2000.
Kazuhiro Yamashita .......... Executive Officer General Manager of The Nomura Securities Co., Ltd. from 1997 to 2000.
</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,
1998 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.
Yoshimitsu Matsuki .......... Managing Director Investment Officer, Fixed Income Department from 1998 to 2000.
Hirokazu Maki ............... Director Deputy General Manager, Clearing Department of NAM from 1998 to 1999,
Senior Manager of NAM from February 2000 to March 2000.
</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.
C-5
<PAGE>
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
CDC MPT & Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds Inc.
GMO Trust
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
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
The Saratoga Advantage Trust
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.
St. Clair Funds
The Skyline Funds
TD Waterhouse Family of Funds, Inc.
TD Waterhouse Trust
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.
C-6
<PAGE>
Director, President and Chief Executive
Officer ........................................ Marie E. Connolly
Director and Executive Vice President ............ George A. Rio
Executive Vice President and Chief
Administrative Officer ......................... Gary S. MacDonald
Executive Vice President ......................... William S. Nichols
Executive Vice President ......................... Charles W. Carr
Senior Vice President, General Counsel,
Chief Compliance Officer, Secretary
and Clerk ...................................... Margaret W. Chambers
Senior Vice President, and Treasurer ............. Joseph F. Tower, III
Senior Vice President and Chief
Financial Officer .............................. William J. Stettler
Senior Vice President ............................ Mary A. Nelson
Senior Vice President ............................ Eric A. Liik
Senior Vice President ............................ John Lehning
Senior Vice President ............................ John Prosperi
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).
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-7
<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, duly authorized, in the City of New York, and State of New York, on
the 27th day of July 2000.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ NOBUO KATAYAMA* Director and President July 27, 2000
-------------------------------------- (Principal Executive Officer)
(Nobuo Katayama)
/s/ JOHN J. BORETTI (Principal Financial and July 27, 2000
-------------------------------------- Accounting Officer)
(John J. Boretti)
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)
JOHN F. WALLACE * Director
--------------------------------------
(John F. Wallace)
*By: /s/ NOBUO KATAYAMA July 27, 2000
--------------------------------------
(Nobuo Katayama, Attorney-in-Fact)
</TABLE>
C-8
<PAGE>
POWER OF ATTORNEY
The undersigned, the Directors of each of the registered investment
companies listed below, hereby authorize Nobuo Katayama, John J. Boretti and
David G. Stoeffel or any of them, as attorney-in-fact, to sign on his behalf in
the capacities indicated on any Registration Statement or amendment thereto
(including post-effective amendments) for each of the following registered
investment companies and to file the same, with all exhibits thereto, with the
Securities and Exchange Commission: Korea Equity Fund, Inc., Jakarta Growth
Fund, Inc., Japan OTC Equity Fund, Inc. and Nomura Pacific Basin Fund, Inc.
Dated: July 26, 2000
/s/ NOBUO KATAYAMA
----------------------------------------------------
Nobuo Katayama
(President and Principal Executive Officer)
/s/ WILLIAM G. BARKER, JR.
----------------------------------------------------
William G. Barker, Jr.
(Director)
----------------------------------------------------
George H. Chittenden
(Director)
/s/ CHOR WENG TAN
----------------------------------------------------
Chor Weng Tan
(Director)
/s/ ARTHUR R. TAYLOR
----------------------------------------------------
Arthur R. Taylor
(Director)
/s/ JOHN F. WALLACE
----------------------------------------------------
John F. Wallace
(Director)
C-9
<PAGE>
EXHIBIT INDEX
Exhibit
Number
-------
4(a) --Form of Interim Management Agreement between Registrant and Nomura
Asset Management U.S.A. Inc.
(b) --Form of Interim Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Co., Ltd.
(c) --Form of Interim Investment Advisory Agreement between Nomura Asset
Management U.S.A. Inc. and Nomura Asset Management Singapore Ltd.
10 --Consent of PricewaterhouseCoopers LLP, independent accountants for
the Registrant.
27 --Financial Data Schedule.
