Exhibit 99(a)(1)
NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
August 6, 2003
I. Covered Officers and Purposes of the Code
This Nomura Funds Code of Ethics for Principal Executive and Senior
Financial Officers (the "Code") for the investment companies listed in Exhibit
A (collectively, "Funds" and each, "Company") applies to the Company's
Principal Executive Officer and Senior Financial Officers (the "Covered
Officers"), each of whom is set forth in Exhibit B, for the purpose of
promoting:
o Honest and ethical conduct, including the ethical handling of actual
or apparent conflicts of interest between personal and professional
relationships;
o Full, fair, accurate, timely and understandable disclosure in reports
and documents that a registrant files with, or submits to, the
Securities and Exchange Commission ("SEC") and in other public
communications made by the Company;
o Compliance with applicable laws and governmental rules and
regulations;
o The prompt internal reporting of violations of the Code to an
appropriate person or persons identified in the Code; and
o Accountability for adherence to the Code.
Covered Officers should adhere to a high standard of business ethics and
should avoid placing themselves in a "compromising position" where their
interests may be, or appear to be, in conflict with those of the Company
and its shareholders.
II. Covered Officers Should Handle Ethically Actual and Apparent Conflicts of
Interest
A Covered Officer must not engage in any activity that could result in an
actual, potential or perceived conflict of interest. Such a "conflict of
interest" arises if a Covered Officer represents the Company in any activity
or transaction and the personal interests of the Covered Officer might affect
his or her ability to represent the Funds' interests fairly and impartially. A
Covered Officer must not knowingly and voluntarily permit himself or herself
to be placed in a position where his or her interests may become adverse to
the Funds.
Certain conflicts of interest arise out of the relationships between
Covered Officers and the Company and already are subject to conflict of
interest provisions in the Investment Company Act of 1940 ("Investment Company
Act") and the Investment Advisers Act of 1940 ("Advisers Act"). For example,
Covered Officers may not individually engage in certain transactions (such as
the purchase or sale of securities or other property) with the Company because
of their status as "affiliated persons" of the Company. The compliance
programs of the Funds and their investment manager, Nomura Asset Management
U.S.A. Inc. ("NAM-USA"), are designed to prevent, or identify and correct,
violations of these provisions. This Code is not intended to, repeat or
replace these programs and procedures, and such conflicts that fall outside of
the parameters of this Code.
Although typically not presenting an opportunity for improper personal
benefit, conflicts arise from, or as a result of, the contractual relationship
between the Company and NAM-USA, of which Covered Officers are also officers
or employees. As a result, the Code recognizes that Covered Officers will, in
the normal course of their duties (whether formally for the Company or for
NAM-USA, or for both), be involved in establishing policies and implementing
decisions that will have different effects on NAM-USA and the Company. The
participation of Covered Officers in such activities is inherent in the
contractual relationship between the Company and NAM-USA and is consistent
with the performance by Covered Officers of their duties as officers of the
Company. Thus, if performed in conformity with the provisions of the
Investment Company Act and the Advisers Act, such activities will be deemed to
have been handled ethically. In addition, it is recognized by the Funds'
Boards of Directors (collectively, the "Board") that Covered Officers may also
be officers or employees of one or more other investment companies covered by
this or other codes.
Other conflicts of interest are covered by the Code, even if such
conflicts of interest are not subject to provisions in the Investment Company
Act and the Advisers Act. The following list provides examples of conflicts of
interest under the Code, but Covered Officers should keep in mind that these
examples are not exhaustive. The overarching principle is that the personal
interest of a Covered Officer should not be placed improperly before the
interest of the Company.
Each Covered Officer must:
o Not use his or her personal influence or personal relationship
improperly to influence investment decisions or financial reporting by
the Company whereby the Covered Officer would benefit personally to
the detriment of the Company;
o Not cause the Company to take action, or fail to take action, for the
individual personal benefit of the Covered Officer rather than the
benefit of the Company;
o Not use material non-public knowledge of portfolio transactions made
or contemplated for the Company to trade personally or cause others to
trade personally in contemplation of the market effect of such
transactions;
o Never accept compensation in any form from any person or entity for
directing Company business to such person or entity or for accepting
business on behalf of the Company. All placements of Company business
and acceptances of business by the Company must be awarded purely upon
business considerations.
These are some conflict of interest situations that should always be
approved by the NAM-USA Compliance Department:
o Service as a director, trustee, officer, owner or partner of, or as a
consultant or independent contractor to, any publicly or privately
owned business organization, regardless of whether compensation of any
form is received;
o It must be remembered that business relationships cannot always be
separated from personal relationships and that the integrity of a
business relationship is always susceptible to criticism in hindsight
where gifts are received;
o The receipt of any gifts or entertainment from any company with which
the Company has current or prospective business dealings unless such
gifts or entertainment are
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business-related, reasonable in cost, appropriate as to time and place,
and not so frequent as to raise any question of impropriety;
o The giving of gifts or entertainment to a Company shareholder, service
provider, supplier or other Company business contact. Covered Officers
must use careful judgment to ascertain that the matter is handled in
good taste without excessive expense;
o A direct or indirect financial interest in commissions, transaction
charges or spreads paid by the Company for effecting portfolio
transactions or for selling or redeeming shares other than an interest
arising from the Covered Officer's employment, such as compensation or
equity ownership.
III. Disclosure and Compliance
o Each Covered Officer should familiarize himself with the disclosure
requirements generally applicable to the Company;
o Each Covered Officer should not knowingly misrepresent, or cause
others to misrepresent, facts about the Company to others, whether
within or outside the Company, including to the Company's directors
and auditors, and to governmental regulators and self-regulatory
organizations;
o Each Covered Officer should, to the extent appropriate within his area
of responsibility, consult with other officers and employees of the
Funds and NAM-USA with the goal of promoting full, fair, accurate,
timely and understandable disclosure in the reports and documents the
Funds file with, or submit to, the SEC and in other public
communications made by the Funds; and
o It is the responsibility of each Covered Officer to promote compliance
with the standards and restrictions imposed by applicable laws, rules
and regulations.
IV. Reporting and Accountability
Each Covered Officer must:
o Upon adoption of the Code (or thereafter as applicable, upon becoming
a Covered Officer) affirm in writing that he or she has received, read
and understands the Code. The form for this purpose is attached to the
Code as Exhibit 3;
o Annually thereafter affirm that he or she has complied with the
requirements of the Code. The document for this purpose is attached to
the Code as Exhibit 4;
o Not retaliate against any other Covered Officer or any employee of the
Funds or their affiliated persons for reports of potential violations
that are made in good faith; and
o Notify the NAM-USA Compliance Department promptly, on a confidential
basis, if he or she knows of any violations of this Code. Failure to
do so is itself a violation of this Code.
The Compliance Officer of NAM-USA is responsible for applying and interpreting
this Code to specific situations in which questions are presented. However,
the Board will consider any approvals or waivers sought by Covered
Officers.
The Funds will follow these procedures when investigating and enforcing this
Code:
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o The Compliance Officer of NAM-USA will take all appropriate actions to
investigate any potential violations reported to him or her;
o If, after such investigation, the Compliance Officer believes that no
violation occurred, the Compliance Officer is not required to take any
further action;
o Any matter that the Compliance Officer believes is a violation will be
reported to the Board;
o If the Board concurs that a violation has occurred, it will consider
appropriate action, which may include review of, and appropriate
modifications to, applicable policies and procedures; notification to
appropriate personnel of NAM-USA or its board; or a recommendation to
dismiss the Covered Officer;
o The Board will be responsible for granting waivers, as appropriate;
and
o Any changes to or waivers of this Code will, to the extent required,
be disclosed as provided by SEC rules.
V. Other Policies and Procedures
This Code shall be the sole code of ethics adopted by the Funds for
purposes of Section 406 of the Sarbanes-Oxley Act and the rules and forms
applicable to registered investment companies thereunder. Insofar as other
policies or procedures of the Funds, NAM-USA or other service providers govern
or purport to govern the behavior or activities of the Covered Officers who
are subject to this Code, they are superseded by this Code to the extent that
they overlap or conflict with the provisions of this Code. The Funds' and
NAM-USA's code of ethics under Rule 17j-1 under the Investment Company Act and
NAM-USA's more detailed policies and procedures set forth in its Compliance
Manual are separate requirements applying to the Covered Officers and others,
and are not part of this Code.
VI. Amendments
Any amendments to this Code, other than amendments to Exhibits 1 and 2, must
be approved by a majority vote of the Board, including a majority vote of
the independent directors.
VII. Confidentiality
All reports and records prepared or maintained pursuant to this Code will be
considered confidential and shall be maintained and protected accordingly.
Except as otherwise required by law or this Code or otherwise directed by
the Board upon due consideration, such matters shall not be disclosed to
anyone other than to the Board, to the appropriate Company or NAM-USA
personnel, or to legal counsel to the Company or NAM-USA.
VIII. Internal Use
The Code is intended solely for the internal use by the Funds and does not
constitute an admission, by or on behalf of any Company, as to any fact,
circumstance, or legal conclusion.
Date: August 6, 2003
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NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 1 - List of Nomura Funds
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Japan Smaller Capitalization Fund, Inc.
Korea Equity Fund, Inc.
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NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 2 - List of Covered Officers
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Yasushi Suzuki
Rita Chopra-Brathwaite
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NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 3 - Certification of Receipt
- ------------------------------------
I hereby acknowledge that I have received and read the Nomura Funds Code of
Ethics for Principal Executive and Senior Financial Officers. I understand and
agree that, as a Covered Officer, I am subject to and will abide by its
provisions and all amendments thereto. I further undertake to obey the rules
of any regulatory body with which the Nomura Funds may be required to comply
and any addition, amendment or replacement that is set out in any written
notice which is subsequently given to me. I understand that failure to follow
such policies and procedures can result in disciplinary action by the Board of
Directors of the Nomura Funds, as well as possible civil and criminal
penalties.
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Signature Date
- --------------------------------------
Print Name
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NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 4 - Annual Compliance Questionnaire and Certification
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2003 CODE OF ETHICS
Please complete the Code of Ethics questionnaire in full, including the
information below. Please type or print very clearly.
Last or family name: _________________________________________________
First or given name: _________________________________________________
Middle name or initial: _________________________________________________
Previous last or family _________________________________________________
name:
(For persons who have married and changed their
names in the past year)
Legal name of funds in _________________________________________________
which you serve as a
Covered Officer:
All Covered Officers are required to complete this questionnaire once a year
to confirm their compliance with the Code of Ethics for the Principal
Executive and Senior Financial Officers of the Nomura Funds (the "Code of
Ethics").
The Code of Ethics should be read prior to answering these questions.
Should you have any questions after reading the Code of Ethics, please consult
with the Compliance Department of Nomura Asset Management U.S.A. Inc.
("NAM-USA").
- ------ ---------------------------------------------------------------------------------- -------------
Yes, No, or
N/A
- ------ ---------------------------------------------------------------------------------- -------------
1. Have you used your personal influence or personal relationships improperly
to influence investment decisions or financial reporting by the Nomura Funds
whereby you would benefit personally to the detriment of the Nomura Funds?
- ------ ---------------------------------------------------------------------------------- -------------
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- ------ ---------------------------------------------------------------------------------- -------------
Yes, No, or
N/A
- ------ ---------------------------------------------------------------------------------- -------------
2. Have you caused the Nomura Funds to take action, or fail to take action, for
your personal benefit rather than the benefit of the Nomura Funds?
- ------ ---------------------------------------------------------------------------------- -------------
3. Have you used material non-public knowledge of portfolio transactions made or
contemplated for the Nomura Funds to trade personally or cause others to trade
personally in contemplation of the market effect of such transactions?
- ------ ---------------------------------------------------------------------------------- -------------
4. Have you accepted compensation in any form from any person for directing Nomura
Fund business to such person or for accepting business on behalf of the Nomura Funds?
- ------ ---------------------------------------------------------------------------------- -------------
5. Do you serve as a director, trustee, officer, owner or partner of, as a consultant or
independent contractor to, any publicly or privately owned business organization,
regardless of whether compensation of any form is received?
- ------ ---------------------------------------------------------------------------------- -------------
If yes, please attach a list of such positions unless previously approved by the
NAM-USA Compliance Department pursuant to the Code of Ethics.
- ------ ---------------------------------------------------------------------------------- -------------
6. Have you accepted gifts or entertainment from any company with which the Nomura
Funds has current or prospective business dealings unless such gifts or
entertainment are business-related, reasonable in cost, appropriate as to time
and place, and not so frequent as to raise any question of impropriety?
- ------ ---------------------------------------------------------------------------------- -------------
If yes, please attach a list of such gifts or entertainment unless previously
approved by the NAM-USA Compliance Department pursuant to the Code of Ethics.
- ------ ---------------------------------------------------------------------------------- -------------
7. Have you given gifts or entertainment to a Company shareholder, service
provides, supplier, or other Company business contact?
- ------ ---------------------------------------------------------------------------------- -------------
If yes, please attach a list of such gifts or entertainment unless previously
approved by the NAM-USA Compliance Department pursuant to the Code of Ethics.
- ------ ---------------------------------------------------------------------------------- -------------
8. Do you have a direct or indirect financial interest in commissions, transaction
charges or spreads paid by the Company for effecting portfolio transactions or
for selling or redeeming shares other than an interest arising from your
employment, such as compensation or equity ownership? If yes, please describe.
- ------ ---------------------------------------------------------------------------------- -------------
9. Are you aware of any cases in which service providers or suppliers have
exploited their relationships with the Nomura Funds?
- ------ ---------------------------------------------------------------------------------- -------------
10 Are you aware, in connection with any business transactions for the Nomura
Funds, of any conduct, improper, unethical, illegal or otherwise, on the part
of any person which may be detrimental to the Nomura Funds?
- ------ ---------------------------------------------------------------------------------- -------------
If yes, attach the details.
- ------ ---------------------------------------------------------------------------------- -------------
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If you feel that any of your responses to the above questions require comment,
please attach an explanation.
I confirm that I have read and understand the Code of Ethics and that I have
answered all of the above questions pertaining to the Code of Ethics to the
best of my ability and confirm that my answers are true.
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Signature Date
- ---------------------------------------
Print Name
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