Exhibit (a)(1)
NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
August 17, 2005
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.
1
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;
2
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 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.
3
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:
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
4
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 17, 2005
5
NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 1 - List of Nomura Funds
Japan Smaller Capitalization Fund, Inc.
Korea Equity Fund, Inc.
6
NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 2 - List of Covered Officers
Rita Chopra-Brathwaite
Neil Daniele
Hiroshi Terasaki
Revised: August 17, 2005
7
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.
- -------------------------------------- ---------------
Signature Date
- --------------------------------------
Print Name
8
NOMURA FUNDS
CODE OF ETHICS FOR PRINCIPAL EXECUTIVE AND
SENIOR FINANCIAL OFFICERS
Exhibit 4 - Annual Compliance Questionnaire and Certification
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").
9
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?
- ----------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------
10
- ----------------------------------------------------------------------------------------------------------
Yes, No,
or N/A
- ----------------------------------------------------------------------------------------------------------
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.
- ----------------------------------------------------------------------------------------------------------
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.
- --------------------------------------- -----------------
Signature Date
- ---------------------------------------
Print Name
11