Japan Smaller Capitalization Fund, Inc.
Rule 17g-1(g)1 Filing (Fidelity Bond)
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NAME OF ASSURED (including its Subsidiaries): Bond Number: 81392052
JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC. VIGILANT INSURANCE COMPANY
Incorporated under the laws of New York
TWO WORLD FINANCIAL CENTER, BUILDING B a stock insurance company herein called the COMPANY
NEW YORK, NY 10281-1712
55 Water Street, New York NY 10041-2899
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ITEM 1. BOND PERIOD: from 12:01 a.m. on July 31, 2006
to 12:01 a.m. on July 31, 2007
ITEM 2. LIMITS OF LIABILITY--DEDUCTIBLE AMOUNTS:
If "Not Covered" is inserted below opposite any specified INSURING
CLAUSE, such INSURING CLAUSE and any other reference shall be deemed
to be deleted. There shall be no deductible applicable to any loss
under INSURING CLAUSE 1. sustained by any Investment Company.
DEDUCTIBLE
INSURING CLAUSE LIMIT OF LIABILITY AMOUNT
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1. Employee $ 1,000,000 $ 25,000
2. On Premises $ 1,000,000 $ 25,000
3. In Transit $ 1,000,000 $ 25,000
4. Forgery or Alteration $ 1,000,000 $ 25,000
5. Extended Forgery $ 1,000,000 $ 25,000
6. Counterfeit Money $ 1,000,000 $ 25,000
7. Threats to Person $ Not Covered $ None
8. Computer System $ Not Covered $ None
9. Voice Initiated Funds Transfer Instruction $ Not Covered $ None
10. Uncollectible Items of Deposit $ Not Covered $ None
11. Audit Expense $ Not Covered $ None
ITEM 3. THE LIABILITY OF THE COMPANY IS ALSO SUBJECT TO THE TERMS OF THE
FOLLOWING ENDORSEMENTS EXECUTED SIMULTANEOUSLY HEREWITH:
1 - 4
IN WITNESS WHEREOF, THE COMPANY has caused this Bond to be signed by its
authorized officers, but it shall not be valid unless also signed by an
authorized representative of the Company.
/s/ Secretary /s/ President, Thomas F. Motamed
Countersigned by W. Andrew Macan /s/ Robert Hamburger
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Authorized Representative
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ICAP Bond (5-98) - Vigilant
Form 17-02-1422 (Ed. 5-98) Page 1 of 1
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The COMPANY, in consideration of payment of the
required premium, and in reliance on the
APPLICATION and all other statements made and
information furnished to the COMPANY by the
ASSURED, and subject to the DECLARATIONS made a
part of this Bond and to all other terms and
conditions of this Bond, agrees to pay the
ASSURED for:
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Insuring Clauses
Employee 1. Loss resulting directly from Larceny or
Embezzlement committed by any Employee,
alone or in collusion with others.
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On Premises 2. Loss of Property resulting directly from
robbery, burglary, false pretenses, common
law or statutory larceny, misplacement,
mysterious unexplainable disappearance,
damage, destruction or removal, from the
possession, custody or control of the
ASSURED, while such Property is lodged or
deposited at premises located anywhere.
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In Transit 3. Loss of Property resulting directly from
common law or statutory larceny,
misplacement, mysterious unexplainable
disappearance, damage or destruction, while
the Property is in transit anywhere:
a. in an armored motor vehicle, including
loading and unloading thereof,
b. in the custody of a natural person
acting as a messenger of the ASSURED,
or
c. in the custody of a Transportation
Company and being transported in a
conveyance other than an armored motor
vehicle provided, however, that covered
Property transported in such manner is
limited to the following:
(1) written records,
(2) securities issued in registered
form, which are not endorsed or are
restrictively endorsed, or
(3) negotiable instruments not payable
to bearer, which are not endorsed
or are restrictively endorsed.
Coverage under this INSURING CLAUSE begins
immediately on the receipt of such Property
by the natural person or Transportation
Company and ends immediately on delivery to
the premises of the addressee or to any
representative of the addressee located
anywhere.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 1 of 19
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Insuring Clauses
(continued)
Forgery Or Alteration 4. Loss resulting directly from:
a. Forgery on, or fraudulent material
alteration of, any bills of
exchange, checks, drafts,
acceptances, certificates of
deposits, promissory notes, due
bills, money orders, orders upon
public treasuries, letters of
credit, other written promises,
orders or directions to pay sums
certain in money, or receipts for
the withdrawal of Property, or
b. transferring, paying or delivering
any funds or other Property, or
establishing any credit or giving
any value in reliance on any
written instructions, advices or
applications directed to the
ASSURED authorizing or
acknowledging the transfer,
payment, delivery or receipt of
funds or other Property, which
instructions, advices or
applications fraudulently purport
to bear the handwritten signature of
any customer of the ASSURED, or
shareholder or subscriber to shares
of an Investment Company, or of any
financial institution or Employee
but which instructions, advices or
applications either bear a Forgery
or have been fraudulently
materially altered without the
knowledge and consent of such
customer, shareholder, subscriber,
financial institution or Employee;
excluding, however, under this INSURING
CLAUSE any loss covered under INSURING
CLAUSE 5. of this Bond, whether or not
coverage for INSURING CLAUSE 5. is
provided for in the DECLARATIONS of this
Bond.
For the purpose of this INSURING CLAUSE, a
mechanically reproduced facsimile
signature is treated the same as a
handwritten signature.
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Extended Forgery 5. Loss resulting directly from the ASSURED
having, in good faith, and in the
ordinary course of business, for its own
account or the account of others in any
capacity:
a. acquired, accepted or received,
accepted or received, sold or
delivered, or given value, extended
credit or assumed liability, in
reliance on any original Securities,
documents or other written instruments
which prove to:
(1) bear a Forgery or a fraudulently
material alteration,
(2) have been lost or stolen, or
(3) be Counterfeit, or
b. guaranteed in writing or witnessed any
signatures on any transfer,
assignment, bill of sale, power of
attorney, guarantee, endorsement or
other obligation upon or in connection
with any Securities, documents or
other written instruments.
Actual physical possession, and continued
actual physical possession if taken as
collateral, of such Securities, documents
or other written instruments by an
Employee, Custodian, or a Federal or
State chartered deposit institution of the
ASSURED is a condition precedent to the
ASSURED having relied on such items.
Release or return of such collateral is
an acknowledgment by the ASSURED that it
no longer relies on such collateral.
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Form 17-02-1421 (Ed. 5-98) Page 2 of 19
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Insuring Clauses
Extended Forgery For the purpose of this INSURING CLAUSE, a
(continued) mechanically reproduced facsimile signature
is treated the same as a handwritten
signature.
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Counterfeit Money 6. Loss resulting directly from the receipt by
the ASSURED in good faith of any Counterfeit
money.
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Threats To Person 7. Loss resulting directly from surrender of
Property away from an office of the ASSURED
as a result of a threat communicated to the
ASSURED to do bodily harm to an Employee as
defined in Section 1.e. (1), (2) and (5), a
Relative or invitee of such Employee, or a
resident of the household of such Employee,
who is, or allegedly is, being held captive
provided, however, that prior to the
surrender of such Property:
a. the Employee who receives the threat
has made a reasonable effort to notify
an officer of the ASSURED who is not
involved in such threat, and
b. the ASSURED has made a reasonable
effort to notify the Federal Bureau of
Investigation and local law enforcement
authorities concerning such threat.
It is agreed that for purposes of this
INSURING CLAUSE, any Employee of the
ASSURED, as set forth in the preceding
paragraph, shall be deemed to be an ASSURED
hereunder, but only with respect to the
surrender of money, securities and other
tangible personal property in which such
Employee has a legal or equitable interest.
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Computer System 8. Loss resulting directly from fraudulent:
a. entries of data into, or
b. changes of data elements or programs
within,
a Computer System, provided the fraudulent
entry or change causes:
(1) funds or other property to be
transferred, paid or delivered,
(2) an account of the ASSURED or of its
customer to be added, deleted,
debited or credited, or
(3) an unauthorized account or a
fictitious account to be debited or
credited.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 3 of 19
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Insuring
Clauses
(continued)
Voice Initiated Funds 9. Loss resulting directly from Voice
Transfer Instruction Initiated Funds Transfer Instruction
directed to the ASSURED authorizing the
transfer of dividends or redemption
proceeds of Investment Company shares from
a Customer's account, provided such Voice
Initiated Funds Transfer Instruction was:
a. received at the ASSURED'S offices by
those Employees of the ASSURED
specifically authorized to receive the
Voice Initiated Funds Transfer
Instruction,
b. made by a person purporting to be a
Customer, and
c. made by said person for the purpose of
causing the ASSURED or Customer to
sustain a loss or making an improper
personal financial gain for such person
or any other person.
In order for coverage to apply under this
INSURING CLAUSE, all Voice Initiated Funds
Transfer Instructions must be received and
processed in accordance with the
Designated Procedures outlined in the
APPLICATION furnished to the COMPANY.
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Uncollectible Items of 10. Loss resulting directly from the
Deposit ASSURED having credited an account of
a customer, shareholder or subscriber
on the faith of any Items of Deposit
which prove to be uncollectible,
provided that the crediting of such
account causes:
a. redemptions or withdrawals to be
permitted,
b. shares to be issued, or
c. dividends to be paid,
from an account of an Investment
Company.
In order for coverage to apply under
this INSURING CLAUSE, the ASSURED
must hold Items of Deposit for the
minimum number of days stated in the
APPLICATION before permitting any
redemptions or withdrawals, issuing
any shares or paying any dividends
with respect to such Items of Deposit.
Items of Deposit shall not be deemed
uncollectible until the ASSURED'S
standard collection procedures have
failed.
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Audit Expense 11. Expense incurred by the ASSURED for
that part of the cost of audits or
examinations required by any
governmental regulatory authority or
self-regulatory organization to be
conducted by such authority,
organization or their appointee by
reason of the discovery of loss
sustained by the ASSURED and covered
by this Bond.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 4 of 19
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General Agreements
Additional Companies A. If more than one corporation, or Investment
Included As Assured Company, or any combination of them is
included as the ASSURED herein:
(1) The total liability of the COMPANY
under this Bond for loss or losses
sustained by any one or more or all of
them shall not exceed the limit for
which the COMPANY would be liable under
this Bond if all such loss were
sustained by any one of them.
(2) Only the first named ASSURED shall be
deemed to be the sole agent of the
others for all purposes under this
Bond, including but not limited to the
giving or receiving of any notice or
proof required to be given and for the
purpose of effecting or accepting any
amendments to or termination of this
Bond. The COMPANY shall furnish each
Investment Company with a copy of the
Bond and with any amendment thereto,
together with a copy of each formal
filing of claim by any other named
ASSURED and notification of the terms
of the settlement of each such claim
prior to the execution of such
settlement.
(3) The COMPANY shall not be responsible
for the proper application of any
payment made hereunder to the first
named ASSURED.
(4) Knowledge possessed or discovery made
by any partner, director, trustee,
officer or supervisory employee of any
ASSURED shall constitute knowledge or
discovery by all the ASSUREDS for the
purposes of this Bond.
(5) If the first named ASSURED ceases for
any reason to be covered under this
Bond, then the ASSURED next named on
the APPLICATION shall thereafter be
considered as the first named ASSURED
for the purposes of this Bond.
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Representation Made By B. The ASSURED represents that all information
Assured it has furnished in the APPLICATION for this
Bond or otherwise is complete, true and
correct. Such APPLICATION and other
information constitute part of this Bond.
The ASSURED must promptly notify the COMPANY
of any change in any fact or circumstance
which materially affects the risk assumed by
the COMPANY under this Bond.
Any intentional misrepresentation, omission,
concealment or incorrect statement of a
material fact, in the APPLICATION or
otherwise, shall be grounds for recision of
this Bond.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 5 of 19
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General Agreements
(continued)
Additional Offices Or C. If the ASSURED, other than an Investment
Employees - Consolidation, Company, while this Bond is in force,
Merger Or Purchase Or merges or consolidates with, or purchases
Acquisiton Of Assets Or or acquires assets or liabilities of
Liabilities - Notice To another institution, the ASSURED shall not
Company have the coverage afforded under this Bond
for loss which has:
(1) occurred or will occur on premises,
or
(2) been caused or will be caused by an
employee, or
(3) arisen or will arise out of the assets
or liabilities,
of such institution, unless the ASSURED:
a. gives the COMPANY written notice of
the proposed consolidation, merger or
purchase or acquisition of assets or
liabilities prior to the proposed
effective date of such action, and
b. obtains the written consent of the
COMPANY to extend some or all of the
coverage provided by this Bond to
such additional exposure, and
c. on obtaining such consent, pays to
the COMPANY an additional premium.
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Change Of Control - D. When the ASSURED learns of a change in
Notice To Company control (other than in an Investment
Company), as set forth in Section 2(a) (9)
of the Investment Company Act of 1940, the
ASSURED shall within sixty (60) days give
written notice to the COMPANY setting
forth:
(1) the names of the transferors and
transferees (or the names of the
beneficial owners if the voting
securities are registered in another
name),
(2) the total number of voting securities
owned by the transferors and the
transferees (or the beneficial
owners), both immediately before and
after the transfer, and
(3) the total number of outstanding voting
securities.
Failure to give the required notice shall
result in termination of coverage for any
loss involving a transferee, to be
effective on the date of such change in
control.
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Court Costs And E. The COMPANY will indemnify the ASSURED for
Attorneys' Fees court costs and reasonable attorneys' fees
incurred and paid by the ASSURED in
defense, whether or not successful,
whether or not fully litigated on the
merits and whether or not settled, of any
claim, suit or legal proceeding with
respect to which the ASSURED would be
entitled to recovery under this Bond.
However, with respect to INSURING CLAUSE
1., this Section shall only apply in the
event that:
(1) an Employee admits to being guilty of
Larceny or Embezzlement, or
(2) an Employee is adjudicated to be
guilty of Larceny or Embezzlement, or
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 6 of 19
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General Agreements
Court Costs And (3) in the absence of 1 or 2 above, an
Attorneys' Fees arbitration panel agrees, after a review
(continued) of an agreed statement of facts between
the COMPANY and the ASSURED, that an
Employee would be found guilty of
Larceny or Embezzlement if such
Employee were prosecuted.
The ASSURED shall promptly give notice to
the COMPANY of any such suit or legal
proceeding and at the request of the COMPANY
shall furnish copies of all pleadings and
pertinent papers to the COMPANY. The COMPANY
may, at its sole option, elect to conduct
the defense of all or part of such legal
proceeding. The defense by the COMPANY shall
be in the name of the ASSURED through
attorneys selected by the COMPANY. The
ASSURED shall provide all reasonable
information and assistance as required by
the COMPANY for such defense.
If the COMPANY declines to defend the
ASSURED, no settlement without the prior
written consent of the COMPANY nor judgment
against the ASSURED shall determine the
existence, extent or amount of coverage
under this Bond.
If the amount demanded in any such suit or
legal proceeding is within the DEDUCTIBLE
AMOUNT, if any, the COMPANY shall have no
liability for court costs and attorney's
fees incurred in defending all or part of
such suit or legal proceeding.
If the amount demanded in any such suit or
legal proceeding is in excess of the LIMIT
OF LIABILITY stated in ITEM 2. of the
DECLARATIONS for the applicable INSURING
CLAUSE, the COMPANY'S liability for court
costs and attorney's fees incurred in
defending all or part of such suit or legal
proceedings is limited to the proportion of
such court costs and attorney's fees
incurred that the LIMIT OF LIABILITY stated
in ITEM 2. of the DECLARATIONS for the
applicable INSURING CLAUSE bears to the
total of the amount demanded in such suit or
legal proceeding.
If the amount demanded is any such suit or
legal proceeding is in excess of the
DEDUCTIBLE AMOUNT, if any, but within the
LIMIT OF LIABILITY stated in ITEM 2. of the
DECLARATIONS for the applicable INSURING
CLAUSE, the COMPANY'S liability for court
costs and attorney's fees incurred in
defending all or part of such suit or legal
proceedings shall be limited to the
proportion of such court costs or attorney's
fees that the amount demanded that would be
payable under this Bond after application of
the DEDUCTIBLE AMOUNT, bears to the total
amount demanded.
Amounts paid by the COMPANY for court costs
and attorneys' fees shall be in addition to
the LIMIT OF LIABILITY stated in ITEM 2. of
the DECLARATIONS.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 7 of 19
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Conditions And
Limitations
Definitions 1. As used in this Bond:
a. Computer System means a computer and
all input, output, processing,
storage, off-line media libraries,
and communication facilities which
are connected to the computer and
which are under the control and
supervision of the operating
system(s) or application(s) software
used by the ASSURED.
b. Counterfeit means an imitation of an
actual valid original which is
intended to deceive and be taken as
the original.
c. Custodian means the institution
designated by an Investment Company
to maintain possession and control of
its assets.
d. Customer means an individual,
corporate, partnership, trust
customer, shareholder or subscriber
of an Investment Company which has a
written agreement with the ASSURED
for Voice Initiated Funds Transfer
Instruction.
e. Employee means:
(1) an officer of the ASSURED,
(2) a natural person while in the
regular service of the ASSURED at
any of the ASSURED'S premises and
compensated directly by the
ASSURED through its payroll
system and subject to the United
States Internal Revenue Service
Form W-2 or equivalent income
reporting plans of other
countries, and whom the ASSURED
has the right to control and
direct both as to the result to
be accomplished and details and
means by which such result is
accomplished in the performance
of such service,
(3) a guest student pursuing studies
or performing duties in any of
the ASSURED'S premises,
(4) an attorney retained by the
ASSURED and an employee of such
attorney while either is
performing legal services for
the ASSURED,
(5) a natural person provided by an
employment contractor to perform
employee duties for the ASSURED
under the ASSURED'S supervision
at any of the ASSURED'S premises,
(6) an employee of an institution
merged or consolidated with the
ASSURED prior to the effective
date of this Bond,
(7) a director or trustee of the
ASSURED, but only while
performing acts within the scope
of the customary and usual
duties of any officer or other
employee of the ASSURED or while
acting as a member of any
committee duly elected or
appointed to examine or audit or
have custody of or access to
Property of the ASSURED, or
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Conditions And
Limitations
Definitions (8) each natural person, partnership or
(continued) corporation authorized by written
agreement with the ASSURED to perform
services as electronic data processor
of checks or other accounting records
related to such checks but only while
such person, partnership or corporation
is actually performing such services
and not:
a. creating, preparing, modifying or
maintaining the ASSURED'S computer
software or programs, or
b. acting as transfer agent or in any
other agency capacity in issuing
checks, drafts or securities for
the ASSURED,
(9) any partner, officer or employee of an
investment advisor, an underwriter
(distributor), a transfer agent or
shareholder accounting recordkeeper, or
an administrator, for an Investment
Company while performing acts coming
within the scope of the customary and
usual duties of an officer or employee
of an Investment Company or acting as a
member of any committee duly elected or
appointed to examine, audit or have
custody of or access to Property of an
Investment Company.
The term Employee shall not include any
partner, officer or employee of a
transfer agent, shareholder accounting
recordkeeper or administrator:
a. which is not an "affiliated person"
(as defined in Section 2(a) of the
Investment Company Act of 1940) of
an Investment Company or of the
investment advisor or underwriter
(distributor) of such Investment
Company, or
b. which is a "bank" (as defined in
Section 2(a) of the Investment
Company Act of 1940).
This Bond does not afford coverage
in favor of the employers of
persons as set forth in e. (4), (5)
and (8) above, and upon payment to
the ASSURED by the COMPANY
resulting directly from Larceny or
Embezzlement committed by any of
the partners, officers or employees
of such employers, whether acting
alone or in collusion with others,
an assignment of such of the
ASSURED'S rights and causes of
action as it may have against such
employers by reason of such acts so
committed shall, to the extent of
such payment, be given by the
ASSURED to the COMPANY, and the
ASSURED shall execute all papers
necessary to secure to the COMPANY
the rights provided for herein.
Each employer of persons as set forth
in e.(4), (5) and (8) above and the
partners, officers and other employees
of such employers shall collectively be
deemed to be one person for all the
purposes of this Bond; excepting,
however, the fifth paragraph of Section
13.
Independent contractors not specified
in e.(4), (5) or (8) above,
intermediaries, agents, brokers or
other representatives of the same
general character shall not be
considered Employees.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 9 of 19
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Conditions And
Limitations
Definitions
(continued) f. Forgery means the signing of the
name of another natural person with
the intent to deceive but does not
mean a signature which consists in
whole or in part of one's own name,
with or without authority, in any
capacity for any purpose.
g. Investment Company means any
investment company registered under
the Investment Company Act of 1940
and listed under the NAME OF
ASSURED on the DECLARATIONS.
h. Items of Deposit means one or more
checks or drafts drawn upon a
financial institution in the United
States of America.
i. Larceny or Embezzlement means
larceny or embezzlement as defined
in Section 37 of the Investment
Company Act of 1940.
j. Property means money, revenue and
other stamps; securities; including
any note, stock, treasury stock,
bond, debenture, evidence of
indebtedness, certificate of
deposit, certificate of interest or
participation in any profit-sharing
agreement, collateral trust
certificate, preorganization
certificate or subscription,
transferable share, investment
contract, voting trust certificate,
certificate of deposit for a
security, fractional undivided
interest in oil, gas, or other
mineral rights, any interest or
instruments commonly known as a
security under the Investment
Company Act of 1940, any other
certificate of interest or
participation in, temporary or
interim certificate for, receipt
for, guarantee of, or warrant or
right to subscribe to or purchase
any of the foregoing; bills of
exchange; acceptances; checks;
withdrawal orders, money orders;
travelers' letters of credit; bills
of lading; abstracts of title;
insurance policies, deeds,
mortgages on real estate and/or
upon chattels and interests
therein; assignments of such
policies, deeds or mortgages; other
valuable papers, including books of
accounts and other records used by
the ASSURED in the conduct of its
business (but excluding all
electronic data processing
records); and, all other
instruments similar to or in the
nature of the foregoing in which the
ASSURED acquired an interest at the
time of the ASSURED'S consolidation
or merger with, or purchase of the
principal assets of, a predecessor
or which are held by the ASSURED
for any purpose or in any capacity
and whether so held gratuitously or
not and whether or not the ASSURED
is liable therefor.
k. Relative means the spouse of an
Employee or partner of the ASSURED
and any unmarried child supported
wholly by, or living in the home
of, such Employee or partner and
being related to them by blood,
marriage or legal guardianship.
l. Securities, documents or other
written instruments means original
(including original counterparts)
negotiable or non-negotiable
instruments, or assignments
thereof, which in and of themselves
represent an equitable interest,
ownership, or debt and which are in
the ordinary course of business
transferable by delivery of such
instruments with any necessary
endorsements or assignments.
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Conditions And
Limitations
Definitions m. Subsidiary means any organization that,
(continued) at the inception date of this Bond, is
named in the APPLICATION or is created
during the BOND PERIOD and of which
more than fifty percent (50%) of the
outstanding securities or voting rights
representing the present right to vote
for election of directors is owned or
controlled by the ASSURED either
directly or through one or more of its
subsidiaries.
n. Transportation Company means any
organization which provides its own or
its leased vehicles for transportation
or which provides freight forwarding or
air express services.
o. Voice Initiated Election means any
election concerning dividend options
available to Investment Company
shareholders or subscribers which is
requested by voice over the telephone.
p. Voice Initiated Redemption means any
redemption of shares issued by an
Investment Company which is requested
by voice over the telephone.
q. Voice Initiated Funds Transfer
Instruction means any Voice Initiated
Redemption or Voice Initiated Election.
For the purposes of these definitions, the
singular includes the plural and the plural
includes the singular, unless otherwise
indicated.
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General Exclusions - 2. This bond does not directly or indirectly
Applicable to All Insuring cover:
Clauses
a. loss not reported to the COMPANY in
writing within sixty (60) days after
termination of this Bond as an
entirety;
b. loss due to riot or civil commotion
outside the United States of America
and Canada, or any loss due to
military, naval or usurped power, war
or insurrection. This Section 2.b.,
however, shall not apply to loss which
occurs in transit in the circumstances
recited in INSURING CLAUSE 3., provided
that when such transit was initiated
there was no knowledge on the part of
any person acting for the ASSURED of
such riot, civil commotion, military,
naval or usurped power, war or
insurrection;
c. loss resulting from the effects of
nuclear fission or fusion or
radioactivity;
d. loss of potential income including, but
not limited to, interest and dividends
not realized by the ASSURED or by any
customer of the ASSURED;
e. damages of any type for which the
ASSURED is legally liable, except
compensatory damages, but not multiples
thereof, arising from a loss covered
under this Bond;
f. costs, fees and expenses incurred by
the ASSURED in establishing the
existence of or amount of loss under
this Bond, except to the extent covered
under INSURING CLAUSE 11.;
g. loss resulting from indirect or
consequential loss of any nature;
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 11 of 19
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Conditions And
Limitations
General Exclusions - h. loss resulting from dishonest acts
Applicable to All Insuring by any member of the Board of
Clauses Directors or Board of Trustees of
(continued) the ASSURED who is not an Employee,
acting alone or in collusion with
others;
i. loss, or that part of any loss,
resulting solely from any violation
by the ASSURED or by any Employee:
(1) of any law regulating:
a. the issuance, purchase
or sale of securities,
b. securities transactions
on security or commodity
exchanges or the over
the counter market,
c. investment companies,
d. investment advisors, or
(2) of any rule or regulation made
pursuant to any such law; or
j. loss of confidential information,
material or data;
k. loss resulting from voice requests
or instructions received over the
telephone, provided however, this
Section 2.k. shall not apply to
INSURING CLAUSE 7. or 9.
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Specific Exclusions - 3. This Bond does not directly or indirectly
Applicable To All Insuring cover:
Clauses Except Insuring
Clause 1. a. loss caused by an Employee,
provided, however, this Section
3.a. shall not apply to loss
covered under INSURING CLAUSE 2. or
3. which results directly from
misplacement, mysterious
unexplainable disappearance, or
damage or destruction of Property;
b. loss through the surrender of
property away from premises of the
ASSURED as a result of a threat:
(1) to do bodily harm to any
natural person, except loss of
Property in transit in the
custody of any person acting
as messenger of the ASSURED,
provided that when such
transit was initiated there
was no knowledge by the
ASSURED of any such threat,
and provided further that this
Section 3.b. shall not apply
to INSURING CLAUSE 7., or
(2) to do damage to the premises
or Property of the ASSURED;
c. loss resulting from payments made
or withdrawals from any account
involving erroneous credits to such
account;
d. loss involving Items of Deposit
which are not finally paid for any
reason provided however, that this
Section 3.d. shall not apply to
INSURING CLAUSE 10.;
e. loss of property while in the mail;
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 12 of 19
[LOGO OMITTED]
CHUBB
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Conditions And
Limitations
Specific Exclusions - f. loss resulting from the failure for any
Applicable To All Insuring reason of a financial or depository
Clauses Except Insuring institution, its receiver or other
Clause 1. liquidator to pay or deliver funds or
(continued) other Property to the ASSURED provided
further that this Section 3.f. shall
not apply to loss of Property resulting
directly from robbery, burglary,
misplacement, mysterious unexplainable
disappearance, damage, destruction or
removal from the possession, custody or
control of the ASSURED.
g. loss of Property while in the custody
of a Transportation Company, provided
however, that this Section 3.g. shall
not apply to INSURING CLAUSE 3.;
h. loss resulting from entries or changes
made by a natural person with
authorized access to a Computer System
who acts in good faith on instructions,
unless such instructions are given to
that person by a software contractor or
its partner, officer, or employee
authorized by the ASSURED to design,
develop, prepare, supply, service,
write or implement programs for the
ASSURED's Computer System; or
i. loss resulting directly or indirectly
from the input of data into a Computer
System terminal, either on the premises
of the customer of the ASSURED or under
the control of such a customer, by a
customer or other person who had
authorized access to the customer's
authentication mechanism.
...............................................................................
Specific Exclusions - 4. This bond does not directly or indirectly
Applicable To All Insuring cover:
Clauses Except Insuring
Clauses 1., 4., And 5. a. loss resulting from the complete or
partial non-payment of or default on
any loan whether such loan was procured
in good faith or through trick,
artifice, fraud or false pretenses;
provided, however, this Section 4.a.
shall not apply to INSURING CLAUSE 8.;
b. loss resulting from forgery or any
alteration;
c. loss involving a counterfeit provided,
however, this Section 4.c. shall not
apply to INSURING CLAUSE 5. or 6.
...............................................................................
Limit Of Liability/Non- 5. At all times prior to termination of this
Reduction and Non- Bond, this Bond shall continue in force for
Accumulation Of Liability the limit stated in the applicable sections
of ITEM 2. of the DECLARATIONS,
notwithstanding any previous loss for which
the COMPANY may have paid or be liable to
pay under this Bond provided, however, that
the liability of the COMPANY under this Bond
with respect to all loss resulting from:
a. any one act of burglary, robbery or
hold-up, or attempt thereat, in which
no Employee is concerned or implicated,
or
b. any one unintentional or negligent act
on the part of any one person resulting
in damage to or destruction or
misplacement of Property, or
c. all acts, other than those specified in
a. above, of any one person, or
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 13 of 19
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Conditions And
Limitations
Limit Of Liability/Non- d. any one casualty or event other
Reduction And Non- than those specified in a., b., or
Accumulation Of Liability c. above,
(continued)
shall be deemed to be one loss and shall
be limited to the applicable LIMIT OF
LIABILITY stated in ITEM 2. of the
DECLARATIONS of this Bond irrespective of
the total amount of such loss or losses
and shall not be cumulative in amounts
from year to year or from period to
period.
All acts, as specified in c. above, of
any one person which
i. directly or indirectly aid in any
way wrongful acts of any other
person or persons, or
ii. permit the continuation of wrongful
acts of any other person or persons
whether such acts are committed with or
without the knowledge of the wrongful
acts of the person so aided, and whether
such acts are committed with or without
the intent to aid such other person,
shall be deemed to be one loss with the
wrongful acts of all persons so aided.
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Discovery 6. This Bond applies only to loss first
discovered by an officer of the ASSURED
during the BOND PERIOD. Discovery occurs
at the earlier of an officer of the
ASSURED being aware if:
a. facts which may subsequently result
in a loss of a type covered by this
Bond, or
b. an actual or potential claim in
which it is alleged that the
ASSURED is liable: to a third party,
regardless of when the act or acts
causing or contributing to such loss
occurred, even though the amount of loss
does not exceed the applicable
DEDUCTIBLE AMOUNT, or the exact amount
or details of loss may not then be known.
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Notice To Company - 7. a. The ASSURED shall give the COMPANY
Proof - Legal Proceedings notice thereof at the earliest
Against Company practicable moment, not to exceed
sixty (60) days after discovery of
loss, in an amount that is in
excess of 50% of the applicable
DEDUCTIBLE AMOUNT, as stated in
ITEM 2. of the DECLARATIONS.
b. The ASSURED shall furnish to the
COMPANY proof of loss, duly sworn
to, with full particulars within
six (6) months after such
discovery.
c. Securities listed in a proof of loss
shall be identified by certificate
or bond numbers, if issued with
them.
d. Legal proceedings for the recovery
of any loss under this Bond shall
not be brought prior to the
expiration of sixty (60) days after
the proof of loss is filed with the
COMPANY or after the expiration of
twenty-four (24) months from the
discovery of such loss.
e. This Bond affords coverage only in
favor of the ASSURED. No claim,
suit, action or legal proceedings
shall be brought under this Bond by
anyone other than the ASSURED.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 14 of 19
[LOGO OMITTED]
CHUBB
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Conditions And
Limitations
Notice To Company - f. Proof of loss involving Voice Initiated
Proof - Legal Proceedings Funds Transfer Instruction shall
Against Company include electronic recordings of such
(continued) instructions.
...............................................................................
Deductible Amount 8. The COMPANY shall not be liable under any
INSURING CLAUSES of this Bond on account of
loss unless the amount of such loss, after
deducting the net amount of all
reimbursement and/or recovery obtained or
made by the ASSURED, other than from any
Bond or policy of insurance issued by an
insurance company and covering such loss, or
by the COMPANY on account thereof prior to
payment by the COMPANY of such loss, shall
exceed the DEDUCTIBLE AMOUNT set forth in
ITEM 3. of the DECLARATIONS, and then for
such excess only, but in no event for more
than the applicable LIMITS OF LIABILITY
stated in ITEM 2. of the DECLARATIONS.
There shall be no deductible applicable to
any loss under INSURING CLAUSE 1. sustained
by any Investment Company.
...............................................................................
Valuation 9. BOOKS OF ACCOUNT OR OTHER RECORDS
The value of any loss of Property consisting
of books of account or other records used by
the ASSURED in the conduct of its business
shall be the amount paid by the ASSURED for
blank books, blank pages, or other materials
which replace the lost books of account or
other records, plus the cost of labor paid
by the ASSURED for the actual transcription
or copying of data to reproduce such books
of account or other records.
The value of any loss of Property other than
books of account or other records used by
the ASSURED in the conduct of its business,
for which a claim is made shall be
determined by the average market value of
such Property on the business day
immediately preceding discovery of such loss
provided, however, that the value of any
Property replaced by the ASSURED with the
consent of the COMPANY and prior to the
settlement of any claim for such Property
shall be the actual market value at the time
of replacement.
In the case of a loss of interim
certificates, warrants, rights or other
securities, the production of which is
necessary to the exercise of subscription,
conversion, redemption or deposit
privileges, the value of them shall be the
market value of such privileges immediately
preceding their expiration if said loss is
not discovered until after their expiration.
If no market price is quoted for such
Property or for such privileges, the value
shall be fixed by agreement between the
parties.
OTHER PROPERTY
The value of any loss of Property, other
than as stated above, shall be the actual
cash value or the cost of repairing or
replacing such Property with Property of
like quality and value, whichever is less.
...............................................................................
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 15 of 19
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Conditions And
Limitations
(continued)
Securities Settlement 10. In the event of a loss of securities
covered under this Bond, the COMPANY
may, at its sole discretion, purchase
replacement securities, tender the value
of the securities in money, or issue its
indemnity to effect replacement
securities.
The indemnity required from the ASSURED
under the terms of this Section against
all loss, cost or expense arising from
the replacement of securities by the
COMPANY'S indemnity shall be:
a. for securities having a value less
than or equal to the applicable
DEDUCTIBLE AMOUNT - one hundred
(100%) percent;
b. for securities having a value in
excess of the DEDUCTIBLE AMOUNT but
within the applicable LIMIT OF
LIABILITY - the percentage that the
DEDUCTIBLE AMOUNT bears to the
value of the securities;
c. for securities having a value
greater than the applicable LIMIT
OF LIABILITY - the percentage that
the DEDUCTIBLE AMOUNT and portion
in excess of the applicable LIMIT OF
LIABILITY bears to the value of the
securities.
The value referred to in Section 10.a.,
b., and c. is the value in accordance
with Section 9, VALUATION, regardless of
the value of such securities at the time
the loss under the COMPANY'S indemnity
is sustained.
The COMPANY is not required to issue
its indemnity for any portion of a loss
of securities which is not covered by
this Bond; however, the COMPANY may do
so as a courtesy to the ASSURED and at
its sole discretion.
The ASSURED shall pay the proportion of
the Company's premium charge for the
Company's indemnity as set forth in
Section 10.a., b., and c. No portion of
the LIMIT OF LIABILITY shall be used as
payment of premium for any indemnity
purchased by the ASSURED to obtain
replacement securities.
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Subrogation - Assignment - 11. In the event of a payment under this
Recovery Bond, the COMPANY shall be subrogated to
all of the ASSURED'S rights of
recovery against any person or entity to
the extent of such payment. On request,
the ASSURED shall deliver to the COMPANY
an assignment of the ASSURED'S rights,
title and interest and causes of action
against any person or entity to the
extent of such payment.
Recoveries, whether effected by the
COMPANY or by the ASSURED, shall be
applied net of the expense of such
recovery in the following order;
a. first, to the satisfaction of the
ASSURED'S loss which would
otherwise have been paid but for
the fact that it is in excess of
the applicable LIMIT OF LIABILITY,
b. second, to the COMPANY in
satisfaction of amounts paid in
settlement of the ASSURED'S claim,
c. third, to the ASSURED in
satisfaction of the applicable
DEDUCTIBLE AMOUNT, and
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 16 of 19
[LOGO OMITTED]
CHUBB
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Conditions And
Limitations
Subrogation - Assignment - d. fourth, to the ASSURED in satisfaction
Recovery of any loss suffered by the ASSURED
(continued) which was not covered under this Bond.
Recovery from reinsurance or indemnity of
the COMPANY shall not be deemed a recovery
under this section.
...............................................................................
Cooperation Of Assured 12. At the COMPANY'S request and at reasonable
times and places designated by the COMPANY,
the ASSURED shall:
a. submit to examination by the COMPANY
and subscribe to the same under oath,
b. produce for the COMPANY'S examination
all pertinent records, and
c. cooperate with the COMPANY in all
matters pertaining to the loss.
The ASSURED shall execute all papers and
render assistance to secure to the COMPANY
the rights and causes of action provided for
under this Bond. The ASSURED shall do
nothing after loss to prejudice such rights
or causes of action.
...............................................................................
Termination 13. If the Bond is for a sole ASSURED, it shall
not be terminated unless written notice
shall have been given by the acting party to
the affected party and to the Securities and
Exchange Commission, Washington, D.C., not
less than sixty (60) days prior to the
effective date of such termination.
If the Bond is for a joint ASSURED, it shall
not be terminated unless written notice
shall have been given by the acting party to
the affected party, and by the COMPANY to
all ASSURED Investment Companies and to the
Securities and Exchange Commission,
Washington, D.C., not less than sixty (60)
days prior to the effective date of such
termination.
This Bond will terminate as to any one
ASSURED, other than an Investment Company:
a. immediately on the taking over of such
ASSURED by a receiver or other
liquidator or by State or Federal
officials, or
b. immediately on the filing of a petition
under any State or Federal statute
relative to bankruptcy or
reorganization of the ASSURED, or
assignment for the benefit of creditors
of the ASSURED, or
c. immediately upon such ASSURED ceasing
to exist, whether through merger into
another entity, disposition of all of
its assets or otherwise.
The COMPANY shall refund the unearned
premium computed at short rates in
accordance with the standard short rate
cancellation tables if terminated by the
ASSURED or pro rata if terminated for any
other reason.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 17 of 19
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Conditions and
Limitations
Termination If any partner, director, trustee, or
(continued) officer or supervisory employee of an
ASSURED not acting in collusion with an
Employee learns of any dishonest act
committed by such Employee at any time,
whether in the employment of the ASSURED
or otherwise, whether or not such act is
of the type covered under this Bond, and
whether against the ASSURED or any other
person or entity, the ASSURED:
a. shall immediately remove such
Employee from a position that would
enable such Employee to cause the
ASSURED to suffer a loss covered by
this Bond; and
b. within forty-eight (48) hours of
learning that an Employee has
committed any dishonest act, shall
notify the COMPANY, of such action
and provide full particulars of such
dishonest act.
The COMPANY may terminate coverage as
respects any Employee sixty (60) days
after written notice is received by each
ASSURED Investment Company and the
Securities and Exchange Commission,
Washington, D.C. of its desire to
terminate this Bond as to such Employee.
-------------------------------------------------------------------------------
Other Insurance 14. Coverage under this Bond shall apply
only as excess over any valid and
collectible insurance, indemnity or
suretyship obtained by or on behalf of:
a. the ASSURED,
b. a Transportation Company, or
c. another entity on whose premises
the loss occurred or which
employed the person causing the
loss or engaged the messenger
conveying the Property involved.
-------------------------------------------------------------------------------
Conformity 15. If any limitation within this Bond is
prohibited by any law controlling this
Bond's construction, such limitation
shall be deemed to be amended so as to
equal the minimum period of limitation
provided by such law.
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Change or Modification 16. This Bond or any instrument amending or
affecting this Bond may not be changed
or modified orally. No change in or
modification of this Bond shall be
effective except when made by written
endorsement to this Bond signed by an
authorized representative of the
COMPANY.
If this Bond is for a sole ASSURED, no
change or modification which would
adversely affect the rights of the
ASSURED shall be effective prior to
sixty (60) days after written notice has
been furnished to the Securities and
Exchange Commission, Washington, D.C.,
by the acting party.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 18 of 19
[LOGO OMITTED]
CHUBB
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Conditions And
Limitations
Change or Modification If this Bond is for a joint ASSURED, no
(continued) charge or modification which would adversely
affect the rights of the ASSURED shall be
effective prior to sixty (60) days after
written notice has been furnished to all
insured Investment Companies and to the
Securities and Exchange Commission,
Washington, D.C., by the COMPANY.
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ICAP Bond (5-98)
Form 17-02-1421 (Ed. 5-98) Page 19 of 19
[LOGO OMITTED]
CHUBB
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Important Notice:
The SEC Requires Proof of Your Fidelity Insurance Policy
Your company is now required to file an electronic copy of your fidelity
insurance coverage (Chubb's ICAP Bond policy) to the Securities and
Exchange Commission (SEC), according to rules adopted by the SEC on June
12, 2006.
Chubb is in the process of providing your agent/broker with an
electronic copy of your insurance policy as well as instructions on how
to submit this proof of fidelity insurance coverage to the SEC. You can
expect to receive this information from your agent/broker shortly.
The electronic copy of your policy is provided by Chubb solely as a
convenience and does not affect the terms and conditions of coverage as
set forth in the paper policy you receive by mail. The terms and
conditions of the policy mailed to you, which are the same as those set
forth in the electronic copy, constitute the entire agreement between
your company and Chubb.
If you have any questions, please contact your agent or broker.
Form 14-02-12160 (ed. 7/2006)
[LOGO OMITTED]
CHUBB
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VIGILANT INSURANCE COMPANY
Endorsement No.: 1
Bond Number: 81392052
NAME OF ASSURED: JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC.
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AMENDED EMPLOYEE DEFINITION ENDORSEMENT
It is agreed that this Bond is amended by deleting paragraph (9), in its
entirety, from the DEFINITION of Employee and substituting the
following:
"(9) any partner, officer or employee of an investment adviser, an
underwriter (distributor), a transfer agent or shareholder
accounting recordkeeper, or an administrator, sub-advisor or
sub-administrator, for an Investment Company, except any partner,
officer or employee of NOMURA SECURITIES INTERNATIONAL, INC. who
is not an officer of the ASSURED, while performing acts coming
within the scope of the customary and usual duties of a partner,
officer or employee of an Investment Company or acting as a member
of any committee duly elected or appointed to examine, audit or
have custody of or access to Property of an Investment Company."
This Endorsement applies to loss discovered after 12:01 a.m. on July 31, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: August 17, 2006 By /s/ Robert Hamburger
------------------------------
Authorized Representative
ICAP Bond
[LOGO OMITTED]
CHUBB
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VIGILANT INSURANCE COMPANY
Endorsement No.: 2
Bond Number: 81392052
NAME OF ASSURED: JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC.
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NEW YORK AMENDATORY ENDORSEMENT
It is agreed that this Bond is amended as follows:
1. By adding to Section 13, Termination, the following:
Bonds In Effect Sixty (60) Days Or Less
If this Bond has been in effect for less than sixty (60) days and if it
is not a renewal Bond, the COMPANY may terminate it for any reason by
mailing or delivering to the ASSURED and to the authorized agent or
broker, if any, written notice of termination at least sixty (60) days
before the effective date of termination.
Bonds In Effect More Than Sixty (60) Days
If this Bond has been in effect for sixty (60) days or more, or if it is
a renewal of a Bond issued by the COMPANY, it may be terminated by the
COMPANY by mailing or delivering to the ASSURED and to the authorized
agent or broker, if any, written notice of termination at least sixty
(60) days before the effective date of termination. Furthermore, when
the Bond is a renewal or has been in effect for sixty (60) days or more,
the COMPANY may terminate only for one or more of the reasons stated in
1-7 below.
1. Nonpayment of premium;
2. Conviction of a crime arising out of acts increasing the hazard
insured against ;
3. Discovery of fraud or material misrepresentation in the obtaining
of this Bond or in the presentation of a claim thereunder;
4. Violation of any provision of this Bond that substantially and
materially increases the hazard insured against, and which
occurred subsequent to inception of the current BOND PERIOD;
5. If applicable, material physical change in the property insured,
occurring after issuance or last annual renewal anniversary date
of this Bond, which results in the property becoming uninsurable
in accordance with the COMPANY's objective, uniformly applied
underwriting standards in effect at the time this Bond was issued
or last renewed; or material change in the nature or extent of
this Bond occurring after issuance or last annual renewal
anniversary date of this Bond, which causes the risk of loss to be
substantially and materially increased beyond that contemplated at
the time this Bond was issued or last renewed;
ICAP Bond - New York
Form 17-02-2863 (Rev. 7-03) Page 1
6. A determination by the Superintendent of Insurance that
continuation of the present premium volume of the COMPANY would
jeopardize the COMPANY's policyholders, creditors or the public,
or continuing the Bond itself would place the COMPANY in violation
of any provision of the New York Insurance Code; or
7. Where the COMPANY has reason to believe, in good faith and with
sufficient cause, that there is a probable risk or danger that the
Property will be destroyed by the ASSURED for the purpose of
collecting the insurance proceeds.
Notice Of Termination
Notice of termination under this SECTION shall be mailed to the
ASSURED and to the authorized agent or broker, if any, at the
address shown on the DECLARATIONS of this Bond. The COMPANY,
however, may deliver any notice instead of mailing it.
Return Premium Calculations
The COMPANY shall refund the unearned premium computed pro rata if
this Bond is terminated by the COMPANY."
2. By adding a new Section reading as follows:
"Section 17. Election To Conditionally Renew / Nonrenew This Bond
Conditional Renewal
If the COMPANY conditionally renews this Bond subject to:
1. Change of limits of liability;
2. Change in type of coverage;
3. Reduction of coverage;
4. Increased deductible;
5. Addition of exclusion; or
6. Increased premiums in excess of 10%, exclusive of any
premium increase due to and commensurate with insured value
added; or as a result of experience rating, retrospective
rating or audit; the COMPANY shall send notice as provided
in Notices Of Nonrenewal And Conditional Renewal immediately
below.
Notices Of Nonrenewal And Conditional Renewal
1. If the COMPANY elects not to renew this Bond, or to
conditionally renew this Bond as provided herein, the
COMPANY shall mail or deliver written notice to the ASSURED
at least sixty (60) but not more than one hundred twenty
(120) days before:
a. The expiration date; or
b. The anniversary date if this Bond has been written for
a term of more than one year.
ICAP Bond - New York
Form 17-02-2863 (Rev. 7-03) Page 2
[LOGO OMITTED]
CHUBB
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2. Notice shall be mailed or delivered to the ASSURED at the
address shown on the DECLARATIONS of this Bond and the
authorized agent or broker, if any. If notice is mailed,
proof of mailing shall be sufficient proof of notice.
3. Paragraphs 1. and 2. immediately above shall not apply when
the ASSURED, authorized agent or broker, or another insurer
has mailed or delivered written notice to the COMPANY that
the Bond has been replaced or is no longer desired.
3. By adding to General Agreement B., Representations Made By Assured, the
following:
No misrepresentation shall be deemed material unless knowledge by the
COMPANY would have lead to the COMPANY'S refusal to write this Bond.
This Endorsement applies to loss discovered after 12:01 a.m. on July 31, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: August 17, 2006 By /s/ Robert Hamburger
------------------------------
Authorized Representative
ICAP Bond - New York
Form 17-02-2863 (Rev. 7-03) Page 3
[LOGO OMITTED]
CHUBB
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VIGILANT INSURANCE COMPANY
Endorsement No.: 3
Bond Number: 81392052
NAME OF ASSURED: JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC.
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DELETING VALUATION-OTHER PROPERTY ENDORSEMENT
It is agreed that this Bond is amended by deleting in its entirety the
paragraph titled Other Property in Section 9., Valuation.
This Endorsement applies to loss discovered after 12:01 a.m. on July 31, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: August 17, 2006 By /s/ Robert Hamburger
--------------------------------
Authorized Representative
ICAP Bond
Form 17-02-2437 (Ed. 1-01)
[LOGO OMITTED]
CHUBB
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Effective date of
this endorsement: July 31, 2006 VIGILANT INSURANCE COMPANY
Endorsement No.: 4
To be attached to and form a part
of Bond Number: 81392052
NAME OF ASSURED: JAPAN SMALLER CAPITALIZATION FUND, INC.
KOREA EQUITY FUND, INC.
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COMPLIANCE WITH APPLICABLE TRADE SANCTION LAWS RIDER
It is agreed that this insurance does not apply to the extent that trade or
economic sanctions or other laws or regulations prohibit the coverage provided
by this insurance.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: August 17, 2006 By /s/ Robert Hamburger
--------------------------------
Authorized Representative
Form 14-02-9228 (Ed. 4/2004)
[LOGO OMITTED]
CHUBB
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VIGILANT INSURANCE COMPANY
Endorsement No.: 5
Bond Number: 81392052
NAME OF ASSURED: JAPAN SMALLER CAPITALIZATION FUND, INC.
------------------------------------------------------------------------------
REVISE ITEM 2. ENDORSEMENT
It is agreed that this Bond is amended by deleting ITEM 2. in its entirety on
the DECLARATIONS and substituting the following:
ITEM 2. LIMITS OF LIABILITY-DEDUCTIBLE AMOUNTS:
If "Not Covered" is inserted below opposite any specified INSURING CLAUSE,
such INSURING CLAUSE and any other reference to such INSURING CLAUSE in this
Bond shall be deemed to be deleted. There shall be no deductible applicable to
any loss under INSURING CLAUSE 1 sustained by any Investment Company.
SINGLE LOSS DEDUCTIBLE
INSURING CLAUSE LIMIT OF LIABILITY AMOUNT
--------------- ------------------ ------
1. Employee $ 1,200,000 $ 25,000
2. On Premises $ 1,200,000 $ 25,000
3. In Transit $ 1,200,000 $ 25,000
4. Forgery or Alteration $ 1,200,000 $ 25,000
5. Extended Forgery $ 1,200,000 $ 25,000
6. Counterfeit Currency $ 1,200,000 $ 25,000
7. Threats to Person $ Not Covered $ N/A
8. Computer System $ Not Covered $ N/A
9. Voice Initiated Funds Transfer Instruction $ Not Covered $ N/A
10. Uncollectible Items of Deposit $ Not Covered $ N/A
11. Audit Expense $ Not Covered $ N/A
This Endorsement applies to loss discovered after 12:01 a.m. on August 8,
2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: August 17, 2006 By /s/ Robert Hamburger
--------------------------------
Authorized Representative
ICAP Bond
Form 17-02-1582 (Ed. 5-98) Page 1
Chubb & Son, div. of Federal Insurance Company
[LOGO OMITTED] as manager of the member insurers of the
CHUBB Chubb Group of Insurance Companies
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POLICYHOLDER
DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(for policies with no terrorism exclusion or sublimit)
You are hereby notified that, under the Terrorism Risk Insurance Act of 2002
(the "Act") effective November 26, 2002, this policy makes available to you
insurance for losses arising out of certain acts of international terrorism.
Terrorism is defined as any act certified by the Secretary of the Treasury, in
concurrence with the Secretary of State and the Attorney General of the United
States, to be an act of terrorism; to be a violent act or an act that is
dangerous to human life, property or infrastructure; to have resulted in
damage within the United States, or outside the United States in the case of
an air carrier or vessel or the premises of a United States Mission; and to
have been committed by an individual or individuals acting on behalf of any
foreign person or foreign interest, as part of an effort to coerce the
civilian population of the United States or to influence the policy or affect
the conduct of the United States Government by coercion.
You should know that the insurance provided by your policy for losses caused
by acts of terrorism is partially reimbursed by the United States under the
formula set forth in the Act_ Under this formula, the United States pays 90%
of covered terrorism losses that exceed the statutorily established deductible
to be paid by the insurance company providing the coverage. The portion of
your policy's annual premium that is attributable to insurance for such acts
of terrorism is: $ -0-.
If you have any questions about this notice, please contact your agent or
broker.
Form 10-02-1281 (Ed. 1/2003)
RESOLUTIONS ADOPTED BY BOARDS OF DIRECTORS OF
JAPAN SMALLER CAPITZLIATION FUND, INC. AND KOREA EQUITY FUND, INC.
RESOLVED, that the terms and amount of joint insured fidelity
bond to be obtained from Vigilant Insurance Company of the Chubb
Group of Insurance Companies in the aggregate amount of $1,200,000
covering the Funds, be, and they hereby are approved;
FURTHER RESOLVED, that the proper officers of the Funds be,
and they hereby are, authorized to cause the Japan Fund to pay
62.5 perent of the total premium payable with rexspect to such
bond and the Korea Fund to pay the rmaining 37.5 per cent of such
premium payable with respect to such bonds;
FURTHER RESOLVED, that the amount of the fidelity bond
coverage be, and it hereby is, approved after consideration of all
factors deemed relevant by the Board, including, but not limited
to, the other parties named as insureds, the nature of the business
activities of such other parties, the amount of the joint insured
bond, the amount of the premium for such bond, the value of the
assets of the Fund, the type and terms of the arrangement
made for custody of the Fund's assets, and the nature of the
securities in the Corporation's portfolio;
FURTHER RESOLVED, that the form of Joint Fidelity Bond
Agreement between the Fund and the other named joint
insureds utilized with respect to the current year is approved for
another year;
FURTHER RESOLVED, that the proper officers of the Funds
be, and they hereby are, authorized and directed to take such
action as they deem necessary and appropriate with respect to
obtaining additional fidelity bond coverage pursuant to Rule 17g-1
under the Investment Company Act of 1940, as amended (the "1940
Act"); and
FURTHER RESOLVED, that the Secretary be, and he hereby is,
designated as the officer responsible for making the necessary
filings and giving the notices with respect to such bond required
by paragraph (g) of Rule 17g-1 under the 1940 Act.