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As filed with the Securities and Exchange Commission on November 8, 1995
File No. 811-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
RICHMOND HOUSE, 12 PAR-LA-VILLE ROAD,
HAMILTON, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(809) 292-3434
JOHN COLLIS
CLARENDON HOUSE, CHURCH STREET
HAMILTON, BERMUDA
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM, DANA & GOULD,
150 FEDERAL STREET, BOSTON, MA 02110
------------------------------------------------------------------------
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EXPLANATORY NOTE
Beneficial interests in the Registrant are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), because such interests are
issued solely in private placement transactions which do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant may be made only by entities which are "accredited investors" within
the meaning of Regulation D under the 1933 Act. This Registration Statement does
not constitute an offer to sell, or the solicitation of an offer to buy, any
beneficial interests in the Registrant.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
See "Investment Objective and Policies," "South Africa," "The Portfolio,"
"Investment Considerations" and "General Information" in the Private Placement
Memorandum which is attached hereto and incorporated herein by reference.
Item 5. Management of the Fund.
See "Management," "Offering of Shares - Expense Reimbursement" and "General
Information" in the Private Placement Memorandum attached hereto.
Item 6. Capital Stock and Other Securities.
See "Summary of the Offering-Dividends," "Valuation of Shares," "Tax
Matters," "General Information" and "Additional Information" in the Private
Placement Memorandum attached hereto.
Item 7. Purchase of Securities Being Offered.
See "Valuation of Shares," "Offering of Shares" and "General Information" in
the Private Placement Memorandum attached hereto.
Item 8. Redemption or Repurchase.
See "Redemptions" and "General Information - Purchase Right" in the Private
Placement Memorandum attached hereto.
Item 9. Pending Legal Proceedings.
Not applicable.
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CONFIDENTIAL Offeree:
PRIVATE PLACEMENT MEMORANDUM Number:
OMEGA SOUTH AFRICA FUND
(OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND)
INITIAL OFFERING
OF UP TO 10,000,000
SHARES OF BENEFICIAL INTEREST
AT U.S.$100 PER SHARE
The Shares offered hereby have not been and will not be registered under
the Securities Act of 1933, as amended, or any state securities laws. Neither
the Securities and Exchange Commission nor any state securities authority has
reviewed this Private Placement Memorandum or passed upon the merits of this
offering. The Fund will register as an investment company under the Investment
Company Act of 1940, as amended.
The Shares will be subject to restrictions on transfer, and there will be
no public market for the Shares.
This Private Placement Memorandum does not constitute an offer to sell, or
the solicitation of an offer to purchase, the Shares in any jurisdiction in
which such offer or solicitation is not authorized or to or from any person
unless the name of such person and a control number appear above on this cover
page.
This Private Placement Memorandum is confidential and is not to be
reproduced or circulated, in whole or in part, without the prior written
approval of the Placement Agent. This Private Placement Memorandum has been
prepared solely for use in connection with the Initial Offering of the Shares.
The Placement Agent has not independently verified any of the information
contained in this Private Placement Memorandum (financial, legal, or otherwise),
and no representation or warranty, express or implied, is made by the Placement
Agent as to the accuracy or completeness of the information contained herein. No
person is authorized to give any information or make any representation not
contained in this Private Placement Memorandum in connection with the Initial
Offering and, if given or made, such information or representation must not be
relied on as having been authorized by the Fund or the Placement Agent. The
delivery of this Private Placement Memorandum at any time does not imply that
information in this Private Placement Memorandum is correct as of any time
subsequent to the date of this Private Placement Memorandum.
S.G.WARBURG & CO. INC. INTERNATIONAL FINANCE CORPORATION
PLACEMENT AGENT STRUCTURING AGENT
September 15, 1995
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INVESTMENT HIGHLIGHTS
SOUTH AFRICA
- South Africa, with the largest economy in Africa, has exciting growth
potential no longer constrained by international sanctions.
- South Africa combines the potential of a developing economy with the
infrastructure and corporate culture more typical of an advanced
industrialized country.
- The earnings of companies included in The Johannesburg Stock Exchange
("JSE") Actuaries All Share Index are forecast to grow by 63% from
September 1995 through December 1997. Assuming constant share prices and
projected earnings growth, the price earnings multiple of the JSE
Actuaries All Share Index, which at August 31, 1995 was 15.9 times,
would fall to 11.9 times at December 31, 1996 and to 9.8 times at
December 31, 1997.*
OLD MUTUAL
- Old Mutual is South Africa's largest financial institution with over
U.S.$35 billion of assets under management, which includes over U.S.$20
billion of equity securities.
- Old Mutual has actively managed South African equity portfolios for over
30 years.
- Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned subsidiary
of Old Mutual, will be the investment adviser.
THE FUND
- The OMEGA South Africa Fund offers investors the opportunity to invest
in an established portfolio initially representing 60 South African
issuers.
<TABLE>
<S> <C>
Size: U.S.$1 billion, allowing investors to establish
significant holdings.
Portfolio: Created from an existing portfolio with an equity
portion that has achieved an average annual total
return for the seven fiscal years to June 30, 1995 of
4.6% above that of the JSE Actuaries All Share Index
over the same period. Allows immediate exposure to
the JSE without market impact.
Redemptions: Investors may request redemption of Shares on any
Business Day.
Liquidity: Provided by a separate pool of securities established
by Old Mutual to fund Share redemptions. This will
allow the Fund to remain fully invested and will
reduce its trading costs.
Operating Expenses: Ordinary operating expenses of the Fund, including
the Management Fee, will not exceed 1.00% per annum
of the Fund's daily net assets.
</TABLE>
The above Investment Highlights are qualified in their entirety by the
information set forth elsewhere in this Private Placement Memorandum (this
"Memorandum"). Investors should carefully review this Memorandum before
investing.
- ---------------
*Based upon the average of earnings forecasts provided by Davis Borkum Hare &
Co. Inc.; Ivor Jones, Roy & Co. Inc.; and Martin & Co., three South African
brokerage firms that are not affiliated with Old Mutual.
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OLD MUTUAL
EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
SUMMARY OF THE OFFERING
This Summary is qualified in its entirety by the information set forth
elsewhere in this Private Placement Memorandum (this "Memorandum"). Investors
should carefully review this Memorandum before investing.
FUND.......................... Old Mutual Equity Growth Assets South Africa
Fund (the "OMEGA South Africa Fund") is a
Massachusetts business trust that will seek
long-term total return in excess of that of The
Johannesburg Stock Exchange ("JSE") Actuaries
All Share Index from investment in equity
securities of South African issuers. Under
normal circumstances, at least 95% of the
Fund's total assets will be invested in equity
securities of South African issuers that are
listed on a securities exchange.
For purposes of the Fund's investment policies,
a South African issuer is an issuer that meets
one of the following tests: (i) its principal
offices or operations are located in South
Africa; or (ii) it derives at least 50% of its
revenues from operations or investments in
South Africa. See "INVESTMENT OBJECTIVE AND
POLICIES".
MASTER TRUST.................. Rather than directly acquire and manage its own
portfolio of securities, the OMEGA South Africa
Fund will invest all of its investable assets
in Old Mutual South Africa Equity Trust (the
"Master Trust"), a Massachusetts trust with its
principal place of business in Bermuda that has
the same investment objective as the OMEGA
South Africa Fund.
ALL REFERENCES IN THIS MEMORANDUM TO THE "FUND"
APPLY TO BOTH THE OMEGA SOUTH AFRICA FUND AND
THE MASTER TRUST, EXCEPT AS OTHERWISE
INDICATED.
INVESTMENT ADVISER............ Old Mutual Asset Managers (Bermuda) Limited
(the "Adviser") will be the investment adviser
to the Master Trust. The Adviser is a
wholly-owned subsidiary of the South African
Mutual Life Assurance Society ("Old Mutual"),
which is the largest (in terms of 1994 year-end
total assets) and oldest insurer in South
Africa. At June 30, 1995 Old Mutual had total
assets under management of over U.S.$35
billion. The OMEGA South Africa Fund will not
have a separate investment adviser, because it
will invest all of its investable assets in the
Master Trust.
The Master Trust will pay the Adviser a
management fee of 0.85% per annum of the Master
Trust's daily net assets (the "Management
Fee"). The Management Fee will accrue
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daily on an annualized basis and be paid
monthly in arrears. See "MANAGEMENT --
Adviser".
INITIAL OFFERING.............. The OMEGA South Africa Fund is offering up to
10 million shares of its beneficial interest
(the "Shares") at a price of U.S.$100 per Share
(totaling U.S.$1 billion), payable in cash at
the closing of the initial issuance of Shares
(the "Initial Closing"). The minimum purchase
for any investor is 50,000 Shares (U.S.$5
million), provided the minimum purchase may, in
particular circumstances, be reduced for
certain investors to not less than 10,000
Shares (U.S.$1 million). The termination date
of the initial offering (the "Initial
Offering") is November 7, 1995 (the "Initial
Offering Termination Date"). No minimum size
for the Initial Offering has been established.
The Shares are being offered and sold only to
investors that are "accredited investors" as
defined in Regulation D under the Securities
Act of 1933, as amended (the "1933 Act"). See
"OFFERING OF SHARES -- Initial Offering".
PORTFOLIO..................... Old Mutual will, shortly before the Initial
Closing, transfer to the Master Trust a
portfolio of South African securities (the
"Portfolio") from Old Mutual's main proprietary
investment portfolio (the "Old Mutual Main
Fund"). At the time it is transferred to the
Master Trust, the Portfolio will have a market
value of approximately U.S.$1 billion and will
comprise holdings in 60 South African issuers.
The Portfolio will reflect the equity holdings
of the Old Mutual Main Fund, subject to
adjustments to exclude companies that are not
South African issuers under the Fund's
investment policies, to consolidate the
weightings of companies within a pyramid group
into a single holding, to reduce the weighting
of larger holdings, to exclude holdings that
represent an insignificant part of the Old
Mutual Main Fund, to consolidate holdings of
different classes of equity securities in the
same company into a single class, and to
exclude companies investing primarily in real
estate. Stamp duty due in respect of the
transfer of the Portfolio will be paid by Old
Mutual. See "THE PORTFOLIO". In addition, Old
Mutual will, shortly before the Initial
Closing, make a capital contribution of up to
U.S.$5 million to the Master Trust.
As consideration for the acquisition of the
Portfolio and for the capital contribution, the
Master Trust will issue substantially all of
its beneficial interest to Old Mutual Fund
Holdings (Bermuda) Limited ("Old Mutual
Bermuda"), a wholly-owned subsidiary of Old
Mutual.
INITIAL CLOSING............... The Initial Closing is expected to be held on
November 10, 1995 (or any earlier date on which
all Shares offered have
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been subscribed for). At the Initial Closing
the OMEGA South Africa Fund will issue the
Shares subscribed for in the Initial Offering.
The OMEGA South Africa Fund will invest the
proceeds of the Initial Offering in the Master
Trust and will be issued a proportionate
beneficial interest in the Master Trust. The
Master Trust will apply the proceeds to redeem
a corresponding portion of the interest of Old
Mutual Bermuda in the Master Trust.
Old Mutual Bermuda will, in turn, invest the
proceeds received from the Master Trust in Old
Mutual Global Assets Fund Limited, a mutual
fund organized under the laws of Bermuda that
will invest in a portfolio of South African and
international securities (the "Global Fund").
Old Mutual prior to the Initial Closing will
also arrange for the transfer to the Global
Fund of approximately U.S.$500 million of South
African securities. Investors in Shares will
not acquire any interest in the Global Fund.
Instead, the Global Fund is designed to provide
a pool of securities to fund redemptions of
Shares, as noted under "Redemptions and
Liquidity Facility" below. Old Mutual
established the Global Fund pursuant to the
approval of the South African Reserve Bank for
the transfer of the Portfolio out of South
Africa to the Master Trust. Old Mutual Bermuda
will be the sole shareholder of the Global
Fund. See "LIQUIDITY FACILITY AND THE GLOBAL
FUND".
VALUATION OF SHARES........... The net asset value per Share will be
determined as of 10:00 a.m. (Eastern time) on
each day on which the New York Stock Exchange
is open for trading (a "Business Day"). The
Fund will generally value JSE listed securities
based on their current JSE ruling price, and
convert prices from South African rand ("S.A.
Rand") to U.S. dollars using exchange rates
prevailing as of the time the net asset value
is to be determined. Trading may take place in
securities held by the Master Trust on days
that are not Business Days and on which it will
not be possible to purchase or redeem Shares.
See "VALUATION OF SHARES".
DIVIDENDS..................... Dividend income from the OMEGA South Africa
Fund is not expected to be a significant
portion of the long-term total return.
Substantially all of the Fund's net income from
dividends and interest will be distributed to
registered holders of Shares ("Shareholders")
semi-annually on or about the last day of June
and December of each year commencing in June
1996. The Fund's net realized capital gains
will be distributed to the Shareholders at
least annually. Dividends may be automatically
reinvested at the written election of the
investor, provided the OMEGA South Africa Fund
reserves the right to suspend or terminate this
reinvestment privilege.
3
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REDEMPTIONS AND LIQUIDITY
FACILITY..................... Investors may request redemption of Shares on
any Business Day. The office of the Transfer
Agent will be open to accept redemption
requests from 12:00 noon to 4:00 p.m. (Eastern
time) on every Business Day.
In order to fund redemptions, the OMEGA South
Africa Fund will redeem a corresponding portion
of its interest in the Master Trust. To the
extent required to provide funds for redeeming
Shares, Old Mutual Bermuda will withdraw monies
from the Global Fund and invest those monies in
the Master Trust (the "Liquidity Facility").
Old Mutual Bermuda may not terminate the
Liquidity Facility without giving at least 120
days notice to Shareholders for so long as the
Adviser serves as investment adviser to the
Master Trust. Any termination of the Liquidity
Facility would not affect Shareholder
redemption rights.
Shares will be redeemed at net asset value (as
next determined) subject to a redemption fee
charged by the OMEGA South Africa Fund of 1.75%
of redemption proceeds (the "Redemption Fee").
For so long as Old Mutual Bermuda provides the
Liquidity Facility, the OMEGA South Africa Fund
will pay to Old Mutual Bermuda amounts
collected in respect of the Redemption Fee as
compensation for the Liquidity Facility.
The Fund believes that the Liquidity Facility
will reduce the trading costs of the Fund. See
"REDEMPTIONS" and "LIQUIDITY FACILITY AND THE
GLOBAL FUND".
INITIAL OFFERING PLACEMENT
ARRANGEMENTS................. The OMEGA South Africa Fund has engaged
S.G.Warburg & Co. Inc. to act as the placement
agent for the Initial Offering (the "Placement
Agent"). The Master Trust will pay the
Placement Agent a placement fee equal to 0.25%
of the initial offering price of the Shares
sold in the Initial Offering. The Master Trust
will also pay Old Mutual Bermuda an amount
equal to 0.25% of the value of the interest it
retains in the Master Trust immediately
following the Initial Closing. The OMEGA South
Africa Fund's net asset value per Share
immediately following the Initial Closing is
expected to be U.S.$99.75. See "OFFERING OF
SHARES -- Initial Offering".
INITIAL OFFERING SUBSCRIPTION
PROCEDURE.................... Investors that wish to subscribe for Shares in
the Initial Offering are required to complete
the Subscription Booklet circulated by the
Placement Agent. All subscriptions are subject
to acceptance by the OMEGA South Africa Fund.
Investors will be provided with the
Subscription Booklet and
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payment instructions shortly before the Initial
Offering Termination Date. See "OFFERING OF
SHARES -- Subscription Procedure".
SECOND OFFERING............... After the Initial Closing, the OMEGA South
Africa Fund expects to offer any remaining
Shares at a price equal to their net asset
value plus a sales charge of 0.25% of the
offering price (the "Second Offering"). The
Second Offering will continue until the first
to occur of (i) the placement of all remaining
Shares, and (ii) the date 6 months following
the Initial Closing. During the Second
Offering, Shares will be offered continuously
and may be purchased on any Business Day. The
OMEGA South Africa Fund may engage broker-
dealers in addition to the Placement Agent to
offer and sell Shares in the Second Offering.
See "OFFERING OF SHARES -- Second Offering and
Further Offerings".
FURTHER OFFERINGS............. Following completion of the Second Offering,
the OMEGA South Africa Fund may, from time to
time, offer any Shares, including Shares unsold
in the Second Offering or redeemed by the OMEGA
South Africa Fund, upon prices and terms to be
determined by the OMEGA South Africa Fund,
provided that in no case will the OMEGA South
Africa Fund offer Shares for less than their
net asset value. See "OFFERING OF SHARES --
Second Offering and Further Offerings".
SERVICING FEE................. The Adviser (or another subsidiary of Old
Mutual) will, on the third anniversary of the
Initial Closing, pay an affiliate of the
Placement Agent from its own resources a
servicing fee with respect to Shares that are
(i) sold in the Initial Offering or Second
Offering, and (ii) continuously outstanding
through the third anniversary of the Initial
Closing ("Qualifying Shares"). The servicing
fee will be equal to 0.125% per annum of the
proportion of the Master Trust's daily net
assets represented by the Qualifying Shares
during the period ending on such third
anniversary. All or part of the servicing fee
may be reallowed to any other broker-dealers
that participate in the Second Offering. See
"OFFERING OF SHARES -- Servicing Fee".
TRANSFER OF SHARES............ There will be no public market for the Shares.
Transfers of Shares will be subject to
restrictions for purposes of complying with
securities laws. One or more broker-dealers,
including S.G. Warburg & Co. Inc., may on a
private basis arrange purchases and sales of
Shares. However, no party is obligated to
arrange purchases and sales of Shares, and
there can be no assurance that any private
market for Shares will, if established, be
continued. See "GENERAL INFORMATION --
Transfers of Shares".
5
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NON-U.S. FUND................. The Old Mutual SAGA Fund, a mutual fund
organized under the laws of Bermuda (the
"Non-U.S. Fund"), may also acquire a beneficial
interest in the Master Trust upon the same
terms and conditions as the OMEGA South Africa
Fund. Shares of the Non-U.S. Fund will be
offered outside of the U.S. to non-U.S.
investors. The operating expenses, distribution
policies, and sales charges of the OMEGA South
Africa Fund and the Non-U.S. Fund may not be
identical, although it is intended that the
sales charges for the OMEGA South Africa Fund
and the Non-U.S. Fund will be the same for the
Initial Offering and the Second Offering.
CERTAIN TAX MATTERS........... For investors subject to U.S. federal income
tax, OMEGA South Africa Fund dividends and
capital gains distributions will be subject to
federal income tax and may be subject to state
and local taxes. Prior to purchasing Shares,
investors should consult with their tax
advisers concerning the consequences of an
investment in the OMEGA South Africa Fund. See
"TAX MATTERS".
INVESTMENT COMPANY ACT........ Each of the OMEGA South Africa Fund and the
Master Trust will register prior to the Initial
Closing as an investment company under the
Investment Company Act of 1940, as amended (the
"1940 Act"). Neither the Securities and
Exchange Commission nor any state securities
authority has reviewed this Memorandum or
passed upon the merits of the Fund or the
Shares.
ERISA......................... Assets of the Fund will not be considered "plan
assets" of Shareholders that are pension or
benefit plans subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"). The OMEGA South Africa Fund
does not impose a limit on the number of Shares
that may be held by ERISA investors. See "ERISA
MATTERS".
MANAGEMENT.................... The Fund is supervised by a board of trustees.
State Street Bank and Trust Company, either
directly or through an indirect wholly-owned
subsidiary, has agreed to provide certain
administrative services to the Fund. See
"MANAGEMENT".
STRUCTURING AGENT............. International Finance Corporation is acting as
structuring agent for the Fund and in that
capacity is providing advice on the
organization of the Fund and its business
arrangements. The Master Trust has agreed to
pay the structuring agent a structuring fee of
U.S.$250,000.
CUSTODIAN AND SUB-CUSTODIAN... State Street Bank and Trust Company will serve
as custodian for the Master Trust and the OMEGA
South Africa Fund. Standard Bank of South
Africa will serve as sub-
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custodian for the Master Trust's South African
registered assets.
TRANSFER AGENT................ State Street Bank and Trust Company will serve
as transfer agent for the OMEGA South Africa
Fund (the "Transfer Agent").
VOTING RIGHTS................. Shareholders will be entitled to vote on the
election of the trustees of the Fund and on
certain important matters, including (i)
certain amendments to the declarations of trust
of the OMEGA South Africa Fund and the Master
Trust, (ii) changes in the investment objective
and fundamental investment restrictions, and
(iii) material amendments to the investment
advisory agreement between the Master Trust and
the Adviser, or the adoption of a new
investment advisory agreement.
REPORTS TO SHAREHOLDERS....... The OMEGA South Africa Fund will furnish
audited annual financial statements and
unaudited semi-annual financial statements to
Shareholders. In addition, the OMEGA South
Africa Fund will provide annual tax information
to Shareholders.
EXPENSES...................... The OMEGA South Africa Fund and the Master
Trust will amortize their organizational and
offering expenses (other than the placement fee
and the amount payable to Old Mutual Bermuda at
the Initial Closing), which are estimated at
less than 0.20% of the net asset value of the
Master Trust at the Initial Closing, over a
period of five years. The OMEGA South Africa
Fund and the Master Trust will be responsible
for the ongoing expenses of conducting their
affairs. See "GENERAL INFORMATION -- Expenses".
The OMEGA South Africa Fund will reimburse the
Adviser for certain marketing expenses incurred
(or advanced to the Placement Agent or others)
by the Adviser in the placement of Shares,
provided the amount of such reimbursements in
any year will not exceed 0.05% of the average
daily net assets of the OMEGA South Africa Fund
for such year. See "OFFERING OF SHARES --
Expense Reimbursement".
INVESTMENT CONSIDERATIONS..... The Fund will invest primarily in securities of
South African issuers and will, as a result, be
particularly subject to risks affecting South
Africa. Investment in South Africa is subject
to various risks, including political
uncertainties. South African securities markets
are less liquid than securities markets in more
developed countries. See "INVESTMENT
CONSIDERATIONS".
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INVESTMENT OBJECTIVE AND POLICIES
INTRODUCTION
Old Mutual will, shortly before the Initial Closing, transfer to the Master
Trust an existing portfolio of South African securities which will provide
investors with immediate exposure to the South African market. The Portfolio
will comprise holdings in 60 South African issuers representing a substantial
cross-section of the JSE and was built up over a number of years by Old Mutual's
fund managers. The Portfolio will have an initial market value of approximately
U.S.$1 billion and will, following its transfer, be managed in accordance with
the investment objective and policies of the Master Trust described below.
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term total return in excess of that
of the JSE Actuaries All Share Index from investment in equity securities of
South African issuers. There can be no assurance that the Fund will achieve its
investment objective.
INVESTMENT POLICIES
The OMEGA South Africa Fund will seek to achieve its investment objective
by investing all of its investable assets in the Master Trust.
The Master Trust will seek to achieve its investment objective by investing
in equity securities of South African issuers. Under normal circumstances, at
least 95% of the Master Trust's total assets will be invested in equity
securities of South African issuers that are listed on a securities exchange.
The Master Trust may invest up to 5% of its total assets in securities that are,
at the time of the investment, not listed on a securities exchange (although
such investments will generally be limited to securities that are expected to be
listed on an exchange within a reasonable period of time).
In managing the Master Trust's assets the Adviser will not speculate for
short-term gain but will focus on securities that, in the Adviser's opinion, are
likely to show long-term improvements in profits and cash flow. Less weight will
be accorded to short-term and cyclical factors. This approach is designed to
result in strong dividend growth and capital appreciation. Historically, South
African issuers have retained a high proportion of earnings and, if this policy
continues, it is likely that the long-term total return would largely be in the
form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common
stock, and securities that participate in profits in a similar manner to common
stock. Equity securities may be purchased in the form of American Depositary
Receipts, European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
CERTAIN RESTRICTIONS
Limitation on Investment in a Single Issuer. The Master Trust will not
purchase securities of any issuer if, upon completion of the purchase, (i) more
than 7.5% of the Master Trust's assets (taken at market value) would be invested
in securities of the issuer, or (ii) the Master Trust would own in excess of 10%
of the voting securities of the issuer.
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<PAGE> 14
Limitation on Investment in Old Mutual Group Controlled Issuers. The Fund
will not purchase securities of any issuer in which Old Mutual, its wholly-owned
subsidiaries, and investment vehicles managed by Old Mutual or its wholly-owned
subsidiaries (collectively, the "Old Mutual Group") own in the aggregate in
excess of 50% of the outstanding equity interest or where the acquisition would
result in the Old Mutual Group owning in the aggregate in excess of 50% of the
outstanding equity interest, provided this restriction (i) will not apply to the
OMEGA South Africa Fund's investment in the Master Trust or to the acquisition
of the Portfolio and (ii) will not prohibit the Fund from electing to receive
dividends consisting of securities, or exercising rights issued in a rights
offering, upon the same terms generally available to other investors.
Limitation on Control or Participation in Takeovers. The Fund will not
participate in any effort to replace the management of any issuer or take legal
or management control of any issuer, provided this restriction will not prohibit
the Fund from (i) accepting a tender or takeover offer made generally to holders
of particular securities or (ii) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or indirectly,
organized by a member of the Old Mutual Group. This restriction will not apply
to the OMEGA South Africa Fund's investment in the Master Trust.
Borrowing. The Fund will not borrow money or purchase securities on
margin, except the Fund may, as a temporary measure for extraordinary or
emergency purposes, borrow from banks in an amount not to exceed 5% of the value
of the Fund's net assets.
Temporary Investments. For temporary defensive purposes, the Master Trust
may invest in high quality money market or short-term debt securities
denominated in U.S. dollars or another currency.
Short Positions. The Master Trust will not make short sales of securities
or maintain a short position.
Hedging and Derivative Securities. The Master Trust does not intend to
engage in currency hedging, although the Master Trust reserves the right to do
so. While the Master Trust is permitted to purchase derivative securities, it
does not expect that these will represent a significant portion of its
portfolio. Not more than 5% of the net assets of the Master Trust may be applied
to margin payments on futures contracts (other than hedging contracts).
Portfolio Turnover. The Master Trust will sell securities whenever the
Manager believes that an issuer's long-term potential to increase its cash flow
and dividends has been reduced or if cash is needed to invest in issuers which
have better long-term growth potential, without regard to the length of time the
securities have been held. The Adviser does not intend to pursue short-term
trading opportunities. The turnover rate of the Master Trust is not expected to
exceed 25% annually.
ADDITIONAL RESTRICTIONS
Certain other restrictions are described under "GENERAL INFORMATION --
Certain Conflicts of Interest". The Fund's registration statement under the 1940
Act will contain additional restrictions on the investment policies of the Fund.
The proposed form of the Fund's registration statement will be provided to
potential investors upon request.
GENERAL
The investment objective of the OMEGA South Africa Fund described under
"Investment Objective" above may not be changed materially except by a majority
vote of Shareholders.
9
<PAGE> 15
The Master Trust has undertaken to the OMEGA South Africa Fund and the
Non-U.S. Fund that it will not make any material change to its investment
objective described under "Investment Objective" above or to its investment
policies described under "Investment Policies" above except in unforeseen
circumstances and with the approval of a majority vote of the Shareholders and a
majority vote of shareholders of the Non-U.S. Fund.
Except as otherwise indicated, the investment policy and restrictions of
the OMEGA South Africa Fund and the investment restrictions of the Master Trust
may be changed without Shareholder approval.
The percentage limitations set forth above, as well as those described
elsewhere in this Memorandum and in the Fund's registration statement under the
1940 Act, are measured and applied only at the time an investment is made or
another relevant action is taken by the Fund.
SOUTH AFRICA
South Africa, with the largest economy in Africa in terms of GDP, has, in
the opinion of the Adviser, exciting growth potential no longer constrained by
international sanctions. The Adviser believes that South Africa combines the
potential of a developing economy with the infrastructure and corporate culture
more typical of an advanced industrialized country.
GENERAL
Until April 1994, political power in South Africa lay largely in the hands
of the white minority. The system of apartheid created considerable social and
political tensions and led to the progressive isolation of South Africa from the
world community. In April 1994, the Government of National Unity (the
"Government") was formed as a result of South Africa's first multi-racial, fully
democratic elections. The Government's majority party is the African National
Congress ("ANC"), which is led by President Nelson Mandela. The success of the
elections has removed important obstacles to growth and created an environment
that is more conducive to both domestic and foreign investments. Although
generally smooth, the transition to democratic rule has been accompanied by
localized violence and social unrest which may continue in the future.
THE STATE OF THE BUSINESS CYCLE
The South African economy has been in recovery from June 1993, following
the longest post-war recession from March 1989 to May 1993. During this
recession real GDP declined by more than 5% from peak to trough. The recovery
from around mid-1993 was partly of a cyclical nature in the form of rising
commodity prices, a sharp recovery in agricultural output following the end of
the drought in 1993, and rising exports owing to the upswing in the economies of
some of South Africa's trading partner countries. More fundamentally, in the
view of the Adviser, the relatively smooth political transition, the official
end of sanctions, and the gradual normalization of the country's international
relations strongly supported the recovery through improved business (local and
foreign) and consumer confidence.
Real GDP grew by 1.1% in 1993 and 2.3% in 1994. Growth was particularly
robust during the second half of 1994 when real GDP rose at an annualized rate
of over 5%. Although the pace of the recovery slowed significantly in the first
half of 1995 under the impact of declines in agricultural and mining production
and a more restrictive economic policy, the Adviser believes that the underlying
growth momentum is sufficient to register real GDP growth of close to 3% in
1995.
10
<PAGE> 16
Regarding longer term prospects, the South African Reserve Bank, in its
June 1995 Quarterly Bulletin, noted a number of favorable factors which, in the
view of the South African Reserve Bank, should ensure the continuation of
relatively strong economic growth for a fairly long period of time. These
include, among other things, ongoing global growth benefiting domestic
exporters, continued domestic consumer and business confidence in view of the
relatively stable political conditions in the country, more favorable conditions
for fixed capital expansion, and the low level of South Africa's foreign debt,
allowing room for foreign borrowing to finance the importation of capital goods.
The following table shows the current real GDP growth forecasts for 1995
and 1996 of four prominent South African institutions:
- --------------------------------------------------------------------------------
REAL GDP GROWTH FORECASTS
% CHANGE
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Bureau for Economic Research................. 2.9 3.4
Davis Borkum Hare & Co. Inc. ................ 3.0 3.4
Ivor Jones, Roy & Co. Inc. .................. 3.0 3.5
Martin & Co. ................................ 3.0 3.3
</TABLE>
- --------------------------------------------------------------------------------
SOUTH AFRICA'S INHERENT STRENGTHS
The South African economy is substantial by the standard of the "emerging
market" countries. It is by far the largest economy in Africa, with a GDP of
over U.S.$120 billion, more than twice the size of any other African economy.
The Adviser believes that there are particular features that could enhance
the performance of the South African economy in the medium term.
The Removal of Sanctions. With the lifting of sanctions, South Africa has
improving access to world markets and should benefit from any global economic
recovery. The Adviser expects that the removal of trade barriers, together with
South Africa's full participation in the Marrakech Agreement on world trade,
will lead to considerable changes in the economy, offering attractive
opportunities for domestic and foreign investors. South African exporters stand
to benefit from new trade flows.
Public Sector Investment. Given the underdeveloped state of large parts of
South Africa and its rapid population growth, the Adviser expects that the
Government will make substantial investments in infrastructure and development
projects. Housing, electrification, and water provision are important
priorities, and several related sectors, such as construction, engineering, and
building materials, may benefit from development projects.
Access to Foreign Capital. South Africa has repaid large amounts of
foreign debt since 1986. By the end of 1994 total outstanding foreign debt
denominated in foreign currency amounted to U.S.$18.6 billion, or 14.6% of GDP,
down from U.S.$23.7 billion, or 47.8% of GDP in 1985. Over the same period the
share of export earnings absorbed by interest payments on the outstanding debt
declined from 11.5% to 6.4%. The Adviser believes that these lower levels of
foreign debt, combined with South Africa's enhanced international standing,
should allow the country renewed access to international capital markets. This
more favorable environment has already resulted in capital flows (not related to
reserves) reversing from an outflow of S.A. Rand 15.0 billion in 1993 to inflows
of S.A. Rand 5.2 billion in 1994 and a further S.A. Rand 9.8 billion during the
first half of 1995.
11
<PAGE> 17
A Sophisticated Business Environment. South Africa's corporate environment
is, in the opinion of the Adviser, generally characterized by large, well
organized companies, of which a number are world class in their respective
industries. Many of these companies have considerable technical expertise and
entrepreneurial skills. Furthermore, a strong framework of commercial law
exists.
Mineral wealth. South Africa is a leading world producer of gold,
platinum, chromium, diamonds, and other strategic minerals in terms of volumes
produced.
ECONOMIC MANAGEMENT
The Adviser believes that the economic policies of the Government are
broadly market-oriented and that the maintenance of macro-economic stability
will remain a high priority. Evidence of this is to be found in the recent
abolition of the financial rand system, South Africa's signing of the Marrakech
Agreement on world trade, and the stated intention of the Government to
gradually reduce the budget deficit and consider the sale of certain state
assets.
Over the past several years, the South African Reserve Bank has pursued a
conservative monetary policy aimed at protecting the exchange rate and reducing
inflation. This policy has brought results, with average inflation being reduced
from 15.3% in 1991 to 9.0% in 1994. The rate of Consumer Price Index inflation
from July 1994 to July 1995 was 9.0%.
Furthermore, South Africa's relations with the International Monetary Fund
and the World Bank are being normalized, and the Adviser expects that this will
have a stabilizing effect upon economic management.
THE JOHANNESBURG STOCK EXCHANGE
The aggregate market capitalization of South African equity securities
listed on the JSE was S.A. Rand 872 billion (U.S.$241 billion) as at July 31,
1995. The actual float for public trading is significantly smaller than the
aggregate market capitalization because of the large number of long-term
holdings by listed holding companies in listed subsidiaries and associates, the
existence of listed pyramid companies, and cross holdings between listed
companies. Historically, liquidity on the JSE (measured by reference to the
total market value of securities traded as a percentage of the total market
capitalization) has been low, being 6.5% on an annualized basis in the seven
month period ended July 31, 1995. Although as at July 31, 1995 there were 646
listed companies on the JSE, market capitalization and trading is concentrated
in a relatively small number of companies. As at July 31, 1995 the 15 largest
companies by market capitalization represented approximately 39% of the JSE
Actuaries All Share Index. As at July 31, 1995 the average annual dividend yield
for companies listed on the JSE was approximately 2.5%.
South Africa was included in both the Morgan Stanley Capital International
("MSCI") and the International Finance Corporation ("IFC") emerging market
indices in March and April 1995, respectively. South Africa has a significant
representation in these emerging markets indices with weightings of 11.0% in
MSCI's Emerging Markets Global Index, 12.9% in the IFC's Global Index, and 23.0%
in the IFC's Investable Index as of July 31, 1995.
12
<PAGE> 18
The following table shows the compound annual average increase, in U.S.
dollar terms, in the JSE Actuaries All Share Index compared with the S&P 500
Index over the periods listed below to August 31, 1995.
<TABLE>
<CAPTION>
PERIODS TO AUGUST 31, 1995
-----------------------------
3 YEARS 5 YEARS 7 YEARS
------- ------- -------
<S> <C> <C> <C>
JSE Actuaries All Share Index*.................................. 22.0% 14.4% 17.9%
------- ------- -------
S&P 500 Index................................................... 10.7% 11.7% 11.5%
------- ------- -------
</TABLE>
- ---------------
* Figures converted to U.S. dollars using the Financial S.A. Rand exchange rate
where applicable.
THE PORTFOLIO
Old Mutual will, shortly before the Initial Closing, transfer to the Master
Trust a portfolio of South African securities (the "Portfolio") from the Old
Mutual Main Fund. The holdings to be included in the Portfolio have been
identified by Old Mutual and are listed on Exhibit A to this Memorandum. At the
time it is transferred to the Master Trust, the Portfolio will have a market
value, based on latest available market prices, of approximately U.S.$1 billion,
and pro rata increases or decreases in the number of securities in each holding
set forth on Exhibit A will be made in order to achieve this market value.
At the time the Portfolio is transferred, it will reflect the equity
holdings of the Old Mutual Main Fund, subject to adjustments to exclude
companies that are not South African issuers under the Fund's investment
policies, to consolidate the weightings of companies within a pyramid group into
a single holding (a pyramid group is one where the parent has as its only
material asset an interest in another listed company), to reduce the weighting
of larger holdings so that none of them represents more than 5% of the
Portfolio, to exclude holdings that represent an insignificant part of the Old
Mutual Main Fund, to consolidate holdings of different classes of equity
securities in the same company into a single class, and to exclude companies
investing primarily in real estate. Stamp duty due in respect of the transfer of
the Portfolio will be paid by Old Mutual.
The Portfolio was built up over 30 years and includes a broad cross section
of blue-chip South African shares. It also includes a selection of medium and
small capitalization stocks. It is slightly underweight in mining stocks and
overweight in industrial issuers. At August 31, 1995 it had an historic price
earnings ratio of 19.2 and an annual dividend yield of 2.1%.
OLD MUTUAL MAIN FUND
The Old Mutual Main Fund is Old Mutual's principal investment fund and is
held generally for the benefit of Old Mutual policyholders.
The Old Mutual Main Fund comprises a balanced portfolio of equities, cash,
bonds, and real property, which at June 30, 1995 were held in the following
proportions:
<TABLE>
<S> <C>
Equities........................................... 72%
Bonds.............................................. 19%
Real Property...................................... 7%
Cash............................................... 2%
----
100%
=====
</TABLE>
Source: Old Mutual
The equity portion of the Old Mutual Main Fund was valued on an unaudited
basis at S.A. Rand 50 billion (U.S.$13.7 billion) as at June 30, 1995.
13
<PAGE> 19
The investment objective of the equity portion of the Old Mutual Main Fund
is to achieve superior long-term total return from a diversified portfolio. It
seeks to deliver returns in excess of the JSE Actuaries All Share Index and of
South African inflation. Due to the long-term nature of the life insurance
liabilities supported by the Old Mutual Main Fund the emphasis has always been
on longer term performance. This philosophy will be applied in relation to the
Fund.
The following table shows the compound annual average total return of the
equity portion of the Old Mutual Main Fund compared with the JSE Actuaries All
Share Index over the periods listed below to June 30, 1995.
<TABLE>
<CAPTION>
PERIODS TO JUNE 30, 1995
----------------------------------
3 YEARS 5 YEARS 7 YEARS**
------- ------- ----------
<S> <C> <C> <C>
Old Mutual Main Fund (equity portion)*..................... 18.43% 19.24% 26.11%
JSE Actuaries All Share Index.............................. 17.24% 15.49% 21.46%
</TABLE>
- ---------------
* Figures given as at June 30 year end for Old Mutual.
** Continuous figures for the equity portion of the Old Mutual Main Fund are not
available prior to June 1988.
The investments held by the Master Trust will vary from the investments of
the Old Mutual Main Fund. Therefore, the investment performance of the Fund and
the Old Mutual Main Fund will differ. There can be no assurance that the future
performance of the Fund will be the same as, or similar to, the past performance
of the Old Mutual Main Fund.
INVESTMENT CONSIDERATIONS
An investment in the Shares is subject to a number of risks. Certain of
these risks are set forth below.
CONCENTRATION IN SOUTH AFRICAN SECURITIES
The Fund will invest primarily in securities of South African issuers and
will, as a result, be particularly subject to risks affecting South Africa and
its economy and securities markets. Investors in the Fund may therefore be
subject to greater risk and volatility than investors in investment vehicles
with more geographically diverse investment portfolios.
SOCIAL AND POLITICAL RISKS
South Africa is undergoing a period of unprecedented social and political
change. This has been accompanied by high levels of crime, violence, and social
unrest in some areas, which may continue. While some of the reasons for this
unrest have been addressed by the recent constitutional changes, others, such as
inadequate housing, education, health care, and employment opportunities, remain
to be addressed for large segments of the population. In some areas inter-tribal
and inter-community antagonisms, channeled through political rivalries,
particularly between the ANC and the Inkatha Freedom Party ("IFP"), have been
additional causes of violence. There can be no assurance that the current or
future governments of South Africa will be able to bring this violence and
social unrest under control or create sufficient wealth to satisfy the
socio-economic needs of the less privileged sections of the population.
The ANC, which comprises the majority party in the Government, has in the
past espoused a socialist economic program, including nationalization of South
African industry and mineral resources and high levels of taxation. In recent
years prominent figures in the ANC have distanced themselves from socialism and
have supported more market-oriented policies. However, there can be no assurance
that market-oriented policies will be pursued.
14
<PAGE> 20
The ANC's national executive has indicated concern regarding the dominant
position of a number of conglomerates in the South African market. This may lead
to a tightening of antitrust rules, with uncertain results.
The Government is a coalition that includes, among others, the ANC, the
IFP, and the National Party. The term of the Government will end in 1999, and
the ANC has indicated that it may not continue the coalition arrangements
thereafter. If the ANC wins control of the next government and excludes other
parties from the government, there may be an increase in social unrest. In
addition, without the restraints of a coalition government, the ANC might pursue
less market-oriented policies than those of the Government.
Negotiations on a permanent democratic constitution for South Africa are
continuing. The negotiations are scheduled to be completed in May 1996, and the
permanent constitution would then become effective in 1999. Failure of the
parties to reach agreement on a permanent constitution, or the adoption of a
constitution that is thought to lack adequate protections for minorities,
regional interests, and private property, may result in further unrest and
economic uncertainty.
In terms of its social and political infrastructure, South Africa currently
has many of the characteristics of an emerging market. Investors should
recognize that investing in emerging market jurisdictions involves certain
considerations not usually associated with investing in securities in more
developed capital markets. Investors should carefully consider their ability to
assume such risks before making an investment in the Fund.
South Africa enjoys a developed legal and commercial infrastructure with a
strong and independent judiciary and central bank. While the Government has
indicated that it supports, and the interim constitution protects, their
continued independence, there remains the possibility that they will come under
greater political control. In particular, the South African Reserve Bank's
attempts to maintain a responsible monetary policy may conflict with the desire
of current and future governments to effect substantial and expensive social
programs.
President Mandela currently plays an important role in the South African
political structure. It is not possible to predict the consequences of a change
in President.
ECONOMIC RISKS
Growth. Economic growth is an essential element in raising standards of
living for underprivileged sectors of the South African population. Although in
its June 1995 Quarterly Bulletin, the South African Reserve Bank noted a number
of favorable factors pointing to continued growth, there are many potential
problems that could either inhibit or extinguish that growth. The Governor of
the South African Reserve Bank, in his address to shareholders of the Bank on
August 22, 1995, referred to a number of structural issues, such as balance of
payments vulnerability, the insufficiency of domestic savings in both the
private and public sectors, and uncompetitive production processes, which may
inhibit sustained economic growth in South Africa.
Inflation. Until recently, South African inflation had persisted at annual
rates of between 10% and 20%. More recently, the South African Reserve Bank has
been successful in bringing that rate to about 10%. There can be no guarantee
that current or future governments of South Africa will be able, or will have as
a primary objective the desire, to keep inflation under control.
Balance of Payments/Access to Foreign Capital. Although South Africa
currently has relatively low levels of foreign debt, its foreign exchange
reserves are depleted, amounting at the end of June 1995 to only U.S.$4.2
billion or 6 weeks of imports of goods and services. If South Africa
15
<PAGE> 21
fails to maintain a balance of payments surplus or is not able to access sources
of foreign capital, the government would probably have to raise interest rates
and deflate the economy.
Government Spending. A major plank of the current Government's policy is
to develop a more even distribution of wealth among the population. While the
Adviser believes that there is scope for limited tax increases, the risk remains
that, if taxes and/or government borrowings increase significantly, there could
be severe adverse consequences for the South African economy.
Commodities. Although approximately 10% of South Africa's GDP directly
involves mining and quarrying activities, the country remains exposed to any
steep fall in world commodity prices.
Agricultural Conditions. Rainfall patterns are variable in South Africa,
and droughts occur frequently in certain parts of the country, resulting in
major fluctuations in agricultural output. Fluctuations in agricultural output
can significantly influence economic and inflation trends.
Increased Competition/Lower Tariffs. Following the lifting of sanctions
and the election of a new government, foreign companies have begun to re-enter
the South African markets. The presence of foreign competition in South African
markets may affect the profitability and share price of some South African
listed companies. South Africa is also a signatory to the Marrakech Agreement on
tariff reduction. In future years the scaling back of tariff protection may
adversely impact the performance of certain South African companies.
Exchange Controls. South Africa has a system of strict exchange controls
applicable to residents, domestic institutions, and local companies. Foreign
investors are generally not subject to exchange controls. Currently foreign
investors can freely repatriate both capital and investment returns subject to
compliance with certain exchange control approval procedures. Although the
Government and the central bank are committed to easing exchange controls, there
can be no assurance that exchange controls will not be tightened or that
non-South African residents (such as the Master Trust) will not be made subject
to restrictions on dealings in assets located or realized in South Africa. In
addition there can be no assurance that a South African administration will not
seek to reverse or modify exchange control approvals granted in relation to the
establishment of the Fund. In the event exchange controls are lifted, the
volatility of South African financial markets may increase. In addition, South
Africa has on prior occasions imposed a dual currency system, and reimposition
of such a system might reduce the value of the Fund's assets.
MARKET CHARACTERISTICS
The securities markets of South Africa are comparatively small, with the
majority of market capitalization and trading volume concentrated in a
relatively small number of companies. In addition, there is a significant degree
of cross-ownership among companies and a concentration of ownership in a
relatively small number of persons, including the Old Mutual Group.
Consequently, the Fund's investments may experience greater price volatility and
lower liquidity than a portfolio invested in equity securities of U.S.
companies.
CURRENCY RISKS
The Master Trust's assets will be invested in securities denominated in S.
A. Rand, and income from these investments will be received in S.A. Rand. As a
result, the Fund's net asset value and distributions, which will be measured in
U.S. dollars, would be adversely affected if the value of the S. A. Rand
declines relative to the U.S. dollar. Historically, the S. A. Rand has tended to
depreciate against the U.S. dollar.
16
<PAGE> 22
TAXATION RISKS
It is possible that current or future South African governments will
significantly raise taxes. South Africa does not currently impose tax on capital
gains. There can be no assurance that a capital gains tax to which the Master
Trust may be subject will not be introduced in the future.
REPORTING STANDARDS
Companies in South Africa are subject to accounting, auditing, and
financial standards and requirements that differ, in some cases significantly,
from those applicable to U.S. companies. There is less publicly available
information about South African companies than about U.S. companies. South
African companies are not subject to the same degree of regulation as are U.S.
issuers with respect to such matters as insider trading rules, restrictions on
market manipulation, shareholder proxy requirements, and timely disclosure of
information.
TRANSACTION COSTS
Transaction costs, including brokerage commissions for transactions both on
and off the securities exchanges in South Africa, are generally higher than in
the U.S.
UNLISTED SECURITIES
The Master Trust may invest up to 5% of its total assets in securities that
are not listed on a securities exchange. These securities may be subject to more
abrupt or erratic changes in value than listed securities, and it may be
difficult and expensive for the Master Trust to dispose of these securities.
NON-DIVERSIFIED FUND
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. See "GENERAL INFORMATION --
Organization".
PRIOR EXPERIENCE OF THE ADVISER
While Old Mutual has substantial experience in investment management,
neither Old Mutual nor the Adviser has previously advised an investment company
registered under the 1940 Act.
MANAGEMENT
TRUSTEES
Each of the OMEGA South Africa Fund and the Master Trust is supervised by a
board of trustees, a majority of whom are not affiliated with the Adviser or Old
Mutual. The current trustees of the OMEGA South Africa Fund and the Master Trust
are the same and are listed below. Asterisks indicate those trustees that are
"interested persons" (as defined in the 1940 Act) of the Fund.
*MICHAEL JOHN LEVETT, South African (aged 56), has been Chairman and
Managing Director of Old Mutual since 1990 and Managing Director since 1985. He
serves as Chairman of the board of trustees of the OMEGA South Africa Fund and
the Master Trust. He has held, and continues to hold, a number of non-executive
directorships, including South African Breweries Limited, Barlow Limited, and
Nedcor Limited. His address is Mutualpark, Jan Smuts Drive, Pinelands, South
Africa.
17
<PAGE> 23
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 72), acts as a
business consultant. He serves as Deputy Chairman of the board of trustees of
the OMEGA South Africa Fund and the Master Trust. He has been a non-executive
director of the South African Reserve Bank since 1982 and was, until his
retirement in 1978, Group Chairman of the Mobil Companies in South Africa. Mr.
Beck was a director of Old Mutual between 1988 and 1994. His address is P.O. Box
4854, Cape Town 8000, South Africa.
WILLIAM LESTER BOYAN, American (aged 58), has been a director of John
Hancock Mutual Life Insurance Company since 1983 and was appointed as President
and Chief Operations Officer in 1992. His address is John Hancock Place, Boston,
Massachusetts.
THOMAS HASKINS DAVIS, Bermudian (aged 47), is President and Chief Executive
Officer of Winchester Global Trust Company Limited. He was President of
Mid-Ocean Trust Company Limited from 1994 to 1995 and was Manager Corporate
Trust at Bank of Bermuda from 1979 to 1993. His address is Williams House, 20
Reid Street, Hamilton, Bermuda.
MICHEL JOHN DREW, Bermudian (aged 59), has been President and Chief
Executive Officer of International Services Limited, a corporate services
operation, since its inception in 1977. In 1969 he established Schroders
(Bermuda) Limited, the principal operating subsidiary in Bermuda of Schroders
plc, the London merchant banking house and acted as Chief Executive Officer
until his retirement in 1994, having been elected a director in 1993, and
President in 1991. His address is 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 52), is President of the Adviser and
has been a member of the general management of Old Mutual since 1981. His
address is Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
KENNETH RIGBY WILLIAMS, British (aged 59), was executive Chairman of
Westgate Overseas Limited, an international investment company, from 1986 to his
retirement in 1994. He holds non-executive directorships with Charles Baynes plc
and Hudaco Industries Limited and was a director of South African Breweries
Limited from 1973 to 1994. His address is Hallams Court, Littleford Lane,
Blackheath, Guildford, Surrey, United Kingdom.
ADVISER
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a wholly-owned
subsidiary of Old Mutual, is the investment adviser to the Master Trust and the
Global Fund. The Adviser was organized in 1995 as a Bermuda company for the
purpose of advising the Master Trust and the Global Fund. The Adviser's address
is Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda.
William Langley, President of the Adviser, will be responsible for the day
to day management of the Master Trust's assets. He joined Old Mutual in 1963,
and since 1985 has been involved in the development of Old Mutual's
international businesses. Prior to 1985 he was a senior portfolio manager, and
his responsibilities included the Old Mutual Main Fund.
Roddy Sparks, the current manager of the equity portion of the Old Mutual
Main Fund, will be responsible for providing in depth research on South African
companies to the Adviser. He joined Old Mutual in 1986 and has managed the
equity portion of the Old Mutual Main Fund since January 1989. He is based in
Cape Town.
18
<PAGE> 24
Old Mutual will provide investment research and information to the Adviser.
Old Mutual's investment division in South Africa employs over 50 investment
professionals, including 19 portfolio managers, 19 research analysts, and 5
economists. Collectively they have considerable experience of the South African
investment market and form one of the largest investment teams in the country.
Old Mutual has an extensive and detailed proprietary economic and investment
database that covers substantially all South African listed companies.
Old Mutual has been a significant investor in the South African equity
market since the early 1960's. In developing its investment philosophy Old
Mutual has focused upon long-term returns and has sought to ignore short-term
fluctuations in the market. In the early 1970's Old Mutual was a pioneer in
developing a risk adjusted dividend discount model for equity valuation that has
since formed the foundation for its long-term fundamental value approach to
investment. At June 30, 1995 Old Mutual had total assets under management of
over U.S.$35 billion.
Because the OMEGA South Africa Fund will invest all of its investable
assets in the Master Trust, the OMEGA South Africa Fund will not have a separate
investment adviser.
The Master Trust will pay the Adviser a Management Fee of 0.85% per annum
of the Master Trust's daily net assets. The Management Fee will accrue daily on
an annualized basis and be paid monthly in arrears. The Adviser will be
responsible for compensating Old Mutual for research and information provided to
the Adviser.
ADMINISTRATOR
State Street Bank and Trust Company (the "OMEGA Fund Administrator") has
agreed to provide, either directly or through an indirect wholly-owned
subsidiary, certain administrative and fund accounting services (including
calculation of the net asset value of the OMEGA South Africa Fund) to the OMEGA
South Africa Fund pursuant to an administrative services agreement. State Street
Cayman Trust Company, Ltd., either directly or through an affiliated entity (the
"Master Trust Administrator"), will provide certain administrative and fund
accounting services to the Master Trust pursuant to an administrative services
agreement.
The Master Trust Administrator will receive an annual administration fee
from the Master Trust calculated as a percentage of the Master Trust's assets.
The percentage will range from 0.05% to 0.01% per annum according to the assets
of the Master Trust. If the assets of the Master Trust total U.S.$1 billion
during a year, the administration fee percentage for that year will be 0.0375%.
In addition, the OMEGA South Africa Fund will pay the OMEGA Fund Administrator
an annual administration fee of U.S.$40,000.
TRANSFER AGENT
State Street Bank and Trust Company (the "Transfer Agent") will serve as
transfer agent and dividend disbursing agent for the OMEGA South Africa Fund.
The Transfer Agent may delegate certain of its functions to an affiliated
entity. The Transfer Agent will receive an annual fee of U.S.$18,000 from the
OMEGA South Africa Fund. The principal business address of the Transfer Agent is
225 Franklin Street, Boston, Massachusetts. State Street Cayman Trust Company,
Ltd., either directly or through an affiliated entity, will serve as registrar
for the Master Trust.
CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company (the "Custodian") will serve as
custodian for the Master Trust's and the OMEGA South Africa Fund's assets.
Standard Bank of South Africa will serve as sub-custodian for the Master Trust's
South African registered assets. All assets of the
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Master Trust and the OMEGA South Africa Fund will be held in a segregated
account in the name of the relevant Fund. The Custodian will receive an annual
custody fee of 0.03% of the Master Trust's average daily net assets. The
Custodian will be responsible for the fees of the sub-custodians.
VALUATION OF SHARES
The net asset value per Share will be determined on each day on which the
New York Stock Exchange is open for trading (a "Business Day"). This
determination is made by the OMEGA Fund Administrator once each day as of 10:00
a.m. (Eastern time), being after the close of business of the JSE for that day,
by adding the market value of all securities and other assets of the OMEGA South
Africa Fund (including the value of its interest in the Master Trust), then
subtracting the OMEGA South Africa Fund's liabilities, and then dividing the
result by the number of outstanding Shares. The Master Trust Administrator will
calculate the net asset value of the Master Trust as of 10:00 a.m. (Eastern
time) on each Business Day by adding the market value of all securities and
other assets of the Master Trust and then subtracting the Master Trust's
liabilities.
The Master Trust will generally value JSE listed securities based on the
current JSE ruling price. The ruling price for a JSE listed security on any day
is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed by the trustees of the Master Trust to reflect their fair value. Values
are converted from S.A. Rand to U.S. dollars using exchange rates prevailing as
of the time the net asset value is to be determined. Trading may take place in
securities held by the Master Trust on days that are not Business Days and on
which it will not be possible to purchase or redeem Shares.
The Fund may, from time to time, revise its procedures relating to the
calculation of net asset value to reflect changes in JSE trading periods and
practices.
OFFERING OF SHARES
The OMEGA South Africa Fund expects to offer Shares in three stages. First,
the OMEGA South Africa Fund is conducting the Initial Offering to which this
Memorandum relates. Following the issuance of the Shares placed during the
Initial Offering, the OMEGA South Africa Fund expects to offer any remaining
Shares in the Second Offering. After completion of the Second Offering, the
OMEGA South Africa Fund may make additional offerings of Shares.
INITIAL OFFERING
The OMEGA South Africa Fund is offering up to 10 million Shares at a price
of U.S.$100 per Share (totaling U.S.$1 billion), payable in cash at the Initial
Closing. The minimum purchase for any investor is 50,000 Shares (U.S.$5
million), provided the minimum purchase may, in particular circumstances, be
reduced for certain investors to not less than 10,000 Shares (U.S.$1 million) in
the discretion of the Placement Agent.
The termination date of the Initial Offering is November 7, 1995 (the
"Initial Offering Termination Date"). No minimum size for the Initial Offering
has been established. If acceptable subscriptions for all Shares offered are
received prior to the Initial Offering Termination Date, the OMEGA South Africa
Fund may conclude the Initial Offering prior to the Initial Offering Termination
Date.
It is expected that the Initial Closing will be held on November 10, 1995
(or any earlier date on which all Shares offered have been subscribed for). The
OMEGA South Africa Fund will schedule
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the Initial Closing and will notify investors that have submitted acceptable
subscriptions for Shares of the date thereof. At the Initial Closing the OMEGA
South Africa Fund will issue the Shares subscribed for in the Initial Offering.
The OMEGA South Africa Fund has engaged S.G.Warburg & Co. Inc. to act as
the exclusive placement agent for the Initial Offering (the "Placement Agent")
on a best efforts basis. The Master Trust will pay the Placement Agent a
placement fee equal to 0.25% of the initial offering price of the Shares sold in
the Initial Offering pursuant to a placement plan in accordance with Rule 12b-1
under the 1940 Act. The Master Trust will pay a corresponding placement fee to
an affiliate of the Placement Agent in respect of the sale of shares in the
Non-U.S. Fund. The Master Trust will also pay Old Mutual Bermuda an amount equal
to 0.25% of the value of the interest it retains in the Master Trust following
the Initial Closing. Old Mutual Bermuda may apply all or a portion of this
amount to compensate broker-dealers that assist in any subsequent placement of
Shares. The Fund has agreed to indemnify the Placement Agent against certain
liabilities, including liabilities under applicable securities laws.
The OMEGA South Africa Fund is offering the Shares without registration
under the 1933 Act as a private placement pursuant to Regulation D under the
1933 Act. The OMEGA South Africa Fund is also relying upon appropriate
exemptions from the registration requirements of applicable state securities or
blue sky laws. The Shares are being offered and sold in the U.S. only to
investors that are "accredited investors" as defined in Regulation D.
The Initial Offering may be terminated or modified. In particular, the
number of Shares offered may be reduced to reflect subscriptions for shares of
the Non-U.S. Fund, which will invest in the Master Trust upon the same terms and
conditions as the OMEGA South Africa Fund. In the event that the terms of the
Initial Offering are materially modified, the new terms will be set forth in a
supplement to this Memorandum.
SUBSCRIPTION PROCEDURE
Investors that wish to subscribe for Shares in the Initial Offering are
required to complete the Subscription Booklet circulated by the Placement Agent.
Completed subscription documents should be forwarded to the Placement Agent at
the following address: 277 Park Avenue, New York, NY 10172. Investors should
notify the OMEGA South Africa Fund or the Placement Agent of any subsequent
changes in the information provided. All subscriptions are subject to acceptance
by the OMEGA South Africa Fund.
The purchase price for Shares subscribed for in the Initial Offering will
be due and payable to the OMEGA South Africa Fund at the Initial Closing.
Investors will be provided with the Subscription Booklet and the payment
instructions for the purchase price of the Shares shortly before the Initial
Offering Termination Date. The price for Shares will be payable by wire transfer
to an account of the Transfer Agent.
CLOSING PROCEDURE
Shortly before the date of the Initial Closing, Old Mutual will transfer
the Portfolio to the Master Trust and will make a capital contribution of up to
U.S.$5 million to the Master Trust. As consideration for the acquisition of the
Portfolio and the up to U.S.$5 million capital contribution, the Master Trust
will issue to Old Mutual Bermuda (a wholly-owned subsidiary of Old Mutual)
substantially all of the beneficial interest in the Master Trust. Old Mutual has
agreed to pay stamp duty due on the transfer of the Portfolio.
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Following the close of JSE trading on the date of the Initial Closing, the
Portfolio will be valued for purposes of the Initial Closing by the Master Trust
Administrator as described under "VALUATION OF SHARES".
At the Initial Closing, the OMEGA South Africa Fund will invest the
proceeds of the Initial Offering in the Master Trust, and will be issued a
proportionate beneficial interest in the Master Trust. The Non-U.S. Fund will
similarly invest the proceeds of its initial offering in the Master Trust in
return for a beneficial interest in the Master Trust. The Master Trust will
apply the proceeds received from the OMEGA South Africa Fund (and the Non-U.S.
Fund) to redeem a corresponding portion of the interest of Old Mutual Bermuda in
the Master Trust. Old Mutual Bermuda will invest the proceeds of this redemption
in the Global Fund.
SECOND OFFERING AND FURTHER OFFERINGS
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO PURCHASE, SHARES IN ANY OFFERING OTHER THAN THE INITIAL OFFERING.
Separate offering and subscription materials will be circulated for any further
offerings of Shares.
After the Initial Closing, the OMEGA South Africa Fund expects to offer
Shares at a price equal to their net asset value plus a sales charge of 0.25% of
the offering price (the "Second Offering"). In the event all Shares offered
during the Initial Offering are sold at the Initial Closing, there will be no
Second Offering. The Second Offering will continue until the first to occur of
(i) the placement of all remaining Shares and (ii) the date 6 months following
the Initial Closing. During the Second Offering Shares will be offered
continuously and may be purchased on any Business Day. The OMEGA South Africa
Fund may engage broker-dealers in addition to the Placement Agent to offer and
sell Shares in the Second Offering.
Following completion of the Second Offering, the OMEGA South Africa Fund
may, from time to time, offer any Shares, including Shares unsold in the Second
Offering or redeemed by the OMEGA South Africa Fund, upon prices and selling
terms to be determined by the OMEGA South Africa Fund, provided that in no case
will the OMEGA South Africa Fund offer Shares for less than their net asset
value.
There can be no assurance that the OMEGA South Africa Fund will conduct the
Second Offering or any further offering of Shares or as to the terms upon which
the Second Offering or any further offering will be made. Investors that
purchase Shares in the Initial Offering will not have any pre-emptive rights
with respect to the Second Offering or any further offerings.
SERVICING FEE
The Adviser (or another subsidiary of Old Mutual) will, on the third
anniversary of the Initial Closing, pay an affiliate of the Placement Agent from
its own resources a servicing fee with respect to Shares that are (i) sold in
the Initial Offering or Second Offering and (ii) continuously outstanding
through the third anniversary of the Initial Closing ("Qualifying Shares"). The
servicing fee will be equal to 0.125% per annum of the proportion of the Master
Trust's daily net assets represented by the Qualifying Shares during the period
ending on such third anniversary. All or part of the servicing fee may be
reallowed to any other broker-dealers that participate in the Second Offering.
The servicing fee will not be paid by the Fund. The servicing fee is
intended to compensate the Placement Agent and other broker-dealers engaged by
the Fund for providing ongoing shareholder services.
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EXPENSE REIMBURSEMENT
The OMEGA South Africa Fund will reimburse the Adviser for certain
marketing expenses incurred (or advanced to the Placement Agent or others) by
the Adviser in the placement of Shares, provided the amount of such
reimbursements in any year will not exceed 0.05% of the average daily net assets
of the OMEGA South Africa Fund for such year. This reimbursement is authorized
pursuant to a plan of placement maintained by the OMEGA South Africa Fund. The
reimbursement will apply to marketing costs for the Shares, including costs
relating to meetings and communications with potential investors, travel, and
printing and distributing offering materials.
The OMEGA South Africa Fund will provide to its trustees quarterly a
written report of amounts reimbursed pursuant to the plan of placement. The
trustees of the OMEGA South Africa Fund will review the continuation of the plan
of placement on an annual basis.
REDEMPTIONS
Investors may request redemption of Shares on any Business Day at their net
asset value (as determined as of 10:00 a.m. (Eastern time) on the next Business
Day), subject to a Redemption Fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds. Redemption requests should be submitted in writing
to the Transfer Agent on a form available from the OMEGA South Africa Fund or
the Transfer Agent. The office of the Transfer Agent will be open to accept
redemption requests from 12:00 noon to 4:00 p.m. (Eastern time) on every
Business Day. The Transfer Agent may require evidence of the authority of
persons submitting any redemption request. Redemption proceeds will be paid in
federal funds within seven days following receipt of a redemption request in
proper form.
In order to fund redemptions, the OMEGA South Africa Fund will redeem a
corresponding portion of its interest in the Master Trust. For so long as Old
Mutual Bermuda provides the Liquidity Facility, the OMEGA South Africa Fund will
pay to Old Mutual Bermuda amounts collected in respect of the Redemption Fee as
compensation for the Liquidity Facility. Should the Liquidity Facility be
terminated, the OMEGA South Africa Fund will pay amounts collected in respect of
the Redemption Fee to the Master Trust.
The Fund believes that the Liquidity Facility will reduce the trading costs
of the Fund. The Redemption Fee will not apply to direct or indirect transfers
of Shares from one investor to another.
LIQUIDITY FACILITY AND THE GLOBAL FUND
The Adviser will serve as investment adviser to Old Mutual Global Assets
Fund Limited, a mutual fund newly organized under the laws of Bermuda (the
"Global Fund"). THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES OF THE GLOBAL FUND. Old
Mutual Bermuda will be the sole shareholder of the Global Fund. The Global Fund
will invest in broadly diversified portfolios of South African equities and
international equity, debt, and money market securities with the goal of
achieving a long-term total return. The Global Fund may only borrow to a limited
extent. The Global Fund is designed to provide a pool of securities to fund
redemptions of Shares and redemptions of shares of the Non-U.S. Fund.
Prior to the Initial Closing Old Mutual will transfer to the Global Fund
approximately U.S.$500 million of South African securities. In addition, at the
Initial Closing and upon subsequent issuances of Shares (or shares in the
Non-U.S. Fund) the Master Trust will redeem a portion of the
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interest of Old Mutual Bermuda in the Master Trust, and Old Mutual Bermuda will
invest the redemption proceeds in the Global Fund.
Old Mutual Bermuda has undertaken to the Master Trust and the OMEGA South
Africa Fund that it will, to the extent required to provide funds for redeeming
Shares, liquidate all or a portion of its interest in the Global Fund to
generate cash, which Old Mutual Bermuda will invest in the Master Trust. Old
Mutual Bermuda may not terminate the Liquidity Facility without giving at least
120 days notice to Shareholders, provided that Old Mutual Bermuda may terminate
the Liquidity Facility at any time without prior notice if the Adviser ceases to
be investment adviser to the Master Trust (other than by reason of the voluntary
termination of the investment advisory agreement with the Master Trust by the
Adviser). Any termination of the Liquidity Facility would not affect Shareholder
redemption rights. If the Liquidity Facility is terminated, the Master Trust may
fund redemptions by realizing its assets. Following termination of the Liquidity
Facility, Old Mutual Bermuda would be free to redeem all or part of its interest
in the Master Trust.
For so long as the Liquidity Facility is made available, Old Mutual Bermuda
will not withdraw monies from the Global Fund except as required for the
Liquidity Facility and except for dividends paid by the Global Fund. In
addition, for so long as the Liquidity Facility is made available, Old Mutual
Bermuda will not withdraw monies from the Master Trust except to withdraw cash
equivalent to amounts invested in the Master Trust by the OMEGA South Africa
Fund (or the Non-U.S. Fund) and except for its proportion of the income and
realized capital profits of the Master Trust.
It is possible that at some time the value of Old Mutual Bermuda's
investment in the Global Fund might be insufficient to fund the redemption of
all Shares submitted for redemption.
Additional investments by the OMEGA South Africa Fund in the Master Trust
that are not offset by redemptions of Master Trust interests (either by Old
Mutual Bermuda or the Non-U.S. Fund) will be applied to acquire additional
securities in accordance with the Master Trust's investment policies.
Old Mutual established the Global Fund pursuant to the approval of the
South African Reserve Bank for the transfer of the Portfolio out of South Africa
to the Master Trust. Under South African exchange control regulations, South
African residents are not, in general, permitted to transfer cash and investment
assets out of South Africa or to hold non-South African investments. Recently
the South African Reserve Bank has relaxed these regulations to permit certain
"asset swaps" in which South African institutions may exchange their South
African investments for non-South African assets. Asset swaps incorporate
safeguards intended to protect South African foreign exchange reserves. The
Global Fund is intended as a means of providing liquidity and assuring that,
when Shareholders liquidate their interests in the Master Trust by redeeming
Shares, Old Mutual Bermuda will acquire equivalent interests in the Master
Trust.
TAX MATTERS
This discussion is for general information only. Investors should consult
their own tax advisers about the tax consequences of an investment in the OMEGA
South Africa Fund before subscribing for Shares.
CERTAIN U.S. TAX MATTERS
The OMEGA South Africa Fund intends to meet the requirements of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies so
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that it will not be liable for any federal income or excise taxes, although the
OMEGA South Africa Fund's income may be subject to non-U.S. taxes. The Master
Trust intends to qualify as a "partnership" under the Code, with the result that
the OMEGA South Africa Fund will be required to take into account its pro rata
share of the Master Trust's income, gain, loss, expense, credit, and other
applicable items.
For investors subject to U.S. federal income tax, OMEGA South Africa Fund
dividends and capital gains distributions are subject to federal income tax and
may also be subject to state and local taxes. Generally, distributions from the
OMEGA South Africa Fund's net investment income and short-term capital gains
will be taxed as ordinary income. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses) will
be taxed as such regardless of how long Shares have been held.
Any OMEGA South Africa Fund dividend that is declared in October, November,
or December of any calendar year, that is payable to shareholders of record in
such a month, and that is paid the following January will be treated as if
received by the shareholders on December 31 of the year in which the dividend is
declared. The OMEGA South Africa Fund will notify shareholders regarding the
federal tax status of its distributions after the end of each calendar year.
Any OMEGA South Africa Fund distribution will have the effect of reducing
the per Share net asset value of Shares by the amount of the distribution.
Shareholders purchasing Shares shortly before the record date of any
distribution may thus pay the full price for the Shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of Shares
by a Shareholder that holds such Shares as a capital asset will be treated as
long-term capital gain or loss if the Shares have been held for more than twelve
months and otherwise as a short-term capital gain or loss. However, any loss
realized upon a disposition of Shares held for six months or less will be
treated as a long-term capital loss to the extent of any distributions of net
capital gain made with respect to those Shares. Any loss realized upon a
disposition of Shares may also be disallowed under rules relating to wash sales.
Foreign exchange gains and losses realized by the Fund will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the Fund.
While, as discussed under "South African Taxation" below, there are
currently no South African taxes that would apply to the earnings of the Fund,
in the future the Fund may pay South African taxes on its investment income. The
OMEGA South Africa Fund expects to be able to elect to "pass through" to
Shareholders non-U.S. income taxes paid. If the OMEGA South Africa Fund so
elects, Shareholders will be required to treat their pro rata portion of the
non-U.S. income taxes paid by the OMEGA South Africa Fund as part of the amounts
distributed to them by the OMEGA South Africa Fund and thus includable in their
gross income for federal income tax purposes. Shareholders who itemize
deductions would then be allowed to claim a deduction or credit (but not both)
on their federal income tax returns for such amounts, subject to certain
limitations. Shareholders who do not itemize deductions would (subject to such
limitations) be able to claim a credit but not a deduction. No deduction for
such amounts will be permitted to individuals in computing their alternative
minimum tax liability. If the OMEGA South Africa Fund does not qualify or elect
to "pass through" to Shareholders non-U.S. income taxes paid by it, Shareholders
will not be able to claim any deduction or credit for any part of the non-U.S.
taxes paid by the OMEGA South Africa Fund.
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Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at a rate of 30%. The OMEGA South
Africa Fund intends to withhold tax payments at the rate of 30% on taxable
dividends and other payments to Non-U.S. Persons that are subject to such
withholding, unless a lower rate is permitted under an applicable treaty. Any
amounts overwithheld may be recovered by such persons by filing a claim for
refund with the Internal Revenue Service within the time period appropriate to
such claims. Distributions received from the OMEGA South Africa Fund by Non-U.S.
Persons also may be subject to tax under the laws of their own jurisdiction. The
OMEGA South Africa Fund is also required in certain circumstances to apply
backup withholding of 31% of taxable dividends and redemption proceeds paid to
any Shareholder (including a Non-U.S. Person) who does not furnish to the OMEGA
South Africa Fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that have been subject to 30% withholding.
SOUTH AFRICAN TAXATION
Income Tax. The Master Trust will be treated as a trust for South African
tax purposes with the result that income passing through the Master Trust will
retain its nature in investors' hands. South African income tax is source based
and therefore only income derived from a South African or deemed South African
source would be taxable. Dividends are exempt from tax. The special withholding
tax on dividends payable from a South African source to non-residents ("NRST")
is to be abolished with effect from October 1, 1995. Interest from a source
within or deemed within South Africa accruing to non-residents or companies and
other associations which are managed and controlled outside South Africa is also
exempt from tax.
Gains realized by the Master Trust on the disposal of South African
securities would be taxable if they are of a revenue nature from a business of
trading in securities. The investment policy of the Master Trust should result
in the underlying securities being held as capital investments (gains in respect
of which would not be regarded as revenue profit).
Capital gains tax. South Africa has no capital gains tax and therefore
capital gains (as opposed to share-dealing gains) on the sale of shares are not
taxable.
Stamp duty or Marketable Securities Tax ("MST"). Stamp duty or MST at a
rate of 1% is payable by the transferee on the transfer of equities. Stamp duty
is not payable with respect to transactions effected through a brokerage firm,
which are subject to MST. Special exemptions from stamp duty and MST apply in
respect of the transfer of securities of South African issuers with a foreign
branch register.
Secondary Tax on Companies ("STC"). To promote reinvestment of profits a
system of STC, at a rate of 25%, payable by South African companies in respect
of net dividends distributed, was introduced during 1993. The level of dividends
payable to the Master Trust would therefore be influenced by STC.
BERMUDA TAXATION
There is no Bermuda income, corporation, or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty, or inheritance tax payable
by the OMEGA South Africa Fund, the Master Trust, or the Shareholders, other
than Shareholders ordinarily resident in Bermuda.
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ERISA MATTERS
Shares of the OMEGA South Africa Fund are available for purchase by
fiduciaries acting on behalf of employee benefit plans subject to ERISA (an
"ERISA Plan"), which otherwise meet all applicable investor criteria. See
"OFFERING OF SHARES" above. In considering an investment in the OMEGA South
Africa Fund, a fiduciary acting on behalf of an ERISA Plan should consider in
the context of the Plan's particular circumstances whether the investment will
be consistent with its responsibilities and the special constraints imposed by
ERISA and the Code.
Because the Fund will be an investment company registered under the 1940
Act, under applicable Department of Labor regulations regarding the
identification of "plan assets" for purposes of ERISA and the prohibited
transaction provisions of the Code, the investment in the Fund by an ERISA Plan
will include the Shares acquired but will not, solely by reason of the
acquisition of such Shares, include any of the underlying assets of the Fund.
The foregoing discussion is merely a summary of certain issues any
fiduciary acting on behalf of an ERISA Plan should evaluate when considering an
investment in Shares of the OMEGA South Africa Fund.
GENERAL INFORMATION
ORGANIZATION
The OMEGA South Africa Fund is a Massachusetts business trust that was
organized in September 1995 and will register as a non-diversified open-end
management investment company under the 1940 Act. The Master Trust is a trust
that was organized in September 1995 under the laws of Massachusetts and will
also register as a non-diversified open-end management investment company under
the 1940 Act. The declaration of trust of the Master Trust provides that the
OMEGA South Africa Fund and any other entities investing in the Master Trust are
each liable for all obligations of the Master Trust. However, it is not expected
that the liabilities of the Master Trust would ever exceed its assets.
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. Under these requirements not more
than 25% of the Master Trust's total assets will be invested in securities of
any one issuer, and at least 50% of the total assets of the Master Trust will be
represented by cash, securities of other investment companies, and other
securities not exceeding with respect to any issuer 5% of the assets of the
Master Trust or 10% of the outstanding securities of any issuer.
INVESTMENT STRUCTURE
Rather than directly acquire and manage its own portfolio of securities,
the OMEGA South Africa Fund will invest all of its investable assets in the
Master Trust, which has the same investment objective as the OMEGA South Africa
Fund. The Non-U.S. Fund and other investment vehicles, if any, may acquire
interests in the Master Trust upon the same terms and conditions as the OMEGA
South Africa Fund. The Non-U.S. Fund and other investment vehicles that invest
in the Master Trust may have different operating expenses and sales charges than
the OMEGA South Africa Fund, although it is intended that the sales charges for
the OMEGA South Africa Fund and the Non-U.S. Fund will be the same for the
Initial Offering and the Second Offering.
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TRANSFERS OF SHARES
The Initial Offering has not been registered under the 1933 Act, and the
Shares will therefore be "restricted securities". The OMEGA South Africa Fund
may require as a condition of any transfer of Shares receipt of an opinion of
counsel, in form and substance satisfactory to the OMEGA South Africa Fund, to
the effect that a proposed transfer may be made without registration under the
1933 Act or applicable state securities laws.
VOTING AND OTHER RIGHTS
Each Share gives the Shareholder one vote in elections for trustees of the
OMEGA South Africa Fund and other matters submitted to Shareholders for vote.
All Shares have equal voting rights. The OMEGA South Africa Fund may issue an
unlimited number of shares and may divide Shares into series and classes.
The OMEGA South Africa Fund's activities are supervised by its board of
trustees. As a Massachusetts business trust, the OMEGA South Africa Fund is not
required to hold annual Shareholder meetings. Shareholders will be entitled to
vote on the election of the trustees of the OMEGA South Africa Fund and certain
important matters, including (i) certain amendments to the declaration of trust
of the OMEGA South Africa Fund, and (ii) changes in the investment objective and
the fundamental investment restrictions of the OMEGA South Africa Fund. Trustees
of the OMEGA South Africa Fund may be removed by a vote of the Shareholders
holding two-thirds of outstanding Shares. Each Share is entitled to participate
equally in dividends and other distributions and the proceeds of any liquidation
of the OMEGA South Africa Fund.
The Master Trust's activities are supervised by its board of trustees.
Holders of the beneficial interest in the Master Trust, including the OMEGA
South Africa Fund, will be entitled to vote on the election of the trustees of
the Master Trust and certain important matters, including (i) certain amendments
to the declaration of trust of the Master Trust, (ii) changes in the investment
objective and the fundamental investment restrictions of the Master Trust, (iii)
material amendments to the investment advisory agreement between the Master
Trust and the Adviser, or the adoption of a new investment advisory agreement,
and (iv) continuation of the Master Trust upon the withdrawal of a holder of its
beneficial interest. The trustees of the Master Trust may be removed by a vote
of the holders of two-thirds of the outstanding beneficial interests in the
Master Trust.
If the Master Trust seeks the vote of the OMEGA South Africa Fund on any
matter (other than a vote to continue the Master Trust upon the withdrawal of
another investor in the Master Trust, in which circumstances the trustees of the
OMEGA South Africa Fund may vote to continue the Master Trust), the OMEGA South
Africa Fund shall submit the matter to a vote of the Shareholders and shall
exercise its Master Trust voting rights proportionately as instructed by the
Shareholders that participate in the vote. It is possible that a majority of the
investors in the Master Trust will exercise their Master Trust voting rights in
a manner contrary to the vote of the Shareholders. The OMEGA South Africa Fund
will be entitled to participate in distributions and the proceeds of any
liquidation of the Master Trust in proportion to its interest in the Master
Trust.
PURCHASE RIGHT
In the event that either the OMEGA South Africa Fund or the Master Trust
votes to dissolve, Old Mutual will be entitled to acquire all of the outstanding
Shares at a price equal to their net asset value. No Redemption Fee will apply
in this case.
28
<PAGE> 34
CERTIFICATES
The Transfer Agent maintains a share register for Shareholders. Share
certificates are not issued.
SECURITIES TRANSACTIONS
The primary consideration in placing the Fund's securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible.
CERTAIN CONFLICTS OF INTEREST
The Old Mutual Group is an important participant in the South African
securities markets. At July 31, 1995 the Old Mutual Group's JSE holdings totaled
S.A. Rand 72 billion, equal to approximately 8% of total JSE market
capitalization. At July 31, 1995 the Old Mutual Group held 5% or more of the
listed securities in 21% of the JSE traded companies, which companies
collectively represented 50% of the JSE market capitalization. As a result of
these holdings, the Old Mutual Group has a substantial interest in many of the
companies that are included in the Portfolio. The Fund has adopted the following
restrictions designed to address conflicts of interest arising from the Old
Mutual Group's position in the South African securities markets:
(i) The Fund will acquire securities of companies in which the Old
Mutual Group holds 5% or more of the equity interest ("OM Affiliated
Companies") only from unaffiliated brokers in open market transactions,
except for (A) transactions approved by order of the Securities and
Exchange Commission, (B) the acquisition of the Portfolio, and (C)
dividends consisting of securities, rights issued in a rights offering to
existing shareholders, and securities received upon exercise of such
rights. This restriction will not apply to the OMEGA South Africa Fund's
investment in the Master Trust.
(ii) The Fund will not participate in any effort to replace the
management of any issuer, or take legal or management control of any
issuer, provided this restriction will not prohibit the Fund from (A)
accepting a tender or takeover offer made generally to holders of a
particular security or (B) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or
indirectly, organized by a member of the Old Mutual Group. This restriction
will not apply to the OMEGA South Africa Fund's investment in the Master
Trust.
(iii) The Fund will not engage in any purchases of securities of OM
Affiliated Companies, or defer its sales of such securities, for the
purpose of supporting the price thereof.
(iv) Fund purchases and sales of the securities of OM Affiliated
Companies, as well as purchases or sales of the same securities by other
members of the Old Mutual Group at similar times, will be reviewed by (A)
the Old Mutual Surveillance Team on a regular basis and (B) the Fund
trustees on at least a quarterly basis. Old Mutual will provide the Fund
trustees with such information as they may require for purposes of this
review.
(v) The Fund will not purchase securities of any issuer in which the
Old Mutual Group owns in the aggregate in excess of 50% of the outstanding
equity interest or where the acquisition would result in the Old Mutual
Group owning in the aggregate in excess of 50% of the outstanding equity
interest, provided this restriction (A) will not apply to the OMEGA South
Africa Fund's investment in the Master Trust or to the acquisition of the
Portfolio and (B) will not prohibit the Fund from electing to receive
dividends consisting of securities, or
29
<PAGE> 35
exercising rights issued in a rights offering, upon the same terms
generally available to other investors.
Old Mutual and companies in the Old Mutual Group act as investment manager
and adviser to a number of funds, customers, and proprietary accounts (including
the Old Mutual Main Fund). The Adviser will act as investment adviser to the
Master Trust, and to the Global Fund which will hold investments in South
African equities.
The South African equity investments of the Master Trust, the Global Fund,
and the Old Mutual Main Fund will ordinarily be managed pursuant to
substantially similar investment objectives and policies. However, the
composition of their respective portfolios, and the purchase and sale
transactions entered into on behalf of the Master Trust, the Global Fund, and
the Old Mutual Main Fund will not be identical.
The Adviser will use its best efforts to assure that the Master Trust has
the opportunity to participate in potential investments which fall within its
investment objective and policies such that the allocation of those investments
as between the Master Trust and the other funds, customers, and proprietary
accounts managed or advised by Old Mutual or one of its wholly-owned
subsidiaries is made on a fair and equitable basis.
EXPENSES
The OMEGA South Africa Fund and the Master Trust will amortize their
organizational and offering expenses (other than the placement fee and the
amount payable to Old Mutual Bermuda at the Initial Closing), which are
estimated at less than 0.20% of the net asset value of the Master Trust at the
Initial Closing, over a period of five years. The OMEGA South Africa Fund and
the Master Trust will be responsible for the ongoing expenses of conducting
their affairs, including (i) investment advisory, administration, custody, and
transfer agency fees and expenses, (ii) legal, audit, and accounting fees and
expenses, (iii) costs of reports to and other communications with investors,
(iv) costs of preparing and filing tax returns and reports and other
governmental filings, (v) fees and expenses of trustees, (vi) printing, copying,
travel, and communication costs, and (vii) costs of registering or qualifying
Fund securities under the securities laws of various jurisdictions.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of the Fund, including the
Management Fee, will not exceed 1.00% per annum of the Fund's daily net assets.
This limitation does not apply to (i) extraordinary expenses (such as the cost
of litigation), (ii) the placement fee and the amount payable to Old Mutual
Bermuda at the Initial Closing, (iii) sales charges on Shares, (iv) brokerage
expenses, or (v) the Redemption Fee. The Adviser may not terminate its
undertaking to so reduce or rebate a portion of the Management Fee without
giving at least 120 days notice to Shareholders, provided the Adviser may
terminate this undertaking at any time without prior notice if the Adviser
ceases to be investment adviser to the Master Trust.
ADDITIONAL INFORMATION
The Fund's registration statement under the 1940 Act will contain more
detailed information about the Fund. The proposed form of the Fund's
registration statement will be provided to potential investors upon request.
The Fund will provide to a prospective investor upon request such
additional information concerning the Fund and its proposed investments as the
Fund possesses or can obtain without unreasonable effort or expense. Requests
for additional information should be directed to S.G.Warburg & Co. Inc., 277
Park Avenue, New York, NY 10172 (212) 224-7970.
30
<PAGE> 36
GLOSSARY
ADVISER means Old Mutual Asset Managers (Bermuda) Limited, the investment
adviser to the Master Trust.
ANC means the African National Congress.
BUSINESS DAY means each day on which the New York Stock Exchange is open for
trading.
CODE means the Internal Revenue Code of 1986, as amended.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA PLAN means an employee benefit plan subject to ERISA.
FUND means the OMEGA South Africa Fund and the Master Trust except as otherwise
indicated.
GLOBAL FUND means Old Mutual Global Assets Fund Limited, a mutual fund organized
under the laws of Bermuda.
GOVERNMENT means the South African Government of National Unity.
IFP means the Inkatha Freedom Party.
INITIAL CLOSING means the closing on the Initial Offering scheduled on or about
November 10, 1995.
INITIAL OFFERING means the offering of up to 10 million Shares on the terms and
conditions of this Memorandum.
INITIAL OFFERING TERMINATION DATE means November 7, 1995.
JSE means The Johannesburg Stock Exchange.
LIQUIDITY FACILITY means the undertaking of Old Mutual Bermuda to apply the
assets of the Global Fund to make such additional investments in the Master
Trust as may be required from time to time in order to provide funds for
redeeming Shares.
MANAGEMENT FEE means the management fee payable to the Adviser of 0.85% per
annum of the Master Trust's daily net assets.
MASTER TRUST means Old Mutual South Africa Equity Trust, a Massachusetts trust.
MASTER TRUST ADMINISTRATOR means State Street Cayman Trust Company, Ltd., as
administrator of the Master Trust.
1940 ACT means the Investment Company Act of 1940, as amended.
1933 ACT means the Securities Act of 1933, as amended.
NON-U.S. FUND means Old Mutual SAGA Fund, a mutual fund organized under the laws
of Bermuda.
OM AFFILIATED COMPANIES means companies in which the Old Mutual Group holds 5%
or more of the equity interests.
OLD MUTUAL means the South African Mutual Life Assurance Society, a mutual
assurance society organized under the laws of South Africa.
OLD MUTUAL BERMUDA means Old Mutual Fund Holdings (Bermuda) Limited, a Bermuda
company that is a wholly-owned subsidiary of Old Mutual.
31
<PAGE> 37
OLD MUTUAL GROUP means Old Mutual, its wholly-owned subsidiaries, and investment
vehicles managed by Old Mutual or its wholly-owned subsidiaries, collectively.
OLD MUTUAL MAIN FUND means Old Mutual's principal investment fund.
OMEGA FUND ADMINISTRATOR means State Street Bank and Trust Company, as
administrator of the OMEGA South Africa Fund.
OMEGA SOUTH AFRICA FUND means Old Mutual Equity Growth Assets South Africa Fund,
a Massachusetts business trust.
PLACEMENT AGENT means S.G.Warburg & Co. Inc., as the placement agent for the
Initial Offering.
PORTFOLIO means a portfolio of South African securities to be transferred from
the Old Mutual Main Fund to the Master Trust.
QUALIFYING SHARES means Shares that are (i) sold in the Initial Offering or
Second Offering, and (ii) continuously outstanding through the third anniversary
of the Initial Closing.
REDEMPTION FEE means a redemption fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds.
S.A. RAND means South African rand, the currency of South Africa.
SECOND OFFERING means the offer for up to 6 months after the Initial Closing of
Shares at a price equal to their net asset value plus a sales charge of 0.25% of
the offering price.
SHAREHOLDERS means the registered holders of Shares.
SHARES means the shares of beneficial interest of the OMEGA South Africa Fund.
TRANSFER AGENT means State Street Bank and Trust Company, as transfer agent for
the OMEGA South Africa Fund.
32
<PAGE> 38
EXHIBIT A
Set forth below are the securities to be included in the Portfolio. The
weighting of these holdings may be adjusted prior to the Initial Closing.
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
ANGLO AMERICAN CORPORATION OF SA LTD........... Mining Houses 5.0
BARLOW LTD..................................... Industrial Holding 5.0
CG SMITH LTD................................... Industrial Holding 5.0
DE BEERS CONSOLIDATED MINES LTD................ Diamonds 5.0
NEDCOR LTD..................................... Banks & Financial Services 5.0
SOUTH AFRICAN BREWERIES LTD.................... Beverages, Hotels & Leisure 5.0
SAFMARINE AND RENNIES HOLDINGS
LTD.......................................... Industrial Holding 5.0
STANDARD BANK INVESTMENT CORP
LTD.......................................... Banks & Financial Services 5.0
SASOL LTD...................................... Chemicals, Oils & Plastics 4.8
REMBRANDT GROUP LTD............................ Industrial Holding 4.3
ANGLOVAAL LTD*................................. Mining Houses 4.2
WOOLTRU LTD*................................... Stores 3.4
GENCOR LTD..................................... Mining Houses 3.0
ANGLOVAAL INDUSTRIES LTD....................... Industrial Holding 2.8
REUNERT LTD.................................... Electronics & Electrical 2.4
GOLD FIELDS OF SA LTD.......................... Mining Houses 2.2
LYDENBURG PLATINUM LTD......................... Platinum 2.0
SAPPI LTD...................................... Paper & Packaging 1.9
RAND MINES LTD................................. Mining Houses 1.9
ISCOR LTD...................................... Steel & Allied 1.8
TRENCOR LTD.................................... Transportation 1.6
FOSCHINI LTD................................... Stores 1.6
ANGLO AMERICAN COAL CORP LTD................... Coal 1.6
JOHNNIES INDUSTRIAL CORPORATION
LTD.......................................... Industrial Holding 1.5
AFRICAN OXYGEN LTD............................. Engineering 1.1
JCI LTD........................................ Mining Houses 1.0
ANGLO AMERICAN PLATINUM CORPORATION LTD........ Mining Houses 1.0
DRIEFONTEIN CONSOLIDATED LTD................... Gold 0.8
GENBEL INVESTMENTS LTD......................... Investment Trusts 0.8
LIBERTY LIFE ASSOCIATION OF AFRICA LTD......... Insurance 0.7
MIDDLE WITWATERSRAND (WESTERN AREAS) LTD....... Mining Holding 0.7
ENGEN LTD...................................... Chemicals, Oils & Plastics 0.7
SAMANCOR LTD................................... Manganese 0.7
JD GROUP LTD................................... Furniture & Household 0.7
CG SMITH FOODS LTD............................. Food 0.7
IMPALA PLATINUM HOLDINGS LTD................... Platinum 0.7
</TABLE>
33
<PAGE> 39
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
ANGLO ALPHA LTD................................ Building, Construction, Allied 0.6
BIDVEST GROUP LTD**............................ Industrial Holding 0.6
AECI LTD....................................... Chemicals, Oils & Plastics 0.6
MUTUAL & FEDERAL INSURANCE CO LTD.............. Insurance 0.6
MURRAY & ROBERTS HOLDINGS LTD.................. Industrial Holding 0.5
TIGER OATS LTD................................. Food 0.5
ALLIED ELECTRONICS CORPORATION
LTD.......................................... Electronics & Electrical 0.5
NAMPAK LTD..................................... Paper & Packaging 0.4
OMNI MEDIA CORPORATION LTD..................... Printing & Publishing 0.4
INVESTEC HOLDINGS LTD.......................... Banks & Financial Services 0.4
EVERITE HOLDINGS LTD........................... Building, Construction, Allied 0.4
MALBAK LTD..................................... Industrial Holding 0.4
SENTRACHEM LTD................................. Chemicals, Oils & Plastics 0.4
IMPERIAL HOLDINGS LTD.......................... Industrial Holding 0.4
METROPOLITAN LIFE LTD.......................... Insurance 0.4
ASSOCIATED ORE AND METAL CORP LTD.............. Mining Holding 0.3
AMALGAMATED BANKS OF SA LTD.................... Banks & Financial Services 0.3
IBM SOUTH AFRICA GROUP LTD..................... Electronics & Electrical 0.3
GRINTEK LTD.................................... Electronics & Electrical 0.3
SOUTHVAAL HOLDINGS LTD......................... Gold 0.3
VAAL REEFS EXPLORATION AND MINING CO LTD....... Gold 0.2
FORWARD CORPORATION LTD........................ Industrial Holding 0.2
FIRST NATIONAL BANK HOLDINGS LTD............... Banks & Financial Services 0.2
INDEPENDENT NEWSPAPERS HOLDINGS LTD............ Printing & Publishing 0.2
-------------
100.0
==========
</TABLE>
All holdings are of ordinary shares except for:
* "N" (restricted voting) ordinary shares
** Convertible Debenture Stock
34
<PAGE> 40
OMEGA SOUTH AFRICA FUND
INVESTMENT ADVISER
Old Mutual Asset Managers (Bermuda) Limited
Richmond House, 12 Par-la-Ville Road, Hamilton
Bermuda
PLACEMENT AGENT
S.G.Warburg & Co. Inc.
277 Park Avenue, New York, NY 10172
STRUCTURING AGENT
International Finance Corporation
1818 H. Street N.W., Washington, DC 20433
ADMINISTRATOR
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
FOR THE MASTER TRUST:
State Street Cayman Trust Company,
Ltd.
P.O. Box 2508
Elizabeth Square, George Town
Grand Cayman, British West Indies
TRANSFER AGENT
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
FOR THE OMEGA SOUTH AFRICA FUND:
KPMG Peat Marwick LLP
99 High Street, Boston, MA 02110
FOR THE MASTER TRUST:
KPMG Peat Marwick
Vallis Building, Hamilton HM 11 Bermuda
LEGAL COUNSEL
IN THE UNITED STATES:
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
IN THE UNITED KINGDOM:
Norton Rose
Kempson House, Camomile Street
London EC3A 7AN
IN BERMUDA:
Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, Bermuda
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of the Offering................. 1
Investment Objective and Policies....... 8
South Africa............................ 10
The Portfolio........................... 13
Old Mutual Main Fund.................... 13
Investment Considerations............... 14
Management.............................. 17
Valuation of Shares..................... 20
Offering of Shares...................... 20
Redemptions............................. 23
Liquidity Facility and the Global
Fund.................................. 23
Tax Matters............................. 24
ERISA Matters........................... 27
General Information..................... 27
Additional Information.................. 30
Glossary................................ 31
</TABLE>
<PAGE> 41
PART B
Item 10. Cover Page.
Not applicable.
Item 11. Table of Contents.
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information and History . . . . . . . . . . . . . . . . . . B-1
Investment Objective and Policies . . . . . . . . . . . . . . . . . B-1
Management of the Fund . . . . . . . . . . . . . . . . . . . . . . . B-12
Control Persons and Principal Holders of Securities . . . . . . . . B-14
Investment Advisory and Other Services . . . . . . . . . . . . . . . B-15
Brokerage Allocation and Other Practices . . . . . . . . . . . . . . B-22
Capital Stock and Other Securities . . . . . . . . . . . . . . . . . B-23
Purchase, Redemption and Pricing of Securities . . . . . . . . . . . B-26
Tax Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-30
Underwriters . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-32
Calculation of Performance Data . . . . . . . . . . . . . . . . . . B-32
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . B-33
</TABLE>
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objective and Policies.
Part A contains additional information about the investment objective and
policies of Old Mutual Equity Growth Assets South Africa Fund (the "OMEGA South
Africa Fund"). Rather than directly acquire and manage its own portfolio of
securities, the OMEGA South Africa Fund will invest all of its investable assets
in Old Mutual South Africa Equity Trust (the "Master Trust"), a Massachusetts
trust that has the same investment objective as the OMEGA South Africa Fund. All
references in this Part B to the "Fund" apply to both the OMEGA South Africa
Fund and the Master Trust, except as otherwise indicated. This Part B should be
read in conjunction with Part A.
The investment objective of the Fund is long-term total return in excess of
that of The Johannesburg Stock Exchange ("JSE") Actuaries All Share Index from
investment in equity
<PAGE> 42
securities of South African issuers. Of course, there can be no assurance that
the Fund will achieve its investment objective.
Part A contains a discussion of the various types of securities in which the
Fund may invest and the risks involved in such investments. The following
supplements the information contained in Part A concerning the investment
objective, policies and techniques of the Fund.
The OMEGA South Africa Fund will seek to achieve its investment objective by
investing all of its investable assets in the Master Trust. The Master Trust
will seek to achieve its investment objective by investing in equity securities
of South African issuers. Under normal circumstances, at least 95% of the Master
Trust's total assets will be invested in equity securities of South African
issuers that are listed on a securities exchange. The Master Trust may invest up
to 5% of its total assets in securities that are, at the time of the investment,
not listed on a securities exchange (although such investments will generally be
limited to securities that are expected to be listed on an exchange within a
reasonable period of time).
In managing the Master Trust's assets, Old Mutual Asset Managers (Bermuda)
Limited, the adviser to the Master Trust (the "Adviser"), will not speculate for
short-term gain but will focus on securities that, in the Adviser's opinion, are
likely to show long-term improvements in profits and cash flow. Less weight will
be accorded to short-term and cyclical factors. This approach is designed to
result in strong dividend growth and capital appreciation. Historically, South
African issuers have retained a high proportion of earnings and, if this policy
continues, it is likely that any long-term total return would largely be in the
form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common stock
and securities that participate in profits in a similar manner to common stock.
Equity securities may be purchased in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
The investment objective of the OMEGA South Africa Fund may not be changed
materially except by a majority vote of shareholders of the OMEGA South Africa
Fund ("Shareholders").
The Master Trust has undertaken to the OMEGA South Africa Fund and to Old
Mutual South Africa Growth Assets Fund Limited, a Bermuda mutual fund that will
also
B-2
<PAGE> 43
invest all of its investable assets in the Master Trust (the "Non-U.S. Fund"),
that it will not make any material change to its investment objective or to its
investment policies described in the Private Placement Memorandum included in
Part A under "INVESTMENT OBJECTIVE AND POLICIES -- Investment Policies" except
in unforeseen circumstances and with the approval of a majority vote of the
Shareholders and a majority vote of shareholders of the Non-U.S. Fund.
Except as otherwise indicated, the investment policy and restrictions of the
OMEGA South Africa Fund and the investment restrictions of the Master Trust may
be changed without Shareholder approval and without the approval of holders of
interests in the Master Trust.
The percentage limitations set forth above, as well as those described
elsewhere in this Part B and in the Fund's registration statement under the
Investment Company Act of 1940, as amended (the "1940 Act"), are measured and
applied only at the time an investment is made or another relevant action is
taken by the Fund.
REPURCHASE AGREEMENTS
The Fund may invest in repurchase agreements collateralized by securities in
which the Fund may otherwise invest. Repurchase agreements are agreements by
which the Fund purchases a security and simultaneously commits to resell that
security to the seller at an agreed-upon date within a number of days (usually
not more than seven) from the date of purchase. The resale price reflects the
purchase price plus an agreed-upon market rate of interest which is unrelated to
the coupon rate or maturity of the purchased security. A repurchase agreement
involves the obligation of the seller to pay the agreed upon price, which
obligation is in effect secured by the value of the underlying security. Under
the 1940 Act, repurchase agreements may be considered to be loans by the buyer.
The Fund's risk is limited to the ability of the seller to pay the agreed-upon
amount on the delivery date. If the seller defaults, the underlying security
constitutes collateral for the seller's obligation to pay, although the Fund may
incur certain costs in liquidating this collateral and in certain cases may not
be permitted to liquidate this collateral. All repurchase agreements entered
into by the Fund are fully collateralized, with such collateral being marked to
market daily.
CURRENCY EXCHANGE TRANSACTIONS
Because the Fund may buy and sell securities denominated in South African
Rand ("S.A. Rand") and other currencies other than the U.S. dollar, and receive
interest, dividends and sale proceeds in currencies other than the U.S. dollar,
the Fund may enter into currency exchange transactions to convert U.S. currency
to non-U.S. currency and non-U.S. currency to U.S. currency, as well as convert
one non-U.S. currency to another non-U.S. currency. The Fund either enters into
these transactions on a spot (i.e., cash) basis at the spot rate
B-3
<PAGE> 44
prevailing in the currency exchange markets, or uses forward contracts to
purchase or sell non-U.S. currencies. The Fund may also enter into currency
hedging transactions in an attempt to protect the value of its assets as
measured in U.S. dollars from unfavorable changes in currency exchange rates and
control regulations. (Although the Fund's assets are valued daily in terms of
U.S. dollars, the Fund does not intend to convert its holdings of non-U.S.
currencies into U.S. dollars on a daily basis.) The Fund does not currently
intend to speculate in currency exchange rates or forward contracts.
The Fund may convert currency on a spot basis from time to time, and
investors should be aware of the costs of currency conversion. Although currency
exchange dealers do not charge a fee for conversion, they do realize a profit
based on the difference (the "spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
currency at one rate, while offering a lesser rate of exchange should the Fund
desire to resell that currency to the dealer.
A forward contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract, agreed upon by the parties, at a price set at the time of the
contract. These contracts are traded in the interbank market conducted directly
between currency traders (usually large commercial banks) and their customers. A
forward contract generally has no deposit requirement, and no fees or
commissions are charged at any stage for trades.
When the Fund enters into a contract for the purchase or sale of a security
denominated in a non-U.S. currency, it may desire to "lock in" the U.S. dollar
price of the security. By entering into a forward contract for the purchase or
sale, for a fixed amount of U.S. dollars, of the amount of non-U.S. currency
involved in the underlying security transaction, the Fund will be able to
protect against a possible loss resulting from an adverse change in the
relationship between the U.S. dollar and the non- U.S. currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
While the Fund does not intend to engage in currency hedging, it reserves
the right to do so. For example, when the Adviser believes that the S.A. Rand
may suffer a substantial decline against the U.S. dollar, the Fund may enter
into a forward contract to sell, for a fixed amount of U.S. dollars, the amount
of S.A. Rand approximating the value of some or all of the Fund's securities
denominated in S.A. Rand. The precise matching of the forward contract amounts
and the value of the securities involved is not generally possible since the
future value of such securities in non-U.S. currencies changes as a consequence
of market movements in the value of those securities between the date the
forward contract is entered into and the date it matures. The projection of a
short-term hedging strategy is highly uncertain. The Fund does not enter into
such forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts obligates the Fund to deliver an
B-4
<PAGE> 45
amount of non-U.S. currency in excess of the value of the Fund's securities or
other assets denominated in that currency.
The Fund generally would not enter into a forward contract with a term
greater than one year. At the maturity of a forward contract, the Fund will
either sell the security and make delivery of the non-U.S. currency, or retain
the security and terminate its contractual obligation to deliver the non-U.S.
currency by purchasing an "offsetting" contract with the same currency trader
obligating it to purchase, on the same maturity date, the same amount of the
non-U.S. currency. If the Fund retains the security and engages in an offsetting
transaction, the Fund will incur a gain or a loss (as described below) to the
extent that there has been movement in forward contract prices. If the Fund
engages in an offsetting transaction, it may subsequently enter into a new
forward contract to sell the non-U.S. currency. Should forward prices decline
during the period between the date the Fund enters into a forward contract for
the sale of the non-U.S. currency and the date it enters into an offsetting
contract for the purchase of such currency, the Fund will realize a gain to the
extent the selling price of the currency exceeds the purchase price of the
currency. Should forward prices increase, the Fund will suffer a loss to the
extent that the purchase price of the currency exceeds the selling price of the
currency.
It is impossible to forecast with precision the market value of the Fund's
securities at the expiration of a forward contract. Accordingly, it may be
necessary for the Fund to purchase additional non-U.S. currency on the spot
market if the market value of the security is less than the amount of non-U.S.
currency the Fund is obligated to deliver and if a decision is made to sell the
security and make delivery of such currency. Conversely, it may be necessary to
sell on the spot market some of the non- U.S. currency received upon the sale of
the security if its market value exceeds the amount of such currency the Fund is
obligated to deliver.
The Fund may also purchase put options on S.A. Rand and other non-U.S.
currencies in order to protect against currency rate fluctuations. If the Fund
purchases a put option on a non-U.S. currency and the value of the U.S. currency
declines, the Fund will have the right to sell the non-U.S. currency for a fixed
amount in U.S. dollars and will thereby offset, in whole or in part, the adverse
effect on the Fund which otherwise would have resulted. Conversely, where a rise
in the U.S. dollar value of another currency is projected, and where the Fund
anticipates investing in securities traded in such currency, the Fund may
purchase call options on the non-U.S. currency.
The purchase of such options could offset, at least partially, the effects
of adverse movements in exchange rates. However, the benefit to the Fund from
purchases of non-U.S. currency options will be reduced by the amount of the
premium and related transaction costs. In addition, where currency exchange
rates do not move in the direction or to the extent anticipated, the Fund could
sustain losses on transactions in non-U.S. currency options which
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would require it to forgo a portion or all of the benefits of advantageous
changes in such rates.
The Fund may write options on S.A. Rand and other non-U.S. currencies for
hedging purposes or otherwise to achieve its investment objectives. For example,
where the Fund anticipates a decline in the value of the U.S. dollar value of a
South African security due to adverse fluctuations in exchange rates it could,
instead of purchasing a put option, write a call option on S.A. Rand. If the
expected decline occurs, the option will most likely not be exercised, and the
diminution in value of the security held by the Fund will be offset by the
amount of the premium received.
Similarly, instead of purchasing a call option to hedge against an
anticipated increase in the cost of a South African security to be acquired
because of an increase in the U.S. dollar value of the S.A. Rand the Fund could
write a put option on the S.A. Rand which, if rates move in the manner
projected, will expire unexercised and allow the Fund to hedge such increased
cost up to the amount of the premium. However, the writing of a currency option
will constitute only a partial hedge up to the amount of the premium, and only
if rates move in the expected direction. If this does not occur, the option may
be exercised and the Fund would be required to purchase or sell the underlying
currency at a loss which may not be offset by the amount of the premium. Through
the writing of options on currencies, the Fund also may be required to forgo all
or a portion of the benefits which might otherwise have been obtained from
favorable movements in exchange rates.
Put and call options on S.A. Rand written by the Fund will be covered by
segregation of cash, short-term money market instruments or high quality debt
securities in an account with the custodian in an amount sufficient to discharge
the Fund's obligations with respect to the option, by acquisition of the
non-U.S. currency or of a right to acquire such currency (in the case of a call
option) or the acquisition of a right to dispose of the currency (in the case of
a put option), or in such other manner as may be in accordance with the
requirements of any exchange on which, or the counterparty with which, the
option is traded and applicable laws and regulations.
The Fund's dealings in non-U.S. currency contracts are limited to the
transactions described above. Of course, the Fund is not required to enter into
such transactions and does not do so unless deemed appropriate by the Adviser.
These methods of protecting the value of the Fund's securities against a decline
in the value of a currency do not eliminate fluctuations in the underlying
prices of the securities. Additionally, although such contracts tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they also
tend to limit any potential gain which might result should the value of such
currency increase.
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Prior to entering into forward contracts, the Fund will establish procedures
consistent with policies of the Securities and Exchange Commission (the "SEC")
concerning forward contracts. Since those policies currently recommend that an
amount of the Fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, the Fund expects always to have
cash, cash equivalents or high quality debt securities available sufficient to
cover any commitments under these contracts or to limit any potential risk.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to generate
income, the Fund may lend its securities to broker-dealers and other
institutional borrowers. Such loans will usually be made only to member banks of
the U.S. Federal Reserve System and to member firms of the New York Stock
Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. The Fund would have the right to call a
loan and obtain the securities loaned at any time on customary industry
settlement notice (which will not usually exceed five days). During the
existence of a loan, the Fund would continue to receive the equivalent of the
interest or dividends paid by the issuer on the securities loaned and would also
receive compensation based on investment of the collateral. The Fund would not,
however, have the right to vote any securities having voting rights during the
existence of the loan, but would call the loan in anticipation of an important
vote to be taken among holders of the securities or of the giving or withholding
of their consent on a material matter affecting the investment. As with other
extensions of credit, there are risks of delay in recovery or even loss of
rights in the collateral should the borrower fail financially. However, the
loans would be made only to entities deemed by the Adviser to be of good
standing, and when, in the judgment of the Adviser, the consideration which can
be earned currently from loans of this type justifies the attendant risk. If the
Adviser determines to make loans, it is not intended that the value of the
securities loaned by the Fund would exceed 33 1/3% of the value of its net
assets.
WHEN-ISSUED SECURITIES
The Fund may purchase securities on a "when-issued" or on a "forward
delivery" basis. It is expected that, under normal circumstances, the Fund would
take delivery of such securities. When the Fund commits to purchase a security
on a "when-issued" or on a "forward delivery" basis, it sets up procedures
consistent with SEC policies. Since those policies currently require that an
amount of the Fund's assets equal to the amount of the purchase be held aside or
segregated to be used to pay for the commitment, the Fund will always have cash,
cash equivalents or high quality debt securities sufficient to cover any
commitments or to limit any potential risk. However, even though the Fund does
not intend
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to make such purchases for speculative purposes and intends to adhere to the
provisions of SEC policies, purchases of securities on such bases may involve
more risk than other types of purchases. For example, the Fund may have to sell
assets which have been set aside in order to meet redemptions. Also, if the
Adviser determines it is advisable as a matter of investment strategy to sell
the "when-issued" or "forward delivery" securities, the Fund would be required
to meet its obligations from the then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from the sale of
the "when-issued" or "forward delivery" securities themselves (which may have a
value greater or less than the Fund's payment obligation).
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
Each of the OMEGA South Africa Fund and the Master Trust has adopted the
following fundamental restrictions, which may not be changed without approval by
holders of a majority of the outstanding voting securities of the OMEGA South
Africa Fund or the Master Trust, which as used in this Part B means the vote of
the lesser of (i) 67% or more of the outstanding voting securities of the OMEGA
South Africa Fund or the Master Trust present at a meeting at which the holders
of more than 50% of the outstanding voting securities of the OMEGA South Africa
Fund or the Master Trust are present or represented by proxy, or (ii) more than
50% of the outstanding voting securities of the OMEGA South Africa Fund or the
Master Trust. The term "voting securities" as used in this paragraph has the
same meaning as in the 1940 Act. The fundamental restrictions are that:
(i) Each of the OMEGA South Africa Fund and the Master Trust may not borrow
money, except that as a temporary measure for extraordinary or emergency
purposes it may borrow from banks and enter into reverse repurchase agreements
in an amount not to exceed 33 1/3% of the current value of its net assets,
including the amount borrowed (and each of the OMEGA South Africa Fund and the
Master Trust may not purchase any securities at any time at which borrowings
exceed 5% of its total assets, taken at market value). It is intended that the
each of the OMEGA South Africa Fund and the Master Trust will borrow money only
from banks and only to accommodate requests for the repurchase of shares or
interests while effecting an orderly liquidation of portfolio securities.
(ii) Each of the OMEGA South Africa Fund and the Master Trust may not make
short sales of securities or purchase securities on margin, except that each of
the OMEGA South Africa Fund and the Master Trust may purchase and sell various
types of futures contracts and may obtain short term credits as necessary for
the clearance of security transactions.
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(iii) Each of the OMEGA South Africa Fund and the Master Trust may not
underwrite securities issued by other persons, except that the OMEGA South
Africa Fund may invest all of its investable assets in the Master Trust and
except to the extent that it may be considered an underwriter within the meaning
of the Securities Act of 1933, as amended (the "1933 Act"), in the disposition
of securities that are considered restricted under the 1933 Act.
(iv) Each of the OMEGA South Africa Fund and the Master Trust may not make
loans to other persons except (a) through the lending of its portfolio
securities, but not in excess of 33 1/3% of its net assets, (b) through the use
of fixed time deposits or repurchase agreements or the purchase of short-term
obligations or (c) by purchasing all or a portion of an issue of debt
securities; for the purposes of this paragraph (iv) the purchase of short-term
commercial paper or a portion of an issue of debt securities which are part of
an issue to the public shall not be considered the making of a loan.
(v) Each of the OMEGA South Africa Fund and the Master Trust may not
purchase or sell real estate (including limited partnership interests but
excluding securities secured by real estate or interests therein), interests in
oil, gas or mineral leases, commodities or commodity contracts in the ordinary
course of business, except that (a) each of the OMEGA South Africa Fund and the
Master Trust may purchase and sell mortgage-related securities and may hold and
sell real estate acquired as a result of the ownership of securities by it and
(b) each of the OMEGA South Africa Fund and the Master Trust may engage in
currency hedging and invest in derivative securities to the extent provided in
Parts A and B of this Registration Statement.
(vi) Each of the OMEGA South Africa Fund and the Master Trust may not issue
any senior security (as that term is defined in the 1940 Act) if such issuance
is specifically prohibited by the 1940 Act or the rules and regulations
promulgated thereunder, except as appropriate to evidence a debt incurred
without violating fundamental investment restriction (i) above.
(vii) Each of the OMEGA South Africa Fund and the Master Trust may not
invest 25% or more of its assets in securities of issuers in any one industry
(other than securities or obligations issued or guaranteed by the United States
government or any agency or instrumentality thereof and other than the OMEGA
South Africa Fund's investment in the Master Trust).
FEDERAL AND STATE RESTRICTIONS
In order to comply with certain statutes and policies each of the OMEGA
South Africa Fund and the Master Trust will as a matter of operating policy
ensure that:
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(i) It does not purchase securities issued by any investment company
registered under the 1940 Act, except by purchase in the open market where no
commission or profit to a sponsor or dealer results from such purchase other
than the customary broker's commission, or except when such purchase, though not
made in the open market, is part of a plan of merger or consolidation; provided,
however, that (a) each of the OMEGA South Africa Fund and the Master Trust will
not purchase the securities of any registered investment company if such
purchase at the time thereof would cause more than 10% of the total assets of
the OMEGA South Africa Fund and the Master Trust (taken at the greater of cost
or market value) to be invested in the securities of such issuers or would cause
more than 3% of the outstanding voting securities of any such issuer to be held
by the OMEGA South Africa Fund and the Master Trust and (b) the restrictions in
this paragraph (i) do not apply to the OMEGA South Africa Fund's investment in
the Master Trust.
(ii) It does not invest more than 15% of its net assets in securities that
are not readily marketable or which are subject to legal or contractual
restrictions on resale, including debt securities for which there is no
established market and fixed time deposits and repurchase agreements maturing in
more than seven days, except that all of the investable assets of the OMEGA
South Africa Fund may be invested in the Master Trust.
(iii) At least 50% of its total assets are represented by cash, securities
of other investment companies, and other securities not exceeding with respect
to any issuer 5% of the assets of the OMEGA South Africa Fund and the Master
Trust or 10% of the outstanding securities of such issuer, except that all of
the investable assets of the OMEGA South Africa Fund may be invested in the
Master Trust.
(iv) Not more than 25% of its assets will be invested in securities of any
one issuer, except that all of the investable assets of the OMEGA South Africa
Fund may be invested in the Master Trust.
These restrictions may be changed by the Trustees of the OMEGA South Africa
Fund or the Master Trust without the approval of Shareholders or holders of
beneficial interest in the Master Trust in response to changes in applicable
statutes and policies.
IRISH STOCK EXCHANGE RESTRICTIONS
The Master Trust has adopted investment restrictions in compliance with the
rules of the Irish Stock Exchange and has undertaken to the Non-U.S. Fund and
the OMEGA South Africa Fund not to change these restrictions for so long as the
shares of the Non-U.S. Fund are listed on the Irish Stock Exchange. These
restrictions are that:
(i) no more than 20% of the gross assets of the Master Trust may be lent
to or invested in the securities of any one issuer;
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(ii) the Master Trust will not take legal or management control of
investments in its portfolio;
(iii) not more than 10% of the gross assets of the Master Trust will be
invested in physical commodities;
(iv) not more than 10% of the gross assets of the Master Trust will be
invested in real estate;
(v) the Master Trust will not engage in any property development
activity;
(vi) the Master Trust will adhere to the principle of diversification in
relation to any derivative investments;
(vii) the Master Trust will not make any investment which would expose it
to unlimited liability, including participation in an unlimited partnership;
(viii) the Master Trust will only enter into underwriting or
sub-underwriting contracts to a limited extent and incidental to the investment
activities of the Master Trust; and
(ix) the Master Trust will not have a net exposure to a single financing
counterparty that exceeds 20% of its gross assets.
PERCENTAGE AND RATING RESTRICTIONS
If a percentage or rating restriction on investment or utilization of assets
set forth above or referred to in Part A is adhered to at the time an investment
is made or assets are so utilized, a later change in percentage resulting from
changes in the value of the securities will not be considered a violation of the
restriction.
PORTFOLIO TURNOVER
The Master Trust, in which the OMEGA South Africa Fund invests, will sell
securities whenever the Adviser believes that an issuer's long-term potential to
increase its cash flow and dividends has been reduced or if cash is needed to
invest in issuers which have better long-term growth potential, without regard
to the length of time the securities have been held. The Adviser does not intend
to pursue short-term trading opportunities. The turnover rate of the Master
Trust is not expected to exceed 25% annually. Specific decisions to purchase or
sell securities for the Master Trust are made by a portfolio manager who is an
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employee of the Adviser and who is appointed and supervised by its senior
officers. The portfolio manager may serve other clients of the Adviser in a
similar capacity.
Item 14. Management of the Fund.
The Trustees and officers of the OMEGA South Africa Fund and the Master
Trust and their principal occupations during the past five years are set forth
below. Their titles may have varied during that period. Asterisks indicate that
those Trustees and officers are "interested persons" (as defined in the 1940
Act) of the OMEGA South Africa Fund and the Master Trust.
TRUSTEES
*MICHAEL JOHN LEVETT, South African (aged 56), serves as Chairman of the
Board of Trustees and President of the OMEGA South Africa Fund and the Master
Trust and as Chairman of the Board of Directors of the Non-U.S. Fund. He is also
Chairman of the Board of Directors of the Adviser and Old Mutual Global Assets
Fund Limited (the "Global Fund"). Mr. Levett has been Chairman and Managing
Director of South African Mutual Life Assurance Society ("Old Mutual") since
1990 and Managing Director since 1985. He has held, and continues to hold, a
number of non-executive directorships, including South African Breweries
Limited, Barlow Limited, an industrial holding company. His address is
Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 72), serves as
Deputy Chairman of the Board of Trustees of the OMEGA South Africa Fund and the
Master Trust and as Deputy Chairman of the Board of Directors of the Non-U.S.
Fund. Mr. Beck acts as a business consultant. He has been a non-executive
director of the South African Reserve Bank since 1982 and was, until his
retirement in 1978, Group Chairman of the Mobil Companies in South Africa. Mr.
Beck was a director of Old Mutual between 1988 and 1994. His address is P.O. Box
4854, Cape Town 8000, South Africa.
WILLIAM LESTER BOYAN, American (aged 58), serves as a trustee of the OMEGA
South Africa Fund and the Master Trust and as a director of the Non-U.S. Fund.
Mr. Boyan has been a director of John Hancock Mutual Life Insurance Company
since 1983 and was appointed as President and Chief Operations Officer in 1992.
His address is John Hancock Place, Boston, Massachusetts.
THOMAS HASKINS DAVIS, Bermudian (aged 47), serves as a trustee of the OMEGA
South Africa Fund and the Master Trust and as a director of the Non-U.S. Fund.
Mr. Davis is President and Chief Executive Officer of Winchester Global Trust
Company Limited. He was President of Mid-Ocean Trust Company Limited from 1994
to 1995 and was Manager
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Corporate Trust at Bank of Bermuda from 1979 to 1993. His address is Williams
House, 20 Reid Street, Hamilton, Bermuda.
MICHAEL JOHN DREW, Bermudian (aged 59), serves as a trustee of the OMEGA
South Africa Fund and the Master Trust and as a director of the Non-U.S. Fund.
Mr. Drew has been President and Chief Executive Officer of International
Services Limited, a corporate services operation, since its inception in 1977.
In 1969 he established Schroders (Bermuda) Limited, the principal operating
subsidiary in Bermuda of Schroders plc, the London merchant banking house, and
acted as Chief Executive Officer until his retirement in 1994, having been
elected a director in 1993, and President in 1991. His address is 22 Church
Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 52), serves as Treasurer and as a
trustee of the OMEGA South Africa Fund and the Master Trust, as Treasurer and as
a director of the Non-U.S. Fund, and as a director of the Global Fund. Mr.
Langley also is the President and a director of the Adviser. Mr. Langley has
been a member of the general management of Old Mutual since 1981. His address is
Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
KENNETH RIGBY WILLIAMS, British (aged 59), serves as a trustee of the OMEGA
South Africa Fund and the Master Trust and as a director of the Non-U.S. Fund.
Mr. Williams was executive Chairman of Westgate Overseas Limited, an
international investment company, from 1986 to his retirement in 1994. He holds
non-executive directorships with Charles Baynes plc, a company engaged in
distribution and engineering, and Hudaco Industries Limited, a South African
distributor of industrial consumable goods, and was a director of South African
Breweries Limited from 1973 to 1994. Mr. Williams also currently serves as a
director of John Lusty plc, a food distribution company. His address is Hallams
Court, Littleford Land, Blackheath, Guildford, Surrey, United Kingdom.
OFFICERS
*MICHAEL JOHN LEVETT serves as Chairman of the Board of Trustees and
President of the OMEGA South Africa Fund and the Master Trust.
*WILLIAM FRANCOIS DE LA HARPE BECK serves as Deputy Chairman of the Board of
Trustees of the OMEGA South Africa Fund and the Master Trust.
*WILLIAM LANGLEY serves as Treasurer of the OMEGA South Africa Fund and the
Master Trust.
*JOHN CHARLES ROSS COLLIS, Bermudian (aged 37), serves as Secretary of the
OMEGA South Africa Fund, the Non-U.S. Fund and the Master Trust. He is also the
Secretary and a director of the Global Fund and the Adviser. Mr. Collis is a
barrister/attorney
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and is a partner in the law firm of Conyers Dill & Pearman (Bermuda). Conyers
Dill & Pearman serves as the Bermudian legal counsel to the Adviser, the OMEGA
South Africa Fund, the Non-U.S. Fund and the Master Trust. As a result of his
position as legal counsel to certain companies and in order to fulfill Bermuda
law requirements, Mr. Collis serves as the director of numerous Bermuda-
incorporated companies. His address is Clarendon House, Church Street, Hamilton,
Bermuda.
The declaration of trust of each of the OMEGA South Africa Fund and the
Master Trust provides that it will indemnify its Trustees and officers against
liabilities and expenses incurred in connection with litigation in which they
may be involved because of their offices with the OMEGA South Africa Fund or the
Master Trust, unless, as to liability to the OMEGA South Africa Fund or the
Master Trust or its investors, it is finally adjudicated that they engaged in
willful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in their offices, or unless with respect to any matter it is
finally adjudicated that they did not act in good faith in the reasonable belief
that their actions were in the best interests of the OMEGA South Africa Fund or
the Master Trust. In the case of settlement, such indemnification will not be
provided unless it has been determined by a court or other body approving the
settlement or other disposition, or by a reasonable determination, based upon a
review of readily available facts, by vote of a majority of disinterested
Trustees or in a written opinion of independent legal counsel, that such
officers or Trustees have not engaged in willful misfeasance, bad faith, gross
negligence or reckless disregard of their duties.
Item 15. Control Persons and Principal Holders of Securities.
On November 3, 1995 Old Mutual transferred to the Master Trust a portfolio
of South African securities having a market value of approximately U.S.$1
billion. In addition, Old Mutual made a cash capital contribution to the Master
Trust of U.S.$4.75 million. As consideration for the portfolio of South African
securities and the capital contribution, the Master Trust issued substantially
all of its beneficial interest to Old Mutual Fund Holdings (Bermuda) Limited
("Old Mutual Bermuda"), a company organized under the laws of Bermuda that is a
wholly-owned subsidiary of Old Mutual. At the closing of the initial offering
(the "Initial Offering") of the shares of beneficial interest ("Shares") of the
OMEGA South Africa Fund (the "Initial Closing"), which is expected to be held on
November 10, 1995, the OMEGA South Africa Fund will invest the proceeds of the
Initial Offering in the Master Trust and will be issued a proportionate
beneficial interest in the Master Trust. The Master Trust will apply the
proceeds to redeem a corresponding portion of the interest of Old Mutual Bermuda
in the Master Trust. Prior to the Initial Closing, Old Mutual Bermuda will hold
at least 99% of the beneficial interest in the Master Trust. The address of Old
Mutual Bermuda is 61 Front Street, Hamilton, Bermuda.
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At the Initial Closing the Master Trust will also issue a portion of its
beneficial interest to the Non-U.S. Fund. Upon completion of the Initial
Closing, the Non-U.S. Fund may own more than 25% of the beneficial interest in
the Master Trust. The address of the Non-U.S. Fund is Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda.
As a result of the interests of Old Mutual Bermuda and the Non-U.S. Fund in
the Master Trust, the OMEGA South Africa Fund and the Shareholders may be unable
to amend the declaration of trust of the Master Trust, or cause the Master Trust
to take or omit various actions, without the consent of Old Mutual Bermuda
and/or the Non-U.S. Fund. The Master Trust has undertaken to the OMEGA South
Africa Fund and to the Non-U.S. Fund that it will not make any material change
to its investment objective or to its investment policies described in the
Private Placement Memorandum included in Part A under "INVESTMENT OBJECTIVE AND
POLICIES -- Investment Policies" except in unforeseen circumstances and with the
approval of a majority vote of the Shareholders and a majority vote of
shareholders of the Non-U.S. Fund.
In addition, the Master Trust has undertaken to the OMEGA South Africa Fund
and the Non-U.S. Fund not to change the restrictions described in Item 13 under
"Investment Restrictions -- Irish Stock Exchange Restrictions" for so long as
the shares of the Non-U.S. Fund are listed on the Irish Stock Exchange. As a
result of this undertaking, the OMEGA South Africa Fund and the Shareholders may
be unable to change those restrictions even if the OMEGA South Africa Fund holds
a majority of the beneficial interest in the Master Trust.
Old Mutual Investment Advisers, Inc., a subsidiary of Old Mutual, has
invested U.S.$100,000 in the OMEGA South Africa Fund and has been issued 1,000
Shares representing its interest in the OMEGA South Africa Fund. Trustees and
officers as a group currently own, and are expected upon completion of the
Initial Closing to own, less than one percent of the outstanding Shares.
Item 16. Investment Advisory and Other Services.
Adviser.
Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned subsidiary of
Old Mutual, is the investment adviser to the Master Trust and manages the Master
Trust's assets pursuant to an investment advisory agreement (the "Advisory
Agreement"). The OMEGA South Africa Fund will not have an investment adviser,
because it will invest all of its investable assets in the Master Trust. The
Adviser was organized in 1995 as a Bermuda company for the purpose of advising
the Master Trust and the Global Fund. The Adviser's address is 12 Par-la-Ville
Road, Hamilton, Bermuda.
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Michael John Levett, the Chairman of the Board of Trustees and the President
of the OMEGA South Africa Fund and the Master Trust, is the Chairman and
Managing Director of Old Mutual and is the Chairman of the Board and a director
of the Adviser. William Langley, the Treasurer and a trustee of the OMEGA South
Africa Fund and the Master Trust, is the President and a director of the Adviser
and is a member of the general management of Old Mutual. John Charles Ross
Collis, the Secretary of the OMEGA South Africa Fund and the Master Trust, is
the Secretary and a director of the Adviser.
The Adviser manages the Master Trust's securities and makes investment
decisions for the Master Trust subject to the organizational documents of the
Master Trust, the 1940 Act, the rules of the Irish Stock Exchange, and such
policies as the Board of Trustees may, with notice to the Adviser, establish.
The Adviser furnishes at its own expense all services, facilities and personnel
necessary or convenient in connection with managing the Master Trust's
investments and effecting securities transactions for the Master Trust. The
Advisory Agreement continues in effect until October 23, 1997 and thereafter as
long as such continuance is specifically approved at least annually by the Board
of Trustees of the Master Trust or by a vote of a majority of the outstanding
voting securities of the Master Trust, and, in either case, by vote of a
majority of the Trustees who are not interested persons of the Master Trust or
the Adviser, at a meeting called for the purpose of voting on the Advisory
Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than 60
days' nor less than 30 days' written notice by the Master Trust when authorized
either by a vote of a majority of the outstanding voting securities of the
Master Trust or by a vote of a majority of the Board of Trustees of the Master
Trust, or by the Adviser on not more than 60 days' nor less than 30 days'
written notice, and will automatically terminate in the event of its assignment.
The Advisory Agreement provides that neither the Adviser nor its personnel shall
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of security
transactions for the Master Trust, except for willful misfeasance, bad faith or
gross negligence in the performance of its or their duties or reckless disregard
of its or their obligations and duties under the Advisory Agreement.
The Adviser will have access to and benefit from investment research and
information generated and used by Old Mutual. The Adviser will be responsible
for compensating Old Mutual for research and information provided to the
Adviser.
The Master Trust will pay the Adviser a management fee of 0.85% per annum of
the Master Trust's daily net assets (the "Management Fee"). The Management Fee
will accrue daily on an annualized basis and be paid monthly in arrears. The
OMEGA South Africa
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Fund will reimburse the Adviser for certain marketing expenses incurred (or
advanced to S.G. Warburg & Co. Inc. or others) by the Adviser in the placement
of Shares, provided the amount of such reimbursements in any year will not
exceed 0.05% of average daily net assets of the OMEGA South Africa Fund for such
year.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of the Fund, including the
Management Fee, will not exceed 1.00% per annum of the Fund's daily net assets.
This limitation does not apply to (i) extraordinary expenses (such as the cost
of litigation), (ii) the placement fee and the amount payable to Old Mutual
Bermuda at the Initial Closing, (iii) sales charges on Shares, (iv) brokerage
expenses, or (v) the redemption fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds. The Adviser may not terminate its undertaking to
so reduce or rebate a portion of the Management Fee without giving at least 120
days notice to investors, provided the Adviser may terminate this undertaking at
any time without prior notice if the Adviser ceases to be investment adviser to
the Master Trust.
Administrators.
Pursuant to separate administrative services agreements (each, an
"Administrative Services Agreement"), State Street Bank and Trust Company (the
"OMEGA Fund Administrator") and State Street Cayman Trust Company, Ltd. (the
"Master Trust Administrator"), either directly or through an indirect
wholly-owned subsidiary or an affiliated entity, will provide certain
administrative, transfer agency and fund accounting services to the OMEGA South
Africa Fund and the Master Trust, respectively.
Pursuant to the respective Administrative Services Agreements, the OMEGA
Fund Administrator and the Master Trust Administrator serve as accounting agent,
registrar, transfer agent and dividend disbursing agent for each of the OMEGA
South Africa Fund and the Master Trust, and provide general administrative
services including overseeing the publication of net asset value and the
maintenance of certain books and records, preparing the U.S. federal, state and
local income tax returns, expense budgets and financial information for
semi-annual and annual reports, proxy statements and other communications,
preparing periodic financial reports and reports relating to the business and
affairs of the OMEGA South Africa Fund and the Master Trust, reporting to the
Board of Trustees of the OMEGA South Africa Fund and the Master Trust regarding
the performance of the custodian and independent public accountants, overseeing
and reviewing calculations of fees paid to the Adviser and the custodian,
helping to establish accounting policies, reviewing implementation of any
dividend reinvestment programs, responding to investor inquiries, preparing
materials for board meetings and making presentations where appropriate.
Either party to the Administrative Services Agreement with the OMEGA South
Africa Fund may, in its discretion, terminate such Agreement for any reason by
giving the
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other party at least 60 days prior written notice of termination.
Notwithstanding the foregoing, the OMEGA South Africa Fund may terminate such
Administrative Services Agreement with immediate effect by written notice to the
OMEGA Fund Administrator in the event that the Initial Closing is canceled
without postponement to a later date. The Administrative Services Agreement with
the OMEGA South Africa Fund also provides that the OMEGA Fund Administrator
shall not be liable for any loss, liability, claim or expense suffered or
incurred by the OMEGA South Africa Fund unless caused by its own fraud, willful
default, gross negligence or willful misconduct or that of its agents or
employees.
The Administrative Services Agreement with the Master Trust remains in
effect until it is terminated and may be terminated without penalty by either
party on not less than 60 days' written notice. In addition, the Master Trust
may terminate the Administrative Services Agreement if the Initial Closing is
canceled without postponement to a later date. The Administrative Services
Agreement with the Master Trust also provides that the Master Trust
Administrator shall not be liable for any loss, liability, claim or expense
suffered or incurred by the Master Trust unless caused by its own fraud, willful
default, gross negligence or willful misconduct or that of its agents or
employees.
The liability of each of the OMEGA Fund Administrator and the Master Trust
Administrator under its respective Administrative Services Agreement shall be
limited to U.S.$5 million for liabilities and losses arising in connection with
certain functions relating to tax and financial reporting, securities law
compliance and recordkeeping. This limitation on liability includes, but is not
limited to, any liability relating to qualification of the OMEGA South Africa
Fund or the Master Trust as a regulated investment company in the U.S. or any
liability relating to the OMEGA South Africa Fund's or the Master Trust's
compliance with any applicable tax or securities statute, regulation or ruling
of any jurisdiction.
The Master Trust Administrator will receive an annual administration fee
from the Master Trust calculated as a percentage of the Master Trust's assets.
The percentage will range from 0.05% to 0.01% per annum according to the average
assets of the Master Trust, as follows:
First U.S.$500 million 0.05%
Next U.S.$500 million 0.025%
Over U.S.$1 billion 0.01%
If the assets of the Master Trust total U.S.$1 billion during a year, the
effective administration fee percentage for that year will be 0.0375%. The OMEGA
South Africa Fund will pay the OMEGA Fund Administrator an annual administration
fee of U.S.$40,000.
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The Master Trust Administrator is a wholly-owned subsidiary of State Street
Bank and Trust Company.
Placement Agent.
S.G. Warburg & Co. Inc. ("S.G. Warburg" or the "Placement Agent") serves as
the exclusive placement agent for the Initial Offering on a best efforts basis
pursuant to a placing agreement (the "Placing Agreement") with the Master Trust,
the OMEGA South Africa Fund, Old Mutual, the Adviser and Old Mutual Bermuda.
S.G. Warburg's engagement as exclusive Placement Agent extends through the
Initial Offering. The OMEGA South Africa Fund may engage other placement agents
for any subsequent offerings. Unless otherwise terminated, the Placing Agreement
continues until the close of the Initial Offering. The Placing Agreement may be
terminated without penalty by a majority of the members of the Board of Trustees
of the Master Trust or the OMEGA South Africa Fund who are not interested
persons of the Master Trust or the OMEGA South Africa Fund, respectively, and
have no direct or indirect financial interest in the operation of the placement
plan adopted by the Master Trust or the OMEGA South Africa Fund or in any
agreements related to such plan, or by the vote of a majority of the outstanding
voting securities of the Master Trust or the OMEGA South Africa Fund, on not
less than 60 days' written notice to each other party to the Placing Agreement.
The Placing Agreement will automatically terminate in the event of its
assignment, as defined in the 1940 Act by S.G. Warburg.
The Master Trust will pay the Placement Agent a placement fee equal to 0.25%
of the initial offering price of the Shares sold in the Initial Offering. The
Master Trust will pay a corresponding placement fee to an affiliate of the
Placement Agent in respect of the sale of shares in the Non-U.S. Fund. The
Master Trust will also pay Old Mutual Bermuda an amount equal to 0.25% of the
value of the interest it retains in the Master Trust following the Initial
Closing. Old Mutual Bermuda may apply all or a portion of this amount to
compensate broker-dealers that assist in any subsequent placement of Shares.
Each of the OMEGA South Africa Fund and the Master Trust has agreed to indemnify
the Placement Agent against certain liabilities, including liabilities under
applicable securities laws.
The Master Trust and the OMEGA South Africa Fund have each adopted a
placement plan in accordance with Rule 12b-1 under the 1940 Act (each, a
"Placement Plan"). The Placement Plan adopted by the Master Trust provides for
the payment of the above-mentioned fees and amounts to the Placement Agent, an
affiliate of the Placement Agent and Old Mutual Bermuda. The Master Trust
Placement Plan also provides for the payment by the Master Trust of a
structuring fee at the Initial Closing to International Finance Corporation, the
structuring agent for the OMEGA South Africa Fund and the Non-U.S. Fund, not to
exceed U.S.$250,000. Furthermore, the Master Trust Placement Plan provides that
the Master Trust may reimburse the Adviser, or another party, for certain
marketing expenses incurred (or advanced to S.G. Warburg or others) in the
placement of shares of the
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OMEGA South Africa Fund and the Non-U.S. Fund, provided the amount of such
reimbursements in any year will not exceed 0.05% of the average daily net assets
of the Master Trust for such year. Under the Placement Plan, the Master Trust
may pay additional fees in connection with the placement of shares of the OMEGA
South Africa Fund and the Non-U.S. Fund as determined by the Trustees, provided
such fees for any year shall not, together with any reimbursement of expenses
under the next preceding sentence for such year, exceed 0.05% of the average
daily net assets of the Master Trust for such year.
The Placement Plan for the OMEGA South Africa Fund provides for (i) the
reimbursement of the Adviser or other persons for certain marketing expenses
incurred or advanced to others provided the amount of such reimbursements in any
year will not exceed 0.05% of the average daily net assets of the OMEGA South
Africa Fund for such year, and (ii) the payment of fees by the OMEGA South
Africa Fund in connection with the placement of Shares, in an amount for any
year that, when added to any reimbursements of marketing expenses by the OMEGA
South Africa Fund for such year, will not exceed 0.05% of the average daily net
assets of the OMEGA South Africa Fund for such year.
Each Placement Plan continues in effect if such continuance is specifically
approved at least annually by a vote of both a majority of the Trustees of the
Master Trust or the OMEGA South Africa Fund, as appropriate, and a majority of
the Trustees who are not "interested persons" of the Master Trust or of the
OMEGA South Africa Fund, as the case may be, and who have no direct or indirect
financial interest in the operation of the Placement Plan or in any agreement
related to such Plan (for purposes of this paragraph "Non-Interested Trustees").
Each Placement Plan requires that the Treasurer of the Master Trust or of the
OMEGA South Africa Fund, as appropriate, provide to the Master Trust's or the
OMEGA South Africa Fund's Board of Trustees, and the Board of Trustees review,
at least quarterly, a written report of the amounts expended (and the purposes
therefor) under the Placement Plan and any related agreement. Each Placement
Plan further provides that the selection and nomination of the Non-Interested
Trustees is committed to the discretion of the disinterested Trustees (as
defined in the 1940 Act) then in office. Each Placement Plan may be terminated
at any time by a vote of a majority of the Non-Interested Trustees or by a vote
of a majority of the outstanding voting securities of the Master Trust or of the
OMEGA South Africa Fund, as appropriate. Each Placement Plan may not be amended
to increase materially the amount of the Master Trust's or of the OMEGA South
Africa Fund's permitted expenditures thereunder without the approval of a
majority of the outstanding voting securities of the Master Trust or of the
OMEGA South Africa Fund and may not be materially amended in any case without a
vote of a majority of both the Trustees and Non-Interested Trustees of the
Master Trust or the OMEGA South Africa Fund, as the case may be. Each of the
Master Trust and the OMEGA South Africa Fund will preserve copies of its
Placement Plan and any agreements or reports made pursuant to its Placement Plan
for a period of not less than six years from the date of the Plan, and for the
first two years such agreements and reports will be maintained in an easily
accessible place.
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The Adviser (or another subsidiary of Old Mutual) will, on the third
anniversary of the Initial Closing, pay an affiliate of the Placement Agent a
servicing fee with respect to Shares that are (i) sold in the Initial Offering
or the second offering of Shares (the "Second Offering") and (ii) continuously
outstanding through the third anniversary of the Initial Closing ("Qualifying
Shares"). The servicing fee will be equal to 0.125% per annum of the proportion
of the Master Trust's daily net assets represented by the Qualifying Shares
during the period ending on such third anniversary. All or part of the servicing
fee may be reallowed to any other broker-dealers that participate in the Second
Offering. The servicing fee will not be paid by the OMEGA South Africa Fund or
the Master Trust. The servicing fee is intended to compensate the Placement
Agent and other broker-dealers engaged by the OMEGA South Africa Fund for
providing ongoing Shareholder services.
Custodian.
The OMEGA South Africa Fund and the Master Trust have each entered into
separate custodian contracts with State Street Bank and Trust Company (the
"Custodian") pursuant to which the Custodian acts as custodian for the OMEGA
South Africa Fund and for the Master Trust. The principal business address of
the Custodian is 225 Franklin Street, Boston, MA 02110.
The Custodian has entered into subcustodian agreements (each a "Subcustodian
Agreement") with Standard Bank of South Africa Limited and with State Street
London Limited (each a "Subcustodian"), pursuant to which Standard Bank of South
Africa Limited and State Street London Limited provide custodial services in
South Africa and the United Kingdom, respectively, for assets of the Master
Trust. Old Mutual holds 24.2% of the outstanding voting securities of Standard
Bank of South Africa Limited. State Street London Limited is a wholly-owned
subsidiary of State Street Bank and Trust Company. The Trustees of the Master
Trust have approved and adopted each Subcustodian Agreement and have found that
maintaining the Master Trust's assets in South Africa and the United Kingdom and
with each Subcustodian is in the best interests of the Master Trust on behalf of
its investors. Each Subcustodian will be paid, by the Custodian, such
compensation pursuant to each Subcustodian Agreement as may be mutually agreed
upon from time to time.
Structuring Agent.
International Finance Corporation (the "Structuring Agent") acted as
structuring agent for the Fund and in that capacity provided advice on the
organization of the Fund and its business arrangements. The Master Trust has
agreed to pay the Structuring Agent a structuring fee of U.S.$250,000 at the
Initial Closing. The principal address of the Structuring Agent is 1818 H.
Street N.W., Washington D.C. 20433.
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Independent Accountants.
KPMG Peat Marwick LLP are the independent public accountants for the OMEGA
South Africa Fund, providing audit services, and assistance and consultation
with respect to the preparation of filings with the SEC. The address of KPMG
Peat Marwick LLP is 99 High Street, Boston, Massachusetts 02110. KPMG Peat
Marwick, Vallis Building, Hamilton HM 11 Bermuda, are the independent public
accountants for the Master Trust.
Item 17. Brokerage Allocation and Other Practices.
The primary consideration in placing the Fund's securities transactions with
broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible. The Adviser attempts to achieve this result by selecting
broker-dealers to execute transactions on behalf of the Master Trust and other
clients of the Adviser on the basis of their professional capability, the value
and quality of their brokerage services, and the level of their brokerage
commissions. In the case of securities traded in the over-the-counter market
(where no stated commissions are paid but the prices include a dealer's markup
or markdown), the Adviser normally seeks to deal directly with the primary
market makers, unless in its opinion, best execution is available elsewhere. In
the case of securities purchased from underwriters, the cost of such securities
generally includes a fixed underwriting commission or concession. From time to
time, soliciting dealer fees may be available to the Adviser on the tender of
the Master Trust's securities in so-called tender or exchange offers. Such
soliciting dealer fees are in effect recaptured for the Master Trust by the
Adviser. At present no other recapture arrangements are in effect.
Under the Advisory Agreement, in connection with the selection of brokers or
dealers and the placing of orders for the purchase and sale of securities, the
Adviser is directed to seek for the Master Trust in its best judgment, prompt
execution in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought from
or sold to broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Master Trust, subject to any
applicable laws, rules and regulations. The Adviser will adhere to the
restrictions adopted by the Fund which are designed to address the substantial
position of Old Mutual and its wholly-owned subsidiaries in the South African
securities markets.
The Management Fee will not be reduced as a consequence of the Adviser's
receipt of brokerage and research services. While such services are not expected
to reduce the expenses of the Adviser, the Adviser would, through the use of the
services, avoid the additional expenses which would be incurred if it should
attempt to develop comparable information through its own staff.
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In certain instances there may be securities that are suitable as an
investment for the Master Trust as well as for one or more of the Adviser's
other clients. Investment decisions for the Master Trust and for the Adviser's
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could adversely affect the
price of or the size of the position obtainable for the security for the Master
Trust. When purchases or sales of the same security for the Master Trust and for
other portfolios managed by the Adviser occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large volume purchases or sales. Similar considerations apply with respect to
investment advisory services provided by Old Mutual and other affiliates of the
Adviser to their respective clients.
Item 18. Capital Stock and Other Securities.
Under the declaration of trust of the OMEGA South Africa Fund, the Trustees
of the OMEGA South Africa Fund are authorized to issue an unlimited number of
transferable Shares and may divide or combine such interests into a greater or
lesser number and may classify or reclassify any unissued Shares into one or
more series or classes of Shares. The Initial Offering of Shares has not been
registered under the 1933 Act, and Shares will therefore be "restricted
securities." The OMEGA South Africa Fund may require as a condition of any
transfer of interests in the Fund receipt of an opinion of counsel, in form and
substance satisfactory to the OMEGA South Africa Fund, to the effect that a
proposed transfer may be effected without registration under the 1933 Act or
applicable state securities laws.
Each whole Share is entitled to one vote as to any matter on which it is
entitled to vote. Shareholders do not have cumulative voting rights, and
Shareholders owning more than 50% of the outstanding Shares may elect all of the
Trustees of the OMEGA South Africa Fund if they choose to do so and in such
event the other Shareholders would not be able to elect any Trustee. As a
Massachusetts business trust, the OMEGA South Africa Fund is not required to
hold, and has no present intention of holding, annual meetings of Shareholders
but the OMEGA South Africa Fund will hold special meetings of Shareholders
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when in the judgment of the Trustees it is necessary or desirable to submit
matters for a Shareholder vote.
The OMEGA South Africa Fund's activities are supervised by a Board of
Trustees. Shareholders will be entitled to vote on the election of the Trustees
of the OMEGA South Africa Fund and certain important matters, including (i)
certain amendments to the declaration of trust of the OMEGA South Africa Fund
and (ii) changes in the investment objective and fundamental investment
restrictions of the OMEGA South Africa Fund. Trustees of the OMEGA South Africa
Fund may be removed by a vote of Shareholders holding at least two-thirds of
outstanding Shares. Each Share is entitled to participate equally in dividends
and other distributions and the proceeds of any liquidation of the Fund. Shares
have no preference, pre-emptive, appraisal, conversion or exchange rights except
as the Trustees may determine. Shares, when issued, are fully paid and
non-assessable.
In the event that either the OMEGA South Africa Fund or the Master Trust
votes to dissolve, Old Mutual will be entitled to acquire all, but not less than
all, of the Shares at a price equal to their aggregate net asset value. No
redemption fee will apply in this case. The Trustees shall promptly notify each
Shareholder of any exercise of Old Mutual's right of purchase and request that
Shareholders submit any certificates representing Shares to the Transfer Agent,
duly endorsed in blank, on or before the date established for the purchase (the
"Purchase Date"). In such case any certificate representing Shares that is not
submitted to the Transfer Agent shall, from and after the Purchase Date,
represent only the right to receive the price for the Shares. In the event Old
Mutual notifies the Trustees that it is exercising its right of purchase, the
OMEGA South Africa Fund shall not without the prior written consent of Old
Mutual, at any time, (a) merge, consolidate, or reorganize, (b) make any
transfer of its property outside of the ordinary course, (c) make any in-kind
distributions of its property, or (d) amend the declaration of trust of the
OMEGA South Africa Fund. No merger, consolidation, sale of assets or
reorganization that terminates, materially modifies, or materially reduces the
practical effect or benefit of Old Mutual's right to purchase the Shares shall
be effected without the prior written consent in each instance of Old Mutual.
The OMEGA South Africa Fund may enter into a merger or consolidation, or
sell all or substantially all of its assets, if approved by the vote of the
holders of two-thirds of the outstanding Shares of all series of the OMEGA South
Africa Fund voting as a single class, or of the affected series of the OMEGA
South Africa Fund, as the case may be, or by an instrument in writing without a
meeting, consented to by the vote of the holders of two-thirds of the
outstanding Shares of all series of the OMEGA South Africa Fund voting as a
single class, or of the affected series of the OMEGA South Africa Fund, as the
case may be; provided, however, that if such merger, consolidation, or transfer
is recommended by the Trustees of the OMEGA South Africa Fund, the "vote of a
majority of the outstanding voting securities" of the OMEGA South Africa Fund,
as defined in the 1940 Act ("Majority Shareholder Vote") shall be sufficient
authorization; and any such merger, consolidation, or
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<PAGE> 65
sale shall be deemed for all purposes to have been accomplished under and
pursuant to the statutes of the Commonwealth of Massachusetts. The OMEGA South
Africa Fund may be terminated (i) by the Trustees with written notice to
Shareholders or (ii) by a Majority Shareholder Vote.
The OMEGA South Africa Fund is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of such a
business trust may, under certain circumstances, be held personally liable as
partners for its obligations and liabilities. However, the declaration of trust
of the OMEGA South Africa Fund contains an express disclaimer of Shareholder
liability for acts or obligations of the OMEGA South Africa Fund and provides
for indemnification and reimbursement of expenses by the OMEGA South Africa Fund
for any Shareholder held personally liable for the obligations of the OMEGA
South Africa Fund. The declaration of trust of the OMEGA South Africa Fund also
provides that the OMEGA South Africa Fund may maintain appropriate insurance
(e.g., fidelity bonding and errors and omissions insurance) for the protection
of the OMEGA South Africa Fund, its Shareholders, Trustees, officers, employees,
independent contractors and agents covering possible tort and other liabilities.
Thus, the risk of a Shareholder incurring financial loss on account of
Shareholder liability is limited to circumstances in which both inadequate
insurance existed and the OMEGA South Africa Fund itself was unable to meet its
obligations.
The declaration of trust of the OMEGA South Africa Fund further provides
that obligations of the OMEGA South Africa Fund are not binding upon the
Trustees individually and that the Trustees will not be liable for any action or
failure to act, but nothing in the declaration of trust protects a Trustee
against any liability to which he or she would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of the
duties involved in the conduct of his or her office.
The Master Trust is organized as a trust under the laws of the Commonwealth
of Massachusetts. The Master Trust's declaration of trust provides that
investors in the Master Trust (including the OMEGA South Africa Fund and the
Non-U.S. Fund) are each jointly and severally liable for the liabilities and
obligations of the Master Trust. However, the risk of the OMEGA South Africa
Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance existed and the Master Trust
itself was unable to meet its obligations. Accordingly, the Trustees of the
OMEGA South Africa Fund believe that neither the OMEGA South Africa Fund nor its
Shareholders will be held liable for obligations of the Master Trust in excess
of the amount of their investments in, respectively, the Master Trust or the
OMEGA South Africa Fund.
The beneficial interest in the Master Trust consists of non-transferable
interests. Each investor in the Master Trust ("Investor") may add to or reduce
its investment in the Master Trust on each day the New York Stock Exchange is
open for trading ("Business Day").
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Upon the determination of the net asset value of the Master Trust at 10:00 a.m.
(Eastern time) on each Business Day, the balance of the Investor's book capital
account (the "Book Capital Account Balance") shall then be adjusted as follows:
(a) the excess, if any, of the net asset value as determined on such Business
Day over the net asset value as last determined shall be allocated among the
Investors in accordance with the amounts of their respective Book Capital
Account Balances, and the amount so allocated shall be added to the Book Capital
Account Balance of each Investor; (b) the excess, if any, of the net asset value
as last determined over the net asset value as determined on such Business Day
shall be allocated among the Investors in accordance with the amounts of their
respective Book Capital Account Balances, and the amounts so allocated shall be
subtracted from the respective Book Capital Account Balance of each Investor;
(c) after effecting the adjustments under subparagraphs (a) and (b), the Book
Capital Account Balance of each Investor shall be increased to reflect any
capital contributions in respect of the increase of such Investor's interest
("Interest"), to the extent such Investor's Book Capital Account Balance has not
previously been increased to reflect the same; and (d) after effecting the
adjustments under subparagraphs (a) and (b), the Book Capital Account Balance of
each Investor shall be decreased to reflect the amount of money or the fair
market value of property other than money (net of liabilities secured by such
property that the Investor is considered to assume or take subject to)
distributed to such Investor by the Master Trust in respect of the decrease or
redemption of such Investor's Interest (or in connection with a termination of
the Master Trust), to the extent such Investor's Book Capital Account Balance
has not previously been decreased to reflect the same. The Book Capital Account
Balance of each Investor as determined above shall be the Book Capital Account
Balance of such Investor until the next calculation of such Investor's Book
Capital Account Balance.
If the Master Trust seeks the vote of the OMEGA South Africa Fund on any
matter (other than a vote to continue the Master Trust upon the withdrawal of
another investor in the Master Trust, in which circumstances the Trustees of the
OMEGA South Africa Fund may vote to continue the Master Trust), the OMEGA South
Africa Fund shall submit the matter to a vote of its Shareholders and shall
exercise its Master Trust voting rights proportionately as instructed by the
Shareholders that participate in the vote. It is possible that a majority of the
investors in the Master Trust will exercise their Master Trust voting rights in
a manner contrary to the vote of the OMEGA South Africa Fund's Shareholders.
Item 19. Purchase, Redemption and Pricing of Securities.
The net asset value per Share is determined each Business Day. As of the
date of this Part B, the New York Stock Exchange is open for trading every
weekday except for the following holidays (or the days on which they are
observed): New Year's Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day. This
determination of net asset value is made by
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<PAGE> 67
the OMEGA Fund Administrator once each day as of 10:00 a.m. (Eastern time),
being after the close of business of the JSE for that day, by adding the market
value of all securities and other assets of the OMEGA South Africa Fund
(including the value of its interest in the Master Trust), then subtracting the
OMEGA South Africa Fund's liabilities, and then dividing the result by the
number of outstanding Shares. The Master Trust Administrator will calculate the
net asset value of the Master Trust as of 10:00 a.m. (Eastern time) on each
Business Day. The net asset value of the Master Trust at any given time and from
time to time shall be the difference of (a) the total assets then held by the
Master Trust, minus (b) the face amount of all Master Trust debts and
obligations.
The Master Trust will generally value JSE listed securities based on the
current JSE ruling price. The ruling price for a JSE listed security on any day
is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed to reflect their fair value. Values are converted from S.A. Rand to
U.S. dollars using exchange rates prevailing as of the time the net asset value
is to be determined. Trading may take place in securities held by the Master
Trust on days that are not Business Days and on which it will not be possible to
purchase or redeem Shares.
The Fund may, from time to time, revise its procedures relating to the
calculation of net asset value to reflect changes in JSE trading periods and
practices.
Trading in securities on most non-U.S. exchanges and over-the-counter
markets is normally completed before the close of regular trading on the New
York Stock Exchange and may also take place on days on which the New York Stock
Exchange is closed. If events materially affecting the value of non-U.S.
securities occur between the time when the exchange on which they are traded
closes and the time when the OMEGA South Africa Fund's net asset value is
calculated, such securities will be valued at fair value in accordance with
procedures established by and under the general supervision of the Board of
Trustees of the OMEGA South Africa Fund.
Investors may request redemption of Shares on any Business Day at their net
asset value (as determined as of 10:00 a.m. (Eastern time) on the next Business
Day), subject to a redemption fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds. A redemption is treated as a sale of the Shares
redeemed and could result in taxable gain or loss to the Shareholder making the
redemption.
Subject to compliance with applicable regulations, the OMEGA South Africa
Fund and the Master Trust have each reserved the right to pay the redemption
price of Shares or beneficial interests in the Master Trust, either totally or
partially, by a distribution in kind of readily marketable securities (instead
of cash). The securities so
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distributed would be valued at the same amount as that assigned to them in
calculating the net asset value for the Shares or beneficial interests being
sold. If a holder of Shares or beneficial interests received a distribution in
kind, such holder could incur brokerage or other charges in converting the
securities to cash.
The Trustees of the OMEGA South Africa Fund have the power at any time to
redeem Shares in the OMEGA South Africa Fund of any Shareholder at a redemption
price determined in accordance with the provisions of the declaration of trust
of the OMEGA South Africa Fund if at such time the aggregate net asset value of
the Shares (or the number of Shares) owned by such Shareholder is less than a
minimum amount (or number of Shares), if any, as determined from time to time by
the Trustees. However, the Trustees have not established any such minimum amount
(or number of shares), and no action to establish a minimum amount (or number of
shares) has been taken by the Trustees.
Each of the OMEGA South Africa Fund and the Master Trust may declare a
suspension of the right of redemption or postpone the date of payment of
redemption proceeds for the whole or any part of any period (a) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (b) during which trading on the New York Stock Exchange is restricted,
(c) during which an emergency exists as a result of which disposal by the OMEGA
South Africa Fund or the Master Trust of securities owned by it is not
reasonably practicable or it is not reasonably practicable for the OMEGA South
Africa Fund or the Master Trust fairly to determine the value of its net assets,
or (d) during which the SEC for the protection of Shareholders by order permits
the suspension of the right of redemption or postponement of the date of payment
of the redemption proceeds; provided that applicable rules and regulations of
the SEC shall govern as to whether the conditions prescribed in (b), (c), or (d)
exist. Such suspension shall take effect at such time as the OMEGA South Africa
Fund or the Master Trust shall specify but not later than the close of business
on the Business Day next following the declaration of suspension, and thereafter
there shall be no right of redemption or payment of the redemption proceeds
until the OMEGA South Africa Fund or the Master Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which the New York Stock Exchange shall have reopened or the
period specified in (b) or (c) shall have expired (as to which, in the absence
of an official ruling by the SEC, the determination of the OMEGA South Africa
Fund or the Master Trust shall be conclusive). In the case of a suspension of
the right of redemption, an investor may either withdraw his request for
redemption or receive payment based on the net asset value upon the termination
of the suspension.
The OMEGA South Africa Fund expects to offer Shares in three stages. First,
the OMEGA South Africa Fund is conducting the Initial Offering. Following the
issuance of the Shares placed during the Initial Offering, the Fund expects to
offer any remaining Shares in
B-28
<PAGE> 69
the Second Offering. After completion of the Second Offering, the OMEGA South
Africa Fund may make additional offerings of Shares.
In the Initial Offering the OMEGA South Africa Fund is offering up to 10
million Shares at a price of U.S.$100 per Share (totaling U.S.$1 billion),
payable in cash at the Initial Closing. The minimum purchase for any investor is
50,000 Shares (U.S.$5 million), provided the minimum purchase may, in particular
circumstances, be reduced for certain investors to not less than 10,000 Shares
(U.S.$1 million) in the discretion of the Placement Agent. The Fund has engaged
S.G. Warburg to act as the exclusive Placement Agent for the Initial Offering on
a best efforts basis.
The termination date of the Initial Offering was November 7, 1995 (the
"Initial Offering Termination Date"). Orders for Shares must be submitted by the
Initial Offering Termination Date. No minimum size for the Initial Offering has
been established.
It is expected that the Initial Closing will be held on November 10, 1995
(or any earlier date on which all Shares offered have been subscribed for). The
OMEGA South Africa Fund will schedule the Initial Closing and will notify
investors that have submitted acceptable subscriptions for Shares of the date
thereof. The purchase price for Shares subscribed for in the Initial Offering
will be due and payable to the OMEGA South Africa Fund at the Initial Closing.
At the Initial Closing the OMEGA South Africa Fund will issue the Shares
subscribed for in the Initial Offering.
The OMEGA South Africa Fund is offering the Shares without registration
under the 1933 Act as a private placement pursuant to Regulation D under the
1933 Act. The OMEGA South Africa Fund is also relying upon appropriate
exemptions from the registration requirements of applicable state securities or
blue sky laws. The Shares are being offered and sold in the U.S. only to
investors that are "accredited investors" as defined in Regulation D.
The Initial Offering may be terminated or modified. In particular, the
number of Shares offered may be reduced to reflect subscriptions for Shares of
the Non-U.S. Fund, which will invest in the Master Trust upon similar terms and
conditions as the OMEGA South Africa Fund. In the event the that the terms of
the Initial Offering are materially modified, the new terms will be set forth in
a supplement to the Private Placement Memorandum relating to the Fund.
In the Second Offering, which will commence after the Initial Closing, the
OMEGA South Africa Fund expects to offer Shares at a price equal to their net
asset value plus a sales charge of 0.25% of the offering price. In the event all
Shares offered during the Initial Offering are sold at the Initial Closing,
there will be no Second Offering. The Second Offering will continue until the
first to occur of (i) the placement of all remaining Shares, and (ii) the date 6
months following the Initial Closing. During the Second Offering Shares will
B-29
<PAGE> 70
be offered continuously and may be purchased on any Business Day. The OMEGA
South Africa Fund may engage broker-dealers in addition to the Placement Agent
to offer and sell Shares in the Second Offering.
Following completion of the Second Offering, the OMEGA South Africa Fund
may, from time to time, offer any Shares, including Shares unsold in the Second
Offering or redeemed by the OMEGA South Africa Fund, upon prices and selling
terms to be determined by the OMEGA South Africa Fund, provided that in no case
will the OMEGA South Africa Fund offer Shares for less than their net asset
value.
Investors that purchase Shares in the Initial Offering will not have any
pre-emptive rights with respect to the Second Offering or any further offerings.
Item 20. Tax Status.
The OMEGA South Africa Fund has elected to be treated and intends to qualify
each year as a "regulated investment company" under Subchapter M of the Internal
Revenue Code of 1986, as amended (the "Code"), by meeting all applicable
requirements of Subchapter M, including requirements as to the nature of the
OMEGA South Africa Fund's gross income, the amount of OMEGA South Africa Fund
distributions, and the composition and holding period of the OMEGA South Africa
Fund's portfolio assets. Provided all such requirements are met, no U.S. federal
income or excise taxes will be required to be paid by the OMEGA South Africa
Fund, although non-U.S. source income earned by the OMEGA South Africa Fund may
be subject to non-U.S. withholding taxes. If the OMEGA South Africa Fund should
fail to qualify as a "regulated investment company" for any year, the OMEGA
South Africa Fund would incur a regular corporate federal income tax upon its
taxable income, and distributions by the OMEGA South Africa Fund would generally
be taxable as ordinary income to Shareholders. The Master Trust intends to
qualify as a "partnership" under the Code, with the result that the OMEGA South
Africa Fund will be required to take into account its pro rata share of the
Master Trust's income, gain, loss, expense, credit, and other applicable items.
The OMEGA South Africa Fund dividends and capital gains distributions are
subject to federal income tax and may also be subject to state and local taxes.
Generally, distributions from the OMEGA South Africa Fund's net investment
income and short-term capital gains will be taxed as ordinary income.
Distributions of net capital gains (i.e., the excess of net long-term capital
gains over net short-term capital losses) will be taxed as such regardless of
how long Shares have been held.
Any OMEGA South Africa Fund dividend that is declared in October, November
or December of any calendar year, that is payable to Shareholders of record in
such a month and
B-30
<PAGE> 71
that is paid the following January will be treated as if received by the
Shareholders on December 31 of the year in which the dividend is declared. The
OMEGA South Africa Fund will notify Shareholders regarding the federal tax
status of its distributions after the end of each calendar year.
Any OMEGA South Africa Fund distribution will have the effect of reducing
the per Share net asset value of the OMEGA South Africa Fund by the amount of
the distribution. Shareholders purchasing Shares shortly before the record date
of any distribution may thus pay the full price for the Shares and then
effectively receive a portion of the purchase price back as a taxable
distribution.
In general, any gain or loss realized upon a taxable disposition of Shares
by a Shareholder of the OMEGA South Africa Fund that holds such Shares as a
capital asset will be treated as long-term capital gain or loss if the Shares
have been held for more than twelve months and otherwise as a short-term capital
gain or loss. However, any loss realized upon a disposition of Shares in the
OMEGA South Africa Fund held for six months or less will be treated as long-term
capital loss to the extent of any distributions of net capital gain made with
respect to those Shares. Any loss realized upon a disposition of Shares may also
be disallowed under rules relating to wash sales.
Foreign exchange gains and losses realized by the OMEGA South Africa Fund
will generally be treated as ordinary income and losses. Use of foreign
currencies for non-hedging purposes may be limited in order to avoid a tax on
the OMEGA South Africa Fund. Investment in certain "passive foreign investment
companies" may also be limited in order to avoid a tax on the OMEGA South Africa
Fund.
Investment income received by the OMEGA South Africa Fund from non-U.S.
securities may be subject to non-U.S. income taxes withheld at the source. There
are currently no South African taxes that would apply to the earnings of the
OMEGA South Africa Fund, although in the future the Master Trust may be required
to pay South African taxes on its investment income. The United States has
entered into tax treaties with many foreign countries that may entitle the OMEGA
South Africa Fund to a reduced rate of tax or an exemption from tax on income
from non-U.S. securities; the OMEGA South Africa Fund intends to qualify for
treaty reduced rates where available. At present, there is no tax treaty in
effect between the United States and South Africa. It is not possible to
determine the OMEGA South Africa Fund's effective rate of foreign tax in advance
since the amount of the OMEGA South Africa Fund's assets to be invested within
various countries is not known.
The OMEGA South Africa Fund expects to be able to elect to "pass through" to
its Shareholders non-U.S. income taxes paid. If the OMEGA South Africa Fund so
elects, Shareholders will be required to treat their pro rata portion of the
non-U.S. income taxes paid by the Master Trust as part of the amounts
distributed to them by the OMEGA South Africa
B-31
<PAGE> 72
Fund and thus includable in their gross income for federal income tax purposes.
Shareholders who itemize deductions would then be allowed to claim a deduction
or credit (but not both) on their federal income tax returns for such amounts,
subject to certain limitations. Shareholders who do not itemize deductions would
(subject to such limitations) be able to claim a credit but not a deduction. No
deduction for such amounts will be permitted to individuals in computing their
alternative minimum tax liability. If the OMEGA South Africa Fund does not
qualify or elect to "pass through" to its Shareholders non-U.S. income taxes
paid by the Master Trust, Shareholders will not be able to claim any deduction
or credit for any part of the non-U.S. taxes paid by the Master Trust.
Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at a rate of 30%. The OMEGA South
Africa Fund intends to withhold tax payments at a rate of 30% on taxable
dividends and other payments to Non-U.S. Persons that are subject to such
withholding, unless a lower rate is permitted under an applicable treaty. Any
amounts overwithheld may be recovered by such persons by filing a claim for
refund with the U.S. Internal Revenue Service within the time period appropriate
to such claims. Distributions received from the OMEGA South Africa Fund by
Non-U.S. Persons also may be subject to tax under the laws of their own
jurisdiction. The OMEGA South Africa Fund is also required in certain
circumstances to apply backup withholding of 31% of taxable dividends and
redemption proceeds paid to any Shareholder (including a Non-U.S. Person) who
does not furnish to the OMEGA South Africa Fund certain information and
certifications or who is otherwise subject to backup withholding. Backup
withholding will not, however, be applied to payments that have been subject to
30% withholding.
Item 21. Underwriters.
Not applicable.
Item 22. Calculation of Performance Data.
A total rate of return quotation for the OMEGA South Africa Fund is
calculated for any period by (a) dividing (i) the sum of the net asset value per
Share on the last day of the period and the net asset value per Share on the
last day of the period of Shares purchasable with dividends and capital gains
distributions declared during such period with respect to a Share held at the
beginning of such period and with respect to Shares purchased with such
dividends and capital gains distributions, by (ii) the net asset value (or
offering price) per Share on the first day of such period, and (b) subtracting 1
from the result. Any annualized total rate of return quotation is calculated by
(x) adding 1 to the period total rate of return quotation calculated above, (y)
raising such sum to a power which is equal to 365 divided by the number of days
in such period, and (z) subtracting 1
B-32
<PAGE> 73
from the result. Total rates of return may also be calculated on Shares at
various sales charge levels or at net asset value. Any performance data which is
based on a reduced sales charge or net asset value per Share would be reduced if
the maximum sales charge were taken into account.
Any current yield quotation for the OMEGA South Africa Fund consists of an
annualized historical yield, carried at least to the nearest hundredth of one
percent, based on a 30 calendar day or one month period and is calculated by (a)
raising to the sixth power the sum of 1 plus the quotient obtained by dividing
the OMEGA South Africa Fund's net investment income earned during the period by
the product of the average daily number of Shares outstanding during the period
that were entitled to receive dividends and the net asset value (or offering
price) per Share on the last day of the period, (b) subtracting 1 from the
result, and (c) multiplying the result by 2.
Item 23. Financial Statements.
See below.
B-33
<PAGE> 74
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
Statement of Assets and Liabilities
November 8, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 75
Independent Auditors' Report
The Board of Trustees
Old Mutual Equity Growth Assets South Africa Fund
We have audited the statement of assets and liabilities of Old Mutual Equity
Growth Assets South Africa Fund ("OMEGA South Africa Fund" or the "Fund") as of
November 8, 1995. The statement of assets and liabilities is the responsibility
of the Fund's management. Our responsibility is to express an opinion on the
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the statement of assets and liabilities is
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement of assets and
liabilities. Our procedures included confirmation of cash by correspondence
with the custodian. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit provides
reasonable basis for our opinion.
In our opinion, the statement of assets and liabilities as referred to above
presents fairly, in all material respects, the financial position of OMEGA
South Africa Fund as of November 8, 1995, in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
Boston, Massachusetts
November 8, 1995
<PAGE> 76
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
Statement of Assets and Liabilities
November 8, 1995
<TABLE>
<S> <C>
Assets:
Cash $100,000
--------
Net assets $100,000
========
Number of shares of beneficial interest outstanding 1,000
========
Net asset value per share of beneficial interest $ 100
========
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE> 77
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
Notes to Statement of Assets and Liabilities
November 8, 1995
(1) THE FUND
Old Mutual Equity Growth Assets South Africa Fund ("OMEGA South Africa
Fund" or the "Fund") is a Massachusetts business trust organized
pursuant to a Declaration of Trust dated as of September 1, 1995.
The OMEGA South Africa Fund will be a registered investment company
under the Investment Company Act of 1940, as amended (the "Act"). It
is offering shares of beneficial interest to United States investors
subject to the terms of a Confidential Private Placement Memorandum
dated September 15, 1995 with the termination date of the Initial
Offering on November 7, 1995. It is expected that all of the assets
of the OMEGA South Africa Fund will be invested in Old Mutual South
Africa Equity Trust (the "Master Trust"), an open-end, management
investment company having the same investment objective as OMEGA
South Africa Fund.
The Master Trust is organized under the laws of Massachusetts pursuant
to a Declaration of Trust dated as of September 1, 1995 (and has its
principal place of business in Bermuda). The Master Trust will be a
registered open-end investment company under the Act. The Master
Trust was formed to hold a portfolio of South African (equity)
securities transferred to it by South African Mutual Life Assurance
Society.
The investment objective of OMEGA South Africa Fund and the Master
Trust is to achieve a long-term, total return in excess of that of
The Johannesburg Stock Exchange ("JSE") Actuaries All Share Index
from investment in equity securities of South African issuers.
(2) SIGNIFICANT ACCOUNTING POLICIES
The accompanying statement of assets and liabilities is prepared in
accordance with United States generally accepted accounting
principles. The following are the significant accounting policies
adopted by OMEGA South Africa Fund:
(a) Income Taxes
The OMEGA South Africa Fund intends to qualify each year and elect to be
taxed as a regulated investment company under Subchapter M of the
United States Internal Revenue Code of 1986, as amended (the Code).
Thus, the OMEGA South Africa Fund is relieved of any federal income
tax liability by distributing virtually all of its net investment
income and capital gains, if any, to its shareholders. The OMEGA
South Africa Fund intends to avoid excise tax liability by making
the required distributions under the Code.
<PAGE> 78
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Statement of Assets and Liabilities
November 3, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 79
Independent Auditors' Report
The Board of Trustees
Old Mutual South Africa Equity Trust:
We have audited the statement of assets and liabilities of Old Mutual South
Africa Equity Trust (the "Trust") including the schedule of investments as of
November 3, 1995. The statement of assets and liabilities is the responsibility
of the Trust's management. Our responsibility is to express an opinion on the
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
assets and liabilities. Our procedures included confirmation of investments held
as of November 3, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities as referred to above
presents fairly, in all material respects, the financial position of the Trust
as of November 3, 1995, in conformity with United States generally accepted
accounting principles.
KPMG Peat Marwick
Chartered Accountants
Hamilton, Bermuda
November 3, 1995
<PAGE> 80
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Statement of Assets and Liabilities
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value (cost $1,010,889,970) $ 1,010,889,970
Cash 4,750,100
Deferred organization expenses 1,800,000
----------------
Total assets 1,017,440,070
----------------
Liabilities:
Accrued organization expenses 1,800,000
----------------
Net assets $ 1,015,640,070
================
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE> 81
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- --------- --------------
<S> <C> <C>
MINING, COAL - (1.62%)
Anglo American Coal Corporation Ltd. 239,000 $ 16,384,452
--------------
MINING, DIAMONDS - (4.91%)
De Beers Consolidated Mines Ltd. 1,800,000 49,852,608
--------------
GOLD MINING, KLERKSDORP - (0.50%)
Southvaal Holdings Ltd. 111,000 2,526,359
Vaal Reefs Exploration and Mining Co. Ltd. 44,000 2,521,697
--------------
5,048,056
--------------
GOLD MINING, WEST WITS - (0.79%)
Driefontein Consolidated Ltd. 720,000 8,045,520
--------------
METALS & MINERALS, MANGANESE - (0.70%)
Samancor Ltd. 490,000 7,121,410
--------------
METALS & MINERALS, PLATINUM - (2.64%)
Impala Platinum Holdings Ltd. 330,000 6,877,357
Lydenburg Platinum Ltd. 1,300,000 19,962,981
--------------
26,840,338
--------------
MINING HOUSES - (18.27%)
Anglo American Corporation of SA Ltd. 870,000 51,172,962
Anglo American Platinum Corporation Ltd. 1,600,000 10,749,297
Anglovaal Industries Ltd. 1,100,000 42,229,382
Gencor Ltd. 8,400,000 29,944,471
Gold Fields of SA Ltd. 880,000 22,924,522
JCI Ltd. 1,200,000 9,871,804
Rand Mines Ltd. 1,600,000 18,646,740
--------------
185,539,178
--------------
MINING HOLDING - (1.05%)
Associated Ore and Metal Corp. Ltd. 44,000 3,257,695
Middle Witwatersrand (Western Areas) Ltd. 2,300,000 7,410,708
--------------
10,668,403
--------------
BANKS & FINANCIAL SERVICES - (11.07%)
Amalgamated Banks of SA Ltd. 710,000 3,407,143
First National Bank Holdings Ltd. 240,000 1,875,643
Investec Holdings Ltd. 300,000 4,853,637
Nedcor Ltd. 3,500,000 50,627,271
Standard Bank Investment Corp. Ltd. 1,300,000 51,689,861
--------------
112,453,555
--------------
</TABLE>
(Continued)
<PAGE> 82
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments (Continued)
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- ---------- -----------
<S> <C> <C>
INSURANCE - (1.65%)
Liberty Life Association of Africa Ltd. 280,000 7,370,947
Metropolitan Life Ltd. 290,000 3,499,006
Mutual & Federal Insurance Co. Ltd. 300,000 5,923,082
-----------
16,793,035
-----------
INVESTMENT TRUSTS - (0.76%)
Genbel Investments Ltd. 2,900,000 7,713,718
-----------
INDUSTRIAL HOLDING - (25.29%)
Anglovaal Ltd. 3,900,000 28,875,026
Barlow Ltd. 3,800,000 50,017,139
Bidvest Group Ltd. 1,100,000 6,334,407
C.G. Smith Ltd. 7,600,000 49,496,127
Forward Corporation Ltd. 1,300,000 1,069,445
Imperial Holdings Ltd. 340,000 3,729,348
Johnnies Industrial Corporation Ltd. 1,200,000 16,288,476
Malbak Ltd. 560,000 3,723,864
Murray & Roberts Holdings Ltd. 750,000 5,450,058
Rembrandt Group Ltd. 4,700,000 44,142,044
Safmarine and Rennies Holdings Ltd. 14,200,000 47,700,007
-----------
256,825,941
-----------
BEVERAGES, HOTEL & LEISURE - (4.86%)
South African Breweries Ltd. 1,500,000 49,359,018
-----------
BUILDING, CONSTRUCTION & ALLIED - (1.12%)
Anglo Alpha Ltd. 180,000 6,416,672
Everite Holdings Ltd. 2,400,000 4,935,902
-----------
11,352,574
-----------
CHEMICALS, OILS & PLASTICS - (6.33%)
AECI Ltd. 880,000 6,213,752
Engen Ltd. 1,200,000 7,897,443
Sasol Ltd. 5,500,000 46,753,959
Sentrachem Ltd. 960,000 3,422,225
-----------
64,287,379
-----------
ELECTRONICS - (3.62%)
Allied Electronics Corporation Ltd. 2,320,000 5,980,119
IBM South Africa Group Ltd. 1,100,000 3,016,384
Grintek Ltd. 2,500,000 2,742,168
Reunert Ltd. 4,100,000 25,015,425
-----------
36,754,096
-----------
</TABLE>
(Continued)
<PAGE> 83
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments (Continued)
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- ---------- -----------------
<S> <C> <C>
ENGINEERING - (1.08%)
African Oxygen Ltd. 310,000 11,008,432
-----------------
FOOD - (1.19%)
C.G. Smith Foods Ltd. 360,000 7,058,340
Tiger Oats Ltd. 310,000 5,015,425
-----------------
12,073,765
-----------------
FURNITURE, HOUSEHOLD & ALLIED - (0.75%)
J.D. Group Ltd. 1,500,000 7,609,515
-----------------
PAPER & PACKAGING - (2.37%)
Nampak Ltd. 870,000 4,532,803
Sappi Ltd. 1,030,000 19,488,586
-----------------
24,021,389
-----------------
PRINTING & PUBLISHING - (0.53%)
Independent Newspapers Holdings Ltd. 270,000 1,036,539
Omni Media Corporation Ltd. 400,000 4,387,468
-----------------
5,424,007
-----------------
STEEL & ALLIED - (1.73%)
Iscor Ltd. 17,700,000 17,618,702
-----------------
STORES - (4.92%)
Foschini Ltd. 2,100,000 16,123,946
Wooltru Ltd. 6,100,000 33,872,626
-----------------
49,996,572
-----------------
TRANSPORTATION - (1.78%)
Trencor Ltd. 3,300,000 18,098,307
-----------------
Total investments (cost $1,010,889,970) - 99.53% of net assets $ 1,010,889,970
=================
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE> 84
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Notes to Statement of Assets and Liabilities
November 3, 1995
(1) THE TRUST
Old Mutual South Africa Equity Trust (the "Trust") is a trust organized
under the laws of Massachusetts pursuant to a Declaration of Trust
dated as of September 1, 1995 and has its principal place of business
in Bermuda. The Trust will be a registered investment company under
the United States Investment Company Act of 1940, as amended (the
"Act"). The Trust was formed to hold a portfolio of South African
equity securities transferred to it by South African Mutual Life
Assurance Society ("Old Mutual").
As of November 3, 1995, the entire beneficial interest in the Trust is
held by Old Mutual Fund Holdings (Bermuda) Limited and Old Mutual
Asset Managers (Bermuda) Limited, wholly-owned subsidiaries of Old
Mutual.
Beneficial interest in the Trust will be issued to Old Mutual Equity
Growth Assets South Africa Fund ("OMEGA South Africa Fund") and Old
Mutual South Africa Growth Assets Fund Limited ("Old Mutual SAGA
Fund"). OMEGA South Africa Fund is a Massachusetts business trust
organized pursuant to a Declaration of Trust dated as of September 1,
1995. It is offering shares to United States investors subject to the
terms of a Confidential Private Placement Memorandum dated September
15, 1995 with the termination date of the Initial Offering on November
7, 1995.
Old Mutual SAGA Fund is a company incorporated under the laws of Bermuda
on September 7, 1995. It is offering shares to nonUnited States
Investors, subject to the terms of a Placement Memorandum with the
Initial Offering also terminating on November 7, 1995.
It is expected that all of the investable assets of OMEGA South Africa
Fund and Old Mutual SAGA Fund will be invested in the Trust. The Trust
is expected to apply amounts so invested to redeem a portion of the
beneficial interest of Old Mutual Fund Holdings (Bermuda) Limited and
Old Mutual Asset Managers (Bermuda) Limited in the Master Trust. As a
result of such investment in the Trust and corresponding redemptions
by Old Mutual Fund Holdings (Bermuda) Limited and Old Mutual Asset
Managers (Bermuda) Limited, it is expected that substantially all of
the beneficial interest in the Trust will be owned by OMEGA South
Africa Fund and Old Mutual SAGA Fund.
(2) SIGNIFICANT ACCOUNTING POLICIES
The accompanying statement of assets and liabilities is prepared in
accordance with United States generally accepted accounting
principles. The following are the significant accounting policies
adopted by the Trust.
(a) Securities Valuation
Securities will be valued each day on which the New York Stock
Exchange is open for trading (a "Business Day") as at 10:00 am United
States Eastern time which is after the close of business for the
Johannesburg Stock Exchange ("JSE") for that day. JSE listed
securities will generally be valued based on the current JSE ruling
price which is generally the last sale price. If the securities did
not trade on the JSE on the date of valuation, they may be valued on a
different basis believed by the trustees of the Trust to reflect their
fair value. Securities valuations, which are denominated in South
Africa Rands, are translated to United States Dollars using the
exchange rate prevailing as of the time of valuation.
(Continued)
<PAGE> 85
2
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Notes to Statement of Assets and Liabilities
Security transactions will be accounted for on a trade-date basis.
Realized gains and losses on sale of securities are determined based
on identified cost. Realized gains and losses on sale of securities
and the change in unrealized gains or losses on securities held on a
valuation date will be included in the statement of operations and
will include realized and unrealized exchange losses on translation of
South African Rands to United States Dollars. Dividend income will be
recognized as income on the ex-dividend date.
(b) Organization Expenses
Organization expenses of the Trust will be amortized on a
straight-line basis over a period not to exceed five years beginning
with the day following the initial closing. The trustees consider
U.S.$100,000 of the $4,750,100 in cash invested as of November 3, 1995
to be the minimum required capital under the Act (the "Initial
Investment"). The amount paid by the Trust on any redemption of
beneficial interests from the Initial Investment will be reduced by
the pro rata portion of any unamortized organization expenses of the
Trust. Such pro rata portion is to be determined by multiplying the
unamortized expenses by a fraction the numerator of which is the
amount to be redeemed and the denominator of which is the amount, at
the time of redemption, of the book capital account of the beneficial
interest attributable to the Initial Investment.
<PAGE> 86
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Financial Statements Included in Part A:
Not applicable.
Financial Statement Included in Part B:
Registrant:
Report of Independent Auditors - November 8, 1995
Statement of Assets and Liabilities at November 8, 1995
Notes to Financial Statements - November 8, 1995
Old Mutual South Africa Equity Trust:
Report of Independent Auditors - November 3, 1995
Statement of Assets and Liabilities at November 3, 1995
Schedule of Investments - November 3, 1995
Notes to Financial Statements - November 3, 1995
(b) Exhibits:
1 Declaration of Trust of Registrant
2 By-Laws of Registrant
5 Investment Advisory Agreement between Old Mutual South
Africa Equity Trust (the "Master Trust") and Old Mutual
Asset Managers (Bermuda) Limited (the "Adviser")
6 Placing Agreement among S.G. Warburg & Co. Inc. ("S.G.
Warburg"), the Master Trust, the Registrant, South African
Mutual Life Assurance Society, the Adviser and Old Mutual
Fund Holdings (Bermuda) Limited
8(a) Custodian Agreement between the Registrant and State
Street Bank and Trust Company (the "Custodian")
8(b) Subcustodian Agreement between the Custodian and Standard
Bank of South Africa Limited
8(c) Subcustodian Agreement between the Custodian and State
Street London Limited
9(a) Administrative Services Agreement between the Registrant
and State Street Bank and Trust Company
9(b) Structuring Agreement among the Master Trust, the
Registrant, Old Mutual South Africa Growth Assets Fund
Limited and International Finance Corporation
<PAGE> 87
9(c) Subscription and Portfolio Transfer Agreement among South
African Mutual Life Assurance Society, Old Mutual Fund
Holdings (Bermuda) Limited, the Adviser, the Master Trust,
the Registrant, Old Mutual South Africa Growth Assets Fund
Limited and Old Mutual Global Assets Fund Limited
9(d) Irish Stock Exchange Undertaking among the Master Trust,
the Registrant and Old Mutual South Africa Growth Assets
Fund Limited
9(e) Form of letter from Old Mutual Investment Advisers, Inc.
with respect to seed capital
9(f) Form of Agreement among the Registrant, the Master Trust,
Old Mutual South Africa Growth Assets Fund Limited and the
Adviser as to the allocation of insurance coverage
15 Placement Plan of the Registrant
27 Financial Data Schedule
Item 25. Persons Controlled by or under Common Control with Registrant.
The Registrant has no subsidiaries apart from any interest in the Master
Trust. Old Mutual Investment Advisers, Inc., a wholly-owned subsidiary of South
African Mutual Life Assurance Society ("Old Mutual"), contributed U.S.$100,000
to the Registrant and received 1,000 shares of the Registrant in return. The
following information is provided as to certain principal subsidiaries of Old
Mutual, which are under common control with the Registrant.
-2-
<PAGE> 88
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
COUNTRY
% OF
NAME OF SUBSIDIARY COMPANY PARENT COMPANY OWNED INCORPORATION NATURE OF BUSINESS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JSE LISTED SUBSIDIARY COMPANIES
- -------------------------------
Mutual & Federal
Mutual & Federal Insurance Company, Ltd. Investment Ltd. 85.85 SOUTH AFRICA Short-term Insurance
Lydenburg Platinum Limited Old Mutual 78.71 SOUTH AFRICA Investment company
Safmarine & Rennies Holdings Old Mutual 57.35 SOUTH AFRICA Holding company
Anglo-Transvaal Collieries Old Mutual 56.76 SOUTH AFRICA Coal mining company
Nedcor Bank Limited Old Mutual 56.37 SOUTH AFRICA Banking
UNLISTED SUBSIDIARY COMPANIES
- -----------------------------
Ashtree Investments Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Capital Securities Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Highlight Investments (Pty) Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Mutual & Federal Investments Limited Old Mutual 51 SOUTH AFRICA Investment holding co.
Old Mutual Actuaries & Consultants (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment advisory co.
Rodina Investments (Pty) Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Fairbairn Investment Holdings SA (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment holding co.
Old Mutual Securities (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment trading co.
Old Mutual Asset Managers (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Portfolio management co.
Old Mutual Health Benefits Administrators (Pty) Old Mutual 100 SOUTH AFRICA Admin health benefit man.
Ltd.
Old Mutual Health Insurance Limited Old Mutual 100 SOUTH AFRICA Short-term health insurer
Old Mutual Syfrets Trust Ltd. Old Mutual 100 SOUTH AFRICA Administration of Estates
Old Mutual Bermuda Holdings (SA) Ltd. Old Mutual 100 SOUTH AFRICA Hold Co. Fund Hold Bermuda
South African Mutual Unit Trust Management Old Mutual 100 SOUTH AFRICA Unit Trust management co.
Company Ltd.
Old Mutual Health Insurance Limited (external) Old Mutual 100 NAMIBIA South-term health insurer
Old Mutual International Asset Managers (Namibia) (Pty) Old Mutual 100 NAMIBIA Portfolio management co.
Ltd.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 89
<TABLE>
<S> <C> <C> <C> <C>
Old Mutual Namibia Medical Administrators (Pty) Old Mutual 100 NAMIBIA Admin health benefit man.
Ltd.
Old Mutual Unit Trust Management Company Namibia Ltd. Old Mutual 100 NAMIBIA Unit Trust management co.
South African Mutual Unit Trust Management Company Old Mutual 100 NAMIBIA Unit Trust management co.
Ltd.
Old Mutual Investment Corporation (Private) Ltd. Old Mutual 100 ZIMBABWE Investment holding co.
Old Mutual Property Investment Corporation Old Mutual 100 ZIMBABWE Investment in fixed property
(Private) Ltd.
Old Mutual International Asset Managers (UK) Old Mutual Group 100 UNITED KINGDOM Asset Managing Co.
Ltd.
OMLA Holdings Ltd. Old Mutual Group 100 UNITED KINGDOM Investment holding co.
Old Mutual Fund Managers Ltd. Old Mutual Group 100 UNITED KINGDOM Man authorized Unit Trusts
Fairbairn International S.A. Old Mutual 100 LUXEMBOURG Holding company
Fairbairn Ireland Ltd. Old Mutual 100 IRELAND Holding company
Old Mutual International Ltd. Fairbairn Ireland 100 IRELAND Long-term life assurer
Limited
Old Mutual Fund Managers Ltd. Fairbairn Ireland 100 IRELAND Man authorized Unit Trusts
Limited
Fairbairn Holdings Ltd. Old Mutual 100 GUERNSEY Holding company
OMIAM Services Ltd. Old Mutual 100 GUERNSEY Service co. to Group
OMIAM Properties Ltd. Old Mutual 100 GUERNSEY Property Co.
Old Mutual International Asset Managers Old Mutual 100 GUERNSEY Asset managing company
(Guernsey) Ltd.
Old Mutual Holdings Ltd. Fairbairn Hold. 100 KENYA Holding company
Ltd.
Old Mutual Insurance Company Ltd. Old Mutual 61 KENYA Insurance company
Holdings Ltd.
</TABLE>
-4-
<PAGE> 90
<TABLE>
<S> <C> <C> <C> <C>
Old Mutual International Asset Managers Old Mutual 100 BAHAMAS Asset managing co.
(Bahamas) Ltd.
Old Mutual International Asset Managers Old Mutual 100 BERMUDA Asset managing co.
(Bermuda) Ltd.
Old Mutual Fund Holdings (Bermuda) Ltd. Old Mutual 100 BERMUDA Hold Co. for Global Asset Fund
Old Mutual Asset Managers (Bermuda) Ltd. Old Mutual 100 BERMUDA Investment manager
Old Mutual Global Assets Fund Ltd. Old Mutual 100 BERMUDA Asset managing co.
Old Mutual Investment Advisers, Inc. Old Mutual 100 USA Old Mutual Marketing
</TABLE>
-5-
<PAGE> 91
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of November 8, 1995
-------------- ----------------------
<S> <C>
Shares of Beneficial Interest One
</TABLE>
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's Declaration of
Trust, filed herewith and (b) Section 9 of the Placing Agreement between the
Registrant, S.G. Warburg and certain other parties, filed herewith.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are (or prior to the Initial Closing will be) insured
under an errors and omissions liability insurance policy. The Registrant and its
officers are (or prior to the Initial Closing will be) also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a company
newly-organized under the laws of Bermuda, serves as the investment adviser to
the Master Trust and to Old Mutual Global Assets Fund Limited, a mutual fund
organized under the laws of Bermuda. The directors and officers of the Adviser
and their affiliations are listed below.
Name: Affiliation:
- ---- -----------
Kevin James Carter Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual Investment Advisers, Inc.
(1 Exeter Plaza, 699 Boylston Street, Boston,
Massachusetts)
-6-
<PAGE> 92
Managing Director, Old Mutual Portfolio
Managers Ltd. (Providence House, 2 Bartley
Way, Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Fairbairn Investment Company Limited
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, Fairbairn European Smaller Companies
Index Trust plc (23 Cathedral Yard, Exeter,
United Kingdom)
Director, Old Mutual South Africa Trust plc
(23 Cathedral Yard, Exeter, United Kingdom)
Director, Lydenburg Platinum Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Argenta European Hedge Fund plc (2nd
Floor, IFSC House, International Financial
Services Centre, Custom House Docks, Dublin,
Ireland)
Director, Old Mutual International Asset
Managers (UK) Ltd. (Providence House, 2
Bartley Way, Hook, Basingstoke, Hampshire,
United Kingdom)
-7-
<PAGE> 93
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers Services Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
John Charles Ross Collis Secretary and Director of the Adviser
Secretary of the Registrant and the Master
Trust
Secretary of Old Mutual South Africa Growth
Assets Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Secretary and Director, Old Mutual Global
Assets Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Partner, Conyers Dill & Pearman (Clarendon
House, Church Street, Hamilton, Bermuda)
William Langley President and Director of the Adviser
Treasurer and Trustee of the Registrant and
the Master Trust
Treasurer and Director of Old Mutual South
Africa Growth Assets Fund Limited (Richmond
House, 12 Par-la-Ville Road, Hamilton,
Bermuda)
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual Investment Advisers, Inc.
(1 Exeter Plaza, 699 Boylston Street, Boston,
Massachusetts)
-8-
<PAGE> 94
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, OMIAM Services Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Assistant General Manager, Old Mutual
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Michael John Levett Chairman of the Board and Director of the
Adviser
Chairman of the Board of Trustees and
President of the Registrant and the Master
Trust
Chairman of the Board of Directors of Old
Mutual South Africa Growth Assets Fund Limited
(Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Chairman and Director, Old Mutual Global
Assets Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Chairman and Managing Director, Old Mutual
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
-9-
<PAGE> 95
Chairman, Ashtree Investments Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, South African Mutual Unit Trust
Management Company Ltd. (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, The South African Breweries Limited
(2 Jan Smuts Avenue, Johannesburg, South
Africa)
Chairman, Ubuntu Medical Scheme (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Barlow Limited (Barlow Park,
Katherine Street, Sandton, South Africa)
Chairman, Capital Securities Limited (Mutual
Park, Pinelands, South Africa)
Director, Central Africa Building Society
(Northend Close, Northridge Park, Borrowdale,
Harare, Zimbabwe)
Chairman, Fairbairn Holdings Limited (P.O. Box
119, Commerce House, St. Peter Port, Guernsey)
Chairman, Fairbairn International S.A. (35 Rue
Glesener 10-11, Luxembourg)
Chairman, Fairbairn Ireland Limited (9-11
Lower Mount Street, Dublin, Ireland)
Chairman, Fairbairn Marketing Services Limited
(P.O. Box 119, Commerce House, St. Peter Port,
Guernsey)
Chairman, Fairbairn Properties Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
-10-
<PAGE> 96
Chairman, Highlight Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, Lydenburg Platinum Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, Merriman Services Limited (P.O. Box
119, Commerce House, St. Peter Port, Guernsey)
Director, Nedcor Limited (100 Main Street,
Johannesburg, South Africa)
Director, Nedcor Bank Limited (100 Main
Street, Johannesburg, South Africa)
Director, Netherdale Investments (Pty) Limited
(c/o Deloitte & Touche, 1st Floor, Sanclare,
Dreyer Street, Claremont, South Africa)
Chairman, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Bermuda Holdings (S.A.)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Chairman, Old Mutual Group (UK) Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Chairman, Old Mutual Health Insurance Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
-11-
<PAGE> 97
Chairman, Old Mutual Holdings Limited (Mutual
Building, Kimathi Street, Nairobi, Kenya)
Director, Old Mutual Insurance Company Limited
(Mutual Building, Kimathi Street, Nairobi,
Kenya)
Chairman, Old Mutual International Financial
Services Limited (Fairbairn House, The Rohais,
St. Peter Port, Guernsey)
Chairman, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Chairman, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Chairman, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Namibia) (Pty) Ltd. (8th Floor, CDM
Building, 10 Bulow Street, Windhoek, Namibia)
Chairman, Old Mutual International (Ireland)
Limited (9-11 Lower Mount Street, Dublin,
Ireland)
Chairman, Old Mutual Investment Corporation
(Private) Limited (Mutual Gardens, 100 The
Chase (West), Emerald Hill, Harare, Zimbabwe)
Chairman, Old Mutual Investment Managers
Limited (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
Chairman, Old Mutual Kenya Staff Provident
Fund (Mutual Building, Kimathi Street,
Nairobi, Kenya)
-12-
<PAGE> 98
Chairman, Old Mutual Life Assurance Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United Kingdom)
Chairman, Old Mutual Malawi Staff Pension Fund
(Old Mutual Building, Glyn Jones Road,
Blantyre, Malawi)
Chairman, Old Mutual Namibia Staff Pension
Fund (Mutual Building, 299 Independence
Avenue, Windhoek, Namibia)
Chairman, Old Mutual South Africa Fund Limited
(Fairbairn House, The Rohais, St. Peter Port,
Guernsey)
Chairman, Fairbairn Investment Company Limited
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Chairman, Fairbairn Investment Holdings S. A.
(Pty) Ltd. (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Mumed 850 Plan (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Chairman, Mutual & Federal Insurance Company
Limited (28th Floor, Mutual & Federal Centre,
69 President Street, Johannesburg, South
Africa)
Chairman, Mutual & Federal Investments Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, National Business Initiative for
Growth, Development and Democracy (17th Floor,
Metal Box Centre, 25 Owl Street, Auckland
Park, South Africa)
Director, Old Mutual South Africa Trust plc
(23 Cathedral Yard, Exeter, United Kingdom)
-13-
<PAGE> 99
Chairman, Old Mutual Staff Benefit Plan,
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, OMLA Holdings Limited (Providence
House, 2 Bartley Way, Hook, Basingstoke,
Hampshire, United Kingdom)
Chairman, Ommed Plan (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, RM Insurance Company (Private)
Limited (Royal Mutual House, Baker Avenue
Harare, Zimbabwe)
Chairman, Rodina Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Safmarine and Rennies Holdings
Limited (2300 Safmarine House, 22 Riebeeck
Street, Cape Town, South Africa)
Director, Sasol Limited (1 Sturdee Avenue,
Rosebank, South Africa)
Trustee and Council Member, South Africa
Foundation (Pilrig Place, 5 Eton Road,
Parktown, South Africa)
Chairman, South African Mutual Life Assurance
Society Pension Fund (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Chairman, South African Mutual Life Assurance
Society Staff Medical Aid Fund (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
-14-
<PAGE> 100
Donald Harrigan Malcolm Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Senior Associate, Conyers Dill & Pearman
(Clarendon House, Church Street, Hamilton,
Bermuda)
Susan Elizabeth Rouse Vice President of the Adviser
Alternate Director, Old Mutual Global Assets
Fund Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Manager of International Operations, Old
Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Gerhard Schalk Van Niekerk Deputy Chairman and Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Chief Operating Officer and Director, Old
Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Ashtree Investments Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Capital Securities Ltd. (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Central Africa Building Society
(Northend Close, Northridge Park, Borrowdale,
Harare, Zimbabwe)
Director, C. G. Smith Limited (36 Wierda Road
West, Wierda Valley, South Africa)
-15-
<PAGE> 101
Director, Fairbairn Holdings Ltd. (P.O. Box
119, Commerce House, St. Peter Port, Guernsey)
Director, Fairbairn Investment Company Limited
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Fairbairn Investment Holdings S.A.
(Pty) Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, GSVN Beleggings (Pty) Ltd. (c/o
Deloitte & Touche, 1st Floor Sanclare, Dreyer
Street, Claremont, South Africa)
Director, Highlight Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Lydenburg Platinum Ltd. (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Committee Member, Mumed 850 Plan (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Mutual & Federal Investments Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Bermuda Holding (S.A.)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
-16-
<PAGE> 102
Director, Old Mutual Group (UK) Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual Health Insurance Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Director, Old Mutual Holdings Ltd. (Mutual
Building, Kimathi Street, Nairobi, Kenya)
Director, Old Mutual Insurance Co. Ltd.
(Mutual Building, Kimathi Street, Nairobi,
Kenya)
Director, Old Mutual International Asset
Managers (Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Ltd. (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Guernsey) Ltd. (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Namibia) (Pty) Ltd. (8th Floor, CDM
Centre, Bulow Street, Windhoek, Namibia)
Director, Old Mutual Investment Corporation
(Pvt) Ltd. (Mutual Gardens, 100 The Chase
(West), Emerald Hill, Harare, Zimbabwe)
Director, Old Mutual Kenya Staff Provident
Fund (Mutual Building, Kimathi Street,
Nairobi, Kenya)
Director, Old Mutual Life Assurance Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United Kingdom)
-17-
<PAGE> 103
Director, Old Mutual Malawi Staff Pension Fund
(Old Mutual Building, Glyn Jones Road,
Blantyre, Malawi)
Committee Member, Old Mutual Namibia Staff
Pension Fund (Mutual Building, 299
Independence Avenue, Windhoek, Namibia)
Trustee, Old Mutual Staff Benefit Plan
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, Old Mutual Unit Trust Management
Company Namibia Ltd. (8th Floor, CDM Centre,
Bulow Street, Windhoek, Namibia)
Director, OMLA Holdings Limited (Providence
House, 2 Bartley Way, Hook, Basingstoke,
Hampshire, United Kingdom)
Committee Member, Ommed Plan (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Director, Rodina Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Alternate Director, Small Business Development
Corporation Ltd. (Small Business Centre, 5
Wellington Road, Parktown, South Africa)
Director and Member, Old Mutual (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director and Member, South African Mutual Life
Assurance Society Pension Fund (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Member and Committee Member, South African
Mutual Life Assurance Society Staff Medical
Aid Fund (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
-18-
<PAGE> 104
Director, South African Mutual Unit Trust
Management Company Ltd. (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Transnet Ltd. (Transnetpark,
Hillside Road, Parktown, South Africa)
Board Member, Ubuntu Medical Scheme
(Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Member of University Council, University of
Stellenbosch (Stellenbosch, Cape Province,
South Africa)
Frits Vleggaar Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Managing Director of the International Group,
Old Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual International Financial
Services Ltd. (Fairbairn House, The Rohais,
St. Peter Port, Guernsey)
Director, Old Mutual International (Guernsey)
Limited (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
Director, L&S Properties Ltd. (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Naftiaux Holdings Ltd. (Courtil
Naftiaux, La Rue des Naftiaux, St. Andrew,
Guernsey)
-19-
<PAGE> 105
Director, Providence Capitol Fund Managers
Int. Ltd. (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
Director, Finexco International Ltd.
(Fairbairn House, The Rohais, St. Peter Port,
Guernsey)
Director, Finexco Personnel Services Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Pioneer International Ltd.
(Fairbairn House, The Rohais, St. Peter Port,
Guernsey)
Director, Fairbairn Guaranteed Futures
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton, Bermuda)
Director, Fairbairn Futures Trading (Bermuda)
Ltd. (Bermuda Commercial Bank Building, 44
Church Street, Hamilton, Bermuda)
Director, Fairbairn US Futures Trading
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton, Bermuda)
Director, Fairbairn Reads Trust Company Ltd.
(Fairbairn House, The Rohais, St. Peter Port,
Guernsey)
Director, Pegasus Trustees Ltd. (Craigmuir
Chambers, Road Town, Tortola, British Virgin
Islands)
Director, Fairbairn Futures Trading (1992)
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton, Bermuda)
Director, Fairbairn US Futures Trading (1992)
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton, Bermuda)
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<PAGE> 106
Director, Fairbairn Managed Futures Ltd. (Euro
Canadian Centre, Marlborough Street, Nassau,
Bahamas)
Director, Rohais Managed Futures (Holding)
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Rohais Series Fire Futures Trading
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Marketing
Services Ltd. (Providence House, 2 Bartley
Way, Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Poplar Services Inc. (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Rohais Series Six Futures Trading
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, FRT Directors Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
FRT Secretarial Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Spectrum Nominees Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
The Collingwood Group Limited (Genesis
Building, George Town, Grand Cayman, Cayman
Islands)
Fairbairn Ireland Limited (9-11 Lower Mount
Street, Dublin, Ireland)
Director, Old Mutual International (Ireland)
Limited (9-11 Lower Mount Street, Dublin,
Ireland)
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<PAGE> 107
Director, Old Mutual International Fund
Managers (9-11 Lower Mount Street, Dublin,
Ireland)
Director, Old Mutual International Asset
Managers (Guernsey) Ltd. (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Ltd. (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, OMIAM Properties Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, OMIAM Services Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual Assets Fund Ltd.
(Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual Fund Holdings (Bermuda)
Ltd. (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Fairbairn International S.A. (35 Rue
Glesener, Luxembourg)
Director, Fairbairn Marketing Services Limited
(P.O. Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Properties Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Holdings Limited (P.O. Box
119, Commerce House, St. Peter Port, Guernsey)
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<PAGE> 108
Director, Fairbairn Actuaries and Consultants
(Fairbairn House, The Rohais, St. Peter Port,
Guernsey)
Director, Fairbairn International S.A. (35 Rue
Glesener, Luxembourg)
Item 29. Principal Underwriters.
(a) S.G. Warburg, the Registrant's placement agent, does not act as
underwriter/placement agent, depositor or investment adviser for any investment
company (other than the Registrant).
(b) The information required by this Item 29 with respect to each director
and officer of S.G. Warburg is incorporated by reference to Schedule A of Form
BD filed by S.G. Warburg pursuant to the Securities and Exchange Act of 1934
(File No. 8-36859).
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in part,
at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
Name Address
---------- -------------
<S> <C>
State Street Bank and Trust Company State Street Bank and Trust
Company
1776 Heritage Drive
Quincy, Massachusetts 02171
Old Mutual Asset Managers (Bermuda) Richmond House,
Limited 12 Par-la-Ville Road,
Hamilton, Bermuda
</TABLE>
Item 31. Management Services.
Not applicable.
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<PAGE> 109
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
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<PAGE> 110
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Registration Statement on Form N-1A to be signed
on its behalf by the undersigned, thereunto duly authorized, in Hamilton,
Bermuda on the 8th day of November, 1995.
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
By: Michael John Levett
-------------------------------
Michael John Levett
Chairman of the Board and
President of Old Mutual Equity
Growth Assets South Africa Fund
<PAGE> 111
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, Old
Mutual South Africa Equity Trust has duly caused this Registration Statement on
Form N-1A of Old Mutual Equity Growth Assets South Africa Fund to be signed in
Hamilton, Bermuda on the 8th day of November, 1995.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: Michael John Levett
-------------------------------
Michael John Levett
Chairman of the Board and
President of Old Mutual
South Africa Equity Trust
<PAGE> 112
EXHIBIT INDEX
1 Declaration of Trust of Registrant
2 By-Laws of Registrant
5 Investment Advisory Agreement between Old Mutual South Africa Equity
Trust (the "Master Trust") and Old Mutual Asset Managers (Bermuda)
Limited (the "Adviser")
6 Placing Agreement among S.G. Warburg & Co. Inc. ("S.G. Warburg"), the
Master Trust, the Registrant, South African Mutual Life Assurance
Society, the Adviser and Old Mutual Fund Holdings (Bermuda) Limited
8(a) Custodian Agreement between the Registrant and State Street Bank and
Trust Company (the "Custodian")
8(b) Subcustodian Agreement between the Custodian and Standard Bank of
South Africa Limited
8(c) Subcustodian Agreement between the Custodian and State Street London
Limited
9(a) Administrative Services Agreement between the Registrant and State
Street Bank and Trust Company
9(b) Structuring Agreement among the Master Trust, the Registrant, Old
Mutual South Africa Growth Assets Fund Limited and International
Finance Corporation
9(c) Subscription and Portfolio Transfer Agreement among South African
Mutual Life Assurance Society, Old Mutual Fund Holdings (Bermuda)
Limited, the Adviser, the Master Trust, the Registrant, Old Mutual
South Africa Growth Assets Fund Limited and Old Mutual Global Assets
Fund Limited
9(d) Irish Stock Exchange Undertaking among the Master Trust, the
Registrant and Old Mutual South Africa Growth Assets Fund Limited
9(e) Form of letter from Old Mutual Investment Advisers, Inc. with
respect to seed capital
9(f) Form of agreement among the Registrant, the Master Trust, Old
Mutual South Africa Growth Assets Fund Limited and the Adviser as to
the allocation of insurance coverage
15 Placement Plan of the Registrant
27 Financial Data Schedule
<PAGE> 1
EXECUTION COPY
EXHIBIT 1
OLD MUTUAL
EQUITY GROWTH ASSETS SOUTH AFRICA FUND
----------------------------------
DECLARATION OF TRUST
Dated as of September 1, 1995
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
ARTICLE I--Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
Section 1.3 Rules of Interpretation 4
ARTICLE II--Trustees 5
Section 2.1 Number of Trustees 5
Section 2.2 Term of Office of Trustees 5
Section 2.3 Resignation and Appointment of Trustees 6
Section 2.4 Vacancies 6
Section 2.5 Delegation of Power to Other Trustees 6
ARTICLE III--Powers of Trustees 7
Section 3.1 General 7
Section 3.2 Investments 8
Section 3.3 Legal Title 9
Section 3.4 Issuance and Repurchase of Securities 9
Section 3.5 Borrowing Money; Lending Trust Property 10
Section 3.6 Delegation; Committees 10
Section 3.7 Collection and Payment 10
Section 3.8 Expenses 10
Section 3.9 Manner of Acting; By-Laws 11
Section 3.10 Miscellaneous Powers 11
Section 3.11 Principal Transactions 12
Section 3.12 Trustees and Officers as Shareholders 12
ARTICLE IV--Investment Adviser, Placement Agent, Administrator,
and Transfer Agent 13
Section 4.1 Investment Adviser 13
Section 4.2 Placement Agent 13
Section 4.3 Administrator 14
Section 4.4 Transfer Agent 14
Section 4.5 Parties to Contract 14
</TABLE>
-ii-
<PAGE> 3
<TABLE>
<S> <C>
ARTICLE V--Limitations of Liability of Shareholders, Trustees and
Others 15
Section 5.1 No Personal Liability of Shareholders,
Trustees, etc. 15
Section 5.2 Non-Liability of Trustees, etc. 15
Section 5.3 Mandatory Indemnification; Insurance 15
Section 5.4 No Bond Required of Trustees 18
Section 5.5 No Duty of Investigation; Notice in Trust
Instruments, etc. 18
Section 5.6 Reliance on Experts, etc. 18
ARTICLE VI--Shares of Beneficial Interest 19
Section 6.1 Beneficial Interest 19
Section 6.2 Rights of Shareholders 19
Section 6.3 Trust Only 19
Section 6.4 Issuance of Shares 20
Section 6.5 Register of Shares 20
Section 6.6 Transfer of Shares 20
Section 6.7 Notices 21
Section 6.8 Voting Powers 21
Section 6.9 Series Designation 22
ARTICLE VII--Redemptions 25
Section 7.1 Redemptions 25
Section 7.2 Suspension of Right of Redemption 26
Section 7.3 Disclosure of Holding 27
Section 7.4 Redemptions of Accounts of Less than
Minimum Amount 27
ARTICLE VIII--Determination of Net Asset Value, Net Income, and
Distributions 27
Section 8.1 Declaration and Calculation of Dividends, etc. 27
Section 8.2 Standing Resolution 27
Section 8.3 Allocation of Dividends and Distributions 27
Section 8.4 Dividends Payable in Shares 28
ARTICLE IX--Duration; Termination of Trust; Amendment;
Mergers, etc. 28
Section 9.1 Duration 28
Section 9.2 Termination of Trust 28
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
Section 9.3 Amendment Procedure 29
Section 9.4 Merger, Consolidation and Sale of Assets 30
Section 9.5 Incorporation, Reorganization 31
Section 9.6 Incorporation or Reorganization of Series 31
ARTICLE X--Reports to Shareholders and Shareholder
Communications 33
ARTICLE XI--Miscellaneous 33
Section 11.1 Filing 33
Section 11.2 Section Headings 34
Section 11.3 Governing Law 34
Section 11.4 Counterparts 34
Section 11.5 Reliance by Third Parties 34
Section 11.6 Provisions in Conflict with Law or Regulations 34
Section 11.7 Principal Office and Registered Agent 35
Section 11.8 Notices to Old Mutual and Investment Adviser 35
</TABLE>
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<PAGE> 5
DECLARATION OF TRUST
OF
OLD MUTUAL
EQUITY GROWTH ASSETS SOUTH AFRICA FUND
----------------------------------
Dated as of September 1, 1995
----------------------------------
WHEREAS, the Trustees desire to establish a trust for the investment and
reinvestment of funds contributed thereto; and
WHEREAS, the Trustees desire that the beneficial interest in the trust
assets be divided into transferable Shares of Beneficial Interest (par value
$0.0001 per share) ("Shares") issued in one or more series as hereinafter
provided;
NOW, THEREFORE, the Trustees and any successor Trustees elected or appointed
in accordance with this Declaration of Trust hereby declare that all money and
property contributed to the trust established hereunder shall be held and
managed in trust for the benefit of holders, from time to time, of the Shares
issued hereunder and subject to the provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is "Old Mutual
Equity Growth Assets South Africa Fund".
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following terms
have the following respective meanings:
"Administrator" means a party furnishing services to the Trust pursuant to
any contract described in Section 4.3 hereof.
"By-Laws" means the By-laws referred to in Section 3.9 hereof.
"Code" means the United States Internal Revenue Code of 1986.
<PAGE> 6
"Collective Vehicle" means any collective or pooled investment vehicle in
which the Trust may invest all or substantially all of its investable assets.
"Commission" has the meaning specified in the 1940 Act.
"Custodian" means a Person employed by the Trust to furnish services as
described in Article X of the By-Laws.
"Declaration" means this Declaration of Trust.
"Entity" means any corporation, company, partnership, trust, unincorporated
association, joint venture, limited liability company, mutual fund, or other
legal or business entity.
"Fiscal Year" means an annual period determined by the Trustees that ends on
June 30 of each year or on such other day as is permitted or required by the
Code.
"Government Authority" means the government of the United States or any
other country, any government of any political subdivision of the United States
or any other country, or any court, tribunal, administrative or regulatory
agency, taxing or revenue authority, central bank or banking regulatory
authority, commission, or body of any of the foregoing having in any case
appropriate jurisdiction.
"Government Mandate" means any statute, law, rule, regulation, code, or
ordinance duly adopted by any Government Authority, any treaty or compact
between two or more Government Authorities, any judgment, order, decree, ruling,
finding, determination, or injunction of any Government Authority, and any
policy or procedure having the force of law of any Government Authority.
"Interested Person" has the meaning given that term in the 1940 Act.
"Investment Adviser" means a Person furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
"Majority Shareholder Vote" means a "vote of a majority of the outstanding
voting securities", as defined in the 1940 Act, with respect to the Shares,
provided that a "Majority Shareholder Vote of a series" means a "vote of a
majority of the outstanding voting securities", as
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<PAGE> 7
defined in the 1940 Act, with respect to the Shares of that particular series.
At the date of this Declaration, Section 2(a)(42) of the 1940 Act provides in
pertinent part as follows:
The vote of a majority of the outstanding voting securities of a company
means the vote, at the annual or a special meeting of the security holders
of such company duly called, (A) of 67 per centum or more of the voting
securities present at such meeting, if the holders of more than 50 per
centum of the outstanding voting securities of such company are present or
represented by proxy; or (B) of more than 50 per centum of the outstanding
voting securities of such company, whichever is less.
"1940 Act" means the Investment Company Act of 1940 and the rules and
regulations of the Commission thereunder.
"Old Mutual" means the South African Mutual Life Assurance Society.
"Offering Document" means any private placement memorandum, prospectus,
offering circular, or similar document authorized by the Trustees for use in
connection with the offer and sale of Shares.
"Person" means any individual, Entity, or Government Authority.
"Placement Agent" means a Person furnishing services to the Trust pursuant
to any contract described in Section 4.2 hereof.
"Shareholder" means a record owner of outstanding Shares.
"Shares" means the Shares of Beneficial Interest into which the beneficial
interest in the Trust shall be divided from time to time or, when used in
relation to any particular series of Shares established by the Trustees pursuant
to Section 6.9 hereof, equal proportionate transferable units into which such
series of Shares shall be divided from time to time. The term "Shares" includes
fractions of Shares as well as whole Shares.
"Transfer" means to sell, convey, transfer, assign, lease, exchange,
quitclaim, donate, or otherwise dispose of, or, as appropriate, any sale,
conveyance, transfer, assignment, lease, exchange, quitclaim, donation, or other
disposition.
"Transfer Agent" means a Person furnishing services to the Trust pursuant to
any transfer agency contract described in Section 4.4 hereof.
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<PAGE> 8
"Trust" refers to the Massachusetts voluntary association established by
this Declaration.
"Trust Property" means any and all property, real or personal, tangible or
intangible, which is owned or held by or for the account of the Trust or the
Trustees, including any and all property allocated or belonging to any series of
Shares pursuant to Section 6.9 hereof.
"Trustees" means the persons who have signed this Declaration, so long as
they shall continue in office in accordance with the terms hereof, and all other
persons who may from time to time be duly elected or appointed, qualified, and
serving as Trustees in accordance with the provisions hereof, and reference
herein to a Trustee or the Trustees shall refer to such persons in their
capacity as trustees hereunder.
"United States" means the United States of America, including the fifty
states, the District of Columbia, all territories and possessions, and any other
areas subject to its jurisdiction.
SECTION 1.3. RULES OF INTERPRETATION. The following rules shall apply in the
construction and interpretation of this Declaration:
(a) The singular includes the plural, and the plural includes the singular.
(b) A reference to any gender includes each other gender.
(c) A reference to any Person includes its legal successors and permitted
assigns.
(d) A reference to any contract, instrument, agreement, or other document,
including any registration statement under the 1940 Act and any private
placement memorandum or other offering document for the Shares, shall include
any written amendment, supplement, or modification thereto and any replacement
thereof.
(e) A reference to any Government Mandate shall include any amendment or
modification thereto and any replacement thereof.
(f) A reference to any Section refers to that Section of this Declaration
unless otherwise indicated.
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<PAGE> 9
(g) The words "include," "includes," and "including" are not limiting.
(h) The words "hereof," "herein," and "hereunder" and words of similar
import shall refer to this Declaration as a whole and not to any particular
Section or subdivision of this Declaration.
ARTICLE II
TRUSTEES
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such number
as shall be fixed from time to time by a majority of the Trustees, provided,
however, that the number of Trustees shall in no event be less than three nor
more than 15. Except as determined from time to time by resolution of the
Trustees, no decrease in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of a Trustee
pursuant to Section 2.2 hereof.
SECTION 2.2. TERM OF OFFICE OF TRUSTEES. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the
lifetime of the Trust and until its termination as hereinafter provided; except
that (a) any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) any Trustee may be removed with cause, at any time by
written instrument signed by at least two-thirds of the remaining Trustees,
specifying the date when such removal shall become effective; (c) any Trustee
who has attained a mandatory retirement age established pursuant to any written
policy adopted from time to time by at least two-thirds of the Trustees shall,
automatically and without action of such Trustee or the remaining Trustees, be
deemed to have retired in accordance with the terms of such policy, effective as
of the date determined in accordance with such policy; (d) any Trustee who has
become incapacitated by illness or injury as determined by a majority of the
other Trustees, may be retired by written instrument signed by a majority of the
other Trustees, specifying the date of his retirement; and (e) a Trustee may be
removed by a vote of Shareholders holding at least two-thirds of the outstanding
Shares. For purposes of the foregoing clause (b), the term "cause" shall include
willful misconduct, gross negligence, dishonesty, fraud, a felony conviction, or
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<PAGE> 10
failure to comply with such written policies as may from time to time be adopted
by at least two-thirds of the Trustees with respect to the conduct of Trustees
and attendance at meetings. Upon the resignation, retirement, or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning, retiring, or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence. The Trust shall promptly notify the Investment Adviser, or,
if the Trust has no Investment Adviser and invests in a Collective Vehicle, the
investment adviser of such Collective Vehicle of the resignation, retirement, or
removal of any Trustee.
SECTION 2.3. RESIGNATION AND APPOINTMENT OF TRUSTEES. In case of a vacancy
as a result of the death, resignation, retirement, removal, or inability of any
of the Trustees, by reason of an increase in number, or for any other reason, a
majority of the remaining Trustees shall fill such vacancy by appointing such
other individual as they in their discretion shall see fit. Any such appointment
shall not become effective, however, until the person named in the written
instrument of appointment shall have accepted in writing such appointment and
agreed in writing to be bound by the terms of this Declaration. The power of
appointment is subject to the provisions of Section 16(a) of the 1940 Act.
SECTION 2.4. VACANCIES. The death, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in Section 2.3, or the number of Trustees as
fixed is reduced, the Trustees in office, regardless of their number, shall have
all the powers granted to the Trustees and shall discharge all the duties
imposed upon the Trustees by this Declaration.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his rights, power, and authority under this
Declaration for a period not exceeding six months at any one time to any other
Trustee; provided that in no case shall fewer than two Trustees personally
exercise the powers granted to the Trustees under this Declaration except as
herein otherwise expressly provided.
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<PAGE> 11
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. GENERAL.
(a) The Trustees shall have exclusive and absolute control over the Trust
Property and over the business of the Trust to the same extent as if the
Trustees were the sole owners of the Trust Property and business in their own
right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees shall have power to conduct the business of the Trust
and carry on its operations and maintain offices anywhere in the world both
within and without the Commonwealth of Massachusetts and the United States, and
to do all such other things and execute all such instruments as the Trustees
deem necessary, convenient, or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. The provisions of this Declaration shall be
construed so as to expand, to the fullest extent possible, the power and
authority of the Trustees on behalf of the Trust.
(b) The Trustees in all instances shall act as principals, and are and shall
be free from the control of the Shareholders except as otherwise expressly
provided herein. The Trustees shall have full power and authority to do any and
all acts and to make and execute any and all contracts and instruments that they
may consider necessary, convenient, or desirable in connection with the
management of the Trust subject to this Declaration. The Trustees shall not in
any way be bound or limited by present or future laws or customs in regard to
trust investments (except as otherwise required by Government Mandate), but
shall have full authority and power to make any and all investments which they,
in their uncontrolled discretion, shall deem proper to accomplish the purposes
of the Trust.
(c) The Trust shall be of the type commonly called a Massachusetts business
trust, and, without limiting the provisions hereof, the Trust may exercise all
powers which are ordinarily exercised by such a trust.
(d) The enumeration of any specific power herein shall not be construed as
limiting the power of the Trustees. The powers of the Trustees may be exercised
without order of or resort to any Government Authority.
-7-
<PAGE> 12
SECTION 3.2. INVESTMENTS.
(a) The Trustees shall have the power:
(i) to conduct, operate, and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, Transfer, exchange, distribute, lend, or otherwise
deal in or dispose of U.S. and non-U.S. currencies, any form of gold or other
precious metal, commodity contracts, any form of option contract, contracts for
the future acquisition or delivery of fixed income or other securities, shares
of, or any other interest in, any investment company as defined in the 1940 Act,
and securities and related derivatives of every nature and kind, including all
types of bonds, debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, bankers acceptances, and other
securities of any kind, issued, created, guaranteed, or sponsored by any and all
Persons, including:
(A) any Government Authority, including the government of the Republic
of South Africa or any province of South Africa and any agency, authority,
or instrumentality of any such government;
(B) any international or supranational instrumentality,
(C) any bank or savings institution organized under the laws of the
United States, any other country, or any political subdivision of any other
country,
(D) any Entity organized under the laws of the United States, any
other country, or any political subdivision of any other country; or
(E) any Collective Vehicle;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time to change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers,
and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including the right to consent and
otherwise act with respect thereto,
-8-
<PAGE> 13
with power to designate one or more Persons to exercise any of said rights,
powers, and privileges in respect of any of said investments;
(iii) to hold any security or property in a form not indicating any trust,
whether in bearer, unregistered, or other negotiable form; or either in the
Trust's own name or in the name of a custodian or a nominee, subject in either
case to proper safeguards according to the usual practice of Massachusetts trust
companies or investment companies;
(iv) to definitively interpret the investment objectives, policies, and
limitations of the Trust or any series; and
(v) to carry on any other business in connection with or incidental to any
of the foregoing powers, to do everything necessary, convenient, or desirable
for the accomplishment of any purpose, the attainment of any object, or the
furtherance of any power herein set forth, and to do every other act or thing
incidental or appurtenant to or connected with the aforesaid purposes, objects,
or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust.
(c) The Trustees shall have the power in their discretion without any
requirement of approval by Shareholders to invest either all or a portion of the
Trust Property in another investment company that is registered under the 1940
Act.
SECTION 3.3. LEGAL TITLE. Legal title to all Trust Property shall be vested
in the Trustees as joint tenants except that the Trustees shall have power to
cause legal title to any Trust Property to be held by or in the name of one or
more of the Trustees, or in the name of the Trust, or in the name of any other
Person or nominee, on such terms as the Trustees may determine. The right,
title, and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter become a Trustee. Upon the
resignation, removal, insolvency, or death of a Trustee, such Trustee shall
automatically cease to have any right, title, or interest in any of the Trust
Property, and the right, title, and interest of such Trustee in the Trust
Property shall vest automatically in the remaining Trustees. Such vesting and
cessation of title shall be effective whether or not Transfer documents have
been executed and delivered.
SECTION 3.4. ISSUANCE AND REPURCHASE OF SECURITIES. The Trustees shall have
the power to issue, Transfer, repurchase, redeem, retire, cancel, acquire, hold,
reissue, and otherwise deal in Shares and, subject
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<PAGE> 14
to the provisions set forth in Articles VII, VIII, and IX and Section 6.9, to
apply to any such repurchase, redemption, retirement, cancellation, or
acquisition of Shares any funds of the Trust or other Trust Property whether
capital or surplus or otherwise, to the full extent now or hereafter permitted
by the laws of the Commonwealth of Massachusetts governing business
corporations.
SECTION 3.5. BORROWING MONEY; LENDING TRUST PROPERTY. The Trustees shall
have power to (a) borrow money or otherwise obtain credit and to secure the same
by mortgaging, pledging, granting security interests in, or otherwise using as
security the Trust Property, (b) endorse, guarantee, or undertake the
performance of any obligation, contract, or engagement of any other Person and
(c) lend Trust Property.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to committees of Trustees or others or to officers,
employees, independent contractors, or agents of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Trustees or otherwise as the Trustees may deem expedient. The
Trustees may specify, modify, limit, and terminate the rights, power, and
authority of any such committees, officers, employees, contractors, and agents.
The Trustees may specify and modify the rules, policies, and procedures
governing any such committees, officers, employees, contractors, and agents or
may authorize such committees, officers, employees, contractors, and agents to
adopt and modify such rules, policies, and procedures (subject in each case to
the power of the Trustees to amend, modify, supplement, or repeal the same).
SECTION 3.7. COLLECTION AND PAYMENT. Subject to Section 6.9, the Trustees
shall have power to collect all property due to the Trust; to pay all claims,
including taxes, against the Trust Property; to prosecute, arbitrate, defend,
compromise, or abandon any claims relating to the Trust Property; to foreclose
any security interest securing any obligations owing to the Trust; and to enter
into releases, agreements, and other instruments in connection with the
foregoing.
SECTION 3.8. EXPENSES. Subject to Section 6.9, the Trustees shall have the
power to incur and pay any expenses which in the opinion of the Trustees are
necessary or incidental to carry out any of the purposes of this Declaration,
and to pay reasonable compensation from the funds of the Trust to themselves as
Trustees. The Trustees shall fix the compensation of all officers, employees,
contractors, agents, and Trustees. The Trustees shall be reimbursed from the
Trust Property, or
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the assets belonging to the appropriate series, for their expenses and
disbursements and for all losses and liabilities by them incurred in
administering the Trust; and for the payment of such expenses, disbursements,
losses, and liabilities, the Trustees shall have a lien on the Trust Property,
or the assets belonging to the appropriate series, prior to any rights or
interests of the Shareholders, or the Shareholders of such series, thereto.
SECTION 3.9. MANNER OF ACTING; BY-LAWS. Except as otherwise provided herein
or in the By-Laws, any action to be taken by the Trustees may be taken by a
majority of the Trustees present at a meeting of Trustees at which a quorum (as
determined in the ByLaws) is present, including any meeting held by means of a
conference telephone circuit or similar communications equipment by means of
which all persons who have given notice to the presiding officer that they wish
to participate in the meeting can hear each other, or by written consents of all
of the Trustees. The Trustees may adopt By-Laws not inconsistent with this
Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-Laws to the extent such power is not reserved to the
Shareholders.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power to:
(a) employ or contract with such Persons as the Trustees may deem desirable for
the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships, and any other combinations or associations; (c) purchase, and pay
for out of Trust Property, insurance policies insuring any Shareholders,
Administrators, Trustees, officers, employees, agents, Investment Advisers,
Placement Agents, selected dealers, or independent contractors of the Trust
against all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity, whether or
not constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (d) establish pension,
profit-sharing, Share purchase, and other retirement, incentive, and benefit
plans for any Trustees, officers, employees, contractors, or agents of the
Trust; (e) to the extent permitted by Government Mandate, indemnify any person
with whom the Trust has dealings, including any Investment Adviser,
Administrator, Custodian, Placement Agent, Transfer Agent, dealer, or other
agent or independent contractor, to such extent as the Trustees shall determine;
(f) guarantee indebtedness or contractual obligations of others; (g) determine
and change the Fiscal Year of the Trust and the method by which its accounts
shall be kept; (h) adopt a seal for the Trust, provided that the absence of such
seal shall not impair the validity of any instrument executed on behalf of the
Trust; (i) set record
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dates for any purpose; (j) subject to Section 9.4 and Section 9.6, merge or
consolidate the Trust or any series with any other Entity and Transfer all or
substantially all of the assets of the Trust to another Person; and (k) set
apart, from time to time, out of any funds of the Trust reserves for any proper
purpose, and abolish any such reserves.
SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions that are not
prohibited by the 1940 Act, or that are permitted by any order of exemption
issued by the Commission, the Trustees shall not, on behalf of the Trust, buy
any securities (other than Shares) from or Transfer any securities (other than
Shares) to, or lend any assets of the Trust to, any Trustee or officer of the
Trust or any firm of which any such Trustee or officer is a member acting as
principal, or have any such dealings with any Investment Adviser, Administrator,
Custodian (other than repurchase agreements), Placement Agent, or Transfer Agent
or with any Interested Person of such Person; but the Trust may, upon customary
terms, employ any such Person, or any firm or company in which such Person is an
Interested Person, as broker, legal counsel, registrar, transfer agent, dividend
disbursing agent, or custodian.
SECTION 3.12. TRUSTEES AND OFFICERS AS SHAREHOLDERS. Except as hereinafter
provided, no officer, Trustee or member of any advisory board of the Trust, and
no member, partner, officer, director, or trustee of any Investment Adviser,
Administrator, or Placement Agent, and no Investment Adviser, Administrator, or
Placement Agent of the Trust, shall take long or short positions in the
securities issued by the Trust. The foregoing provision shall not prevent:
(a) The Placement Agent from purchasing Shares from the Trust if such
purchases are limited (except for reasonable allowances for clerical errors,
delays and errors of transmission, and cancellation of orders) to purchases for
the purpose of filling orders for Shares received by the Placement Agent and
provided that orders to purchase from the Trust are entered with the Trust or
the Custodian promptly upon receipt by the Placement Agent of purchase orders
for Shares, unless the Placement Agent is otherwise instructed by its customer;
(b) The Placement Agent from purchasing Shares as agent for the account of
the Trust; or
(c) The purchase from the Trust or from the Placement Agent of Shares by any
officer, Trustee, or member of any advisory board of the Trust or by any member,
partner, officer, director, or trustee of any Investment Adviser, Administrator,
or Placement Agent at a price not
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lower than the net asset value of the Shares at the moment of such purchase,
provided that any such sales are only to be made pursuant to a uniform offer
described in the current Offering Document for the Shares being purchased.
ARTICLE IV
INVESTMENT ADVISER, PLACEMENT AGENT, ADMINISTRATOR, AND TRANSFER AGENT
SECTION 4.1. INVESTMENT ADVISER. Subject to a Majority Shareholder Vote of
each series affected thereby, the Trustees may in their discretion from time to
time enter into one or more investment advisory or management contracts whereby
the other party to each such contract shall undertake to furnish the Trust such
management, investment advisory, statistical, and research facilities and
services, and such other facilities and services, if any, with respect to one or
more series of Shares, as the Trustees shall from time to time consider
necessary, convenient, or desirable and all upon such terms and conditions as
the Trustees may in their discretion determine. Notwithstanding any provision of
this Declaration, the Trustees may delegate to the Investment Adviser authority
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans, or Transfers of assets of the
Trust on behalf of the Trustees or may authorize any officer, employee, or
Trustee to effect such purchases, sales, loans, or Transfers pursuant to
recommendations of the Investment Adviser (and all without further action by the
Trustees). Any of such purchases, sales, loans, or Transfers shall be deemed to
have been authorized by all the Trustees. Such services may be provided by one
or more Persons.
SECTION 4.2. PLACEMENT AGENT. The Trustees may in their discretion from time
to time enter into one or more placement agreements providing for the sale of
Shares whereby the Trust may either agree to issue Shares to the other party to
any such contract or appoint any such other party its sales agent for Shares. In
either case, any such contract shall be on such terms and conditions as the
Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws; and such contract may also provide for the repurchase or sale of Shares
by such other party as principal or as agent of the Trust and may provide that
such other party may enter into selected dealer and sales agreements with
registered securities dealers and depository institutions to further the
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purpose of the placement or repurchase of the Shares. Such services may be
provided by one or more Persons.
SECTION 4.3. ADMINISTRATOR. The Trustees may in their discretion from time
to time enter into one or more contracts for the provision of administrative
services to the Trust as the Trustees shall from time to time consider
necessary, convenient, or desirable and all upon such terms and conditions as
the Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws. Such services may be provided by one or more Persons.
SECTION 4.4. TRANSFER AGENT. The Trustees may in their discretion from time
to time enter into one or more contracts for the provision of transfer agency
services to the Trust or to Shareholders of the Trust as the Trustees shall from
time to time consider necessary, convenient, or desirable and all upon such
terms and conditions as the Trustees may in their discretion determine, provided
that such terms and conditions are not inconsistent with the provisions of this
Declaration or the By-Laws. Such services may be provided by one or more
Persons.
SECTION 4.5. STRUCTURING AGENT. The Trustees may in their discretion from
time to time enter into one or more agreements for the provision of structuring
services and advice to the Trust on such terms and conditions as the Trustees
may in their discretion determine, provided that such terms and conditions are
not inconsistent with the provisions of this Declaration or the By-Laws. Such
services may be provided by one or more Persons.
SECTION 4.6. PARTIES TO CONTRACT. Any contract of the character described in
Section 4.1, 4.2, 4.3, 4.4 or 4.5 or any Custodian contract as described in
Article X of the By-Laws may be entered into with any Person, although one or
more of the Trustees or officers of the Trust may be an officer, partner,
director, trustee, shareholder, or member of such other party to the contract,
or otherwise interested in such contract, and no such contract shall be
invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article IV or the By-Laws.
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ARTICLE V
LIMITATIONS ON LIABILITY OF SHAREHOLDERS,
TRUSTEES AND OTHERS
SECTION 5.1. NO PERSONAL LIABILITY OF SHAREHOLDERS, TRUSTEES, ETC. No
Shareholder shall be subject to any personal liability whatsoever to any Person
in connection with Trust Property or the acts, obligations, or affairs of the
Trust. No Trustee, officer, or employee of the Trust shall be subject to any
personal liability whatsoever to any Person, other than the Trust or its
Shareholders, in connection with Trust Property or the affairs of the Trust and
all Persons other than the Trust or its Shareholders shall look solely to the
Trust Property for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee, officer, or
employee, as such, of the Trust, is made a party to any suit or proceeding to
enforce any such liability, he shall not, on account thereof, be held to any
personal liability. The Trust shall indemnify and hold each Shareholder harmless
from and against all claims and liabilities to which such Shareholder may become
subject by reason of his being or having been a Shareholder, and shall reimburse
such Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The rights accruing to a
Shareholder under this Section 5.1 shall not exclude any other right to which
such Shareholder may be lawfully entitled, nor shall anything herein contained
restrict the right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Notwithstanding any other provision of this Declaration to the contrary, no
Trust Property shall be used to indemnify or reimburse any Shareholder of any
Shares of any series other than Trust Property allocated or belonging to that
series.
SECTION 5.2. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer, or
employee of the Trust shall be liable to the Trust or to any Shareholder,
Trustee, officer, employee, or agent of the Trust for any action or failure to
act (including the failure to compel in any way any former or acting Trustee to
redress any breach of trust), or for any error of judgment or mistake of fact or
law, except for his own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his duties.
SECTION 5.3. MANDATORY INDEMNIFICATION; INSURANCE.
(a) Subject to the exceptions and limitations contained in paragraph (b)
below:
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(i) every person who is or has been a Trustee, officer, or employee of the
Trust shall be indemnified by the Trust, to the fullest extent permitted by
Government Mandate (including the 1940 Act) against all liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit, or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, or employee and
against amounts paid or incurred by him in the settlement thereof; and
(ii) for all purposes of this Article V, the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits, or
proceedings (civil, criminal, administrative, or other, including appeals),
actual or threatened; and the words "liability" and "expenses" shall include
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties,
and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee, officer,
or employee:
(i) against any liability to the Trust or the Shareholders by reason of a
final adjudication by the Government Authority before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee,
officer, or employee or other disposition not involving a final adjudication as
provided in paragraph (b) (i) or (b) (ii) above resulting in a payment by a
Trustee, officer, or employee, unless there has been either a determination that
such Trustee, officer, or employee did not engage in willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office by the Government Authority approving the settlement or
other disposition or by a reasonable determination, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that he did
not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting on the
matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
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(B) by written opinion of independent legal counsel.
(c) Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property and the Trust's present or
former Shareholders, Trustees, officers, employees, independent contractors, and
agents in such amounts as the Trustees shall deem adequate to cover possible
tort liability (whether or not the Trust would have the power to indemnify such
Persons against such liability), and such other insurance as the Trustees in
their sole judgment shall deem advisable.
(d) The rights of indemnification herein provided shall be severable, shall
not affect any other rights to which any Trustee, officer, or employee may now
or hereafter be entitled, shall continue as to a Person who has ceased to be
such a Trustee, officer, or employee, and shall inure to the benefit of the
heirs, executors, and administrators of such Person. Nothing contained herein
shall affect any rights to indemnification to which personnel other than
Trustees, officers, and employees may be entitled by contract or otherwise under
Government Mandate.
(e) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other appropriate
security or the Trust shall be insured against losses arising out of any such
advances; or
(ii) a majority of the Disinterested Trustees acting on the matter (provided
that a majority of the Disinterested Trustees then in office act on the matter)
or an independent legal counsel in a written opinion, shall determine, based
upon a review of readily available facts (as opposed to a full trial-type
inquiry), that there is reason to believe that the recipient ultimately will be
found entitled to indemnification.
As used in this Section 5.3 a " Disinterested Trustee" is one (i) who is not
an "Interested Person" of the Trust (including anyone who has been exempted from
being an "Interested Person" by any rule, regulation, or order of the
Commission), and (ii) against whom none of such actions,
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suits, or other proceedings or another action, suit, or other proceeding on the
same or similar grounds is then or had been pending.
SECTION 5.4. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be obligated to
give any bond or other security for the performance of any of his duties
hereunder.
SECTION 5.5. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS, ETC. No
purchaser, lender, Transfer Agent, or other Person dealing with the Trustees or
any officer, employee, or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee, or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee, or agent. Every obligation, contract, instrument,
certificate, Share, other security of the Trust, or undertaking, and every other
act or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees, or agents of the Trust. Every written obligation,
contract, instrument, certificate, Share, other security of the Trust, or
undertaking made or issued by the Trustees shall recite that the same is
executed or made by them not individually, but as Trustees under this
Declaration, and that the obligations of any such instrument are not binding
upon any of the Trustees or Shareholders individually, but bind only the trust
estate, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees or Shareholders individually.
SECTION 5.6. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or employee
of the Trust shall, in the performance of his duties, be fully and completely
justified and protected with regard to any act or any failure to act resulting
from reliance in good faith upon the books of account or other records of the
Trust, upon an opinion of counsel, or upon reports made to the Trust by any of
its officers or employees or by any Investment Adviser, Placement Agent,
Transfer Agent, selected dealers, accountants, appraisers, or other experts or
consultants selected with reasonable care by the Trustees, officers, or
employees of the Trust, regardless of whether such counsel or expert may also be
a Trustee.
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ARTICLE VI
SHARES OF BENEFICIAL INTEREST
SECTION 6.1. BENEFICIAL INTEREST. The beneficial interest in the Trust shall
be divided into transferable Shares, which may be divided into one or more
series as provided in Section 6.9. Each such series shall have such classes of
Shares as the Trustees may from time to time determine. The number of Shares
authorized hereunder is unlimited. The Trustees may divide or combine the Shares
into a greater or lesser number, and may classify or reclassify any unissued
Shares into one or more series or classes of Shares. All Shares issued hereunder
including Shares issued in connection with a dividend in Shares or a split of
Shares, shall be fully paid and non-assessable.
SECTION 6.2. RIGHTS OF SHAREHOLDERS. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Shareholders shall have no
interest therein other than the beneficial interest conferred by their Shares,
and they shall have no right to call for any partition or division of any
property, profits, rights, or interests of the Trust nor shall they be required
to assume any losses of the Trust in excess of their respective interests in the
Trust or suffer an assessment of any kind by virtue of their ownership of
Shares. The Shares shall be personal property giving only the rights
specifically set forth in this Declaration. The Shares shall not entitle the
holder to preference, preemptive, appraisal, conversion, or exchange rights,
except as the Trustees may determine. Every Shareholder by virtue of having
become a Shareholder shall be held expressly to have assented and agreed to the
terms of this Declaration and to have become a party hereto. The death of a
Shareholder during the continuance of the Trust shall not operate to terminate
the Trust nor entitle the representative of any deceased Shareholder to an
accounting or to take any action before any Government Authority or elsewhere
against the Trust or the Trustees, but only to the rights of said decedent under
this Trust.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create only
the relationship of Trustee and beneficiary between the Trustees and the
Shareholders. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation,
bailment, or any form of legal relationship other than a trust. Nothing in this
Declaration shall be construed to make the Shareholders, either by themselves or
with the Trustees, partners or members of a joint stock association.
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SECTION 6.4. ISSUANCE OF SHARES. The Trustees in their discretion may, from
time to time without vote of the Shareholders, issue Shares, in addition to the
then issued and outstanding Shares and Shares held in the treasury, to such
parties and for such amount and type of consideration, including cash or
property, and on such terms as the Trustees may deem necessary, convenient, or
desirable, and may in such manner acquire other assets (including the
acquisition of assets subject to, and in connection, with the assumption of
liabilities) and businesses. The Trustees may impose a sales charge or
commission on issuances of Shares or authorize a Placement Agent to impose such
a sales charge or commission. The Trustees may issue fractional Shares. The
Trustees may from time to time divide or combine the Shares of any series into a
greater or lesser number without thereby changing their proportionate beneficial
interests in Trust Property allocated or belonging to such series. Contributions
to the Trust may be accepted for, and Shares shall be redeemed as, whole Shares
and/or fractions of a Share.
SECTION 6.5. REGISTER OF SHARES. A register shall be kept at the principal
office of the Trust or at an office of the Transfer Agent (and/or any
sub-transfer agent) which register shall contain the names and addresses of the
Shareholders and the number of Shares held by them respectively and a record of
all transfers thereof. Such register shall be conclusive as to who are the
holders of the Shares and who shall be entitled to receive dividends or
distributions or otherwise to exercise or enjoy the rights of Shareholders. No
Shareholder shall be entitled to receive payment of any dividend or
distribution, nor to have notice given to him as herein or in the By-Laws
provided, until he has given his address to the Transfer Agent, a sub-transfer
agent, or such other officer or agent of the Trustees as shall keep the said
register for entry thereon. It is not contemplated that certificates will be
issued for the Shares; however, the Trustees, in their discretion, may authorize
the issuance of Share certificates and promulgate appropriate rules and
regulations as to their use.
The Trust shall be entitled to treat the holder of record of any Share as
the holder in fact thereof, and shall not be bound to recognize any equitable or
other claim of interest in such Share on the part of any other Person except as
may be otherwise expressly provided by Government Mandate.
SECTION 6.6. TRANSFER OF SHARES. Shares shall be transferable on the records
of the Trust only by the record holder thereof or by his agent thereunto
authorized in writing, upon delivery to the Trustees, the
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Transfer Agent, or a sub-transfer agent of a duly executed instrument of
Transfer together with any certificates (if issued) for such Shares and such
evidence of the genuineness of each such execution and authorization and of
other matters as may reasonably be required. The Trustees may impose such
restrictions upon the transfer of Shares (either generally or with respect to
Shares of a particular series) as they determine to be necessary, convenient, or
desirable for purposes of complying with applicable Government Mandates. Upon
such delivery the Transfer shall be recorded on the register of the Trust. Until
such record is made, the Shareholder of record shall be deemed to be the holder
of such Shares for all purposes hereunder and neither the Trustees nor any
Transfer Agent, sub-transfer agent, or registrar nor any officer, employee, or
agent of the Trust shall be affected by any notice of the proposed Transfer.
Any person becoming entitled to any Shares in consequence of the death,
bankruptcy, or incompetence of any Shareholder, or otherwise by operation of
law, shall be recorded on the register of Shares as the holder of such Shares
upon production of the proper evidence thereof to the Trustees, the Transfer
Agent, or a sub-transfer agent; but until such record is made, the Shareholder
of record shall be deemed to be the holder of such Shares for all purposes
hereunder and neither the Trustees nor any Transfer Agent, sub-transfer agent,
or registrar nor any officer or agent of the Trust shall be affected by any
notice of such death, bankruptcy, or incompetence, or other operation of law.
SECTION 6.7. NOTICES. Any and all notices to which any Shareholder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Shareholder of record at his last
known address as recorded on the register of the Trust.
SECTION 6.8. VOTING POWERS.
(a) The Shareholders shall have power to vote only (i) for the election of
Trustees as provided in Section 16 of the 1940 Act, (ii) for the removal of
Trustees as provided in Section 2.2, (iii) with respect to any investment
advisory or management contract as provided in Section 4.1, (iv) with respect to
termination of the Trust as provided in Section 9.2, (v) with respect to any
amendment of this Declaration to the extent and as provided in Section 9.3, (vi)
with respect to any merger, consolidation, or sale of assets as provided in
Sections 9.4 and 9.6, (vii) with respect to incorporation of the Trust or any
series to the extent and as provided in Sections 9.5 and 9.6, (viii) to the same
extent as the stockholders of a
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Massachusetts business corporation as to whether or not a court action,
proceeding, or claim should or should not be brought or maintained derivatively
or as a class action on behalf of the Trust or the Shareholders, and (ix) with
respect to such additional matters relating to the Trust as may be required by
this Declaration, the By-Laws, or applicable Government Mandate, or as the
Trustees may consider necessary, convenient, or desirable. The Trust shall
promptly notify the Investment Adviser, or, if the Trust has no Investment
Adviser and invests in a Collective Vehicle, the investment adviser of such
Collective Vehicle of any vote by the Shareholders under this Section 6.8.
(b) Each whole Share shall be entitled to one vote as to any matter on which
it is entitled to vote and each fractional Share shall be entitled to a
proportionate fractional vote, except that Shares held in the treasury of the
Trust shall not be voted. Shares shall be voted by individual series on any
matter submitted to a vote of the Shareholders of the Trust except as provided
in Section 6.9(g). There shall be no cumulative voting in the election of
Trustees. The By-Laws may include further provisions for Shareholder votes,
quorums, meetings and related matters.
(c) Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by Government Mandate, this
Declaration, or the By-Laws to be taken by Shareholders.
SECTION 6.9. SERIES DESIGNATION. The Trustees, in their discretion, may
authorize the division of Shares into one or more series, and the different
series shall be established and designated, and the variations in the relative
rights, privileges, and preferences as between the different series shall be
fixed and determined by the Trustees subject in all respects to the following
provisions:
(a) All Shares shall be identical except that (i) there may be such
variations as shall be fixed and determined by the Trustees between different
series as to purchase price, right of redemption, the price, terms, and manner
of redemption, and special and relative rights as to dividends and on
liquidation, and (ii) there shall be such variations as to voting rights as
specified in Section 6.9(g).
(b) The number of authorized Shares and the number of Shares of each series
that may be issued shall be unlimited. The Trustees may classify or reclassify
any unissued Shares or any Shares previously issued and reacquired of any series
into one or more series that may be established and designated from time to
time. The Trustees may hold as
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treasury shares (of the same or some other series), reissue for such
consideration and on such terms as they may determine, or cancel any Shares of
any series reacquired by the Trust at their discretion from time to time.
(c) All consideration received by the Trust for the issuance or sale of
Shares of a particular series, together with all assets in which such
consideration is invested or reinvested, all income and earnings thereon,
profits therefrom, and proceeds thereof, including any proceeds derived from the
sale, exchange, or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held in trust for the benefit of Shareholders of that series for all
purposes, subject only to the rights of creditors of such series, and shall be
so recorded upon the books of account of the Trust. In the event that there are
any assets, income, earnings, profits, proceeds, funds, or payments which are
not readily identifiable as held for the benefit of Shareholders of any
particular series, the Trustees shall allocate them to and among any one or more
of the series established and designated from time to time in such manner and on
such basis as the Trustees, in their sole discretion, deem fair and equitable.
Each such allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all series for all purposes. No Shareholder of any particular
series shall have any claim on or right to any assets allocated or belonging to
any other series.
(d) The assets belonging to each particular series shall be charged with the
liabilities of the Trust in respect of that series and any expenses, costs,
charges, and reserves attributable to that series. Any general liabilities,
expenses, costs, charges or reserves of the Trust which are not readily
identifiable as belonging to any particular series shall be allocated and
charged by the Trustees to and among any one or more of the series established
and designated from time to time in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the Shareholders of all series for all purposes. The
Trustees shall have full discretion, to the extent not inconsistent with the
1940 Act, to determine which items shall be treated as income and which items as
capital; and each such determination and allocation shall be conclusive and
binding upon the Shareholders. Under no circumstances shall the assets allocated
or belonging to any particular series be charged with liabilities, expenses,
costs, charges, or reserves attributable to any other series. All Persons who
have extended credit that has been allocated to a particular series, or who have
a claim or contract that has been allocated to any particular
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series, shall look only to the assets of that particular series for payment of
such credit, claim, or contract.
(e) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section 3.2
unless otherwise provided in the instrument of the Trustees establishing such
series which is hereinafter described.
(f) Each Share of a series shall represent a beneficial interest in the net
assets allocated or belonging to such series only, and such interest shall not
extend to the assets of the Trust generally. Dividends and distributions on
Shares of a particular series may be paid with such frequency as the Trustees
may determine, which may be monthly or otherwise, pursuant to a standing vote
adopted only once or with such frequency as the Trustees may determine, to the
Shareholders of that series only, from such of the income and capital gains,
accrued or realized, from the assets belonging to that series, as the Trustees
may determine, after providing for actual and accrued liabilities belonging to
that series. All dividends and distributions on Shares of a particular series
shall be distributed pro rata to the Shareholders of that series in proportion
to the number of Shares of that series held by such Shareholders at the date and
time of record established for the payment of such dividends or distributions.
Shares of any particular series of the Trust may be redeemed solely out of Trust
Property allocated or belonging to that series. Upon liquidation or termination
of a series of the Trust, Shareholders of such series shall be entitled to
receive a pro rata share of the net assets of such series only.
(g) On any matter submitted to a vote of the Shareholders of the Trust, all
Shares then entitled to vote shall be voted by individual series, except that
(i) when required by the 1940 Act or Section 9.3 to be voted in the aggregate,
Shares shall not be voted by individual series, (ii) the Shares shall vote as
one class in the election and removal of Trustees, and (iii) when the Trustees
have determined that the matter affects the interests of Shareholders of all
series or classes of Shares and that the Shares shall vote as one class on the
matter.
(h) The establishment and designation of any series of Shares shall be
effective upon the execution by a majority of the Trustees of an instrument
setting forth such establishment and designation and the relative rights and
preferences of such series, or as otherwise provided in such instrument, or upon
a resolution adopted by a majority of the Trustees and the execution by an
officer of the Trust on behalf of the Trustees of an instrument setting forth
such establishment and
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designation and the relative rights and preferences of such series, or as
otherwise provided in such instrument. At any time that there are no Shares
outstanding of any particular series previously established and designated, the
Trustees may by an instrument executed by a majority of their number abolish
that series and the establishment and designation thereof. Each instrument
referred to in this paragraph shall have the status of an amendment to this
Declaration.
(i) Notwithstanding anything in this Declaration to the contrary, the
Trustees may, in their discretion, authorize the division of Shares of any
series into Shares of one or more classes or subseries of such series. All
Shares of a class or a subseries shall be identical with each other and with the
Shares of each other class or subseries of the same series except for such
variations between classes or subseries as may be approved by the Board of
Trustees and be permitted under the 1940 Act or pursuant to any exemptive order
issued by the Commission.
(j) The Trust shall promptly notify the Investment Adviser, or, if the Trust
has no Investment Adviser and invests in a Collective Vehicle, the investment
adviser of such Collective Vehicle, of the establishment or designation of any
new series.
ARTICLE VII
REDEMPTIONS
SECTION 7.1. REDEMPTIONS. In case any Shareholder at any time desires to
dispose of his Shares, he may deposit his certificates therefor (if any), duly
endorsed in blank or accompanied by an instrument of Transfer executed in blank,
or if the Shares are not represented by any certificate, a written request or
other such form of request as the Trustees may from time to time authorize, at
the office of the Transfer Agent or a sub-transfer agent keeping the register of
Shares with respect to such Shareholders, or at the office of any bank or trust
company, either in or outside of the Commonwealth of Massachusetts, which is a
member of the Federal Reserve System and which the said Transfer Agent or the
said sub-transfer agent has designated in writing for that purpose, together
with an irrevocable offer in writing in a form acceptable to the Trustees to
Transfer the Shares represented thereby to the Trust at the net asset value per
Share thereof (less any applicable redemption fee or sales charge), next
determined after such deposit as provided in Article VIII. The Trustees may
authorize the Transfer Agent to designate the hours of each day during which
requests for redemptions of Shares will
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be accepted. Payment (which may be in cash or in kind) for said Shares shall be
made to the Shareholder within seven days after the date on which the deposit is
made, unless (a) the date of payment is postponed pursuant to Section 7.2, or
(b) the receipt, or verification of receipt, of the purchase price for the
Shares to be redeemed is delayed, in either of which events payment may be
delayed beyond seven days. The Trustees may impose a redemption fee or sales
charge on redemptions of Shares (either generally or with respect to Shares of a
particular series) and may authorize a service provider of the Trust to impose
such a redemption fee or sales charge. The Trust may, but shall not be obligated
to, (a) pay a fee or other amount to Old Mutual, any wholly-owned direct or
indirect subsidiary of Old Mutual, or any Collective Vehicle in an amount
approved by the Trustees in consideration for an undertaking by such party (or
an affiliate of such party) to make arrangements under which cash is provided to
the Trust, directly or indirectly, for the purpose of funding redemptions of
Shares, and (b) apply the proceeds of any redemption fee to fund payment of the
fee referred to in clause (a).
SECTION 7.2. SUSPENSION OF RIGHT OF REDEMPTION. The Trust may declare a
suspension of the right of redemption or postpone the date of payment of the
redemption proceeds for the whole or any part of any period (a) during which the
New York Stock Exchange is closed other than customary week-end and holiday
closings, (b) during which trading on the New York Stock Exchange is restricted,
(c) during which an emergency exists as a result of which disposal by the Trust
of securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(d) during which the Commission for the protection of Shareholders by order
permits the suspension of the right of redemption or postponement of the date of
payment of the redemption proceeds; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
prescribed in (b), (c), or (d) exist. Such suspension shall take effect at such
time as the Trust shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right of redemption or payment of the redemption proceeds until the
Trust shall declare the suspension at an end, except that the suspension shall
terminate in any event on the first day on which the New York Stock Exchange
shall have reopened or the period specified in (b) or (c) shall have expired (as
to which, in the absence of an official ruling by the Commission, the
determination of the Trust shall be conclusive). In the case of a suspension of
the right of redemption, a Shareholder may either withdraw his request for
redemption or receive payment based on the net asset value upon the termination
of the suspension.
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SECTION 7.3. DISCLOSURE OF HOLDING. The Shareholders shall upon request
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Shares as the Trustees deem necessary or convenient to
comply with the Code, or any other applicable Government Mandate. Upon the
failure of a Shareholder to comply with such a request of the Trustees, the
Trust shall have the power to redeem the Shares of such Shareholder at a
redemption price determined in accordance with Section 7.1.
SECTION 7.4. REDEMPTIONS OF ACCOUNTS OF LESS THAN MINIMUM AMOUNT. The
Trustees shall have the power at any time to redeem Shares of any Shareholder at
a redemption price determined in accordance with Section 7.1 if at such time the
aggregate net asset value of the Shares (or the number of Shares) owned by such
Shareholder is less than a minimum amount (or number of Shares), if any, as
determined from time to time by the Trustees.
ARTICLE VIII
DETERMINATION OF NET ASSET VALUE,
NET INCOME, AND DISTRIBUTIONS
SECTION 8.1. DECLARATION AND CALCULATION OF DIVIDENDS, ETC. The Trustees may
from time to time declare and pay dividends and other distributions (in cash or
in kind) in respect of the Shares or any series. The Trustees, in their absolute
discretion, may prescribe and shall set forth in the By-Laws or in a duly
adopted vote of the Trustees such procedures and schedules for determining the
net asset value of the Shares, the net income of the Trust or any series, or the
amount, record date, and payment date of dividends and distributions in respect
of the Shares or any series.
SECTION 8.2. STANDING RESOLUTIONS. Dividends and other distributions may be
declared pursuant to a standing resolution adopted only once or with such
frequency as the Trustees may determine, and may, if so determined by the
Trustees, be payable in Shares at the election of each Shareholder entitled to
receive such dividends and distributions.
SECTION 8.3. ALLOCATION OF DIVIDENDS AND DISTRIBUTIONS. All dividends and
distributions on Shares (or on Shares of a particular series) shall be
distributed pro rata to the Shareholders (or Shareholders of that
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series) in proportion to the number of Shares (or Shares of that series) held by
each of them as of the record date for such dividend or distribution.
SECTION 8.4. DIVIDENDS PAYABLE IN SHARES. The Trustees may at any time
declare and distribute a dividend payable in Shares or other securities of the
Trust among the Shareholders (or among the Shareholders of a particular series
or class).
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
SECTION 9.1. DURATION. The Trust shall continue without limitation of time
but subject to the provisions of this Article IX.
SECTION 9.2. TERMINATION OF TRUST.
(a) The Trust may be terminated by a Majority Shareholder Vote, or by the
Trustees with written notice to the Shareholders. Any series of the Trust may be
terminated by a Majority Shareholder Vote of that series, or by the Trustees
with written notice to the Shareholders of that series. Upon the termination of
the Trust or any series of the Trust:
(i) The Trust or series of the Trust shall carry on no business except for
the purpose of winding up its affairs.
(ii) The Trustees shall notify Old Mutual of the termination.
(iii) Upon either (1) receipt by the Trustees of notice from Old Mutual that
it will not exercise its right of purchase under Section 9.7 with respect to
Shares of the Trust or series, (2) failure of Old Mutual to exercise its rights
under Section 9.7 within 30 days of the notice under clause (ii) above with
respect to the Shares of the Trust or the series, or (3) purchase by Old Mutual
of all Shares of the Trust or the series under Section 9.7 and approval by Old
Mutual of the winding up of the Trust or the series, the Trustees shall proceed
to wind up the affairs of the Trust or series of the Trust and all the powers of
the Trustees under this Declaration shall continue until the affairs of the
Trust or series of the Trust shall have been wound up, including the power to
(A) fulfill or discharge the contracts of the Trust, (B) collect the assets of
the Trust or series of the Trust, (C) Transfer all or any part of the remaining
Trust
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Property of the Trust or series of the Trust to one or more Persons at public or
private sale for consideration which may consist in whole or in part of cash,
securities, or other property of any kind, (D) discharge or pay the liabilities
of the Trust or series of the Trust, and (E) do all other acts necessary,
convenient, or desirable in the discretion of the Trustees to liquidate the
business of the Trust or series of the Trust.
(iv) After (A) the Trust has paid or made adequate provision for the payment
of all liabilities, (B) the Trustees have received such releases, indemnities,
and refunding agreements as they deem necessary, convenient, or desirable, and
(C) either (I) receipt by the Trustees of notice from Old Mutual that it will
not exercise its right of purchase under Section 9.7 with respect to Shares of
the Trust or series, (II) failure of Old Mutual to exercise its rights under
Section 9.7 within 30 days of the notice under clause (ii) above with respect to
the Shares of the Trust or the series, or (3) purchase by Old Mutual of all
Shares of the Trust or the series under Section 9.7 and approval by Old Mutual
of such distribution, the Trustees may distribute the remaining Trust Property
of the Trust or series of the Trust, in cash or in kind, or partly in cash and
partly in kind, among the Shareholders of the Trust or series of the Trust
according to the number of Shares, or Shares of that series, held by each of
them respectively.
(b) After termination of the Trust (or any series of the Trust) and a
liquidating distribution to the Shareholders of the Trust (or such series of the
Trust) as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder with respect to the Trust (or such
series of the Trust), and the rights and interests of all Shareholders of the
Trust (or such series of the Trust) shall thereupon cease.
SECTION 9.3. AMENDMENT PROCEDURE. All rights granted to Shareholders
hereunder are granted subject to a right to amend this Declaration, except as
otherwise provided.
(a) This Declaration may be amended by a Majority Shareholder Vote or by any
instrument in writing, without a meeting, signed by a majority of the Trustees
and consented to by the holders of not less than a majority of the Shares. The
Trustees may also amend this Declaration without the vote or consent of
Shareholders to designate series in accordance with Section 6.9, to change the
name of the Trust, to supply any omission, to cure, correct, or supplement any
ambiguous, defective,
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or inconsistent provision hereof, or to conform this Declaration to the
requirements of applicable Government Mandates or the regulated investment
company provisions of the Code, but the Trustees shall not be liable for failing
to make any such amendments.
(b) An amendment that the Trustees have determined would affect the rights,
privileges, or interests of a particular series of Shares, but not the rights,
privileges, or interests of all series of Shares generally, and which would
otherwise require a Majority Shareholder Vote under paragraph (a) of this
Section 9.3, may be made by a Majority Shareholder Vote of such series rather
than a Majority Shareholder Vote.
(c) No amendment to this Declaration may change any rights with respect to
the Shares, or any series of Shares, by reducing the amount payable thereon upon
liquidation of the Trust or by diminishing or eliminating any voting rights
pertaining thereto, except with the Majority Shareholder Vote, or a Majority
Shareholder Vote of that series. No amendment to this Declaration may impair the
exemption from personal liability of the Shareholders, Trustees, officers,
employees, and agents of the Trust or permit assessments upon Shareholders.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Shareholders or by the
Trustees as aforesaid, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
(e) Prior to the issuance of any Shares, this Declaration may be amended in
any respect by the affirmative vote of a majority of the Trustees or by an
instrument signed by a majority of the Trustees.
(f) No provision of this Declaration relating to or in any way affecting Old
Mutual's right of purchase under Section 9.7 or any notice in respect thereof
shall be amended or modified without the prior written consent in each instance
of Old Mutual.
(g) The Trust shall promptly notify the Investment Adviser, or, if the Trust
has no Investment Adviser and invests in a Collective Vehicle, the investment
adviser of such Collective Vehicle, of any amendment to this Declaration.
SECTION 9.4. MERGER, CONSOLIDATION, AND SALE OF ASSETS. The Trust may merge
or consolidate with any other Entity or may Transfer all or substantially all of
the Trust Property (or all or substantially all of the
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Trust Property allocated or belonging to a particular series of the Trust)
including its good will, upon such terms and conditions and for such
consideration when and as authorized at any meeting of Shareholders called for
such purpose by the vote of the holders of two-thirds of the outstanding Shares
of all series of the Trust voting as a single class, or of the affected series
of the Trust, as the case may be, or by an instrument in writing without a
meeting, consented to by the vote of the holders of two-thirds of the
outstanding Shares of all series of the Trust voting as a single class, or of
the affected series of the Trust, as the case may be; provided, however, that
(I) if such merger, consolidation, or Transfer is recommended by the Trustees,
the vote or written consent by Majority Shareholder Vote shall be sufficient
authorization; and any such merger, consolidation, or Transfer shall be deemed
for all purposes to have been accomplished under and pursuant to the statutes of
the Commonwealth of Massachusetts, and (II) no Shareholder approval shall be
required for Transfers in connection with a termination of the Trust under
Section 9.2. Nothing contained herein shall be construed as requiring approval
of Shareholders for any Transfer of assets in the ordinary course of the
business of the Trust. Prior to taking any action pursuant to a Shareholder vote
authorizing a merger, consolidation, or Transfer of all or substantially all of
the Trust Property (or all or substantially all of the Trust Property allocated
to any particular series of the Trust), the Trust shall promptly notify the
Investment Adviser, or, if the Trust has no Investment Adviser and invests in a
Collective Vehicle, the investment adviser of such Collective Vehicle, of such
Shareholder vote.
SECTION 9.5. INCORPORATION, REORGANIZATION. With a Majority Shareholder
Vote, the Trustees may (a) cause to be organized or assist in organizing an
Entity under the laws of any jurisdiction to acquire all or part of the Trust
Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, (b) Transfer all or part of the Trust Property to
any such Entity in exchange for the shares or securities thereof or otherwise,
and (c) lend money to, subscribe for the shares or securities of, and enter into
any contracts with any such Entity in which the Trust holds or is about to
acquire shares or any other interest. Subject to Section 9.4, the Trustees may
also cause a merger or consolidation between the Trust and any such Entity if
and to the extent permitted by Government Mandate. Nothing contained in this
Section 9.5 shall be construed as requiring approval of Shareholders for the
Trustees to organize or assist in organizing an Entity and Transferring a
portion of the Trust Property to such Entity in the ordinary course of the
business of the Trust. Prior to taking any action pursuant to a Shareholder vote
under this Section 9.5, the Trust shall promptly notify the Investment Adviser,
or, if the Trust has no Investment Adviser and invests in a Collective
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Vehicle, the investment adviser of such Collective Vehicle, of such Shareholder
vote.
SECTION 9.6. INCORPORATION OR REORGANIZATION OF SERIES. With a Majority
Shareholder Vote of any series, the Trustees may (a) cause to be organized or
assist in organizing an Entity under the laws of any jurisdiction to acquire all
or part of the Trust Property of such series or to carry on any business in
which such series shall directly or indirectly have any interest, (b) Transfer
all or part of the Trust Property of such series to any such Entity in exchange
for the shares or securities thereof or otherwise, and (c) lend money to,
subscribe for the shares or securities of, and enter into any contracts with any
such Entity in which such series holds or is about to acquire shares or any
other interest. Subject to Section 9.4, the Trustees may also cause a merger or
consolidation between such series and any such Entity if and to the extent
permitted by Government Mandate. Nothing contained in this Section 9.6 shall be
construed as requiring approval of Shareholders of any series for the Trustees
to organize or assist in organizing an Entity and Transferring a portion of the
Trust Property of such series to such Entity in the ordinary course of the
business of such series. Prior to taking any action pursuant to a Shareholder
vote under this Section 9.6, the Trust shall promptly notify the Investment
Adviser, or, if the Trust has no Investment Adviser and invests in a Collective
Vehicle, the investment adviser of such Collective Vehicle of such Shareholder
vote.
SECTION 9.7. RIGHT OF PURCHASE. Upon any vote to terminate the Trust or any
series under the first two sentences of Section 9.2(a) or any vote of trustees,
directors, investors, or other controlling persons of any Collective Vehicle to
terminate or dissolve such Collective Vehicle, Old Mutual shall have the right
to purchase all, but not less than all, of the Shares of the Trust or such
series at a price equal to the aggregate net asset value of such Shares (as next
determined in accordance with the By-Laws following such notice to the Trustees)
upon the terms and conditions of this Section. Old Mutual may exercise any right
of purchase by, within 30 days of the notice required under Section 9.2(a)(ii)
or of any notice with respect to a vote to terminate or dissolve a Collective
Vehicle, delivering a notice to the Trustees making reference to this Section,
stating that Old Mutual is exercising its right of purchase hereunder, and
specifying a purchase date not less than 5 nor more than 30 days after the date
of such notice (the "Purchase Date"). The Trustees shall promptly notify each
Shareholder of the exercise of the right of purchase and of the Purchase Date
and request that Shareholders submit any certificates representing Shares
subject to purchase ("Subject Shares") to the Transfer Agent, duly endorsed in
blank, on or before the Purchase
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Date. On the Purchase Date upon receipt by the Trust of an amount in cash equal
to the aggregate price of the Subject Shares as aforesaid, the Subject Shares
shall be transferred to Old Mutual or its designee upon the register of
Shareholders. The Trust shall forthwith distribute the price for the Subject
Shares to the Persons entitled thereto (against surrender of any certificate
representing such Shares duly endorsed in blank to the extent not previously
submitted to the Transfer Agent), and any certificate representing Subject
Shares that was not submitted to the Transfer Agent shall, from and after the
Purchase Date, represent only the right to receive a ratable portion of such
price. In the event Old Mutual notifies the Trustees that it is exercising its
right of purchase under this Section, the Trust shall not without the prior
written consent of Old Mutual, at any time, (a) merge, consolidate, or
reorganize the Trust or any series, (b) make any Transfer of Trust Property (or
the assets of any series) outside of the ordinary course, (c) make any in-kind
distributions of any Trust Property (or assets of the series subject to the
right of purchase), or (d) amend this Declaration. No transaction under any of
Sections 9.4, 9.5, and 9.6 that terminates, materially modifies, or materially
reduces the practical effect or benefit of Old Mutual's rights under this
Section 9.7 shall be effected without the prior written consent in each instance
of Old Mutual.
ARTICLE X
REPORTS TO SHAREHOLDERS AND SHAREHOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Shareholders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto shall be
filed in the office of the Secretary of the Commonwealth of Massachusetts and in
such other place or places as may be required under the Government Mandates of
the Commonwealth of Massachusetts and may also be filed or recorded in such
other places as the Trustees deem appropriate. Each amendment shall be signed by
a majority of the Trustees or shall be accompanied by a certificate of an
appropriate officer
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of the Trust stating that such amendment was properly approved. Unless such
amendment or certificate sets forth a later date on which it shall take effect,
any amendment shall take effect as of its approval. A restated Declaration,
integrating into a single instrument all of the provisions of this Declaration
which are then in effect and operative, may be executed from time to time by a
majority of the Trustees and shall be conclusive evidence of all amendments
contained therein and may thereafter be referred to in lieu of this original
Declaration and the various amendments thereto.
SECTION 11.2. SECTION HEADINGS. Section headings are placed herein for
convenience of reference only and shall not affect the meaning or interpretation
of this Declaration.
SECTION 11.3. GOVERNING LAW. This Declaration shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to any choice of law rules that would require application of the
Government Mandates of any other jurisdiction.
SECTION 11.4. COUNTERPARTS. This Declaration may be simultaneously executed
in several counterparts, each of which shall be deemed to be an original, and
such counterparts, together, shall constitute one and the same instrument, which
shall be sufficiently evidenced by any such original counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by a
Trustee certifying to: (a) the number or identity of Trustees or Shareholders,
(b) the due authorization or execution of any instrument or writing on behalf of
the Trust, (c) the form of any vote passed at a meeting of Trustees or
Shareholders or adopted by written consent of the Trustees or Shareholders, (d)
the fact that the number of Trustees or Shareholders present at any meeting or
executing any written instrument satisfies the requirements of this Declaration,
(e) the form of any By-Laws adopted by or the identity of any officers of the
Trust, or (f) the existence of any fact that in any manner relates to the
affairs of the Trust, shall be conclusive evidence, absent actual fraud or
manifest error, as to the matters so certified in favor of any Person to whom
such certificate is addressed.
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if the Trustees
shall determine, with the advice of counsel, that any such provision is in
conflict with the 1940 Act, the regulated investment
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company provisions of the Code, or with other applicable Government Mandates,
the conflicting provision shall be deemed never to have constituted a part of
this Declaration; provided however, that (i) such determination shall not affect
any of the remaining provisions of this Declaration or render invalid or
improper any action taken or omitted prior to such determination, (ii) the Trust
shall promptly notify the Investment Adviser, or, if the Trust has no Investment
Adviser and invests in a Collective Vehicle, the investment adviser of such
Collective Vehicle, of any such determination, and (iii) the Trust shall
promptly notify Old Mutual of any such determination with respect to any of
Sections 9.2(a)(ii), 9.3(f), 9.7, or 11.8.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any manner
affect such provision in any other jurisdiction or any other provision of this
Declaration in any jurisdiction.
SECTION 11.7. PRINCIPAL OFFICE AND REGISTERED AGENT. The name of the
registered agent of the Trust is John Collis, Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda. The principal office of the Trust is Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda. The Trustees may, without the approval of
Shareholders, change the registered agent of the Trust and the principal office
of the Trust.
SECTION 11.8. NOTICES TO OLD MUTUAL AND INVESTMENT ADVISER. All notices
required to be given to Old Mutual or the Investment Adviser (or any investment
adviser of any Collective Vehicle) under this Declaration shall be submitted in
writing (a) to Old Mutual at Mutualpark, Jan Smuts Drive, Pinelands, 7405, South
Africa or at such other address as Old Mutual may, from time to time, request
with notice to the Trustees and (b) to such Investment Adviser (or investment
adviser) at the then effective address for notices to such Investment Adviser or
investment adviser under its advisory agreement with the Trust or such
Collective Vehicle. Any notice to Old Mutual, the Investment Adviser, or an
investment adviser of a Collective Vehicle shall be effective only upon its
actual receipt.
--SIGNATURE PAGE FOLLOWS--
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IN WITNESS WHEREOF, the undersigned have executed this instrument as of the
date first set forth above.
William Francois de la Harpe Beck
---------------------------------
William Francois de la Harpe Beck
as Trustee
and not individually
P.O. Box 4854
Cape Town 8000
South Africa
William L. Boyan
---------------------------------
William L. Boyan
as Trustee
and not individually
John Hancock Mutual Life Insurance
Company
P.O. Box 111
Boston, Massachusetts 02117
U.S.A.
Thomas Haskins Davis
---------------------------------
Thomas Haskins Davis
as Trustee
and not individually
13 Commonland Point Road
Hamilton Parish CR01
Bermuda
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Michael John Drew
---------------------------------
Michael John Drew
as Trustee
and not individually
International Services Limited
P.O Box HM1186
Hamilton HM EX
Bermuda
William Langley
---------------------------------
William Langley
as Trustee
and not individually
South African Mutual Life Assurance
Society
P.O. Box 66
Cape Town 8000
South Africa
Michael John Levett
---------------------------------
Michael John Levett
as Trustee
and not individually
South African Mutual Life Assurance
Society
P.O. Box 66
Cape Town 8000
South Africa
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Kenneth Rigby Williams
---------------------------------
Kenneth Rigby Williams
as Trustee
and not individually
Druid Lodge
Grantley Avenue
Wonersh Park
Guildford
Surrey GU5 0QN
United Kingdom
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<PAGE> 1
EXHIBIT 2
BY-LAWS OF OLD MUTUAL
EQUITY GROWTH ASSETS SOUTH AFRICA FUND
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
SECTION 1. DEFINITIONS. Capitalized terms used in these By-Laws without
definition shall have the respective meanings assigned to them in the
Declaration of Trust of Old Mutual Equity Growth Assets South Africa Fund dated
as of September 1, 1995 (the "Declaration").
SECTION 2. RULES OF INTERPRETATION. The rules of interpretation set forth in
Section 1.03 of the Declaration shall apply to these By-Laws as if set forth
herein, provided that references in such rules of interpretation to the
Declaration shall, when such rules are applied to these By-Laws, instead be
references to these By-Laws.
ARTICLE II
OFFICES
The Trust may have offices in such places without as well as within the
Commonwealth of Massachusetts and the United States as the Trustees may from
time to time determine.
ARTICLE III
SHAREHOLDERS
SECTION 1. MEETINGS. A meeting of Shareholders may be called at any time by
a majority of the Trustees. A meeting shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Shareholders holding in the aggregate not less than
ten percent (10%) of the outstanding Shares entitled to vote on the matters
specified in such written request. Any such meeting shall be held within or
without the Commonwealth of Massachusetts and the United States on such day and
at such time as the Trustees shall designate. The holders of fifty percent (50%)
of outstanding Shares entitled to vote present in person or
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by proxy shall constitute a quorum at any meeting of the Shareholders. In the
absence of a quorum, a majority of outstanding Shares entitled to vote present
in person or by proxy may adjourn the meeting from time to time until a quorum
shall be present.
Whenever a matter is required to be voted by Shareholders of the Trust in
the aggregate under Section 6.8 and Section 6.9 of the Declaration, the Trust
may either hold a meeting of Shareholders of all series, as defined in Section
6.9 of the Declaration, to vote on such matter, or hold separate meetings of
Shareholders of each of the individual series to vote on such matter, provided
that (i) such separate meetings shall be held within one year of each other, and
(ii) a quorum consisting of the holders of fifty percent (50%) of outstanding
Shares of the individual series entitled to vote present in person or by proxy
shall be present at each such separate meeting.
SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of Shareholders,
stating the time, place, and purposes of the meeting, shall be given by the
Trustees, by mail (postage prepaid) or by an internationally recognized courier
service (such as Federal Express or DHL), to each Shareholder entitled to vote
at such meeting at his address as recorded on the register of the Trust, mailed
at least ten (10) days and not more than sixty (60) days before the meeting.
Only the business stated in the notice of the meeting shall be considered at
such meeting. Any adjourned meeting may be held as adjourned without further
notice. No notice need be given to any Shareholder who shall have failed to
inform the Trust of his current address or if a written waiver of notice,
executed before or after the meeting by the Shareholder or his attorney
thereunto authorized, is filed with the records of meeting. Where separate
meetings are held for Shareholders of each of the individual series to vote on a
matter required to be voted on by Shareholders of the Trust in the aggregate, as
provided in Article III, Section 1, notice of each such separate meeting shall
be provided in the manner described above in this Section 2 to Shareholders of
the respective series entitled to vote at such meeting.
SECTION 3. RECORD DATE. The Trustees may fix a date not more than sixty (60)
days prior to the date of any meeting of Shareholders or distribution or other
action as a record date for the purpose of determining the Shareholders who are
entitled to notice of and to vote at such meeting or any adjournment thereof or
to participate in such distribution or for the purpose of such other action; or
without fixing such record date the Trustees may for any of such purposes from
time to time close the transfer books for such period, not exceeding thirty (30)
days, as the Trustees may determine. If the Trustees do not establish a record
date for any meeting, distribution, or other action, the record date shall be
the close of business on the second business day next preceding the date of the
Trustees' action authorizing such meeting, distribution, or other action. Where
separate meetings are held for Shareholders
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<PAGE> 3
of each of the individual series to vote on a matter required to be voted on by
Shareholders of the Trust in the aggregate, as provided in Article III, Section
1, the record date of each such separate meeting, for purposes of determining
the Shareholders who are entitled to notice of and to vote at such meeting or
any adjournment thereof, shall be determined in the manner described above in
this Section 3. The Trustees shall, to the extent practicable, provide the
Shareholders with advance notice of the record date for any meeting,
distribution, or other action, although failure to provide such notice shall not
in any case invalidate any such meeting, distribution, or other action or any
vote taken or consent granted at any such meeting or pursuant to any such
action.
SECTION 4. PROXIES. At any meeting of Shareholders, any holder of Shares
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of the Trust or one or more Trustees or officers of the Trust. Only
Shareholders of record shall be entitled to vote. Each full Share shall be
entitled to one vote, and fractional Shares shall be entitled to a vote of such
fraction. When any Share is held jointly by several persons, any one of them may
vote at any meeting in person or by proxy in respect of such Share, but if more
than one of them shall be present at such meeting in person or by proxy, and
such joint owners or their proxies so present disagree as to any vote to be
cast, such vote shall not be received in respect of such Share. A proxy
purporting to be executed by or on behalf of a Shareholder shall be deemed valid
unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. If the holder of any such Share is a
minor or a person of unsound mind, and subject to guardianship or to the legal
control of any other person as regards the charge or management of such Share,
such Share may be voted by such guardian or such other person appointed or
having such control, and such vote may be given in person or by proxy. Unless
otherwise specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting.
SECTION 5. INSPECTION OF RECORDS. The records of the Trust shall be open to
inspection by Shareholders to the same extent as is permitted shareholders of a
Massachusetts business corporation.
SECTION 6. ACTION WITHOUT MEETING. Any action which may be taken by
Shareholders may be taken without a meeting if a majority of Shareholders
entitled to vote on the matter (or such larger proportion thereof as shall be
required by law, the Declaration, or these By-Laws for approval of such matter)
consent to the action in writing and the written consents are filed with the
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<PAGE> 4
records of the meetings of Shareholders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Shareholders.
ARTICLE IV
TRUSTEES
SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their discretion
provide for regular or stated meetings of the Trustees. Notice of regular or
stated meetings need not be given. Meetings of the Trustees other than regular
or stated meetings shall be held whenever called by the Chairman or by any
Trustee. Notice of the time and place of each meeting other than regular or
stated meetings shall be given by the Secretary or an Assistant Secretary or by
the officer or Trustee calling the meeting and shall be sent to each Trustee at
his business address either by (i) mail (postage prepaid) at least ten (10) days
before the meeting, (ii) an internationally recognized courier service (such as
Federal Express or DHL) at least five (5) days before the meeting, (iii) fax at
least two (2) days before the meeting, or (iv) personal delivery or telephone at
least one (1) day before the meeting. Notwithstanding the foregoing, at least
ten (10) days prior notice shall be given of the time and place of any meeting
to be conducted in person. Notice of a meeting need not be given to any Trustee
if a written waiver of notice, executed by him before or after the meeting, is
filed with the records of the meeting, or to any Trustee who attends the meeting
without protesting prior thereto or at its commencement the lack of notice to
him. A notice or waiver of notice need not specify the purpose of any meeting.
The Trustees may meet by means of a telephone conference circuit or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, which telephone conference meeting shall be deemed
to have been held at a place designated by the Trustees at the meeting. Any
action required or permitted to be taken at any meeting of the Trustees may be
taken by the Trustees without a meeting if all the Trustees consent to the
action in writing and the written consents are filed with the records of the
Trustees' meetings. Such consents shall be treated as a vote for all purposes.
SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees shall
constitute a quorum for the transaction of business at any regular or special
meeting of the Trustees and (except as otherwise required by law, the
Declaration, or these ByLaws) the act of a majority of the Trustees present at
any such meeting, at which a quorum is present, shall be the act of the
Trustees. In the absence of a quorum, a majority of the Trustees present may
adjourn the meeting from time to time until a quorum shall be present. Notice of
an adjourned meeting need not be given.
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<PAGE> 5
ARTICLE V
COMMITTEES AND ADVISORY BOARD
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than two (2) Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and such other powers
of the Trustees as the Trustees may, from time to time, delegate to the
Executive Committee except those powers which by law, the Declaration, or these
By-Laws the Trustees are prohibited from so delegating. The Trustees may also
elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee), and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman. The Trustees may abolish any Committee at
any time. The Trustees shall have power to rescind any action of any Committee,
but no such rescission shall have retroactive effect.
SECTION 2. MEETINGS, QUORUM, AND MANNER OF ACTING. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit. Unless the Trustees so provide, all the
Committees shall be governed by the same rules that apply to the full Board.
Each Committee may, but is not required to, keep regular minutes of its
meetings and records of decisions taken without a meeting and cause them to be
recorded in a book designated for that purpose and kept in the office of the
Trust.
SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board to
consist in the first instance of not less than two (2) members. Members of such
Advisory Board shall not be Trustees or officers and need not be Shareholders. A
member of such Advisory Board shall hold office for such
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<PAGE> 6
period as the Trustees may by vote provide and may resign therefrom by a written
instrument signed by him which shall take effect upon its delivery to the
Trustees. The Advisory Board shall have no legal powers and shall not perform
the functions of Trustees in any manner, such Advisory Board being intended
merely to act in an advisory capacity. Such Advisory Board shall meet at such
times, upon such notice, and in accordance with such procedures as the Trustees
may by vote provide.
SECTION 4. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman and one or more Deputy
Chairmen, each to hold office until his successor shall have been duly elected
and qualified. The Chairman and any Deputy Chairman may be, but need not be,
Shareholders. The Chairman shall preside at all meetings of the Trustees and
shall have such other duties as from time to time may be assigned to him by the
Trustees. In the absence or disability of the Chairman, the Deputy Chairman or,
if there are more than one Deputy Chairman, any Deputy Chairman designated by
the Trustees shall perform all the duties of the Chairman. Each Deputy Chairman
shall perform such other duties as may be assigned to him from time to time by
the Trustees or the Chairman.
ARTICLE VI
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer, and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise provided
by law, the Declaration, or these By-Laws, each of the President, any Vice
President, the Treasurer, and the Secretary shall hold office until his
respective successor shall have been duly elected and qualified, and all other
officers shall hold office at the pleasure of the Trustees. Any person may hold
up to two offices of the Trust at the same time (in addition, if applicable, to
such person's service as a Trustee), provided the President may hold no other
office (except the President may be a Trustee). Except as above provided, any
two offices may be held by the same person. Any officer may be, but need not be,
a Trustee or Shareholder.
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SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of the
Trustees, may remove any officer with or without cause by a vote of a majority
of the Trustees. Any officer or agent appointed by any officer or committee may
be removed with or without cause by such appointing officer or committee.
SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President, unless the
Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks, and employees as he may find necessary,
convenient, or desirable to transact the business of the Trust. The President
shall also have the power to grant, issue, execute, or sign such powers of
attorney, proxies, or other documents as may be deemed necessary, convenient, or
desirable in the furtherance of the interests of the Trust. The President shall
have such other powers and duties as, from time to time, may be conferred upon
or assigned to him by the Trustees.
SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be the
principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety as the Trustees shall require. The Treasurer shall be
responsible for the general supervision of the Trust's funds and property and
for the general supervision of the Trust's custodian.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep the
minutes of all meetings of the Shareholders; shall keep the minutes of all
meetings of the Trustees; shall have custody of the seal of the Trust; and shall
have charge of the Share transfer books, lists, and records unless the same are
in the charge of the Transfer Agent. The Secretary shall attend to the giving
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and serving of all notices by the Trust in accordance with the provisions of
these By-Laws and as required by law; and subject to these By-Laws, shall in
general perform all the duties incident to the office of Secretary and such
other duties as from time to time may be assigned to him by the Trustees.
SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence or
disability of the Secretary, any Assistant Secretary designated by the Trustees
shall perform all of the duties, and may exercise any of the powers, of the
Secretary. Each Assistant Secretary shall perform such other duties as from time
to time may be assigned to him by the Trustees.
SECTION 10. COMPENSATION OF OFFICERS, TRUSTEES, AND MEMBERS OF THE ADVISORY
BOARD. Subject to any applicable law or provision of the Declaration, the
compensation of the officers, Trustees, and members of the Advisory Board shall
be fixed from time to time by the Trustees or, in the case of officers, by any
committee of officers upon whom such power may be conferred by the Trustees. No
officer shall be prevented from receiving such compensation as such officer by
reason of the fact that he is also a Trustee.
SECTION 11. EXECUTION OF PAPERS. Except as the Trustees may generally or in
particular cases authorize, all deeds, leases, transfers, contracts, bonds,
notes, checks, drafts, and other obligations made, accepted, or endorsed by the
Trust shall be executed by the President, any Vice President, or the Treasurer,
or by whomever else shall be designated for that purpose by the Trustees, and
need not bear the seal of the Trust.
ARTICLE VII
FISCAL YEAR
The Fiscal Year of the Trust shall be determined by the Trustees, provided,
however, that the Trustees may from time to time change the Fiscal Year.
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ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form as the Trustees
may from time to time prescribe.
ARTICLE IX
NOTICES AND WAIVERS OF NOTICE
SECTION 1. GENERAL PROVISIONS FOR NOTICES. Any notice shall be deemed to be
given (i) in the case of notices sent by mail, courier service, or fax, when the
same shall be mailed, submitted to a courier company for shipment, or faxed, and
(ii) in the case of notices sent by personal delivery or telephone, when the
same shall be delivered or when delivery is duly attempted and refused. A notice
shall be deemed to have been faxed when the sending fax machine or service
generates a confirmation indicating that all pages of the fax have been
successfully transmitted.
SECTION 2. WAIVERS OF NOTICES. Whenever any notice is required to be
given by law, the Declaration, or these By-Laws, a waiver thereof in writing,
signed by the person entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE X
CUSTODIAN
SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times employ a
bank or trust company having a capital, surplus, and undivided profits of at
least $5,000,000 as custodian with authority as agent of the Trust, but subject
to such restrictions, limitations, and other requirements, if any, as may be
contained in the Declaration, these By-Laws, and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver the same upon
written order;
(ii) to receive and receipt for any monies due to the Trust and deposit the
same in its own banking department or elsewhere as the Trustees may
direct, provided such monies shall always be separately identified as
funds of the Trust;
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(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and accounts of the
Trust and furnish clerical and accounting services; and
(v) if authorized by the Trustees, to compute the net income of the Trust
and the net asset value of Shares;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees. Subject to the
approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial, and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act.
SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules, regulations,
and orders as the Commission may adopt, the Trustees may direct the custodian to
deposit all or any part of the securities owned by the Trust (i) in a system for
the central handling of securities established by a national securities exchange
or a national securities association registered with the Commission under the
U.S. Securities Exchange Act of 1934, pursuant to which system all securities of
any particular class or series of any issuer deposited within the system are
treated as fungible and may be transferred or pledged by bookkeeping entry
without physical delivery of such securities, provided that all such deposits
shall be subject to withdrawal only upon the order of the Trust or its
custodian; or (ii) with such other person as may be permitted by the Commission,
or otherwise in accordance with the 1940 Act.
SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to such
rules, regulations, and orders as the Commission may adopt, the Trustees may
direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the U.S. Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
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ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be amended or repealed, or new By-Laws
may be adopted, (i) by the Shareholders by a Majority Shareholder Vote, or (ii)
by the Trustees, provided, however, that no By-Law may be amended, adopted, or
repealed by the Trustees if such amendment, adoption, or repeal requires,
pursuant to law, the Declaration, or these By-Laws, a vote of the Shareholders,
provided no such amendment shall terminate, limit, modify, or materially burden
the exercise of Old Mutual's rights under any of Sections 9.2(a)(ii), 9.3(f),
9.7, 11.6, or 11.8 of the Declaration without the prior written consent of Old
Mutual in each instance.
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EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
THIS INVESTMENT ADVISORY AGREEMENT, dated as of October 23, 1995 (this
"Agreement"), by and between Old Mutual South Africa Equity Trust, a
Massachusetts trust (the "Trust"), and Old Mutual Asset Managers (Bermuda)
Limited (the "Adviser");
WITNESSETH:
WHEREAS, the Trust will engage in business as an open-end investment company
registered under the United States Investment Company Act of 1940 (collectively
with the rules and regulations promulgated thereunder, the "1940 Act"),
WHEREAS, Old Mutual Fund Holdings (Bermuda) Limited, a Bermuda company, Old
Mutual Equity Growth Assets South Africa Fund, a Massachusetts business trust
that will register under the 1940 Act, and Old Mutual South Africa Growth Assets
Fund, a Bermuda mutual fund that is to be listed on the Irish Stock Exchange
(the "ISO"), are expected to acquire beneficial interests in the Trust, and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the Trust, and the Adviser is willing to
provide such investment advisory services for the Trust on the terms and
conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein set forth, the parties covenant and agree as follows:
1. Duties of the Adviser. The Trust engages the Adviser as investment
adviser to the Trust upon the terms and conditions of this Agreement, and the
Adviser accepts such engagement. The Adviser shall act as investment adviser of
the Trust and in that capacity shall:
(a) provide the Trust with such investment advice and supervision as the
Trust may from time to time consider necessary for the proper
supervision of the Trust's investment assets,
<PAGE> 2
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(b) determine from time to time what securities shall be purchased, sold or
exchanged and what portion of the assets of the Trust shall be held
uninvested, and
(c) make recommendations as to the manner in which voting rights, rights to
consent to corporate action and any other rights pertaining to the
Trust's securities shall be exercised,
provided, however, the Adviser's performance of such duties shall be subject
always to the restrictions contained within:
(a) the Trust's Declaration of Trust, dated as of September 1, 1995 (the
"Declaration"),
(b) the Trust's By-laws (the "By-laws"),
(c) the 1940 Act,
(d) the rules of the ISO,
(e) the then-current Registration Statement of the Trust under the 1940
Act, and
(f) such determinations of investment policy for the Trust as the Board may
from time to time establish with notice to the Adviser (provided the
Adviser shall be bound by any such policy for the period, if any,
specified in such notice or until similarly notified that such policy
has been revoked).
The Adviser shall take, on behalf of the Trust, all actions which it deems
necessary to implement the investment policies of the Trust, and in particular
to place all orders for the purchase or sale of securities for the Trust's
account with the brokers or dealers selected by the Adviser, and to that end the
Adviser is authorized as the agent of the Trust to give instructions to the
custodian (and any subcustodians) of the Trust as to deliveries of securities
and payments of cash for the account of the Trust. In connection with the
selection of brokers or dealers for the Trust and the placing of such orders,
the Adviser is directed to seek for the Trust in its best judgment, prompt
execution in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought from
or sold to broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Trust, subject to any applicable
laws, rules and regulations.
<PAGE> 3
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2. Allocation of Charges and Expenses. The Adviser shall furnish at its own
expense all services, facilities and personnel necessary or convenient to
perform its duties under Section 1 above. The Trust will pay from its assets all
of its own expenses allocable to the Trust including compensation of Trustees
not employed by the Adviser or a parent company of the Adviser; governmental
fees; interest charges; taxes; membership dues in the Investment Company
Institute allocable to the Trust; fees and expenses of independent auditors and
of legal counsel of the Trust; expenses of issuing and redeeming beneficial
interests in the Trust and servicing Holder (as defined in the Declaration)
accounts; expenses of preparing, printing and mailing, notices, proxy statements
and reports to governmental officers and commissions and to Holders; expenses
connected with the execution, recording and settlement of security transactions;
insurance premiums; fees and expenses of the custodian (and any subcustodians)
for all services to the Trust, including safekeeping of funds and securities and
maintaining required books and accounts; expenses of calculating the net asset
value of the Trust; and expenses of meetings of the Trustees and Holders.
3. Compensation of the Adviser. For the services to be rendered under this
Agreement, the Trust shall pay to the Adviser from the assets of the Trust a
management fee of 0.85% per annum of the Trust's daily net assets (the
"Management Fee"). The Management Fee shall accrue daily on an annualized basis
and be paid monthly in arrears. If the Adviser serves under this Agreement for
less than the whole of any period specified in this Section 3, the Management
Fee shall be prorated for such partial period.
4. Covenants of the Adviser. The Adviser shall throughout the term of this
Agreement:
(a) not deal with itself, or with the Trustees of the Trust as principals,
in making purchases or sales of securities or other property for the
account of the Trust, except as permitted by the 1940 Act and the rules
of the ISO,
(b) not take a long or short position in shares of the Trust except as
permitted by the Declaration,
(c) comply with all other provisions of the 1940 Act, the ISO rules, the
Declaration, the By-laws and the then-current 1940 Act Registration
Statement of the Trust relative to the Adviser and its directors and
officers, and
<PAGE> 4
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(d) maintain its registration under the United States Investment Advisers
Act of 1940, comply with rules thereunder and notify the Trustees of
any proceedings to revoke, suspend or modify such registration.
5. Limitation of Liability of the Adviser. The Adviser shall not be liable
for any error of judgment, mistake of law, loss arising out of any investment or
act or omission in the execution of securities transactions for the Trust,
except for willful misfeasance, bad faith or gross negligence in the performance
of its duties, or by reason of reckless disregard of its obligations and duties
hereunder. As used in this Section 5, the term "Adviser" shall include
directors, officers and employees of the Adviser.
6. Activities of the Adviser. The engagement of the Adviser under this
Agreement shall not be exclusive, and the Adviser shall be free to render
investment advisory and/or other services to others. The Trust shall have no
right or interest in any income from any such services. It is understood that
Trustees, officers, and Holders of the Trust are or may be or may become
interested in the Adviser, as directors, officers, employees, or otherwise and
that directors, officers and employees of the Adviser are or may become
similarly interested in the Trust and that the Adviser and/or its affiliates may
be or may become interested in the Trust as a Holder or otherwise.
7. Duration, Termination and Amendment of this Agreement.
(a) This Agreement shall become effective as of the day and year first
above written and shall govern the relations between the parties hereto
thereafter, and shall remain in force until October 23, 1997 on which
date it will terminate unless its continuance after October 23, 1997 is
"specifically approved at least annually" (i) by the vote of a majority
of the Trustees of the Trust who are not "interested persons" of the
Trust or of the Adviser at a meeting specifically called for the
purpose of voting on such approval, and (ii) by the Board of Trustees
of the Trust or by "vote of a majority of the outstanding voting
securities" of the Trust.
(b) This Agreement may be terminated at any time without the payment of any
penalty by the Trustees or by the "vote of a majority of the
outstanding voting securities" of the Trust, or by the Adviser, in each
case on not more than 60 days' nor less than 30 days' written notice to
the other party. This
<PAGE> 5
-5-
Agreement shall automatically terminate in the event of its
"assignment."
(c) This Agreement may be amended only if such amendment is approved by the
"vote of a majority of the outstanding voting securities" of the Trust.
(d) The terms "specifically approved at least annually," "vote of a
majority of the outstanding voting securities," "assignment,"
"affiliated person," and "interested persons," when used in this
Agreement, shall have the respective meanings specified in, and shall
be construed in a manner consistent with, the 1940 Act, subject,
however, to such exemptions as may be granted by the United States
Securities and Exchange Commission under said Act.
8. Trust Obligations. The obligations of the Trust hereunder shall not be
binding upon any of the Trustees, Holders, nominees, officers, agents or
employees of the Trust, personally, but shall bind only the assets and property
of the Trust as provided in the Declaration.
9. Name of Trust. In the event the Adviser ceases for any reason to serve as
investment adviser of the Trust, the Trust shall forthwith upon request by the
Adviser (i) change its name so that it does not include the words "Old Mutual",
"OMEGA", "SAGA" or any variation or combination of any thereof, and (ii) require
any Holders to do the same (other than any Holder whose continued use of such
name is consented to in writing by the Adviser).
10. Notices. All notices, requests, and other communications hereunder shall
be in writing and shall be delivered by hand to an officer of the addressee or
sent by courier service or certified mail return receipt requested, postage
prepaid, addressed to the respective address of the addressee. Any notice given
pursuant to this Agreement shall be deemed to have been given when delivered or
when delivery is duly attempted and refused.
11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, subject to the
applicable provisions of the 1940 Act, without regard to any choice of law
principles that would require application of the laws of any other jurisdiction.
The parties hereto absolutely and irrevocably consent to the jurisdiction of the
courts of the Commonwealth of Massachusetts and of any Federal court located in
said
<PAGE> 6
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Commonwealth in connection with any actions or proceedings arising out of or
relating to this Agreement and waive any objection to the convenience of any
such court.
12. Headings. The descriptive section headings have been inserted for
convenience of reference only and do not define or limit the provisions hereof.
13. Severability. If any term of this Agreement shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall be in no
way affected thereby, and this Agreement shall be construed and be enforceable
as if such invalid, illegal or unenforceable term had not been included herein.
14. Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto with respect to the subject matter hereof and supersedes any
prior negotiations, understandings or arrangements.
15. Counterparts. This Agreement may be executed in several counterparts,
each of which when executed and delivered is an original, but all of which
together shall constitute one instrument. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart.
16. Rules of Interpretation. The following rules shall apply in the
construction and interpretation of this Agreement:
(a) The singular includes the plural, and the plural includes the singular.
(b) A reference to any gender includes each other gender.
(c) A reference to any Person includes its legal successors and permitted
assigns.
(d) A reference to any contract, instrument, agreement or other document,
including any registration statement under the 1940 Act, shall include any
written amendment, supplement or modification thereto and any replacement
thereof.
(e) A reference to any statute, law, rule or regulation shall include any
amendment or modification thereto and any replacement thereof.
<PAGE> 7
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(f) The words "include," "includes" and "including" are not limiting.
(h) The words "hereof," "herein" and "hereunder" and words of similar import
shall refer to this Agreement as a whole and not to any particular part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The undersigned Trustee or officer of the Trust has executed this Agreement
not individually, but as Trustee or officer under the Trust's Declaration of
Trust, dated as of September 1, 1995, as amended, and the obligations of this
Agreement are not binding upon any of the Trustees or officers of the Trust
individually.
OLD MUTUAL SOUTH AFRICA OLD MUTUAL ASSET
EQUITY TRUST MANAGERS (BERMUDA)
LIMITED
By: Michael J. Levett By: William Langley
--------------------- --------------------
Michael J. Levett William Langley
Chairman of the Board President
<PAGE> 1
EXHIBIT 6
PLACING AGREEMENT
relating to shares of
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
dated as of October 27, 1995
among
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED
and
S.G. WARBURG & CO. INC.
<PAGE> 2
THIS AGREEMENT is made as of October 27, 1995 by and among OLD MUTUAL
SOUTH AFRICA EQUITY TRUST, a Massachusetts trust organized as an open-end
investment company (the "MASTER TRUST"), OLD MUTUAL EQUITY GROWTH ASSETS SOUTH
AFRICA FUND, a Massachusetts business trust organized as an open-end investment
company (the "OMEGA FUND"), SOUTH AFRICAN MUTUAL LIFE ASSURANCE SOCIETY,
(incorporated in terms of the South Africa Mutual Life Assurance (Private) Act,
1966 and registered in South Africa as a long-term insurer in terms of the
Insurance Act, 1943) ("OLD MUTUAL"), OLD MUTUAL ASSET MANAGERS (BERMUDA)
LIMITED, a company incorporated under the laws of Bermuda ("OMAM"), OLD MUTUAL
FUND HOLDINGS (BERMUDA) LIMITED, a company incorporated under the laws of
Bermuda ("OLD MUTUAL BERMUDA"), and S.G. WARBURG & CO. INC., a company
incorporated under the laws of the State of New York ("S.G. WARBURG").
WHEREAS, OMAM and Old Mutual Bermuda are, respectively, direct and
indirect wholly owned subsidiaries of Old Mutual;
WHEREAS, OMAM will be the investment adviser to the Master Trust and to
Old Mutual Global Assets Fund Limited (the "GLOBAL FUND"), an open-end
investment company incorporated under the laws of Bermuda which will be a wholly
owned subsidiary of Old Mutual Bermuda;
WHEREAS, the Master Trust has agreed to acquire a portfolio of South
African securities from Old Mutual in exchange for Old Mutual Bermuda acquiring
substantially all of the beneficial interest in the Master Trust;
WHEREAS, the OMEGA Fund will seek to achieve its investment objective
by investing all of its investable assets in the Master Trust;
WHEREAS, the Old Mutual South Africa Growth Assets Fund Limited, a
company organized under the laws of Bermuda (the "SAGA FUND"), will seek to
achieve its investment objective by investing all of its investable assets in
the Master Trust;
WHEREAS, by resolution of the board of trustees of the OMEGA Fund
passed on October 23, 1995 it was resolved to offer up to 10,000,000 shares of
beneficial interest in the OMEGA Fund at a price of $100 per share pursuant to
the Initial Offering on and subject to the terms and conditions set forth herein
and in the Private Placement Memorandum;
WHEREAS, SBC Warburg, pursuant to a Placement Agreement dated the date
hereof made with the SAGA Fund and others (the "NON-US PLACEMENT AGREEMENT") has
agreed, as agent of the SAGA Fund, to use its reasonable endeavors to offer and
sell shares of the SAGA Fund outside the United States; and
WHEREAS, the OMEGA Fund wishes to engage S.G. Warburg as its agent for
the purpose of soliciting offers to purchase Shares pursuant to the Initial
Offering and S.G.
<PAGE> 3
Warburg, on the terms, subject to the conditions and in reliance on the
representations, warranties, covenants and agreements of the other parties
hereto contained herein, wishes to accept such engagement:
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS. In this Agreement the following words and expressions
shall have the following meanings:
"AFFILIATE" means, in relation to any person, any entity that controls,
is controlled by, or is under common control with such person within
the meaning of Rule 405 under the Securities Act and Rule 12b-2 under
the Exchange Act
"BUSINESS DAY" means any day which is not a day on which banking
institutions in London or New York are generally obligated or
authorized by law or executive order to close
"COMMISSION" means the Securities and Exchange Commission
"ENGAGEMENT LETTER" means two letters dated September 1, 1995 from SBC
Warburg to Old Mutual relating to, inter alia, the Initial Offering
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
"FUND AGREEMENTS" means each of the agreements listed in Schedule I
hereto
"INITIAL CLOSING DATE" means November 10, 1995, or such earlier or
later Business Day (not being later than December 10, 1995) as S.G.
Warburg may in agreement with the OMEGA Fund and Old Mutual determine
on which the closing of the Initial Offering is to occur
"INITIAL OFFERING" means the offer and sale to investors that are
institutional "accredited investors" as defined in Regulation D under
the Securities Act of up to 10,000,000 Shares at the Offering Price and
otherwise on the terms and conditions set forth in this Agreement and
the Issue Documents
"INITIAL OFFERING TERMINATION DATE" means November 7, 1995, or such
earlier or later Business Day (not being later than December 10, 1995)
as may be agreed by S.G. Warburg, the OMEGA Fund and Old Mutual, after
which no further subscriptions for Shares pursuant to the Initial
Offering will be accepted
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended
2
<PAGE> 4
"ISSUE DOCUMENTS" means the Private Placement Memorandum and the
Subscription Agreement
"LIBOR" means the offered rate in the London Interbank Market quoted at
or about 11.00 a.m. (London time) on the Initial Closing Date for
overnight US dollar deposits on the page "LIBOR" of the Reuters Monitor
Money Rates Services or, if more than one rate is offered, the
arithmetic mean thereof
"MAJORITY OF OUTSTANDING VOTING SECURITIES" has the meaning assigned
thereto in the Investment Company Act
"MASTER TRUST 12B-1 PLAN" means the placement plan adopted by the
Master Trust pursuant to Rule 12b-1 under the Investment Company Act
"NON-US PLACEMENT MEMORANDUM" means the placement memorandum dated
October 27, 1995 prepared by the SAGA Fund in connection with the offer
and sale of the shares of the SAGA Fund
"OFFERING PRICE" means the sum of $100 per Share
"OMEGA FUND 12B-1 PLAN" means the placement plan adopted by the OMEGA
Fund pursuant to Rule 12b-1 under the Investment Company Act
"PORTFOLIO" means the portfolio of South African securities to be
transferred from Old Mutual to the Master Trust as described in the
Private Placement Memorandum
"PORTFOLIO TRANSFER DATE" means the date on which the Portfolio is to
be transferred from Old Mutual to the Master Trust pursuant to the
Portfolio Transfer and Subscription Agreement
"PORTFOLIO TRANSFER AND SUBSCRIPTION AGREEMENT" means the agreement
dated October 23, 1995 by and among Old Mutual, Old Mutual Bermuda, the
Master Trust, the OMEGA Fund, the SAGA Fund, the Global Fund and OMAM
relating to the transfer of the Portfolio to the Master Trust
"PRIVATE PLACEMENT MEMORANDUM" means the private placement memorandum
dated September 15, 1995 prepared by the OMEGA Fund in connection with
the offer and sale of the Shares and provided to S.G. Warburg, as the
same may be amended and supplemented from time to time up to and
including the Initial Closing Date
"PRIVATE PLACEMENT PROCEDURES" means the memorandum dated September 11,
1995 entitled "Placement Procedures for U.S. Private Institutional
Offering" prepared by Bingham, Dana & Gould and furnished to S.G.
Warburg
3
<PAGE> 5
"QUALIFYING SHARES" means Shares that are (i) sold in the Initial
Offering or, if they are sold to "Category C Clients" as referred to in
the Engagement Letter, in the Second Offering and (ii) continuously
outstanding during the period ending on the third anniversary of the
Initial Closing Date
"REGULATION S" means Regulation S under the Securities Act
"REGISTRATION STATEMENTS" means the registration statements to be filed
by the OMEGA Fund and the Master Trust under the Investment Company Act
"RULES AND REGULATIONS" means the rules and regulations of the
Commission as then in effect
"SECOND OFFERING" means the offer for up to six months after the
Initial Closing Date of any remaining Shares at a price equal to their
net asset value plus a sales charge
"SECURITIES ACT" means the Securities Act of 1933, as amended
"SHARES" means shares of beneficial interest of the OMEGA Fund
"SUBSCRIBER" means a person who agrees, on the terms and subject to the
conditions set out or referred to in a Subscription Agreement, to
purchase Shares pursuant to the Initial Offering
"SUBSCRIPTION AGREEMENT" means an agreement, in the form of Exhibit 1
hereto, on the terms and subject to the conditions of which Subscribers
may subscribe for Shares pursuant to the Initial Offering
"TRUSTEES" means the trustees of the OMEGA Fund
"US DOLLARS" and "$" means the lawful currency of the United States of
America
"WARRANTORS" means each of the Master Trust, the OMEGA Fund, Old
Mutual, OMAM and Old Mutual Bermuda
2. REPRESENTATIONS AND WARRANTIES. Each Warrantor, severally and not
jointly, represents and warrants to and agrees with S.G. Warburg, for the
benefit of S.G. Warburg and each agent appointed pursuant to Section 3(b)
hereof, as set forth in Annex A hereto. Each of the representations, warranties
and agreements made in such Annex A shall be deemed made on and as of the date
hereof and on and as of the Initial Closing Date with the same effect as if made
on and as of such date.
4
<PAGE> 6
3. APPOINTMENT OF AGENT.
(a) The OMEGA Fund, pursuant to the OMEGA Fund 12b-1 Plan, hereby
irrevocably appoints S.G. Warburg to act as the exclusive agent of the OMEGA
Fund for the purpose of soliciting offers to purchase Shares pursuant to the
Initial Offering, and S.G. Warburg hereby accepts such appointment.
(b) Without prejudice to the generality of subsection (a) above, the
OMEGA Fund hereby authorizes S.G. Warburg to appoint, on behalf of the OMEGA
Fund, with the prior approval in each case of the OMEGA Fund and Old Mutual, one
or more agents (each, an "AUTHORIZED AGENT") for the purpose of soliciting
offers to purchase Shares pursuant to the Initial Offering, which shall be the
agents of the OMEGA Fund and not of S.G. Warburg. Such appointments shall be on
such terms as the OMEGA Fund and Old Mutual shall approve, such approvals not to
be unreasonably delayed or withheld. S.G. Warburg shall have no liability
whatsoever for the acts or omissions of any Authorized Agent, or for the
negligence, fraud or default of any such agent, unless such agent is an
Affiliate of S.G. Warburg.
(c) On the terms, subject to the conditions and in reliance on the
representations, warranties, covenants and agreements of the other parties
hereto set forth herein, S.G. Warburg hereby undertakes, as agent for the OMEGA
Fund, to use its best efforts to solicit offers to purchase Shares on the terms
and subject to the conditions set forth in this Agreement and the Issue
Documents. S.G. Warburg S.G. Warburg shall have no liability to the OMEGA Fund
or any other party hereto in the event any such purchase is not consummated for
any reason.
(d) Nothing in this Agreement shall oblige S.G. Warburg to purchase any
Shares pursuant to the Initial Offering or otherwise or impose an absolute
obligation on S.G. Warburg or any Authorized Agent to procure Subscribers
therefor pursuant to the Initial Offering or otherwise.
(e) If it should appear reasonably likely that the aggregate amount of
all subscriptions for Shares in the Initial Offering plus all subscriptions for
shares of the SAGA Fund in the Initial Offering (as defined in the Non-US
Placement Agreement) will be less than $1,000,000,000, the parties hereto will,
as soon as practicable after the execution of this Agreement, negotiate in good
faith with each other and with Fleming Martin and Rand International with a view
to entering into a separate agreement relating to the Second Offering as soon as
practicable. Such negotiations will be with a view to S.G. Warburg, Fleming
Martin and Rand International acting as agents for the purpose of soliciting
offers to purchase Shares pursuant to the Second Offering and the Second
Offering being made on substantially the terms and conditions described or
referred to in the Private Placement Memorandum and in the Engagement Letter.
5
<PAGE> 7
4. OFFERING BY AGENT; OTHER WARRANTIES. S.G. Warburg represents and
warrants to and agrees with the OMEGA Fund, the Master Trust and Old Mutual
that:
(i) it has duly authorized and executed this Agreement and, assuming
its due authorization and execution by each other party hereto, this
Agreement constitutes the legal, valid, binding and enforceable
obligation of S.G. Warburg, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity;
(ii) it is duly registered as a broker-dealer under the Exchange Act
and is in compliance with all applicable registration and reporting
requirements thereunder, to the extent material to its obligations
under this Agreement as agent for the solicitation of offers to
purchase Shares in the Initial Offering;
(iii) it has not taken and will not take any action or actions that,
without more, would cause the offering of the Shares pursuant to the
Initial Offering to be subject to registration under the Securities
Act;
(iv) it has not offered and will not offer the Shares in the Initial
Offering in contravention of any applicable state securities laws;
(v) it has not offered and will not offer the Shares in the Initial
Offering in contravention of the restrictions set forth in the sections
captioned "OFFERING OF SHARES - Initial Offering" and "GENERAL
INFORMATION - Transfers of Shares" in the Private Placement Memorandum;
and
(vi) it has not taken and will not take any action or actions in
connection with the offering of the Shares in the Initial Offering that
contravene, in any material respect, the Private Placement Procedures.
5. FEES AND EXPENSES.
(a) For the services rendered by S.G. Warburg under this Agreement:
(i) the Master Trust shall pay to or to the order of S.G.
Warburg a placement fee equal to 0.25 per cent of an amount determined
by multiplying (x) the total number of Shares sold in the Initial
Offering by (y) the Offering Price; and
(ii) OMAM shall pay to or to the order of S.G. Warburg an
amount equal to the out-of-pocket expenses (including but not limited
to legal and accounting fees and disbursements in any jurisdiction)
reasonably incurred by S.G. Warburg in connection with the Initial
Offering.
6
<PAGE> 8
The amount payable pursuant to clause (i) above shall become due and payable to
or to the order of S.G. Warburg by the Master Trust at 3:00 p.m., New York time,
on the Initial Closing Date. The amount payable pursuant to clause (ii) above
shall be payable to or to the order of S.G. Warburg by OMAM on demand, and OMAM
shall thereafter be reimbursed for such payment by the OMEGA Fund in accordance
with the OMEGA Fund 12b-1 Plan.
(b) Subject to Section 10 of this Agreement and to the OMEGA Fund 12b-1
Plan and the Master Trust 12b-1 Plan, respectively, each of the OMEGA Fund and
the Master Trust hereby agrees with S.G. Warburg that it shall be liable for,
and shall promptly pay, all its organizational and offering expenses, including
without limitation, all accounting and legal expenses in any jurisdiction and
public relations consultants', design consultants' and other professional fees,
the costs of printing, advertising and circulating the Issue Documents and any
related documents, and all costs of marketing the Initial Offering (including,
without limitation, roadshows).
(c) All sums payable to S.G. Warburg under this Section 5 or otherwise
under this Agreement shall be paid free and clear of all deductions or
withholdings unless the deduction or withholding is required by law, in which
event the party required to make such payment shall pay to S.G. Warburg such
additional amount as shall be required to ensure that the net amount retained by
S.G. Warburg is equal to the full amount that would have been received had no
such deduction or withholding been made, and the same shall apply with respect
to all sums paid to the order of S.G. Warburg under this Agreement.
(d) OMAM shall, on the third anniversary of the Initial Closing Date,
pay or procure the payment to SBC Warburg, for providing or procuring the
provision of ongoing services for holders of Shares, a servicing fee in respect
of all Qualifying Shares in an amount equal to 0.125 per cent per annum of the
proportion of the Master Trust's daily net assets represented by the Qualifying
Shares during the period ending on such third anniversary.
(e) Each of OMAM and Old Mutual agrees with S.G. Warburg that it shall
at its own expense take such steps as may be necessary and as shall be
reasonably satisfactory to S.G. Warburg in order to ensure that Qualifying
Shares are at all times capable of being identified for the purpose of
determining the amount of the servicing fee payable to SBC Warburg pursuant to
subsection (d) above and each of the OMEGA Fund and the Master Trust agrees to
facilitate the taking of such steps by OMAM and Old Mutual to the extent
practicable. For the purpose of determining such servicing fee if a holder of
both Shares which are eligible to become Qualifying Shares ("Eligible Shares")
and other Shares redeems any Shares he shall be deemed not to have redeemed any
Eligible Shares until all such other Shares have been redeemed by him. Any
dispute or difference as to such servicing fee shall be referred to the auditors
of the Master Trust for the time being who shall be deemed to be acting as
experts and not as arbitrators and whose certificate as to such servicing fee
shall be final and binding on the parties. The fees of such auditors shall be
borne by Old Mutual and S.G. Warburg equally and such parties shall undertake
liability to such auditors for the payment of their fees.
7
<PAGE> 9
(f) OMAM shall provide or cause to be provided to the boards of
trustees of the Master Trust and the OMEGA Fund, respectively, such written
reports regarding the amount and purpose of any expenditures made pursuant to
the Master Trust 12b-1 Plan and the OMEGA Fund 12b-1 Plan, respectively, as may
be required by Rule 12b-1(b)(3)(ii) under the Investment Company Act.
6. UNDERTAKINGS.
(a) The OMEGA Fund agrees (i) to make no amendment or
supplement to the Private Placement Memorandum (other than as described in
clause (ii) below) without the prior written consent of S.G. Warburg, which
consent shall not be unreasonably withheld or delayed, (ii) if , prior to the
Initial Closing Date, any event shall have occurred as a result of which the
Private Placement Memorandum would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it should be necessary to amend or supplement the
Private Placement Memorandum to comply with applicable law, to prepare an
amended Private Placement Memorandum or supplement to the Private Placement
Memorandum which will correct such statement or omission or will effect such
compliance and (iii) to furnish without charge to S.G. Warburg as many copies as
S.G. Warburg may from time to time reasonably request of any such amended
Private Placement Memorandum or supplement thereto. If for any reason referred
to in clause (ii) above the Private Placement Memorandum must be amended or
supplemented, then, (x) from and after receipt by S.G. Warburg of notice from
the OMEGA Fund that the OMEGA Fund is preparing an amended Private Placement
Memorandum or a supplement thereto, S.G. Warburg will distribute the Private
Placement Memorandum only as so amended or supplemented and (y) as soon as
practicable after receipt of a sufficient number of copies of such amended
Private Placement Memorandum or supplement thereto, S.G. Warburg will furnish
copies thereof to each investor to which it previously furnished a copy of the
Private Placement Memorandum.
(b) Each Warrantor agrees with S.G. Warburg that it shall notify S.G.
Warburg promptly after becoming aware that any of its representations or
warranties set forth in Annex A hereto is untrue or inaccurate in any material
respect or would, if repeated by reference to the facts and circumstances
existing at any time prior to the Initial Closing Date, be untrue or inaccurate
in any material respect.
(c) Old Mutual agrees with S.G. Warburg that it shall ensure (i) that
each of Old Mutual Bermuda and OMAM complies with its obligations under this
Agreement and (ii) that prior to the Initial Closing Date, each of the OMEGA
Fund and the Master Trust is duly registered as an open-end management company
under the Investment Company Act.
(d) Each of the Warrantors agrees with S.G. Warburg that it shall
comply with the obligations undertaken by it under the Portfolio Transfer and
Subscription Agreement.
8
<PAGE> 10
(e) The Master Trust agrees with S.G. Warburg and the OMEGA Fund that
it shall not (i) within a period of 12 months from the Initial Closing Date
without prior consultation with S.G. Warburg and the OMEGA Fund, issue any
beneficial interests in the Master Trust to investors other than OMAM, the OMEGA
Fund, the SAGA Fund and Old Mutual Bermuda in accordance with the arrangements
described in the Portfolio Transfer and Subscription Agreement, the Private
Placement Memorandum and the Non-US Placement Memorandum or (ii) issue any
beneficial interests in the Master Trust if the result of such issue would be to
prejudice the interests of the OMEGA Fund.
(f) Each of the OMEGA Fund and the Master Trust agrees with S.G.
Warburg that (i) prior to termination of this Agreement, it shall not file any
amendment to its Registration Statement without prior notice to S.G. Warburg, it
being understood that nothing contained in this Agreement shall in any way limit
the right of the OMEGA Fund or the Master Trust to file any such amendment to
its Registration Statement it may deem advisable, (ii) it shall promptly advise
S.G. Warburg of (x) any request of the Commission for any amendment of its
Registration Statement or for any additional information relating to or that
could affect disclosure in such Registration Statement and (y) the issuance by
the Commission of any order suspending its registration under the Investment
Company Act, or the institution or (to the best of its knowledge) threatening of
any proceeding for that purpose, (iii) it shall use its best efforts to prevent
the issuance by the Commission of any such order or suspension and, if issued,
to obtain as soon as possible the withdrawal or suspension thereof, (iv) as soon
as practicable (giving effect to the normal periodic reporting requirements
under the Investment Company Act and the Rules and Regulations thereunder), it
shall make generally available to S.G. Warburg (with sufficient copies for any
Authorized Agents) a report containing the financial statements required under
Section 30(d) of the Investment Company Act and Rule 30d-1 thereunder and (v) at
all times after the date hereof until the date on which the OMEGA Fund's audited
accounts for the period ending June 30, 1996 are published, notify S.G. Warburg
in advance of and forward to S.G. Warburg for comment final proofs of (x) all
documents to be sent by the OMEGA Fund to the holders of Shares, (y) all
documents to be filed with the Commission pursuant to the Investment Company Act
and the Rules and Regulations thereunder and (z) any announcement of profits or
losses and dividends of the OMEGA Fund or the Master Trust.
(g) The OMEGA Fund agrees with S.G. Warburg that, except as may be
required by any regulatory authority or under any applicable laws or by any
provision of this Agreement, neither the OMEGA Fund nor any person on its behalf
will at any time prior to the date on which the OMEGA Fund's audited accounts
for the period ending June 30, 1996 are published make any public announcement,
public statement or public communication regarding the OMEGA Fund which is
material in relation to the Initial Offering or the Shares, whether in response
to inquiries or otherwise, without the prior consent of S.G. Warburg, which
consent shall not be unreasonably withheld or delayed.
9
<PAGE> 11
7. CLOSING, SETTLEMENT AND ALLOTMENT.
(a) Allocations of Shares pursuant to the Initial Offering
shall be determined by S.G. Warburg at its discretion after consultation with
Old Mutual and the OMEGA Fund, and S.G. Warburg shall notify Old Mutual and the
OMEGA Fund if it wishes to reject any proposed subscription in whole or in part;
provided, however, that no allocation of Shares pursuant to the
Initial Offering shall be made (i) to any investor which, together with its
Affiliates, proposes to subscribe for 1,500,000 or more Shares without the
consent of the OMEGA Fund and Old Mutual or (ii) to any investor that the OMEGA
Fund, after consultation with S.G. Warburg, reasonably believes is not an
"accredited investor" within the meaning of Regulation D under the Securities
Act. The OMEGA Fund shall, as soon as practicable following fulfillment or
waiver of the conditions set forth herein and in any event not later than 5:00
p.m. (Bermuda time) on the Initial Closing Date issue to each Subscriber the
number of Shares such Subscriber has purchased pursuant to the Initial Offering
in such proportions and such names as S.G. Warburg shall previously have
notified to the OMEGA Fund.
(b) The Subscription Agreements will require Subscribers to
make payment for their Shares directly to a nominated bank account of the OMEGA
Fund by not later than 9:30 a.m. (New York time) on the Initial Closing Date and
the OMEGA Fund will provide details in writing to S.G. Warburg by not later than
10:00 a.m. (New York time) on the Initial Closing Date of any Subscriber that
has not made payment to the OMEGA Fund for the Shares for which it has agreed to
subscribe. With respect to any such Subscriber, S.G. Warburg may either cancel
the relevant allocation to such Subscriber on behalf of the OMEGA Fund or
accept, with the consent of the OMEGA Fund, such late payment with interest
thereon (for the account of the OMEGA Fund) at LIBOR plus one per cent in
respect of each day (or part thereof) from the due time for such payment to the
time when such payment is actually made.
(c) The OMEGA Fund shall procure that, at the cost of the OMEGA
Fund, as soon as reasonably practicable after allotment of the Shares allotted
pursuant to subsection (a) above, the register of shares of the OMEGA Fund shall
be made up by the transfer agent to reflect such allotments.
8. CONDITIONS.
The obligations of S.G. Warburg hereunder shall be subject to the accuracy in
all material respects of the representations and warranties of each other party
hereto contained herein as of the dates when made or deemed to have been made,
to the performance in all material respects by each other party hereto of its
obligations hereunder and to the following additional conditions:
(i) a Registration Statement meeting the requirements of the
Investment Company Act and the Rules and Regulations thereunder shall
have been filed with the Commission in respect of each of the OMEGA
Fund and the Master Trust prior to the
10
<PAGE> 12
Initial Closing Date, and no order suspending or revoking the
registration of the OMEGA Fund or the Master Trust under Section 8(e)
of the Investment Company Act shall have been issued and no proceedings
therefor initiated or threatened by the Commission;
(ii) Bowman Gilfillan Hayman Godfrey, South African legal
advisers to SBC Warburg, the Master Trust, the OMEGA Fund and the SAGA
Fund, shall have furnished to S.G. Warburg their legal opinion, dated
the Initial Closing Date, in form and substance satisfactory to S.G.
Warburg and its counsel, to the effect set forth in Annex B hereto;
(iii) Bingham, Dana & Gould, United States legal advisers to
the Master Trust, the OMEGA Fund and the SAGA Fund, shall have
furnished to S.G. Warburg their legal opinion, dated the Initial
Closing Date, in form and substance satisfactory to S.G. Warburg and
its counsel, to the effect set forth in Annex C hereto;
(iv) Conyers, Dill and Pearman, legal advisers in Bermuda to
the Master Trust, the OMEGA Fund and the SAGA Fund, shall have
furnished to S.G. Warburg their legal opinion, dated the Initial
Closing Date, in form and substance satisfactory to S.G. Warburg and
its counsel, to the effect set forth in Annex D hereto; and
(iv) the OMEGA Fund shall have procured the delivery to S.G.
Warburg as soon as reasonably practicable following the making of a
request in writing therefor by S.G. Warburg to the OMEGA Fund, of all
such further information and documents as S.G. Warburg may reasonably
request.
If any of the conditions set forth in this Section 8 is not fulfilled or
expressly waived in writing by S.G. Warburg or varied by written agreement of
the parties hereto, the provisions of Section 10(f) shall apply.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Warrantors, severally and not jointly, agrees to
indemnify and hold harmless S.G. Warburg, the directors, officers, employees and
agents of S.G. Warburg and each person who controls S.G. Warburg within the
meaning of either the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act, the
Investment Company Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Private Placement Memorandum or in any amendment thereof or supplement thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or (iii) any
breach or alleged breach of any of the representations, warranties or
undertakings by it (in the case of the
11
<PAGE> 13
Master Trust or the OMEGA Fund) or by any Warrantor (in the case of Old Mutual,
OMAM and Old Mutual Bermuda), and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that no Warrantor shall
be liable in any such case to the extent that any such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Private Placement Memorandum or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the OMEGA
Fund or Old Mutual by S.G. Warburg expressly for use therein. The parties agree
that Annex E sets forth all of the written information so furnished by S.G.
Warburg at the date of this Agreement. This indemnity agreement will be in
addition to any liability which the Warrantors may otherwise have.
(b) Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under subsection (a) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in subsection (a)
above. An indemnified party will consult with the indemnifying parties regarding
the defense and possible settlement of any action to which the obligations
provided in this Section 9 apply, and will keep such indemnifying parties
apprised as to the progress of any such action. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. No indemnifying party shall be liable under this Section 9
for any settlement or compromise entered into without its consent (provided that
such consent shall not be unreasonably withheld or delayed).
(c) In the event that the indemnity provided in subsection (a) above is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, each Warrantor agrees, severally and not jointly, to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which S.G. Warburg may be subject in such proportion
as is appropriate to reflect the relative benefits received by it (in the case
of the
12
<PAGE> 14
Master Trust or the OMEGA Fund) or by the Warrantors generally (in the case of
Old Mutual, OMAM and Old Mutual Bermuda), on the one hand, and by S.G. Warburg,
on the other hand, from the Initial Offering. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, each Warrantor
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also its relative fault (in the case of the Master Trust
or the OMEGA Fund) or that of the Warrantors generally (in the case of Old
Mutual, OMAM and Old Mutual Bermuda), on the one hand, and of S.G. Warburg, on
the other hand, in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Warrantors shall be deemed to be equal to the total net proceeds
from the Initial Offering (before deducting expenses), and benefits received by
S.G. Warburg shall be deemed to be equal to the amount received by it in
connection with the Initial Offering in accordance with Section 5 hereof.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Warrantors or by
S.G. Warburg. The Warrantors and S.G. Warburg agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
subsection (c), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person who controls S.G.
Warburg within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of S.G. Warburg shall have the same
rights to contribution as S.G. Warburg.
(d) If a claim is made under this Agreement against a Warrantor other
than the OMEGA Fund or the Master Trust, such Warrantor shall not have, or
pursue, any claim or third party action to join, claim against, seek a
contribution from or otherwise claim or seek damages or compensation from the
OMEGA Fund or the Master Trust.
10. TERMINATION.
(a) The obligations of the OMEGA Fund and the Master Trust,
respectively, under this Agreement shall continue in effect for a
period beyond one year from the date hereof only so long as such
continuance is specifically approved at least annually in the manner
described in Rule 12b-1(b)(2) under the Investment Company Act, and if
not so approved shall be deemed terminated.
(b) The obligations of the OMEGA Fund and the Master Trust,
respectively, under this Agreement may be terminated at any time,
without the payment of any penalty, by (i) a majority of the members of
the board of trustees of the OMEGA Fund or the Master Trust (as the
case may be) who are not interested persons of the OMEGA Fund or the
Master Trust (as the case may be) and have no direct or indirect
financial interest in the operation of the OMEGA Fund 12b-1 Plan or the
Master Trust 12b-1 Plan (as the case may be) or in any agreements
related to such plan or (ii) the vote of a Majority of the Outstanding
Voting Securities of the OMEGA Fund or the Master Trust (as the case
may be) on 60 days' notice given to each other party hereto in
accordance with Section 11 hereof.
(c) This Agreement will automatically terminate in the event of
its assignment (as defined in the Investment Company Act) by S.G.
Warburg.
13
<PAGE> 15
(d) If at any time prior to the Initial Closing Date it shall
come to the knowledge of any Warrantor or S.G. Warburg that:
(i) any statement contained in the Private Placement
Memorandum is or has become untrue, inaccurate or misleading;
or
(ii) any matter has arisen which would, if the Private
Placement Memorandum were issued at that time, constitute an
omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; or
(iii) any of the representations and warranties set
forth in Annex A hereto was untrue or inaccurate as at the date
hereof or would, if repeated by reference to the facts and
circumstances existing at any time prior to the Initial Closing
Date, be untrue or inaccurate; or
(iv) any Warrantor has not complied or cannot comply
with its obligations under this Agreement
and such fact or event is, of itself or taken together with any other
such fact or event, material in the context of the Initial Offering,
the relevant Warrantor or S.G. Warburg (as the case may be) shall
forthwith give notice thereof to the other parties to this Agreement
and S.G. Warburg shall have the right (exercisable in its absolute
discretion but after consultation with Old Mutual and the OMEGA Fund)
at any time prior to the Initial Closing Date by notice in writing to
the other parties to terminate this Agreement.
(e) This Agreement shall be immediately terminable by the OMEGA
Fund by written notice to S.G. Warburg in the event that S.G. Warburg
shall be in material breach of this Agreement.
(f) If at any time prior to the Initial Closing Date any
government regulation, crisis of international or national effect or
change in the conditions prevailing in any relevant financial market
occurs or comes into effect which is likely materially and adversely to
affect the OMEGA Fund and/or the Portfolio or which will make it
inadvisable or inexpedient to proceed with the Initial Offering, each
of S.G. Warburg and Old Mutual shall have the right (subject to the
prior consent of the other) at any time prior to the Initial Closing
Date by notice in writing to the other parties to this Agreement to
terminate this Agreement.
(g) In the event that this Agreement shall be terminated
pursuant to this Section 10, or if the provisions of this Section shall
apply by virtue of Section 8, all the outstanding obligations of S.G.
Warburg hereunder (and accordingly all obligations of Subscribers) and
any outstanding obligations of any Warrantor shall terminate and none
14
<PAGE> 16
of the parties hereto shall have any claim against any other in respect
of any matter or thing arising out of or in connection with this
Agreement for compensation, costs, damages or otherwise, except as
provided in Section 12 of this Agreement and except that:
(i) Old Mutual shall be liable for the legal fees and
disbursements reasonably incurred by S.G. Warburg in connection
with the Initial Offering and its associated transactions and
all such costs, charges, fees and expenses as are referred to
in Section 5.(b) hereof;
(ii) such termination shall not prejudice any accrued
rights or claims by any party against any other party hereto
(including without limitation any right to make a claim under
Section 2 hereof in relation to any matter that gave rise to a
right to terminate this Agreement under subsection (c) above)
(it being understood that no claim for lost profits or
commissions will survive any such termination occurring prior
to the Initial Closing Date); and
(iii) if so requested in writing by S.G. Warburg, the
OMEGA Fund shall circulate such notice or other communication
as may be reasonably required by S.G. Warburg.
11. NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing with copies to each party hereto, and shall be delivered or
sent by mail or facsimile transmission, as follows:
if to S.G. Warburg, to 277 Park Avenue, New York, New York, 10172, fax
no. 212 224 7521, to the attention of Bruce Watts;
if to the Master Trust, the OMEGA Fund, OMAM or Old Mutual Bermuda, to
Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda, fax no. 809
292 4720, to the attention of J.C.R. Collis; and
if to Old Mutual, to Mutualpark, Jan Smuts Drive, Pinelands 7405, PO
Box 66, Cape Town, South Africa, fax no. 2721 509 3899, to the
attention of William Langley.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
12. REPRESENTATIONS AND WARRANTIES TO SURVIVE.
The respective agreements, representations, warranties, indemnities and other
statements of the Warrantors and S.G. Warburg set forth in or made pursuant to
this Agreement will, to the extent permitted by applicable law, remain in full
force and effect regardless of any investigation made by or on behalf of any
Warrantor or S.G. Warburg or any of the officers directors or controlling
persons referred to in Section 10 hereof and will survive the offer of
15
<PAGE> 17
the Shares. The provisions of Sections 5, 9 and 10 hereof shall, to the extent
permitted by law, survive the termination or cancellation of this Agreement.
13. GOVERNING LAW AND JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) Each Warrantor irrevocably (i) agrees that any legal suit,
action or proceeding against such Warrantor brought by S.G. Warburg or
by any officer or director of S.G. Warburg or by any Affiliate of S.G.
Warburg arising out of or based upon this Agreement or the transactions
contemplated herein may be instituted in the federal courts of the
United States or in the courts of England, (ii) waives, to the fullest
extent it may effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such proceeding and (iii)
submits to the non-exclusive jurisdiction of such courts in any such
suit, action or proceeding. Each of the Warrantors agrees to maintain
an authorized agent in New York and in London, upon whom process may be
served in any such suit, action or proceeding and to take any and all
action, including the filing of any and all documents and instruments,
necessary to keep such appointments in full force and effect. Each of
the Warrantors (i) has appointed Norose Notices Limited, Kempson House,
Camomile Street, London EC3 7AN as its authorized agent for service of
any writ, decree or other document in the United Kingdom (the
"Authorized English Agent") and represents and warrants that the
Authorized English Agent has agreed to act as such and (ii) has
appointed Bingham, Dana & Gould, 150 Federal Street, Boston,
Massachusetts 02110, as its authorized agent for service of any writ,
decree or other document in the United States (the "Authorized U.S.
Agent") and represents and warrants that the Authorized U.S. Agent has
agreed to act as such. Service of process upon the Authorized English
Agent or upon the Authorized U.S. Agent (or any successor authorized
agent) and written notice of such service to any Warrantor shall be
deemed, in every respect, effective service of process upon such
Warrantor.
14. PROTECTION OF TRUSTEES.
This Agreement is executed and made by the trustees of the OMEGA Fund
not individually, but as trustees under the Declaration of Trust of the OMEGA
Fund dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of the shareholders of the OMEGA Fund individually, but
bind only the trust estate of the OMEGA Fund.
This Agreement is executed and made by the trustees of the Master Trust
not individually, but as trustees under the Declaration of Trust of the Master
Trust dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such trustees individually.
16
<PAGE> 18
15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original, but all such counterparts will together constitute
one and the same instrument.
IN WITNESS whereof this Agreement has been entered into the day and
year first above written.
SIGNED by WILLIAM BOYAN
for and on behalf of
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
/s/ WILLIAM BOYAN
-------------------------
Duly authorized signatory
SIGNED by KENNETH WILLIAMS
for and on behalf of
OLD MUTUAL EQUITY GROWTH
ASSETS SOUTH AFRICA FUND
/s/ KENNETH WILLIAMS
-------------------------
Duly authorized signatory
SIGNED by MICHAEL LEVETT
for and on behalf of
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY
/s/ M. J. LEVETT
-------------------------
Duly authorized signatory
SIGNED by WILLIAM LANGLEY
for and on behalf of
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
/s/ WILLIAM LANGLEY
-------------------------
Duly authorized signatory
17
<PAGE> 19
SIGNED by MICHAEL LEVETT
for and on behalf of
OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED
/s/ M. J. LEVETT
-------------------------
Duly authorized signatory
SIGNED by BRUCE R. WATTS
for and on behalf of
S.G. WARBURG & CO. INC.
/s/ BRUCE R. WATTS
-------------------------
Duly authorized signatory
18
<PAGE> 20
SCHEDULE I
The following constitute the "Fund Agreements" as defined in this Agreement:
1. the Investment Advisory Agreement between the Master Trust and OMAM;
2. the Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Bermuda, the Master Trust, the OMEGA Fund, the SAGA Fund, and
the Global Fund;
3. the Administrative Services Agreement between State Street Bank and
Trust Company and the OMEGA Fund;
4. the Administrative Services Agreement between State Street Cayman Trust
Company and the Master Trust;
5. Custodian Agreements between State Street Bank and Trust Company and
each of the OMEGA Fund and the Master Trust, respectively.
<PAGE> 21
ANNEX A
WARRANTIES
Each of Old Mutual, OMAM and Old Mutual Bermuda represents and warrants to and
agrees with, and each of the OMEGA Fund and the Master Trust represents and
warrants to and agrees with (but only for or as to itself, as the case may be),
S.G. Warburg as follows:
1. Each of the OMEGA Fund and the Master Trust meets the requirements for
use of Form N-1A under the Investment Company Act and the Rules and
Regulations thereunder.
2. The notification of registration on Form N-8A, as amended, by the OMEGA
Fund and the Master Trust will comply in all material respects with the
applicable requirements of the Investment Company Act and the Rules and
Regulations thereunder.
3. From and after the time each Registration Statement is filed with the
Commission through the Initial Closing Date, such Registration
Statement (as amended or supplemented from time to time) will conform,
in all material respects, with the Investment Company Act and the Rules
and Regulations thereunder and will not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that no
representation or warranty is given with respect to any statement
contained in any such Registration Statement that is made in reliance
upon and in conformity with written information furnished to the OMEGA
Fund or the Master Trust by S.G. Warburg expressly for use therein.
4. No person is, and no person at any time through the Initial Closing
Date will be, serving or acting as an officer or director of or
investment adviser to the OMEGA Fund or the Master Trust except in
accordance with the Investment Company Act and the Investment Advisers
Act of 1940, as amended, and the Rules and Regulations under each such
act.
5. The Private Placement Memorandum does not, and at all times through the
Initial Closing Date will not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
6. The OMEGA Fund has been duly created and is lawfully and validly
existing as a business trust, and the Master Trust has been duly
created and is lawfully and validly existing as a trust, under the laws
of the Commonwealth of Massachusetts, in each case with full power and
authority to enter into this Agreement and consummate the transactions
contemplated herein, and to own its properties and conduct its business
as described in its Registration Statement and in the Private Placement
Memorandum;
<PAGE> 22
each of the OMEGA Fund and the Master Trust is duly qualified to
transact business in each other state and every other jurisdiction in
which it is required to be so qualified; and the Declaration of Trust
and By-Laws of each of the OMEGA Fund and the Master Trust complies
and, from and after the time the OMEGA Fund's Registration Statement is
filed with the Commission will comply, in all material respects with
all applicable requirements of the Investment Company Act and the Rules
and Regulations thereunder.
7. The issuance of the Shares as contemplated by this Agreement and by the
Private Placement Memorandum has been duly and validly authorized by
the OMEGA Fund and the Shares, when issued and paid for as contemplated
herein and therein, will be validly issued and fully paid and
nonassessable and will conform in all material respects to the
description thereof contained in the Private Placement Memorandum. The
issuance and sale of beneficial interests in the Master Trust to the
OMEGA Fund and the SAGA Fund as contemplated by the Subscription and
Portfolio Transfer Agreement and the Private Placement Memorandum has
been duly and validly authorized by the Master Trust, and such
beneficial interests, when issued as contemplated therein, will be
validly issued and will conform in all material respects to the
description thereof contained in the Private Placement Memorandum.
8. Each of this Agreement and each of the Fund Agreements to which it is a
party has been duly authorized, executed and delivered by each of the
Warrantors, complies in all material respects with all applicable
provisions of the Investment Company Act and the Rules and Regulations
thereunder and, assuming its due authorization, execution and delivery
by each of the parties thereto other than such Warrantor, constitutes
the legal, valid, binding and enforceable obligation of such Warrantor,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.
9. No consents, approvals, authorizations or orders are required to be
obtained under the Investment Company Act or the Rules and Regulations
thereunder in order to permit the solicitation by S.G. Warburg of
offers to purchase Shares pursuant to the Initial Offering as
contemplated by this Agreement and the Private Placement Memorandum;
and the solicitation by S.G. Warburg of offers to purchase Shares
pursuant to the Initial Offering as contemplated by this Agreement and
the Private Placement Memorandum will not result in a violation of the
provisions of the Investment Company Act or the Rules and Regulations
thereunder.
10. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
(including without limitation any consent, approval, authorization,
order, registration or qualification under the Investment Company Act
and the Rules and Regulations thereunder) is required for the
consummation by each Warrantor of the transactions contemplated in this
Agreement or the Fund Agreements to which it is a party, except the
registration of the OMEGA
A-2
<PAGE> 23
Fund and the Master Trust under the Investment Company Act and such as
have already been obtained and are in full force and effect or such as
may be required under state securities laws.
11. The execution and delivery by each Warrantor of this Agreement and the
Fund Agreements to which it is a party, and the compliance with and
consummation of the transactions contemplated in this Agreement and the
Fund Agreements to which it is a party by such Warrantor, will not
conflict with, result in a breach of, or constitute a default under,
the constitutive documents of such Warrantor or the terms of any other
agreement or instrument to which such Warrantor is a party or by which
it is bound, or any order or regulation applicable to such Warrantor of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Warrantor or any of its
properties.
12. The execution and delivery by each Warrantor of this Agreement and the
Fund Agreements to which it is a party, and the compliance with and
consummation of the transactions contemplated in this Agreement and the
Fund Agreements to which it is a party by such Warrantor, will not
result in a violation of the Investment Company Act and Rules and
Regulations thereunder or any applicable law, rule or regulation of
Bermuda or the Republic of South Africa.
13. Except as stated or contemplated in the Private Placement Memorandum,
(i) neither the OMEGA Fund nor the Master Trust has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, whether or not in the ordinary course of business, that
are material to the OMEGA Fund or the Master Trust, (ii) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
other) of the OMEGA Fund or the Master Trust (except that no
representation is made with respect to fluctuations in the value of the
Portfolio as a result of changes in the prices of the underlying
securities), (iii) there has been no dividend or distribution paid or
declared in respect of the OMEGA Fund or the Master Trust and (iv)
neither the OMEGA Fund nor the Master Trust has incurred any
indebtedness for borrowed money.
14. The OMEGA Fund will elect or has elected to be treated as a regulated
investment company as defined in Section 851(a) of the U.S. Internal
Revenue Code of 1986 for its first taxable year and will operate so as
to qualify as such in such first taxable year.
A-3
<PAGE> 24
15. No provision of the Declaration of Trust or By-Laws of the Master Trust
or of the Investment Company Act or the Rules and Regulations
thereunder and no other reason disqualifies the Master Trust from being
deemed resident in a jurisdiction other than the United States for U.S.
income tax purposes.
16. The OMEGA Fund does not own any securities or have any beneficial
interest in any other company or entity (other than the Master Trust)
and the OMEGA Fund has not entered into any binding commitment to
acquire any investment (other than beneficial interests in the Master
Trust) or to enter into any joint venture arrangement.
17. None of the Warrantors has taken or will take any action or actions
that, without more, would cause the offering of the Shares to be
subject to registration under the Securities Act.
18. None of the Warrantors has offered or will offer any Shares for sale
prior to the Initial Closing Date except as contemplated by this
Agreement.
19. Except as contemplated in the Private Placement Memorandum, on the
Portfolio Transfer Date and at all times subsequent thereto through the
Initial Closing Date, each of the OMEGA Fund and the Master Trust will
own all of its assets free and clear in all material respects of all
liens, security interests, pledges, mortgages, charges and other
encumbrances or defects and all governmental or other consents required
for the transfer of the Portfolio to the Master Trust will have been
obtained and will be in full force and effect.
20. On the Portfolio Transfer Date and at all times subsequent thereto
through the Initial Closing Date, the Global Fund will own all of the
assets to be transferred to it pursuant to the Portfolio Transfer and
Subscription Agreement free and clear in all material respects of all
liens, security interests, pledges, mortgages, charges and other
encumbrances or defects and all governmental or other consents required
for the transfer of such assets to the Global Fund will have been
obtained and will be in full force and effect.
In addition to the foregoing, each of Old Mutual, OMAM and Old Mutual Bermuda
represents, warrants and agrees as follows:
21. Neither the SAGA Fund nor any person acting on its behalf has offered
or sold or will offer or sell shares in the SAGA Fund in the United
States or to or for the account of a U.S. Person, as such term is
defined in Regulation S (except that no representation is made as to
the actions of SBC Warburg or any of its Affiliates).
22. Neither the SAGA Fund nor any person acting on its behalf has engaged
or will engage in directed selling efforts (as defined in Regulation S)
with respect to the shares of the
A-4
<PAGE> 25
SAGA Fund (except that no representation is made as to the actions of
SBC Warburg or any of its Affiliates).
A-5
<PAGE> 26
ANNEX B
Private and Confidential
[Letterhead of Bowman Gillfillan Hayman Godfrey Inc]
To: SBC Warburg
1 Finsbury Avenue
London EC2M 2PP
S.G. Warburg & Co. Inc.,
OMEGA Fund
[Address details]
SAGA Fund
[Address details]
Master Trust
[Address details]
Dear Sirs,
Old Mutual Equity Growth Assets South Africa Fund.
Old Mutual South Africa Growth Assets Fund
Placing of Shares
We refer to the proposed placings ("the Placings") by S.G. Warburg & Co. Inc.
(S.G. Warburg") of shares in the Old Mutual Equity Growth Assets South Africa
Fund Limited ("OMEGA Fund") and by Swiss Bank Corporation, acting through its
division SBC Warburg "SBC Warburg") of shares in Old Mutual South Africa Growth
Assets Fund ("SAGA Fund").
We have been asked to express an opinion on various legal aspects of the
proposed Placings under South Africa law. We are familiar with international
transactions involving South Africa and are qualified to give this opinion to
you.
This opinion is limited to the laws of the Republic of South Africa ("South
Africa"), as they are at the date of the opinion.
1 Definitions
Words and expressions defined in the Glossary in each of the Placement
Memoranda referred to in paragraphs 2.1(a) and 2.1(b) below, and which
are not defined in this opinion shall have the same meanings in this
opinion as those ascribed to them in those
<PAGE> 27
Glossaries.
2 Documents Examined
2.1 We examined the following documents in connection with the
Placings:-
(a) the draft Private Placement Memorandum dated September
15, 1995, prepared for the Initial Offering by the
Omega Fund of up to 10,000,000 Shares of beneficial
Interest at U.S.$100 per share;
(b) the draft Placement Memorandum dated 15 September,
1995 prepared for the Initial Offering by the Saga
Fund of up to 20,000,000 Shares at U.S.$50 per share;
(c) the South African Mutual Life Assurance Society
(Private) Act, 1966 (Act 52 of 1966), as amended by
Act 53 of 1980 and by the further amendments made in
terms of Section 73 of that Act, and confirmed by
orders of the Cape Provincial Division of the Supreme
Court of South Africa granted on 21 December 1966, 12
December 1968, 19 February 1974 and 17 December 1981
("the Old Mutual Act");
(d) the bye-laws of the Old Mutual made in terms of
Chapter 7 of the Old Mutual Act;
(e) the Resolutions of the Board of Directors of Old
Mutual passed on ________________ 1995;
(f) correspondence between the South African Reserve Bank
("the Reserve Band") as the representative of the
Treasury and Old Mutual, including the following:
letter dated 1 August 1995 from Old Mutual to the
Reserve Bank; letter dated 28 August 1995 from the
Reserve Bank to Old Mutual; letter dated 29 August
from Old Mutual to the Reserve Bank; letter dated 30
August 1995 from the Reserve Bank to Old Mutual;
letter dated 22 September 1995 from Old Mutual to the
Reserve Bank;
(g) a copy, certified to our satisfaction, of the
Portfolio Transfer and Description Agreement dated __
October 1995 ("the Transfer Agreement");
(h) a copy, certified to our satisfaction, of the Placing
Agreement relating to shares of the Omega Fund dated
as of ___________ 1995 ("the Omega Placing
Agreement");
B-2
<PAGE> 28
(i) a copy, certified to our satisfaction, of the
Agreement dated ___________ 1995 relating to the
placing of up to ___ shares of U.S.$____ each in the
Saga Fund ("the Saga Placing Agreement");
(j) a copy, certified to our satisfaction, of the letter
agreement dated 23 August 1995 between SBC Warburg and
Old Mutual read together with the separate letter of
the same date between the same parties (the
"Engagement Letters").
2.2 We have also made such other enquiries and examined such other
documents as we have considered appropriate for the purpose of
giving this opinion.
3 Assumptions
For the purposes of this opinion we have made the following
assumptions;
3.1 that all signatures on all documents are genuine;
3.2 that copies of all original documents submitted to us are
complete and conform with the originals;
3.3 that all Resolutions shown to us have been validly passed;
3.4 that all the amendments to the Old Mutual Act which were made
in terms of Section 73 of that Act and confirmed by orders of
the Cape Provincial Division of the Supreme Court of South
Africa, which are referred to above, were validly made and
confirmed;
3.5 that the approval of the Financial Services Board which is
referred to in the letter dated 28 August 1995 from the Reserve
Bank to Old Mutual and which is said in that letter to have
been obtained for Old Mutual's "original proposal" was in fact
obtained; and that such approval satisfies the requirements of
the Insurance Act 1943 (Act 27 of 1943) in so far as that Act
requires any approval from the Financial Services Board for the
transfer of the Portfolio to the Master Trust and the Global
Fund Portfolio to the Global Fund and for any of the other
transactions or arrangements mentioned or described in this
opinion;
3.6 that each of the four agreements referred to in paragraphs
2.1(g), 2.1(h), 2.1 (i) and 2.1(j) above, has been duly
authorised, executed and validly entered into by every party to
it other than Old Mutual.
4 Acknowledgement
We understand and acknowledge that in order for the Placings to proceed
in accordance
B-3
<PAGE> 29
with what is stated in the Placement Memoranda referred to in
paragraphs 2.1(a) and 2.1(b) above, it is intended that the following
will take place:
4.1 that Old Mutual will transfer, or will procure the transfer of
the Portfolio to the Master Trust, and of the Global Fund
Portfolio to the Global Fund, prior to the Initial Closing so
that ownership of the Portfolio and the Global Fund Portfolio
will be transferred to and become vested in the Master Trust
and the Global Fund respectively;
4.2 prior to the transfers of the Portfolio and the Global Fund
Portfolio, Old Mutual will have received the necessary
approvals required in terms of the Exchange Control
Regulations, 1961 ("Excon Regulations") made in terms of the
Currency and Exchanges Act 1933 (Act 9 of 1933), to effect
those transfers and arrange for the Placings;
4.3 prior to those transfers any approval required from the
Financial Services Board in terms of the Insurance Act 1943 for
those transfers will have been received;
5 Opinion
On the basis of and subject to the aforegoing, we are of the opinion
that:
5.1 Old Mutual is duly incorporated and exists as a body corporate
by virtue and in terms of the Old Mutual Act;
5.2 Old Mutual is also duly registered under the Insurance Act,
1943 to carry on in South Africa the following classes of
insurance business: Life business and sinking fund business.
5.3 Old Mutual has the requisite capacity to enter into each of the
agreements referred to in paragraphs 2.1(g), 2.1(h), 2.1(i) and
2.1(j) above and to perform its obligations under each of those
agreements.
5.4 Each of those agreements has been duly authorised and executed
by Old Mutual and is valid, legally binding and, subject to
what is stated below, enforceable against Old Mutual in
accordance with its terms;
5.5 The necessary approvals required from the Treasury (represented
by the Reserve Bank) in terms of the Excon Regulations, have
been obtained for the following obligations of Old Mutual under
the Transfer Agreement:
(a) the transfer of the Portfolio to the Master Trust;
B-4
<PAGE> 30
(b) the transfer of the Global Fund Portfolio to the
Global Fund;
(c) the payment of the amount of U.S.$5,000,000 by Old
Mutual to the Master Trust to meet initial costs.
5.6 If Old Mutual becomes liable under the Transfer Agreement to
pay any other monies to or in favour or on behalf of any party
who is not a resident of South Africa, the approval of the
Treasury would be required for such payment in terms of the
Excon Regulations; and that approval would have to be applied
for and decided upon by the Treasury at the time the obligation
to make the payment arises.
5.7 No approvals are required now from the Treasury in terms of the
Excon Regulations for any of Old Mutual's obligations under
either of the Placing Agreements referred to in paragraph
1.1(h) and 1.1(i) above. However, if Old Mutual becomes liable
under either of those two Agreements to pay any monies to, or
in favour or on behalf of any person resident outside the
Republic the approval of the Treasury would be required in
terms of the Excon Regulations for the payment; and that
approval would have to be applied for and decided upon by the
Treasury at the time the obligation to make the payment arises.
5.8 The entering into and the performance by Old Mutual of its
obligations under each of the four agreements referred to in
paragraphs 2.1(g), 2.1(h), 2.1(i) and 2.1(j) will not violate,
contravene or conflict with any law in force in South Africa,
or be unenforceable because it is contrary to public policy in
South Africa.
5.9 Subject to what is stated above no consent, permit, licence,
approval, authorisation or exemption under the laws of South
Africa is required for Old Mutual to enter into or perform any
of its obligations under any of those four agreements.
5.10 Neither SBC Warburg nor S.G. Warburg will be deemed to be
resident, domiciled or carrying on business, or will be subject
to taxation in South Africa by reason only of the negotiation,
preparation, execution, delivery, performance, observance,
enforcement of, or receipt of any payment or repayment pursuant
to the transfers of the Portfolio and the Global Fund Portfolio
or otherwise in connection with the effecting of the Placings.
5.11 Following the implementation of the Transfer Agreement, and the
proper transfer of the Portfolio to the Master Trust in terms
of and pursuant to that agreement, the Master trust would
become the owner of and have good and marketable title to all
the securities in the Portfolio.
B-5
<PAGE> 31
5.12 Following the implementation of the Transfer Agreement, and the
proper transfer of the Global Fund Portfolio to the Global Fund
in terms of and pursuant to that agreement, the Global Fund
would become the owner of and have good and marketable title to
all the securities in the Global Fund Portfolio.
5.13 Subject to what is stated in paragraphs 5.14 and 5.15 below the
transfer of the Portfolio to the Master Trust and of the Global
Fund Portfolio to the Global Fund Portfolio pursuant to the
Transfer Agreement will attract stamp duty in South Africa in
terms of the Stamp Duties Act, 1968 (Act 77 of 1968) at the
rate of 1% of the value of all the securities so transferred.
That value should be the value determined for the securities in
accordance with the relevant provisions of the Transfer
Agreement. It should be noted that if transfer of any of the
securities is registered after the expiry of a period of 6
months from the date of execution of the statutory instrument
of transfer which will be required for the registration, the
duty increases to three times the duty which would have been
payable if the transfer had been registered before the expiry
of that period of 6 months.
5.14 If the statutory instrument of transfer required to be executed
for the registration of transfer of any securities in the
Portfolio or in the Global Fund Portfolio is executed outside
South Africa and the registration of the transfer is executed
in any branch register kept by the issuer of the securities
outside South Africa the registration would be exempt from
stamp duty in South Africa, provided the branch register
satisfies certain requirements of the Stamp Duties Act, 1962.
5.15 If the transfer of any of those securities is effected through
a purchase by a stock broker where the transaction attracts
Marketable Securities Tax in terms of the Marketable Securities
Tax Act, 1948 (Act 32 of 1948), then that tax will be payable
in lieu of stamp duty. Any marketable securities tax so payable
on any of the securities will be 1% of the consideration for
which they are so purchased.
5.16 Save as mentioned above there is no stamp duty, marketable
security tax, capital duty or increase in capital duty or any
other documentary or registration tax or impost of any nature
which will be payable by any party in connection with the
transfer of the Portfolio to the Master Trust or the Global
Fund Portfolio to the Global Fund in terms of the Transfer
Agreement.
5.17 SBC Warburg will be entitled without limit or restriction and
without the need to obtain any consent, approval, licence or
permission of any person to exercise all or any of its rights
under the Saga Placing Agreement without having to establish a
place of business in South Africa or to carry out any other
requirement, save as stated in paragraph 5.19 below.
B-6
<PAGE> 32
5.18 The same applies to S.G. Warburg in relation to the exercise of
all or any of its rights under the Omega Placing Agreement.
5.19 A final judgment obtained against Old Mutual in any
jurisdiction outside South Africa will be recognised and
enforced in South Africa in accordance with and subject to the
principles of South African law applicable to the recognition
and enforcement of foreign judgments in civil matters. Very
briefly there are four essential requirements that need to be
fulfilled. First foreign court must have had international
competence to decide the case, as determined by South African
legal principles. Second the judgment must be final and
conclusive. Third the recognition and enforcement of the
judgment must not be against public policy in South Africa,
including observance of the rules of natural justice. Fourthly
if the Protection of Businesses Act, 1978 (Act 99 of 1978)
applies to the judgment the consent of the Minister of Trade
and Industry must be obtained. In our opinion it is not certain
that this Act would apply to any judgment of a foreign court
obtained against Old Mutual to enforce any of its obligations
under any of the agreements referred to in paragraphs 2.1(g),
2.1(h), 2.1(i) and 2.1(j) above. But if that Act were to apply
and if the consent of the Minister were required we are of the
opinion that it is unlikely that his consent would be refused.
Moreover if his consent were refused, it might be possible now
to challenge the validity of the Act in terms of the new
constitution which is the Constitution of the Republic of South
Africa Act, 1993 (Act 200 of 1993).
Yours faithfully,
B-7
<PAGE> 33
ANNEX C
[Form of Bingham, Dana & Gould Opinion]
<PAGE> 34
ANNEX D
November -, 1995
Swiss Bank Corporation
SBC Warburg
1 High Timber Street
London EC4V 3SB
Dear Sirs:
Re: Old Mutual South Africa Growth Assets Fund Limited ("SAGA Fund")
Old Mutual Asset Managers (Bermuda) Limited ("OMAM")
Old Mutual Fund Holdings (Bermuda) Limited ("OMB")
Old Mutual Global Assets Fund Limited ("Global Assets Fund")
all together (the "Companies")
Initial Offering of Shares of SAGA Fund
We have acted a special legal counsel in Bermuda to the Companies in
connection with the initial offering of up to 20,000,000 shares (the "Shares")
of SAGA Fund at US$50.00 per Share.
For the purposes of giving this opinion, we have examined the following
documents:
(i) [a draft of] an agreement among Old Mutual South Africa Equity
Trust (the "Master Trust"), SAGA Fund, South African Mutual Life
Assurance Society ("Old Mutual"), OMAM, OMB and Swiss Bank
Corporation dated -, 1995 relating to the placing of up to
20,000,000 shares of US$1.00 each in SAGA Fund (the "Placing
Agreement");
(ii) [a draft of] an agreement among the Master Trust, Old Mutual
Equity Growth Assets South Africa Fund ("OMEGA Fund"), Old
Mutual, OMAM, OMB and S.G. Warburg & Co. Inc. dated -, 1995
relating to the placing of up to 10,000,000 shares of OMEGA Fund
in a United States private placement (the "US Placing
Agreement");
(iii) [a draft of] the Portfolio Transfer and Subscription Agreement
among Old Mutual, OMB, OMAM, the Master Trust, OMEGA Fund, SAGA
Fund and Global Assets
<PAGE> 35
Page -2-
November -, 1995
Opinion to Swiss Bank Corporation
Fund dated -, 1995;
(iv) [a draft of] the Advisory Agreement between OMAM and the Master
Trust dated -, 1995;
(v) [a draft of] the [SAGA Custodian Agreement] between SAGA Fund
and State Street Bank and Trust Company dated -, 1995;
(vi) [a draft of] the SAGA Administrative Services Agreement between
SAGA Fund and State Street Cayman Trust Company, Ltd., dated -,
1995; and
(vii) [a draft of] the Investment Restrictions undertaking among the
Master Trust, OMEGA Fund and SAGA Fund dated -, 1995.
The Placing Agreement, the U.S. Placing Agreement, the Portfolio
Transfer and Subscription Agreement, the Advisory Agreement, the [SAGA Custodian
Agreement], the SAGA Administrative Agreement and the Investment Restrictions
Undertaking are herein sometimes collectively referred to as the "Documents".
We have also reviewed the memorandum of association and the bye-laws of
the Company, minutes of meetings of its directors and such other documents and
made such enquiries as to questions of law as we have deemed necessary in order
to render the opinion set forth below.
We have assumed (a) the genuineness and authenticity of all signatures
and the conformity to the originals of all copies of documents (whether or not
certified), (b) the capacity, power and authority of each of the parties to the
Documents, other than the Companies, (c) the due execution and delivery of the
Documents by each of the parties thereto, [other than the Companies], (d) the
accuracy and completeness of all factual representations made in the Documents
and other documents reviewed by us, (e) that there is no provision of the law of
any jurisdiction, other than Bermuda, which would have any implication in
relation to the opinions expressed herein, (f) the validity and binding effect
under the laws of England [or -, as the case may be] (the "Foreign Laws") of the
Documents which are expressed to be subject to such Foreign Laws in accordance
with their respective terms, (g) the validity under the Foreign Laws of the
submission by the Companies pursuant to the Documents to the non-exclusive
jurisdiction of the English courts [or -, as the case may be] (the "Foreign
Courts").
The obligations of the Companies under the Documents (a) will be
subject to the laws from time to time in effect relating to bankruptcy,
insolvency, liquidation, possessory liens, rights of set off, reorganisation,
amalgamation, moratorium or any other laws or legal procedures, whether of a
similar nature or otherwise, generally affecting the rights of creditors, (b)
will be subject to statutory limitation of the time within which proceedings may
be brought, (c) will be
D-2
<PAGE> 36
Page -3-
November -, 1995
Opinion to Swiss Bank Corporation
subject to general principles of equity and, as such, specific performance and
injunctive relief, being equitable remedies, may not be available, (d) may not
be given effect to by a Bermuda court, whether or not it was applying the
Foreign Laws, if and to the extent they constitute the payment of an amount
which is the nature of a penalty and not in the nature of liquidated damages.
We have made no investigation of an express no opinion in relation to
the laws of any jurisdiction other than Bermuda. This opinion is to be governed
by and construed in accordance with the laws of Bermuda and is limited to and is
given on the basis of the current law and practice in Bermuda. This opinion is
issued solely for your benefit and is not to be relied upon by any other person,
firm or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion
that:
1. The Companies are duly incorporated and existing under the laws of
Bermuda.
2. Each Company has the necessary corporate power and authority to enter
into and perform its obligations under the Documents to which it is a
party. The execution and delivery by each Company of the Documents to
which it is a party and the performance by each Company of its
obligations thereunder will not violate the memorandum of association
or bye-laws of such Company nor any applicable law, regulation, order
or decree in Bermuda.
3. Each Company has taken all corporate action required to authorise its
execution, delivery and performance of the Documents to which it is a
party. [When duly executed and delivered by or on behalf of each
Company, the Documents will constitute]/[The Documents to which a
Company is a party have been duly executed and delivered by or on
behalf of the Company, and constitute] the valid binding obligations of
such Company in accordance with the terms thereof.
4. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of Bermuda or
any sub-division thereof is required to authorise or is required in
connection with the execution, delivery, performance and enforcement of
the Documents or the allotment or issue of the Shares except such as
have been duly obtained in accordance with Bermuda law.
5. The Documents will not be subject to ad valorem stamp duty in Bermuda.
6. The SAGA Fund has the power under its memorandum of association and
bye-laws, and the directors of SAGA Fund are empowered, to allot and
issue the Shares without any sanction or consent by the members of the
SAGA Fund or any class of them.
D-3
<PAGE> 37
Page -4-
November -, 1995
Opinion to Swiss Bank Corporation
7. The choice of the Foreign Laws to govern the Documents is a valid
choice of law and the submission therein by each Company which is a
party to the non-exclusive jurisdiction of the Foreign Courts is valid
and binding upon such Company.
8. [With respect to the Placing Agreement, the Investment Restrictions
Undertaking and -, such final and conclusive judgment in the superior
court of the Foreign Courts against a Company under which a sum of
money is payable (not being in respect of multiple damages, or a fine,
penalty, tax or other charge of similar nature) would, on registration
in accordance with the provisions of The Judgments (Reciprocal
Enforcement) Act 1958 be enforceable in the Supreme Court of Bermuda
against such Company without the necessity of any retrial of the issues
subject of such judgment or any re-examination of the underlying
claims; however, where such foreign judgment is expressed in a currency
other than Bermuda dollars the registration will involve the conversion
of the judgment debt into Bermuda dollars on the basis of the exchange
rate prevailing at the date of such judgment as is equivalent to the
judgment sum payable. The present policy of the Bermuda Monetary
Authority is to give consent for the Bermuda dollar award made by the
Supreme Court of Bermuda to be paid in the original judgment currency.]
[With respect to the Portfolio Transfer and Subscription Agreement and
-, the courts of Bermuda would recognise as a valid judgment, a final
and conclusive judgment in personam obtained in the Foreign Courts
against a Company which is a party to such agreements based upon such
agreements under which a sum of money is payable (other than a sum of
money payable in respect of multiple damages, taxes or other charges of
a like nature or in respect of a fine or other penalty) and would give
a judgment based thereon provided that (a) such courts had proper
jurisdiction over the parties subject to such judgment, (b) such courts
did not contravene the rules of natural justice of Bermuda, (c) such
judgment was not obtained by fraud, (d) the enforcement of the judgment
would not be contrary to the public policy of Bermuda, (e) no new
admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of Bermuda and (f) the due
compliance with the correct procedures under the laws of Bermuda.]
Yours faithfully,
CONYERS, DILL & PEARMAN
D-4
<PAGE> 38
ANNEX E
The following constitutes all of the written information furnished by
S.G. Warburg to the OMEGA Fund for inclusion in the Private Placement Memorandum
at the date of this Agreement:
<PAGE> 1
EXHIBIT 8(a)
CUSTODIAN CONTRACT
Between
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
CUSTODIAN CONTRACT
This Contract is made as of the 23rd day of October, 1995 by and between OLD
MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a business trust organized and
existing under the laws of The Commonwealth of Massachusetts with its registered
office at Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "Fund"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company with its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
U.S.A. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities which it desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the
Declaration of Trust of the Fund dated as of September 1, 1995 (the "Declaration
of Trust"). The Fund agrees to deliver to the Custodian all securities and cash
owned by it, and all payments of income, payments of principal or capital
distributions received by it with respect to all securities owned by the Fund
from time to time, and the cash consideration received by it for such new or
treasury shares of beneficial interest, ("Shares") of the Fund as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article 5), the
Custodian shall from time to time employ one or more sub-custodians located in
the United States, but only in accordance with an applicable vote by the Board
of Trustees of the Fund, and provided that the Custodian shall have no more or
less responsibility or liability to the Fund on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The foregoing provision shall not be construed to limit the
liability of the Custodian for the acts or omissions of a subcustodian to
amounts actually recovered from such subcustodians. The Custodian may employ as
sub-custodian for the Fund's foreign securities and other assets the foreign
banking institutions and foreign securities depositories designated in Schedule
A hereto but only in accordance with the provisions of Article 3. The Custodian
shall not be liable for losses arising from the bankruptcy, insolvency or
receivership of any sub-custodian, except to the extent any such loss results
from the negligence or wilful misconduct
<PAGE> 3
of the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11. Non-
cash property of the Fund held by the Custodian hereunder shall be
segregated in such a manner that said property will not be subject to the
claims of creditors of the Custodian.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt of
payment therefor;
2) Upon the receipt of payment in connection with any repurchase agreement
related to such securities entered into by the Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
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<PAGE> 4
6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or
into the name or nominee name of any agent appointed pursuant to
Section 2.9 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different number
of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of the
securities of the issuer of such securities, or pursuant to provisions
for conversion contained in such securities, or pursuant to any deposit
agreement; provided that, in any such case, the new securities and
cash, if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities
or the surrender of interim receipts or temporary securities for
definitive securities; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government, its
agencies or instrumentalities, except that in connection with any loans
for which collateral is to be credited to the Custodian's account in
the book-entry system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable or responsible for the
delivery of securities owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of
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<PAGE> 5
1934 (the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the rules
of the Commodity Futures Trading Commission and/or any Contract Market,
or any similar organization or organizations, regarding account
deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer Agent")
for the Fund, for delivery to such Transfer Agent or to the holders of
Shares in connection with distributions in kind, as may be described
from time to time in the Fund's currently effective private placement
memorandum ("Placement Memorandum") and registration statement under
the Investment Company Act of 1940 (the "Registration Statement"), in
satisfaction of requests by holders of Shares for repurchase or
redemption; and
15) For any other proper trust purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper trust purpose, and naming the person or persons
to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund or in
the name of any nominee of the Fund or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Fund, unless the Fund has
authorized in writing the appointment of a nominee to be used in common with
other registered investment companies having the same investment adviser as
the Fund, or in the name or nominee name of any agent appointed pursuant to
Section 2.9 or in the name or nominee name of any sub-custodian appointed
pursuant to Article 1. All securities accepted by the Custodian on behalf of
the Fund under the terms of this Contract shall be in "street name" or other
good delivery form. If, however, the Fund directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best efforts
only to timely collect income due the Fund on such
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<PAGE> 6
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls,
maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank account
or accounts in the United States in the name of the Fund, subject only to
draft or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account of the
Fund, other than cash maintained by the Fund in a bank account established
and used in accordance with Rule 17f-3 under the Investment Company Act of
1940. Funds held by the Custodian for the Fund may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such
other banks or trust companies as it may in its discretion deem necessary or
desirable; provided, however, that every such bank or trust company shall be
qualified to act as a custodian under the Investment Company Act of 1940 and
that each such bank or trust company and the funds to be deposited with each
such bank or trust company shall be approved in writing by vote of a
majority of the Board of Trustees of the Fund. Such funds shall be deposited
by the Custodian in its capacity as Custodian and shall be withdrawable by
the Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund and
the Custodian, the Custodian shall, upon the receipt of Proper Instructions,
make federal funds available to the Fund as of specified times agreed upon
from time to time by the Fund and the Custodian in the amount of checks
received in payment for Shares of the Fund which are deposited into the
Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments with
respect to United States registered securities held hereunder to which the
Fund shall be entitled either by law or pursuant to custom in the securities
business, and shall collect on a timely basis all income and other payments
with respect to United States bearer domestic securities if, on the date of
payment by the issuer, such securities are held by the Custodian or its
agent thereof and shall credit such income, as collected, to the Fund's
custodian account. Without limiting the generality of the foregoing, the
Custodian shall detach and present for payment all coupons and other income
items requiring presentation as and when they become due and shall collect
interest when due on securities held hereunder. Income due the Fund on
United States securities loaned pursuant to the provisions of Section 2.2
(10) shall be the responsibility of the Fund. The Custodian will have no
duty or responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist the Fund in
arranging for the timely delivery to the Custodian of the income to which
the Fund is properly entitled.
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<PAGE> 7
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may be
continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures contracts or
options on futures contracts for the account of the Fund but only (a)
against the delivery of such securities or evidence of title to such
options, futures contracts or options on futures contracts to the
Custodian (or any bank, banking firm or trust company doing business in
the United States or abroad which is qualified under the Investment
Company Act of 1940, as amended, to act as a custodian and has been
designated by the Custodian as its agent for this purpose pursuant to
Section 2.9) registered in the name of the Fund or in the name of a
nominee of the Custodian referred to in Section 2.3 hereof or in proper
form for transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions set forth in
Section 2.10 hereof; (c) in the case of a purchase involving the Direct
Paper System, in accordance with the conditions set forth in Section
2.11; (d) in the case of repurchase agreements entered into between the
Fund and the Custodian, or another bank, or a broker-dealer which is a
member of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's account
at the Federal Reserve Bank with such securities or (ii) against
delivery of the receipt evidencing purchase by the Fund of securities
owned by the Custodian along with written evidence of the agreement by
the Custodian to repurchase such securities from the Fund or (e) for
transfer to a time deposit account of the Fund in any bank, whether
domestic or foreign; such transfer may be effected prior to receipt of
a confirmation from a broker and/or the applicable bank pursuant to
Proper Instructions as defined in Article 5;
2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
3) For payment of the amount of dividends received in respect of
securities sold short;
4) For any other proper trust purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee of the Fund signed
by an officer of the Fund and certified by its Secretary or an
Assistant Secretary, specifying the amount of such payment, setting
forth the purpose for which such payment is to be made, declaring such
purpose to be a proper trust purpose, and naming the person or persons
to whom such payment is to be made;
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<PAGE> 8
5) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section 4 hereof;
6) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account of
the Fund: interest, taxes, management, accounting, transfer agent and
legal fees, and operating expenses of the Fund whether or not such
expenses are to be in whole or part capitalized or treated as deferred
expenses; and
7) For the payment of any dividends or distributions declared pursuant to
the governing documents of the Fund.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased. Except
as specifically stated otherwise in this Contract, in any and every case
where payment for purchase of domestic securities for the account of the
Fund is made by the Custodian in advance of receipt of the securities
purchased in the absence of specific written instructions from the Fund to
so pay in advance, the Custodian shall be absolutely liable to the Fund for
such securities to the same extent as if the securities had been received by
the Custodian.
2.9 Appointment of Agents. With the prior consent of the Fund, the Custodian may
at any time or times in its discretion appoint (and may at any time remove)
any other bank or trust company which is itself qualified under the
Investment Company Act of 1940, as amended, to act as a custodian, as its
agent to carry out such of the provisions of this Article 2 as may be agreed
between the Custodian and the Fund from time to time; provided, however,
that the appointment of any agent shall not relieve the Custodian of its
responsibilities hereunder. The Custodian shall be responsible for the fees
and expenses of any such agent, except as otherwise provided in the written
fee schedule between the Custodian and the Fund.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under Section
17A of the Securities Exchange Act of 1934, which acts as a securities
depository, or in the book-entry system authorized by the U.S. Department of
the Treasury and certain federal agencies, collectively referred to herein
as "U.S. Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and regulations, if any,
and subject to the following provisions:
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<PAGE> 9
1) The Custodian may keep domestic securities of the Fund in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System
which shall not include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic securities of the
Fund which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund in a U.S. Securities System upon (i) receipt of
advice from the U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer domestic securities
sold for the account of the Fund in a U.S. Securities System upon (i)
receipt of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of
an entry on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices from the
U.S. Securities System of transfers of domestic securities for the
account of the Fund shall identify the Fund, be maintained for the Fund
by the Custodian and be provided to the Fund at its request. Upon
request, the Custodian shall furnish the Fund confirmation of each
transfer to or from the account of the Fund in the form of a written
advice or notice and shall furnish to the Fund copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Fund;
4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the U.S. Securities System's accounting system, internal
accounting control and procedures for safeguarding securities deposited
in the U.S. Securities System;
5) The Custodian shall have received the initial or annual certificate, as
the case may be, required by Article 14 hereof;
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the U.S. Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the U.S. Securities System; at the election of the
Fund, it shall
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<PAGE> 10
be entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian may
deposit and/or maintain securities owned by the Fund in the Direct Paper
System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account of the
Fund in the Direct Paper System upon the making of an entry on the
records of the Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian shall transfer
securities sold for the account of the Fund in the Direct Paper System
upon the making of an entry on the records of the Custodian to reflect
such transfer and receipt of payment for the account of the Fund;
5) The Custodian shall furnish the Fund confirmation of each transfer to
or from the account of the Fund, in the form of a written advice or
notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transaction in the U.S. Securities System
for the account of the Fund;
6) The Custodian shall provide the Fund with any report on its system of
internal accounting control as the Fund may reasonably request from
time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper Instructions
establish and maintain a segregated account or accounts for and on behalf
of the Fund, into which account or accounts may be transferred cash and/or
securities, including securities maintained in an
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<PAGE> 11
account by the Custodian pursuant to Section 2.10 hereof, (i) in accordance
with the provisions of any agreement among the Fund, the Custodian and a
broker-dealer registered under the Exchange Act and a member of the NASD
(or any futures commission merchant registered under the Commodity Exchange
Act), relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange (or the
Commodity Futures Trading Commission or any registered contract market), or
of any similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for purposes
of segregating cash or government securities in connection with options
purchased, sold or written by the Fund or commodity futures contracts or
options thereon purchased or sold by the Fund, (iii) for the purposes of
compliance by the Fund with the procedures required by Investment Company
Act Release No. 10666, or any subsequent release or releases of the
Securities and Exchange Commission relating to the maintenance of
segregated accounts by registered investment companies and (iv) for other
proper trust purposes, but only, in the case of clause (iv), upon receipt
of, in addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an officer of
the Fund and certified by the Secretary or an Assistant Secretary, setting
forth the purpose or purposes of such segregated account and declaring such
purposes to be proper trust purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection
with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to
the Fund such proxies, all proxy soliciting materials and all notices
relating to such securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to the Fund all written
information (including, without limitation, pendency of calls and
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic securities being
held for the Fund. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Fund all written information received by the
Custodian from issuers of the domestic securities whose tender or exchange
is sought and from the party (or his agents) making the tender or exchange
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<PAGE> 12
offer. If the Fund desires to take action with respect to any tender offer,
exchange offer or any other similar transaction, the Fund shall procure
that the Custodian is notified at least three business days prior to the
date on which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph (c)(1) of Rule 17f-5 under
the Investment Company Act of 1940, and (b) cash and cash equivalents in
such amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by the Custodian and each foreign
sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the Custodian or by the foreign banking
institutions serving as sub-custodians pursuant to the terms hereof
(Foreign Securities Systems and U.S. Securities Systems are collectively
referred to herein as the "Securities Systems"). Where possible, such
arrangements shall include entry into agreements containing the provisions
set forth in Section 3.5 hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a Foreign
Sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided
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<PAGE> 13
however, that (i) the records of the Custodian with respect to securities
and other non-cash property of the Fund which are maintained in such
account shall identify by book-entry those securities and other non-cash
property belonging to the Fund and (ii) the Custodian shall require that
securities and other non-cash property so held by the Foreign Sub-custodian
be held separately from any assets of the Foreign Sub-custodian or of
others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a foreign
banking institution shall be substantially in the form set forth in Exhibit
1 hereto and shall provide that: (a) the Fund's assets will not be subject
to any right, charge, security interest, lien or claim of any kind in favor
of the foreign banking institution or its creditors or agent, except a
claim of payment for their safe custody or administration; (b) beneficial
ownership of the Fund's assets will be freely transferable without the
payment of money or value other than for custody or administration; (c)
adequate records will be maintained identifying the assets as belonging to
the Fund; (d) officers of or auditors employed by, or other representatives
of the Custodian, including to the extent permitted under applicable law
the independent public accountants for the Fund, will be given access to
the books and records of the foreign banking institution relating to its
actions under its agreement with the Custodian; and (e) assets of the Fund
held by the foreign sub-custodian will be subject only to the instructions
of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Fund from time to
time, as mutually agreed upon, statements in respect of the securities and
other assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any transfers
of securities to or from each custodial account maintained by a foreign
banking institution for the Custodian on behalf of the Fund indicating, as
to securities acquired for the Fund, the identity of the entity having
physical possession of such securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to the foreign securities of
the Fund held outside the United States by foreign sub-custodians.
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<PAGE> 14
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the Fund
and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities, except for liabilities resulting from the negligence or
misfeasance of such sub-custodian or nominee.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss, damage, cost, expense, liability or claim resulting from
nationalization, expropriation, currency restrictions, or acts of war or
terrorism or any loss where the sub-custodian has otherwise exercised
reasonable care. Notwithstanding the foregoing provisions of this paragraph
3.10, in delegating custody duties to State Street London Ltd., the
Custodian shall not be relieved of any responsibility to the Fund for any
loss due to such delegation, except such loss as may result from (a)
political risk (including, but not limited to, exchange control
restrictions, confiscation, expropriation, nationalization, insurrection,
civil strife or armed hostilities) or (b) other losses (excluding a
bankruptcy or insolvency of State Street London Ltd. not caused by
political risk) due to Acts of God, nuclear incident or other
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<PAGE> 15
losses under circumstances where the Custodian and State Street London Ltd.
have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event that
the Custodian or its nominee shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with the
performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund shall
be security therefor and should the Fund fail to repay the Custodian
promptly after written request, the Custodian shall be entitled to utilize
available cash and to dispose of such Funds assets to the extent necessary
to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be similar
in kind and scope to that furnished to the Fund in connection with the
initial approval of this Contract. In addition, the Custodian will promptly
inform the Fund in the event that the Custodian learns of a material
adverse change in the financial condition of a foreign sub-custodian or any
material loss of the assets of the Fund or in the case of any foreign
sub-custodian not the subject of an exemptive order from the Securities and
Exchange Commission is notified by such foreign sub-custodian that there
appears to be a substantial likelihood that its shareholders' equity will
decline below $200 million (U.S. dollars or the equivalent thereof) or that
its shareholders' equity has declined below $200 million (in each case
computed in accordance with generally accepted U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this Contract,
the provisions hereof shall not apply where the custody of the Funds assets
are maintained in a foreign branch of a banking institution which is a
"bank" as defined by Section 2(a)(5) of the Investment Company Act of 1940
meeting the qualification set forth in Section 26(a) of said Act. The
appointment of any such branch as a sub-custodian shall be governed by
paragraph 1 of this Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained in an
interest bearing account established for the Fund with the Custodian's
London branch, which account shall be subject to the direction of the
Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for any
obligations now or hereafter imposed on the Fund or the Custodian as
custodian of the Fund by the tax law of the United States of America or any
state or political subdivision thereof (except taxes
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<PAGE> 16
attributable to the domicile of the Custodian in Massachusetts and in such
case the Custodian shall notify the Fund). It shall be the responsibility
of the Fund to notify the Custodian of the obligations imposed on the Fund
or the Custodian as custodian of the Fund by the tax law of jurisdictions
other than those mentioned in the above sentence, including responsibility
for withholding and other taxes, assessments or other governmental charges,
certifications and governmental reporting. The sole responsibility of the
Custodian with regard to such tax law shall be to use reasonable efforts to
assist the Fund with respect to any claim for exemption or refund under the
tax law of jurisdictions for which the Fund has provided such information.
4. Payments for Repurchases or Redemptions and Sales of Shares of the Fund
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available to the Fund for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian is authorized upon receipt of
instructions from the Transfer Agent to wire funds to or through a commercial
bank designated by the redeeming shareholders. In connection with the redemption
or repurchase of Shares of the Fund, the Custodian shall honor checks drawn on
the Custodian by a holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the Custodian in accordance with
such procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
The Custodian shall receive from the placement agent for the Fund's Shares
or from the Transfer Agent of the Fund and deposit into the Fund's account such
payments as are received for Shares of that Fund issued or sold from time to
time by the Fund. The Custodian will provide timely notification to the Fund and
the Transfer Agent of any receipt by it of payments for Shares of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or initialled by
one or more person or persons as the Board of Trustees shall have from time to
time authorized. Each such writing shall set forth the specific transaction or
type of transaction involved, including a specific statement of the purpose for
which such action is requested. Oral instructions will be considered Proper
Instructions if the Custodian reasonably believes them to have been given by a
person
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<PAGE> 17
authorized to give such instructions with respect to the transaction involved.
The Fund shall cause all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant Secretary as to the
authorization by the Board of Trustees of the Fund accompanied by a detailed
description of procedures approved by the Board of Trustees, Proper Instructions
may include communications effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees and the Custodian are
satisfied that such procedures afford adequate safeguards for the Fund's assets.
For purposes of this Section, Proper Instructions shall include instructions
received by the Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.12.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection with
the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions, notice,
request, consent, certificate or other instrument or paper reasonably believed
by it to be genuine and to have been properly executed by or on behalf of the
Fund. The Custodian may receive and accept a certified copy of a vote of the
Board of Trustees of the Fund as conclusive evidence (a) of the authority of any
person to act in accordance with such vote or (b) of any determination or of any
action by the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in full force and
effect until receipt by the Custodian of written notice to the contrary.
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<PAGE> 18
8. Duties of Custodian with Respect to the Books of Account and Calculation of
Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Trustees of the Fund to keep the
books of account of the Fund and/or compute the net asset value per share of the
outstanding shares of the Fund or, if directed in writing to do so by the Fund,
shall itself keep such books of account and/or compute such net asset value per
share. If so directed, the Custodian shall also calculate daily the net income
of the Fund as described in the Fund's currently effective Placement Memorandum
and Registration Statement related to the Fund and shall advise the Fund and the
Transfer Agent daily of the total amounts of such net income and, if instructed
in writing by an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various components.
The calculations of the net asset value per share and the daily income of the
Fund shall be made at the time or times described from time to time in the
Fund's currently effective Placement Memorandum and Registration Statement.
9. Records and Reports
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder.
All such records shall be the property of the Fund and shall at all times during
the regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the Securities and Exchange Commission. The Custodian shall, at the Fund's
request, supply the Fund with a tabulation of securities owned by the Fund and
held by the Custodian and shall, when requested to do so by the Fund and for
such compensation as shall be agreed upon between the Fund and the Custodian,
include certificate numbers in such tabulations.
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of the Fund's Form N-1A, and Form N-SAR or other annual
reports to the Securities and Exchange Commission and with respect to any other
requirements of such Commission.
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<PAGE> 19
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
domestic securities deposited and/or maintained in a Securities System, relating
to the services provided by the Custodian under this Contract; such reports,
shall be of sufficient scope and in sufficient detail, as may reasonably be
required by the Fund to provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no such
inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its services
and expenses as Custodian, as agreed upon from time to time between the Fund and
the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable care,
the Custodian shall not be responsible for the title, validity or genuineness of
any property or evidence of title thereto received by it or delivered by it
pursuant to this Contract and shall be held harmless in acting upon any notice,
request, consent, certificate or other instrument reasonably believed by it to
be genuine and to be signed by the proper party or parties, including any
futures commission merchant acting pursuant to the terms of a three-party
futures or options agreement. The Custodian shall exercise reasonable care in
carrying out the provisions of this Contract, but shall be kept indemnified by
and shall be without liability to the Fund for any action taken or omitted by it
in good faith without negligence. It shall be entitled to rely on and may act
upon advice of outside counsel (who may be counsel for the Fund) on all matters,
and shall be without liability for any action reasonably taken or omitted
pursuant to such advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct of a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances beyond
the reasonable control of the Custodian or any sub-custodian or Securities
System or any agent or nominee of any of the foregoing, including, without
limitation, nationalization or expropriation, imposition of currency controls or
restrictions, the interruption, suspension or restriction of trading on or the
closure of any securities market, power or other mechanical or technological
failures or interruptions, computer viruses or communications
18
<PAGE> 20
disruptions, acts of war or terrorism, riots, revolutions, work stoppages
(except a work stoppage by employees of the Custodian which is not part of a
more general labor stoppage), natural disasters or other similar events or acts;
(ii) errors by the Fund in its instructions to the Custodian provided such
instructions have been in accordance with this Contract; (iii) the insolvency of
or acts or omissions by a Securities System; (iv) any delay or failure of any
broker, agent or intermediary, central bank or other commercially prevalent
payment or clearing system to deliver to the Custodian's sub-custodian or agent
securities purchased or in the remittance or payment made in connection with
securities sold; (v) any delay or failure of any company, corporation, or other
body in charge or registering or transferring securities in the name of the
Custodian, the Fund, the Custodian's sub-custodians, nominees or agents or
agents or any consequential losses arising out of such delay or failure to
transfer such securities including non-receipt of bonus, dividends and rights
and other accretions or benefits; (vi) delays or inability to perform its duties
due to any disorder in market infrastructure with respect to any particular
security or Securities System; and (vii) any provision of any present or future
law or regulation or order of the United States of America, or any state
thereof, or any other country, or political subdivision thereof having
appropriate jurisdiction or of any court of competent jurisdiction.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment by the Custodian of its own money
or which action may, in the reasonable opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund being liable for the payment of
money or incurring liability of some other form, the Fund upon request of the
Custodian, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or agents,
to advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that the Custodian or its nominee shall incur or be assessed any
taxes, charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly after written
request, the Custodian shall be entitled to utilize available cash and to
dispose of the Fund assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
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<PAGE> 21
14. Computerized Reporting Services.
14.1 Protection of Equipment, Confidential or Proprietary Programs and
Information. The Fund agrees to use the equipment, computer programs and
other information supplied by the Custodian under this Agreement solely for its
own internal use and benefit and not for resale or other transfer or disposition
to, or use by or for the benefit of, any other person or organization without
the prior written approval of the Custodian.
The Fund acknowledges that the data bases, computer programs, screen
formats, screen designs, report formats, interactive design techniques, and
other information furnished to the Fund by the Custodian constitute copyrighted
trade secrets or proprietary information of substantial value to the Custodian.
Such data bases, programs and other information are collectively referred to
below as "Proprietary Information". The Fund agrees that it shall treat all
Proprietary Information as proprietary to the Custodian and that it shall not
divulge any Proprietary Information to any person or organization except as
expressly permitted hereunder. Without limiting the foregoing, the Fund agrees
for itself and its employees and agents:
(1) to use such programs and data bases (i) solely on the Custodian's
computers, (ii) solely from equipment at Fund locations agreed to
between the Fund and the Custodian and (iii) solely in accordance with
the Custodian's applicable user documentation;
(2) to use equipment supplied by the Custodian solely with programs
supplied by the Custodian and no other programs or software;
(3) to refrain from copying or duplicating in any way (other than in the
normal course of performing processing on Custodian's computers) any
part of any Proprietary Information, provided, however, that the Fund
may copy or duplicate Proprietary Information to the extent
incorporated in any computer generated print-out or other written
report containing Customer Data for internal use consistent with this
Agreement but only to the extent necessary to copy or duplicate such
Customer Data;
(4) to refrain from obtaining unauthorized access to any programs, data or
other information not owned by the Fund, and if such access is
accidentally obtained, to respect and safeguard the same as
Proprietary Information;
(5) to refrain from causing or allowing information transmitted from the
Custodian's computer to the Fund's terminals to be retransmitted to
another computer, terminal or other device;
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<PAGE> 22
(6) that the Fund shall have access to only those authorized transactions
as agreed to between the Fund and the Custodian; and
(7) to honor reasonable written requests made by the Custodian to protect
at the Custodian's expense the rights of the Custodian in Proprietary
Information at common law, under the Federal copyright statutes and
under other Federal and state statutes.
Notwithstanding anything in this Section 14 to the contrary, the Fund may
disclose Proprietary Information, (i) if and to the extent required to do so by
applicable law or pursuant to an order of a court of competent jurisdiction or
other governmental agency having appropriate authority, in which case the Fund
shall, to the extent possible, provide the Custodian with timely notice prior to
any such disclosure and (ii) if and to the extent such information has become
public other than as a result of a breach of this Agreement by the Fund or any
officer, trustee, employee or agent of the Fund.
14.2 Fund Acknowledgement. The Fund hereby acknowledges that the
data and information it may access from the Custodian utilizing the computerized
reporting services will be unaudited and may not be accurate due to inaccurate
pricing of securities, delays of a day or more in updating account information
and other causes for which Custodian will not be liable to the Fund.
15. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue in
full force and effect until terminated as hereinafter provided, may be amended
at any time by mutual agreement of the parties hereto and may be terminated by
either party by an instrument in writing delivered or mailed, postage prepaid to
the other party, such termination to take effect not sooner than thirty (30)
days after the date of such delivery or mailing by the Fund and not sooner than
one hundred twenty (120) days after the date of such delivery or mailing by the
Custodian; provided, however that the Custodian shall not act under Section 2.10
hereof in the absence of receipt of an initial certificate of the Secretary or
an Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System, as required by Rule 17f-4 under
the Investment Company Act of 1940, as amended and that the Custodian shall not
act under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any time
by action of its Board of Trustees (i) substitute another bank or trust company
for the Custodian by giving notice as described above
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<PAGE> 23
to the Custodian, or (ii) immediately terminate this Contract in the event of
the appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction. Notwithstanding the foregoing, the Fund may terminate this
Contract with immediate effect by written notice to the Custodian in the event
that the Initial Closing (as such term is defined in the Placement Memorandum)
is cancelled without postponement to a later date.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall likewise
reimburse the Custodian for its costs, expenses and disbursements, as provided
in the written fee schedule between the Fund and the Custodian.
16. Successor Custodian
If a successor custodian shall be appointed by the Board of Trustees of the
Fund, the Custodian shall, upon termination, deliver to such successor custodian
at the office of the Custodian, duly endorsed and in the form for transfer, all
securities then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall, in
like manner, upon receipt of a certified copy of a vote of the Board of Trustees
of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date when such termination shall become
effective, then the Custodian shall have the right to deliver to a bank or trust
company, which is a "bank" as defined in the Investment Company Act of 1940, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $200,000,000, all
securities, funds and other properties held by the Custodian and all instruments
held by the Custodian relative thereto and all other property held by it under
this Contract and to transfer to an account of such successor custodian all of
the Fund's securities held in any Securities System. Thereafter, and until a
successor custodian shall be named by the Fund, such bank or trust company shall
be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified
22
<PAGE> 24
copy of the vote referred to or of the Board of Trustees to appoint a successor
custodian, the Custodian shall be entitled to fair compensation for its services
during such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the duties
and obligations of the Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and the
Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision of
the Declaration of Trust of the Fund. No interpretive or additional provisions
made as provided in the preceding sentence shall be deemed to be an amendment of
this Contract.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts, without
regard for any choice of law rules that would require application of the laws of
another jurisdiction.
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of the
Fund's assets.
20. Assignment.
This Contract may not be assigned by the Custodian without the written
consent of the Fund.
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<PAGE> 25
21. Confidentiality.
None of the parties hereto shall, unless compelled to do so by any court of
competent jurisdiction either before or after the termination of this Contract ,
disclose to any person not authorized by the relevant party to receive the same
any non-public information relating to such party and to the affairs of such
party of which the party disclosing the same shall have become possessed in
connection with this Contract and each party shall use its best endeavors to
prevent any such disclosure as aforesaid.
22. Notices.
Any notice, instruction or other instrument required to be given hereunder
may be delivered in person to the offices of the parties as set forth herein
during normal business hours or delivered prepaid registered mail or by telex,
cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: Old Mutual Equity Growth Assets South Africa Fund
Richmond House
12 Par-la-Ville Road
Hamilton, HM 11
Bermuda
Attention: J.C.R. Collis
Telephone: 809-295-1422
Telecopy: 809-295-4720
To the Custodian: State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts, U.S.A.
Attention: Thomas Muscarella
Telephone: 617-985-9808
Telecopy: 617-537-5173
Such notice, instruction or other instrument shall be deemed to have been
served in the case of a registered letter at the expiration of five business
days after posting, in the case of cable twenty-four hours after dispatch and,
in the case of telex, immediately on dispatch and if delivered outside normal
business hours it shall be deemed to have been received at the next time after
delivery when normal business hours commence and in the case of cable, telex or
telecopy on the business day after the receipt thereof. Evidence that the notice
was properly addressed, stamped and put into the post shall be conclusive
evidence of posting.
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<PAGE> 26
23. Limitation on Liability of Trustees.
This Contract is executed and made by the Trustees of the Fund not
individually, but as trustees under the Declaration of Trust of the Fund dated
as of September 1, 1995, and the obligations of this Contract are not binding
upon any of such Trustees or upon any of the Shareholders of the Fund
individually, but bind only the trust estate of the Fund.
24. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
YES /X/ The Custodian is authorized to release the Fund's name, address,
and share positions.
NO / / The Custodian is not authorized to release the Fund's name, address,
and share positions.
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<PAGE> 27
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and its
seal to be hereunder affixed as of the day and year first written above.
ATTEST OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
M. J. Levett By William Langley
- ------------------------- ---------------------------------
Its: Treasurer
ATTEST STATE STREET BANK AND TRUST COMPANY
Glenn Francis By K.C. Cuocolo
- ------------------------- ---------------------------------
Its: Senior Vice President
<PAGE> 28
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Old Mutual South
Africa Growth Assets Fund Limited for use as sub-custodians for the Fund's
securities and other assets:
(Insert banks and securities depositories)
Certified:
- -------------------------
Fund's Authorized Officer
Date:
--------------------
<PAGE> 29
EXHIBIT 1
SUBCUSTODIAN AGREEMENT
AGREEMENT made this ____ day of __________________, 19 __, between
State Street Bank and Trust Company, a Massachusetts trust company (hereinafter
referred to as the "Custodian"), having its principal place of business at 225
Franklin Street, Boston, MA, and __________________________ (hereinafter
referred to as the "Subcustodian"), a _____________________ organized under the
laws of ________________________ and having an office at _____________________.
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and
conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
A. Establishment of the Account. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as
hereinafter defined) from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter
defined) from time to time received by Subcustodian therefor.
B. Use of the Account. The Account shall be used exclusively
to hold, acquire, transfer or otherwise care for, on behalf of Custodian as
custodian and the customers of Custodian and not for Custodian's own interest,
Securities and such Cash or cash equivalents as are transferred to Subcustodian
or as are received in payment of any transfer of, or as payment on, or
interest on, or dividend from, any such Securities (herein collectively called
"Cash").
<PAGE> 30
C. Transfer of Property in the Account. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. Ownership and Segregation of Property in the Account. The
ownership of the property in the Account, whether Securities, Cash or both, and
whether any such property is held by Subcustodian in an Eligible Depository,
shall be clearly recorded on Subcustodian's books as belonging to Custodian on
behalf of Custodian's customers, and not for Custodian's own interest and, to
the extent that Securities are physically held in the Account, such Securities
shall also be physically segregated from the general assets of Subcustodian,
the assets of Custodian in its individual capacity and the assets of
Subcustodian's other customers. In addition, Subcustodian shall maintain such
other records as may be necessary to identify the property hereunder as
belonging to each Account.
E. Registration of Securities in the Account. Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name of
Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.
II. Services to Be Provided By the Subcustodian
The services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.
A. Services Performed Pursuant to Instructions. All transactions
involving the Securities and Cash in the Account shall be executed solely in
accordance with Custodian's Instructions as that term is defined in Paragraph
VI hereof, except those described in paragraph B below.
B. Services to Be Performed Without Instructions. Subcustodian will,
unless it receives Instructions from Custodian to the contrary:
1. Collect Cash. Promptly collect and receive all dividends,
income, principal, proceeds from transfer and other payments with respect to
property held in the Account, and present for payment all Securities held in
the Account which are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment upon
presentation, and credit Cash receipts therefrom to the Deposit Account.
2. Exchange Securities. Promptly exchange Securities where
the exchange is purely ministerial including, without limitation, the exchange
of temporary Securities for those in definitive form and the exchange of
warrants, or other documents of entitlement to Securities, for the Securities
themselves.
2
<PAGE> 31
3. Sale of Rights and Fractional Interests. Whenever
notification of a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears an expiration date, Subcustodian
will promptly endeavor to obtain Custodian's Instructions, but should these not
be received in time for Subcustodian to take timely action, Subcustodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Account.
4. Execute Certificates. Execute in Custodian's name for the
Account, whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.
5. Pay Taxes and Receive Refunds. To pay or cause to be paid
from the Account any and all taxes and levies in the nature of taxes imposed on
the property in the Account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benefits, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith.
6. Prevent Losses. Take such steps as may be reasonably
necessary to secure or otherwise prevent the loss of, entitlements attached to
or otherwise relating to property held in the Account.
C. Additional Services.
1. Transmission of Notices of Corporate Action. By such means
as will permit Custodian to take timely action with respect thereto,
Subcustodian will promptly notify Custodian upon receiving notices or reports,
or otherwise becoming aware, of corporate action affecting Securities held in
the Account (including, but not limited to, calls for redemption, mergers,
consolidations, reorganizations, recapitalizations, tender offers, rights
offerings, exchanges, subscriptions and other offerings) and dividend, interest
and other income payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements.
Upon request by Custodian, Subcustodian will promptly deliver, or cause any
Eligible Depository authorized and acting hereunder to deliver, to Custodian
all notices, proxies, proxy soliciting materials and other communications that
call for voting or the exercise of rights or other specific action (including
material relative to legal proceedings intended to be transmitted to security
holders) relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting
instruments to be executed by the registered holder of the Securities, but
without indicating the manner in which such Securities are to be voted.
3
<PAGE> 32
3. Monitor Financial Service. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to
corporate actions and dividend, interest and other income payments.
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the
central system for handling of designated securities or equivalent book entries
in , or (b) a transnational system for the central handling of
securities or equivalent book entries (herein called "Eligible Depository"),
provided however, that, while so maintained, such Securities shall be subject
only to the directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such Securities shall be the
same as if such Securities were held by Subcustodian on its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act of 1940, a copy of which is attached hereto as Attachment A (the "Rule"),
and Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial
likelihood that Subcustodian will cease to qualify under the Rule as currently
in effect or as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United
States Securities and Exchange Commission which order permits Custodian to
employ Subcustodian notwithstanding the fact that Subcustodian fails to qualify
under the terms of the Rule, and Subcustodian shall
4
<PAGE> 33
immediately notify Custodian, in writing or by other authorized means, if for
any reason it is no longer covered by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this
section, Custodian may terminate this Agreement immediately without prior
notice to Subcustodian.
VI. Definitions
A. Instructions. The term "Instructions" means:
1. instructions in writing signed by authorized individuals
designated as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as
shall customarily be used for the transmission of like information, and
4. such other forms of communication as from time to time may
be agreed upon by Custodian and Subcustodian, which Subcustodian believes in
good faith to have been given by Custodian or which are transmitted with proper
testing or authentication pursuant to terms and conditions which Custodian may
specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. Account. The term "Account" means collectively the Custody
Account, and the Deposit Account.
C. Securities. The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities (convertible or
non-convertible), notes, or other obligations or securities and any
certificates, receipts, futures contracts, foreign exchange contracts, options,
warrants, scrip or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
VII. Miscellaneous Provisions
5
<PAGE> 34
A. Statements Regarding the Account. Subcustodian will supply
Custodian with such statements regarding the Account as Custodian may request,
including the identity and location of any Eligible Depository authorized and
acting hereunder. In addition, Subcustodian will supply Custodian an advice or
notification of any transfers of Securities to or from the Account indicating,
as to Securities acquired for the Account, if applicable, the Eligible
Depository having physical possession of such Securities.
B. Examination of Books and Records. Subcustodian agrees that its
books and records relating to the Account and Subcustodian's actions under this
Agreement shall be open to the physical, on-premises inspection and audit at
reasonable times by officers of, auditors employed by or other representatives
of Custodian including (to the extent permitted under the law of _____________)
the independent public accountants for any customer of Custodian whose property
is being held hereunder and such books and records shall be retained for such
period as shall be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will
furnish its auditor's reports on its system of internal controls, and
Subcustodian will use its best efforts to obtain and furnish similar reports of
any Eligible Depository authorized and acting hereunder.
C. Standard of Care. In holding, maintaining, servicing and disposing
of Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, provided that Subcustodian shall exercise at
least the degree of care and maintain adequate insurance as expected of a
prudent professional Subcustodian for hire and shall assume the burden of
proving that it has exercised such care in its maintenance of Property held by
Subcustodian in its Account. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as
if it had itself retained physical possession of them. Subcustodian shall also
indemnify and hold harmless Custodian and each of Custodian's customers from
and against any loss, damage, cost, expense, liability or claim (including
reasonable attorney's fees) arising out of or in connection with the improper
or negligent performance or the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the law
of _________________, or any other law, applicable to Subcustodian in connection
with its duties hereunder, including (but not limited to) the payment of all
transfer taxes or other taxes and compliance with any currency restrictions and
securities laws in connection with its duties as Subcustodian.
D. Loss of Cash or Securities. Subcustodian agrees that, in the event
of any loss of Securities or Cash in the Account, Subcustodian will use its
best efforts to ascertain the circumstances relating to such loss and will
promptly report the same to Custodian and shall use every legal means available
to it to effect the quickest possible recovery.
6
<PAGE> 35
E. Compensation of Subcustodian. Custodian agrees to pay to
Subcustodian from time to time such compensation for its services and such
out-of-pocket or incidental expenses of Subcustodian pursuant to this Agreement
as may be mutually agreed upon in writing from time to time.
F. Operating Requirements. The Subcustodian agrees to follow such
Operating Requirements as the Custodian may establish from time to time. A copy
of the current Operating Requirements is attached as Attachment B to this
Agreement.
G. Termination. This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or
Custodian, shall be followed within 60 days by Instructions specifying the
names of the persons to whom Subcustodian shall deliver the Securities in the
Account and to whom the Cash in the account shall be paid. If within 60 days
following the giving of such notice of termination, Subcustodian does not
receive such Instructions, Subcustodian shall continue to hold such Securities
and Cash subject to this Agreement until such Instructions are given. The
obligations of the parties under this Agreement shall survive the termination
of this Agreement.
H. Notices. Unless otherwise specified in this Agreement, all notices
and communications with respect to matters contemplated by this Agreement shall
be in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to
such other address as either party hereto may from time to time designate by
notice duly given in accordance with this paragraph):
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, MA 02105
I. Confidentiality. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws,
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
7
<PAGE> 36
J. Assignment. This Agreement shall not be assignable by either
party but shall bind any successor in interest of Custodian and Subcustodian
respectively.
K. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of ____________. To the extent inconsistent with
this Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:____________________
Date:__________________
AGREED TO BY SUBCUSTODIAN
_______________________
By:____________________
Date:__________________
8
<PAGE> 37
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Argentina Citibank, N.A. Caja de Valores S.A.
Australia Westpac Banking Austraclear Limited;
Corporation
Reserve Bank Information and
Transfer System (RITS)
Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft Kontrollbank AG
der Sparkassen
Bangladesh Standard Chartered Bank None
Belgium Generale Bank Caisse Interprofessionnelle
de Depots et de Virements
de Titres S.A. (CIK);
Banque Nationale de Belgique
Botswana Barclays Bank of Botswana Limited None
Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo
(Bovespa);
Banco Central do Brasil,
Systema Especial de Liquidacao
e Custodia (SELIC)
Canada Canada Trustco The Canadian Depository
Mortgage Company for Securities Limited (CDS)
Chile Citibank, N.A. None
</TABLE>
<PAGE> 38
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
China The Hongkong and Shanghai Shanghai Securities Central
Banking Corporation Limited Clearning and Registration
Corporation (SSCCRC);
Shenzhen Securities Registrars
Co., Ltd. and it designated
agent banks
Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
Cyprus Barclays Bank PLC None
Czech Republic Ceskoslovenska Obchodni Stredisko Cennych Papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
Denmark Den Danske Bank Vaerdipapircentralen -
The Danish Securities
Center (VP)
Egypt National Bank of Egypt None
Finland Kansallis-Osake-Pankki The Central Share Register of
Finland
France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
Germany Berliner Handels- The Deutscher Kassenverein AG
und Frankfurter Bank
Ghana Barclays Bank of Ghana Limited None
</TABLE>
<PAGE> 39
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Greece National Bank of The Central Securities Depository
Greece S.A. (Apothetirio Titlon A.E.)
Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
Hungary Citibank Budapest Rt. None
India The Hongkong and Shanghai None
Banking Corporation Limited
Indonesia Standard Chartered Bank None
Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
Italy Morgan Guaranty Trust Monte Titoli S.p.A.;
Company
Banca d'Italia
Japan Sumitomo Trust None;
& Banking Co., Ltd.
Bank of Japan Net System
Jordan The British Bank of the Middle East None
Kenya Barclays Bank of Kenya Limited None
Korea Bank of Seoul Korea Securities Depository (KSD)
</TABLE>
<PAGE> 40
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Malaysia Standard Chartered Bank None
Malaysia Berhad
Mexico Citibank, N.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito
de Valores);
Banco de Mexico
Morocco Banque Commerciale du Maroc None
Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEF)
New Zealand ANZ Banking Group None:
(New Zealand) Limited
The Reserve Bank of
New Zealand,
Austraclear NZ
Norway Christiania Bank og Verdipapirsentralen -
Kreditkasse The Norwegian Registry
of Securities (VPS)
Pakistan Deutsche Bank AG None
Peru Citibank, N.A. Caja de Valores (CAVAL)
Philippines Standard Chartered Bank None
Poland Citibank Poland S.A. The National Depository
of Securities (Centrum
Krajowego Depozytu
Papierow Wartos ciowych)
</TABLE>
<PAGE> 41
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Portugal Banco Comercial Portugues Central de Valores
Mobiliarios (Central)
Singapore The Development Bank The Central Depository
of Singapore Ltd. (Pte) Limited (CDP)
South Africa Standard Bank of None
South Africa Limited
Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores (SCLV);
Banco de Espana,
Anotaciones en Cuenta
Sri Lanka The Hongkong and Shanghai The Central Depository
Banking Corporation Limited System (Pvt) Limited
Sweden Skandinaviska Enskilda Vardepapperscentralen -
Banken The Swedish Securities Register
Center (VPC)
Switzerland Union Bank of Switzerland Schweizerische Effekten -
Giro AG (SEGA)
Taiwan Central Trust of China The Taiwan Securities
Central Depository
Company, Ltd. (TSCD)
Thailand Standard Chartered Bank The Share Depository Center
(SDC)
Turkey Citibank, N.A. Istanbul Stock Exchange
Settlement and Custody Co. Inc.
(I.M.K.B. Takas ve Saklama A.S.)
</TABLE>
<PAGE> 42
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUNDS CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
United Kingdom State Street Bank and None;
Trust Company
The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO)
Uruguay Citibank, N.A. None
Venezuela Citibank, N.A. None
Zambia Barclays Bank of Zambia Limited None
Zimbabwe Barclays Bank of Zimbabwe Limited None
</TABLE>
<PAGE> 1
EXHIBIT 8(b)
SUBCUSTODIAN AGREEMENT
AGREEMENT made this November 29, 1993, between State Street Bank and Trust
Company, a Massachusetts Trust Company (hereinafter referred to as the
"Custodian"), having its principal place of business at 225 Franklin Street,
Boston, MA, and Standard Bank of South Africa Limited (hereinafter referred to
as the "Subcustodian"), a bank organized under the laws of the Republic of South
Africa and having its registered office at 46 Marshall Street, Johannesburg,
2001 Republic of South Africa.
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Accounts (the "Accounts") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Accounts and to hold and
maintain all Property in the Accounts in accordance with the terms and
conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
A. Establishment of the Account
Custodian hereby requests that Subcustodian establish for each client of the
Custodian an Account which shall be composed of:
1. A Custody Account for any and all Securities (as hereinafter defined)
from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter defined) from
time to time received by Subcustodian therefor.
<PAGE> 2
-2-
B. Use of the Account
The Account shall be used exclusively to hold, acquire, transfer or
otherwise care for, on behalf of Custodian as custodian and the customers of
Custodian and not for Custodian's own interest, Securities, and such Cash or
cash equivalents as are transferred to Subcustodian or as are received in
payment of any transfer of, or as payment on, or interest on, or dividend from,
any such Securities (herein collectively called "Cash").
C. Transfer of Property in the Account
Beneficial ownership of the Securities and Cash in the Account shall be
freely transferable without payment of money or value other than for safe
custody and administration.
D. Ownership and Segregation of Property in Account
The ownership of the property in the Account, whether Securities, Cash or
both, and whether any such property is held by Subcustodian in an Eligible
Depository, shall be clearly recorded on Subcustodian's books as belonging to
Custodian on behalf of Custodian's customers, and not for Custodian's own
interest and, to the extent that Securities are physically held in the Account,
such Securities shall also be physically segregated from the general assets of
Subcustodian, the assets of Custodian in its individual capacity and the assets
of Subcustodian's other customers. In addition, Subcustodian shall maintain such
other records as may be necessary to identify the property hereunder as
belonging to each Account.
E. Registration of Securities in the Account
Securities which are eligible for deposit in a depository as provided for in
Paragraph III may be maintained with the depository in an account for
Subcustodian's customers. Securities which are not held in a depository and that
are ordinarily held in registered form will be registered in the name of the
Subcustodian or in the name of Subcustodian's nominee, unless alternate
Instructions are furnished by Custodian.
II. Services to be Provided by the Subcustodian
The Services Subcustodian will provide to Custodian and the manner in which
such services will be performed will be as set forth below in this Agreement.
A. Services Performed Pursuant to Instructions
All transactions involving the Securities and Cash in the Account shall be
executed solely in accordance with Custodian's Instructions as
<PAGE> 3
-3-
that term is defined in Paragraph VI hereof, except those described in Paragraph
B below.
B. Services to be Performed without Instructions
Subcustodian will, unless it receives Instructions from Custodian to the
contrary:
1. Collect Cash
Promptly collect and receive all dividends, income, principal, proceeds from
transfer and other payments with respect to property held in the Account, and
present for payment all Securities held in the Account which are called,
redeemed or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, and credit Cash receipts
therefrom to the Deposit Account.
2. Exchange Securities
Promptly exchange Securities where the exchange is purely administrative
including, without limitation, the exchange of temporary Securities for those in
definitive form and the exchange of warrants, or other documents of entitlement
to Securities, for the Securities themselves.
3. Sale of Rights and Fractional Interests
Whenever notification of a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend or stock split is received for the
Account and such rights entitlement or fractional interest bears an expiration
date, Subcustodian will promptly endeavor to obtain Custodian's Instructions,
but should these not be received in time for Subcustodian to take timely action,
Subcustodian is authorized to sell such rights entitlement or fractional
interest and to credit the Account.
4. Execute Certificates
Execute in Custodian's name for the Account, whenever Subcustodian deems it
appropriate, such ownership and other certificates as may be required to obtain
the payment of income from the Securities held in the Account.
5. Pay Taxes and Receive Refunds
To pay or cause to be paid from the Account any and all taxes and levies in
the nature of taxes imposed on the property in the Account by any governmental
authority, and to take all steps necessary to obtain all tax exemptions,
privileges or other benefits, including reclaiming and recovering any
withholding tax, relating to the Account and to execute
<PAGE> 4
-4-
any declarations, affidavits, or certificates of ownership which may be
necessary in connection therewith.
6. Prevent Losses
Take such steps as may be reasonably necessary to secure, or otherwise
prevent the loss of, entitlements attached to or otherwise relating to property
held in the Account.
C. Additional Services
1. Transmission of Notices of Corporate Action
By such means as will permit Custodian to take timely action with respect
thereto, Subcustodian will promptly notify Custodian upon receiving notices or
reports, or otherwise becoming aware, of corporate actions affecting Securities
held in the Account (including, but not limited to, calls for redemption,
mergers, consolidations, reorganizations, recapitalizations, tender offers,
rights offerings, exchanges, subscriptions and other offerings) and dividend,
interest and other income payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements
Upon request by Custodian, Subcustodian will promptly deliver, or cause any
Eligible Depository authorized and acting hereunder to deliver, to Custodian all
notices, proxies, proxy soliciting materials and other communications that call
for voting or the exercise of rights or other specific action (including
material relative to legal proceedings intended to be transmitted to security
holders) relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting instruments
to be executed by the registered holder of the Securities, but without
indicating the manner in which such Securities are to be voted.
3. Monitor Financial Service
In furtherance of its obligations under this Agreement, Subcustodian will
use its best endeavors to monitor a leading financial information service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to corporate
actions and dividend, interest and other income payments.
<PAGE> 5
-5-
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian, maintain
all or any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the central
system for handling of designated securities or equivalent book entries in South
Africa or (b) a transnational system for the central handling of securities or
equivalent book entries (herein called "Eligible Depository"), provided however,
that, while so maintained, such Securities shall be subject only to the
directions of Subcustodian, and that Subcustodian duties, obligations and
responsibilities with regard to such Securities shall be the same as if such
Securities were held by Subcustodian on its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge,
security interest, lien or claim of any kind (collectively "Charges") in favor
of Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment by Subcustodian for such
property's safe custody or administration in accordance with the terms of this
Agreement. Subcustodian will immediately notify Custodian of any attempt by any
party to assert any Charge against the property held in the Account and shall
take all lawful actions to protect such property from such Charges until
Custodian has had reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian Represents and Warrants that:
(A) It is a branch of a "qualified U.S. bank" or it is an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act of 1940, a copy of which is attached hereto as Attachment A (the "Rule"),
and Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial likelihood
that Subcustodian will cease to qualify under the Rule as currently in effect or
as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission which order permits Custodian to employ
Subcustodian notwithstanding the fact that
<PAGE> 6
-6-
Subcustodian fails to qualify under the terms the Rule, and Subcustodian shall
immediately notify Custodian, in writing or by other authorized means, if for
any reason it is no longer covered by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this
section, Custodian may terminate this Agreement immediately without prior notice
to Subcustodian.
VI. Definitions
A. Instructions
The term "Instructions" means
1. instructions in writing signed by authorized individuals designated as
such by Custodian;
2. SWIFT, telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable from as shall
customarily be used for the transmission of like information; and
4. such other forms of communication as from time to time may be agreed
upon by Custodian and Subcustodian, which Subcustodian believes in good
faith to have been given by Custodian or which are transmitted with
proper testing or authentication pursuant to terms and conditions which
Custodian may specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practices. Where Instructions are incomplete or deficient in any
respects, the Subcustodian may act in accordance with the current market
practice governing that transaction at the time of its completion in supplying
any administrative or other non-discretionary details regarding such transaction
and may act in accordance with such details.
B. Account
The term "Account" means collectively the Custody Account, and the Deposit
Account.
<PAGE> 7
-7-
C. Securities
The term "Securities" includes, without limitation, stocks, shares, bonds,
debentures, debt securities (convertible or non-convertible), or other
obligations or securities and any certificates, receipts, futures contracts,
foreign exchange contracts, options, warrants, scrip or other instruments
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interest therein, or in any
property or assets.
VII. Miscellaneous Provisions
A. Statements Regarding the Account
Subcustodian will supply Custodian with such statements regarding the
Account as Custodian may request, including the identity and location of any
Eligible Depository authorized and acting hereunder. In addition, Subcustodian
will supply Custodian with an advice or notification of any transfer of
Securities to or from the Account indicating, as to Securities acquired for the
Account, if applicable, the Eligible Depository having physical possession of
such securities.
B. Examination of Books and Records
Subcustodian agrees that its books and records relating to the Account and
Sub-custodian's actions under this agreement shall be open to the physical,
on-premises inspection and audit at reasonable times by officers of, auditors
employed by, or other representatives of Custodian including (to the extent
permitted under the laws of the Republic of South Africa) the independent public
accountants for any customer of Custodian whose property is being held
hereunder) and such books and records shall be retained for such period as shall
be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will
furnish its auditor's reports on its system of internal controls, and
Subcustodian will use its best efforts to obtain and furnish similar reports of
any Eligible Depository authorized and acting hereunder.
C. Standard of Care
In holding, maintaining, servicing and disposing of Property under this
Agreement and in fulfilling any other obligations hereunder, Subcustodian shall
exercise the same standard of care that it exercises over its own assets,
provided that Subcustodian shall exercise at least the degree of care and
maintain adequate insurance as expected of a prudent professional Subcustodian
for hire and shall assume the burden of proving
<PAGE> 8
-8-
that it has exercised such care in its maintenance of Property held by
Subcustodian in its Accounts. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as if
it had itself retained physical possession of them. Subcustodian shall indemnify
and hold harmless Custodian and each of Custodian's customers from and against
any loss, damage, cost, expense, liability or claim (including reasonable
attorney's fees) arising out of or in connection with the improper or negligent
performance or the nonperformance of the duties of Subcustodian.
The Subcustodian will take due care but will not be responsible for any
loss, damage or costs arising from any tainted or fraudulent securities which
may be delivered to the Subcustodian by or on behalf of the Custodian unless the
Subcustodian, its agents or employees act fraudulently or in bad faith
themselves. The Subcustodian will, however assist in investigations when tainted
or fraudulent securities are delivered to the Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the
laws of the Republic of South Africa, or any other law, applicable to
Subcustodian in connection with its duties hereunder, including (but not limited
to) the payment of all transfer taxes or other taxes and compliance with any
currency restrictions and securities laws in connection with its duties as
Subcustodian.
D. Loss of Cash or Securities
Subcustodian agrees that, in the event of any loss of Securities or Cash in
the Account, Subcustodian will use its best efforts to ascertain the
circumstances relating to such loss and will promptly report the same to
Custodian and shall use every legal means available to it to effect the quickest
possible recovery.
E. Compensation of Subcustodian
Custodian agrees to pay to Subcustodian from time to time such compensation
for its services and such out-of-pocket or incidental expenses of Subcustodian
pursuant to this Agreement as may be mutually agreed upon in writing from time
to time.
F. Operating Requirements
The Subcustodian agrees to follow such Operating Requirements as the
Custodian may establish from time to time, provided that such Requirements
conform with local market, exchange, and regulatory
<PAGE> 9
-9-
procedures in South Africa. A copy of the current Custodian Operating
Requirements is attached as Attachment B to this Agreement.
G. Termination
This Agreement may be terminated by Subcustodian or Custodian on 60 days'
written notice to the other party, sent by registered mail, provided that any
such notice, whether given by Subcustodian or Custodian, shall be followed
within 60 days by Instructions specifying the names of the persons to whom
Subcustodian shall deliver the Securities in the Account and to whom the Cash in
the Account shall be paid. If within 60 days following the giving of such notice
of termination, Subcustodian does not receive such Instructions, Subcustodian
shall continue to hold Securities and Cash subject to this Agreement until such
Instructions are given. The obligations of the parties under this Agreement
shall survive the termination of this Agreement.
H. Notices
Unless otherwise specified in this Agreement, all notices and communications
with respect to matters contemplated by this Agreement shall be in writing, and
delivered by mail, postage prepaid, telex, SWIFT, or other mutually agreed
telecommunication methods to the following addresses (or to such other address
as either party hereto may from time to time designate by notice duly given in
accordance with this paragraph):
To Subcustodian: The Standard Bank of South Africa Limited
46 Marshall Street
Johannesburg 2001
R.S.A.
Telex: 487367
SWIFT: SBZAZAJJ
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, Massachusetts 02105
U.S.A.
I. Confidentiality
Subcustodian and Custodian shall each use its best efforts to maintain the
confidentiality of the property in the Account and the beneficial owners
thereof, subject however, to the provisions of any laws requiring disclosure. In
addition, Subcustodian shall safeguard any test keys, identification codes or
other security devices which Custodian shall
<PAGE> 10
-10-
make available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
J. Assignment
This Agreement shall not be assignable by either party but shall bind any
successor in interest of Custodian and Subcustodian respectively.
K. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the Republic of South Africa. To the extent inconsistent with this
Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
CUSTODIAN: STATE STREET BANK
AND TRUST COMPANY
By: James B. Lathrop
--------------------------------
James B. Lathrop, Vice President
Date: November 29, 1993
AGREED TO BY SUBCUSTODIAN: STANDARD BANK OF SOUTH
AFRICA LIMITED
By: J.C. Moggee
--------------------------------
Date: 03 December 1993
----------------
<PAGE> 1
Exhibit 8(c)
CUSTODIAN AGREEMENT
To: State Street London Limited
State Street House
12 Nicholas Lane
London EC4N 7BN
Great Britain
Gentlemen:
The undersigned State Street Bank and Trust Company ("State Street") hereby
requests that State Street London Limited (the "Trust Company") establish a cash
account at State Street's licensed London branch (or at such other
deposit-taking institution in the United Kingdom as State Street may designate)
and a custody account for each custody customer and employee benefit plan
account identified in the Schedule attached to this Agreement and each
additional account which is or may hereafter be identified to this Agreement.
Such customers and accounts are referred to herein as the "Customer" or
"Customers." Each such cash account and each such custody account so established
will be referred to herein as the "Cash Account" and "Custody Account,"
respectively, and will be subject to the following terms and conditions:
1. The Trust Company shall hold in trust as agent for State Street and
shall physically segregate in the Cash Account and Custody Account,
respectively, such cash, bullion, coin, stocks, shares, bonds,
debentures, notes and other securities and other property which is
delivered to the Bank for those State Street Accounts (the "Property").
2. a. Upon the prior approval of State Street the Trust Company may
deposit Securities, as hereafter defined, in a securities
depository or utilize a clearing agency, incorporated or organized
under the laws of a country other than the United States;
b. When securities held for a Customer are deposited in a securities
depository or clearing agency by the Trust Company, the Trust
Company shall identify on its books as belonging to State Street
as agent for the Customer, the securities so deposited.
3. Upon the written instructions of State Street, in accordance with
Paragraph 7, the Trust Company is authorized to direct
<PAGE> 2
the payment of cash from the Cash Account and to sell, assign,
transfer, deliver or exchange, or to purchase for the Custody Account,
any and all stocks, shares, bonds, debentures, notes and other
securities ("Securities"), bullion, coin and any other property, but
only as provided in such written instructions. So long as and to the
extent that it exercises reasonable care, the Trust Company shall not
be responsible for the title, validity or genuineness of any Property
or evidence of title thereto received by it or delivered by it and
shall be held harmless in acting upon any written instruction
reasonably believed by it to be genuine and to be signed by the proper
party or parties.
4. Unless the Trust Company receives written instructions of State Street
to the contrary, the Trust Company is authorized:
a. To promptly receive and collect all income and principal with
respect to the Property and to deposit cash receipts in the Cash
Account;
b. To promptly exchange securities where the exchange is purely
ministerial (including, without limitation, the exchange of
temporary securities for those in definitive form and the exchange
of warrants, or other documents of entitlement to securities, for
the securities themselves);
c. To promptly surrender securities at maturity or when called for
redemption upon receiving payment therefor;
d. Whenever notification of a rights entitlement or a fractional
interest resulting from a rights issue, stock dividend or stock
split is received for securities in the Custody Account and such
rights entitlement or fractional interest bears an expiration
date, the Trust Company will endeavor to obtain State Street
Bank's instructions, but should these not be received in time for
the Trust Company to take timely action, the Trust Company is
authorized to sell such rights entitlement or fractional interest
and to credit the Custody Account;
<PAGE> 3
e. To hold registered in the name of the nominee of the Trust Company
or its agents such Securities as are ordinarily held in registered
form;
f. To execute in State Street's name for the Customer, whenever the
Trust Company deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income
from the Property; and
g. To pay or cause to be paid, from the Cash Account any and all
taxes and levies in the nature of taxes imposed on such assets by
any governmental authority and shall use reasonable efforts, to
promptly reclaim any foreign withholding tax relating to the Cash
Account.
5. If the Trust Company shall receive any proxies, notices, reports, or
other communications relative to any of the Securities of the Custody
Account in connection with tender offers, reorganization, mergers,
consolidations, or similar events which may have an impact upon the
issuer thereof, the Trust Company shall promptly transmit any such
communication to State Street by means as will permit State Street to
take timely action with respect thereto.
6. The Trust Company is authorized in its discretion to appoint brokers
and agents in connection with the Trust Company's handling of
transactions relating to the Property provided that any such
appointment shall not relieve the Trust Company of any of its
responsibilities or liabilities hereunder.
7. Written instructions shall include (i) instructions in writing signed
by such persons as are designated in writing by State Street; (ii)
telex or tested telex instructions of State Street; (iii) other forms
of instruction in computer readable form as shall be customarily
utilized for the transmission of like information; and (iv) such other
forms of communication as from time to time shall be agreed upon by
State Street and the Trust Company.
8. The Trust Company shall supply periodic reports with respect to the
safekeeping of assets held by it under this Agreement. The content of
such reports shall include but not be limited to any transfer to or
from any account held by the Trust
<PAGE> 4
Company hereunder and such other information as State Street may
reasonably request.
9. In addition to its obligations under Section 2b hereof, the Trust
Company shall maintain such other records as may be necessary to
identify the assets hereunder as belonging to each Customer.
10. The Trust Company agrees that its books and records relating to its
actions under this Agreement shall be opened to the physical,
on-premise inspection and audit at reasonable times by officers of,
auditors employed by, or other representatives of State Street
(including to the extent permitted under applicable law the independent
public accountants of any Customer) and shall be retained for such
period as shall be agreed by State Street and the Trust Company.
11. The Trust Company shall be entitled to reasonable compensation for its
services and expenses as custodian under this Agreement, as agreed upon
from time to time by the Trust Company and State Street.
12. a. The Trust Company shall exercise reasonable care in carrying out
the provisions of this Agreement, but shall be kept indemnified by
and shall be without liability for any action taken or omitted by
it in good faith without negligence. It shall be entitled to rely
on and may act upon advice of counsel (who may be counsel for the
Trust Company, State Street or both) on all matters, and shall be
without liability for any action reasonably taken or omitted
pursuant to such advice.
b. If State Street requires the Trust Company to take action with
respect to the Securities, which action involves the payment of
money or which action may, in the opinion of the Trust Company,
result in the Trust Company being liable for the payment of money
or incurring liability of some other form, State Street, as a
prerequisite to requiring the Trust Company to take action, shall
provide indemnity to the Trust Company in an amount and form
satisfactory to it.
13. The Trust Company shall not be liable for any loss resulting from
political risks such as exchange control restrictions,
<PAGE> 5
expropriation, nationalization, insurrection, civil strife, armed
hostilities or other similar events or any loss resulting from Acts of
God, nuclear incident and the like under circumstances where the Trust
Company has exercised reasonable care.
14. The Trust Company agrees (i) the property held hereunder is not subject
to any right, charge, security interest, lien or claim of any kind in
favor of the Trust Company or any of its agents or its creditors except
a claim of payment for their safe custody and administration and (ii)
the beneficial ownership of the Property shall be freely transferable
without the payment of money or other value other than for safe custody
or administration.
15. This Agreement may be terminated by the Trust Company or State Street
by 60 days' written notice to the other, sent by registered mail or
express courier. The Trust Company, upon the date this Agreement
terminates pursuant to notice which has been given in a timely fashion,
shall deliver the Property to the Customer unless the Trust Company has
received written instructions of State Street specifying the name(s) of
the person(s) to whom the Property shall be delivered.
16. The Trust Company and State Street shall each use its best efforts to
maintain the confidentiality of the Property in each Cash Account and
Custody Account, subject, however, to the provisions of any laws
requiring the disclosure of the Property.
17. Unless otherwise specified in this Agreement, all notices with respect
to matters contemplated by this Agreement shall be deemed duly given
when received in writing or by confirmed telex by the Trust Company or
State Street at their respective addresses set forth below, or at such
other address as be specified in each case in a notice similarly given:
To State Street Master Trust Division, Global Custody
STATE STREET BANK AND TRUST
COMPANY
P.O. Box 1713
Boston, Massachusetts 02105
U.S.A.
<PAGE> 6
To the Trust Company ATTN:
---------------------------
STATE STREET LONDON LIMITED
State Street House
12 Nicholas Lane
London EC4N 7BN
Great Britain
18. This Agreement shall be governed by and construed in accordance with
the laws of the United Kingdom except to the extent that such laws are
preempted by the laws of the United States of America.
Please acknowledge your agreement to the foregoing by executing a copy of
this letter.
Very truly yours,
STATE STREET BANK AND
TRUST COMPANY
By:
---------------------------------
Title:
------------------------------
Date:
-------------------------------
Agreed to by: STATE STREET LONDON LIMITED
By:
---------------------------------
Title:
------------------------------
Date:
-------------------------------
<PAGE> 1
Exhibit 9(a)
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made as of the 23rd day of October, 1995 by and
between OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a Massachusetts
business trust (the "FUND"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Fund desires to retain the Administrative Agent to perform
certain accounting, registrar, transfer agency and administrative services and
the Administrative Agent is willing to perform such services upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto do hereby agree as
follows:
Section 1. APPOINTMENT AS ADMINISTRATIVE AGENT.
The Fund hereby appoints the Administrative Agent to act as registrar,
transfer agent and accounting and administrative agent for the Fund, and the
Administrative Agent hereby accepts such appointment, in each case upon the
terms and conditions set forth below and subject to the control, supervision and
direction of the Fund and the review and comment by the Fund's auditors and
legal counsel.
Section 2. DELIVERY OF DOCUMENTS.
The Fund shall promptly deliver to the Administrative Agent certified copies
of each of the following documents and all future amendments and supplements
thereto, if any:
(a) The Declaration of Trust and by-laws of the Fund (as the same may be
amended from time to time, the "CHARTER DOCUMENTS");
(b) The Fund's currently effective Registration Statement under the
Investment Company Act of 1940, as amended (the "1940 ACT") and Private
Placement Memorandum, together with all amendments and supplements
thereto in effect from time to time (collectively, the "PLACEMENT
MEMORANDUM" and together with the Charter Documents, the "CONSTITUTIVE
DOCUMENTS");
(c) Certified copies of the resolutions of the Board of Trustees of the
Fund (the "BOARD") authorizing (1) the Fund to enter into this
Agreement and (2) certain individuals on behalf of the Fund (a) to give
instructions to the Administrative
<PAGE> 2
Agent pursuant to this Agreement and (b) to sign checks and pay
expenses on behalf of the Fund; and
(d) Such other certificates, documents or opinions which the Administrative
Agent may, in its reasonable discretion, request in connection with the
performance of its duties hereunder.
Section 3. ACCOUNTING SERVICES.
The Administrative Agent shall maintain the books of account of the Fund and
shall perform the following duties in the manner prescribed by the Constitutive
Documents and further in accordance with written procedures adopted by the Fund
from time to time:
(a) Record general ledger entries;
(b) Calculate daily net income;
(c) Reconcile activity to the trial balance;
(d) Calculate and publish daily net asset value; and
(e) Prepare account balances.
The Fund shall provide timely prior written notice to the Administrative
Agent of any modification in the manner in which such calculations are to be
performed. For purposes of calculating the net asset value of the Fund, the
Administrative Agent shall value the Fund's portfolio securities utilizing
prices obtained from sources designated by the Fund on the Price Source
Authorization form attached hereto as Exhibit A, as the same may be amended by
the Fund and the Administrative Agent from time to time, or otherwise designated
by means of Proper Instructions (as such term is defined in Section 9 below)
(collectively, the "AUTHORIZED PRICE SOURCES"). The Administrative Agent shall
not be responsible for any revisions to the methods of calculation prescribed by
the Constitutive Documents or the Fund unless and until such revisions are
communicated in writing to the Administrative Agent.
Section 4. REGISTRAR AND TRANSFER AGENCY SERVICES.
The Administrative Agent shall act as registrar and transfer agent for the
shares (the "SHARES") of each class of beneficial interest of the Fund as may be
authorized and issued from time to time, as dividend disbursing agent, and as
relevant agent in connection with accumulation, open account or similar plans,
including without limitation any periodic investment plan or periodic withdrawal
program, in each case in accordance with the provisions of the Constitutive
Documents and further in accordance with written procedures adopted by the Fund
from time to time.
-2-
<PAGE> 3
In the foregoing capacity, the Administrative Agent shall perform the
following services:
(a) In accordance with procedures set forth in the Placement Memorandum and
established from time to time by agreement between the Fund and the
Administrative Agent, the Administrative Agent shall:
(i) Receive for acceptance, orders for the purchase of Shares
authorized pursuant to the Charter Documents of the Fund and
promptly deliver payment and appropriate documentation therefor
to the entity acting as custodian of the Fund from time to time
(the "CUSTODIAN");
(ii) Pursuant to purchase orders, issue the appropriate number of
Shares and hold such Shares in the appropriate Shareholder
account;
(iii) Receive for acceptance redemption requests and redemption
directions and deliver the appropriate documentation therefor
to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and (iii)
above, the Administrative Agent shall be authorized to execute
such transactions directly with broker-dealers acting on behalf
of the Fund or a placement agent or distributor who shall
thereby be deemed to be acting on behalf of the Fund;
(v) At the appropriate time as and when it receives monies paid to
it by the Custodian with respect to any redemption, pay over or
cause to be paid over in the appropriate manner such monies as
instructed by the redeeming Shareholders;
(vi) Subject to the Charter Documents of the Fund, effect transfers
of Shares by the registered owners thereof upon receipt of
appropriate instructions;
(vii) Prepare and transmit payments for dividends and distributions
declared by the Fund;
(viii) Track ownership of Shares issued in the Initial Offering and
Second Offering for purposes of calculating the Servicing Fee
(as each such term is defined in the Placement Memorandum);
(ix) Issue replacement certificates for those certificates alleged
to have been lost, stolen or destroyed upon receipt of
indemnification satisfactory to the Administrative Agent and
protecting the Administrative Agent and the Fund, and, at its
option, issue replacement certificates in place of
-3-
<PAGE> 4
mutilated stock certificates upon presentation thereof and
without such indemnity;
(x) Maintain records of account for and advise the Fund and its
Shareholders as to the foregoing; and
(xi) Maintain the Register of Shareholders of the Fund in accordance
with applicable law and the Charter Documents of the Fund;
record the issuance of Shares of the Fund and maintain a record
of the total number of Shares of the Fund which are authorized
(based upon data provided to it by the Fund) and issued and
outstanding. The Administrative Agent shall also provide the
Fund and its designated agents on a regular basis with a record
of the total number of Shares which are authorized and issued
and outstanding and shall have no obligation, when recording
the issuance of Shares, to monitor the issuance of such Shares
or to take cognizance of any laws relating to the issue or sale
of such Shares, which functions shall be the sole
responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the services
set forth in the above paragraph (a), the Administrative Agent shall:
perform the customary services of a transfer agent, dividend disbursing
agent, and, as relevant, agent in connection with accumulation,
open-account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but
not limited to: maintaining all Shareholder accounts, preparing
Shareholder meeting lists, mailing proxies, mailing Shareholder reports
and Placement Memoranda to current Shareholders and prospective
investors, preparing and mailing confirmation forms and statements of
account to Shareholders for all purchases and redemptions of Shares and
other confirmable transactions in Shareholder accounts, preparing and
mailing activity statements for Shareholders, and providing Shareholder
account information.
The Administrative Agent shall provide such additional transfer agency
services on behalf of the Fund as may be agreed upon in writing from time to
time by the Fund and the Administrative Agent.
Section 5. GENERAL ADMINISTRATIVE SERVICES.
The Administrative Agent shall provide all administrative services necessary
or convenient for the efficient conduct of the Fund as may be agreed upon from
time to time (excluding services provided by the Fund's Custodian, legal counsel
or independent accountants) in each case in accordance with procedures
established by the Fund and the Administrative Agent, including, without
limitation, the following services:
-4-
<PAGE> 5
(a) Oversee the publication of the Fund's net asset value in accordance
with the policy of the Fund as adopted from time to time by the Board;
(b) Oversee the maintenance by the Custodian of certain books and records
of the Fund as required under Rule 31a-1(b) of the 1940 Act;
(c) Prepare the Fund's United States ("U.S.") federal, state and local
income tax returns for review by the Fund's independent accountants and
filing by the Fund's treasurer;
(d) Prepare the Fund's expense budget and submit for approval by officers
of the Fund and arrange for payment of the Fund's expenses;
(e) Prepare for review and approval by officers of the Fund financial
information for the Fund's semi-annual and annual reports, proxy
statements and other communications required or otherwise to be sent to
Fund Shareholders, and arrange for the printing and dissemination of
such reports and communications to Shareholders;
(f) Prepare for review by an officer of and legal counsel for the Fund the
periodic financial reports required to be filed by the Fund with the
Securities and Exchange Commission ("SEC") on Form N-SAR and financial
information required by Form N-1A and such other reports, forms or
filings as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the Fund as may
be mutually agreed upon and not otherwise prepared by the Fund's
Custodian, legal counsel or independent accountants;
(h) Make such reports and recommendations to the Board concerning the
performance of the independent accountants as the Board may reasonably
request;
(i) Make such reports and recommendations to the Board concerning the
performance and fees of the Fund's Custodian as the Board may
reasonably request or deems appropriate;
(j) Oversee and review calculations of fees paid to the Fund's Custodian;
(k) Consult with the Fund's officers, independent accountants, legal
counsel and Custodian in establishing the accounting policies of the
Fund;
-5-
<PAGE> 6
(l) Review implementation of any dividend reinvestment programs authorized
by the Board;
(m) Respond to, or refer to the Fund's officers, Shareholder inquiries
relating to the Fund;
(n) Provide such periodic testing of portfolios as may be mutually agreed
upon to assist the Fund in complying with the mandatory qualification
requirements of the Internal Revenue Code of 1986, as amended (the
"CODE"), the requirements of the 1940 Act and the Placement Memorandum
limitations;
(o) Perform the functions specified in such compliance procedures
memorandum as may be mutually agreed upon from time to time by the
Administrative Agent and the Fund; and
(p) Prepare materials for Board meetings and make presentations where
appropriate.
Section 6. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS.
The Fund assumes full responsibility for complying with all securities, tax,
commodities and other laws, rules and regulations applicable to it.
The Administrative Agent shall create and maintain all records relating to
the services provided hereunder in a manner which shall meet the obligations of
the Fund under the Constitutive Documents and applicable law. All such records
shall be the property of the Fund and shall at all times during the regular
business hours of the Administrative Agent be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and agents of
the regulatory agencies having jurisdiction over the Fund. The Administrative
Agent shall preserve the records required to be maintained hereunder for the
period required by law unless such records are earlier surrendered in connection
with the termination of this Agreement or otherwise upon written request.
Section 7. APPOINTMENT OF AGENTS.
The Administrative Agent may at its own expense employ agents in the
performance of its duties and the exercise of its rights under this Agreement,
provided that the employment of such agents shall not reduce the Administrative
Agent's obligations or liabilities hereunder. The Fund acknowledges that certain
duties of the Administrative Agent will be performed by certain affiliates and
agents of the Administrative Agent in Toronto, Canada.
-6-
<PAGE> 7
Section 8. PROVISION OF INFORMATION.
The Fund shall provide, or shall cause a third party to provide, certain
data to the Administrative Agent as a condition to the Administrative Agent's
obligations under Section 3 above. The data required to be provided pursuant to
this Section is set forth on Schedule A hereto, which schedule may be separately
amended or supplemented by agreement between the Fund and the Administrative
Agent from time to time.
The Administrative Agent is authorized and instructed to rely upon the
information it receives from the Fund or any third party authorized in writing
by the Fund (a "THIRD PARTY AGENT") to provide such information to the
Administrative Agent. The Administrative Agent shall have no responsibility to
review, confirm or otherwise assume any duty with respect to the accuracy or
completeness of any information supplied to it by the Fund or any Third Party
Agent.
Section 9. INSTRUCTIONS AND ADVICE.
The term "PROPER INSTRUCTIONS" shall mean instructions received by the
Administrative Agent from the Fund or any person duly authorized by the Fund in
writing. Such instructions may be in writing signed by the authorized person or
may be in a tested communication or in a communication utilizing access codes
effected between electro-mechanical or electronic devices or may be by such
other means as may be agreed upon from time to time by the Administrative Agent
and the party giving such instructions (including, without limitation, oral
instructions). All oral instructions shall be promptly confirmed in writing. The
Fund shall cause its duly authorized representative to certify to the
Administrative Agent in writing the names and specimen signatures of persons
authorized to give Proper Instructions. The Administrative Agent shall be
entitled to rely upon the identity and authority of such persons until it
receives written notice from the Fund to the contrary. The Administrative Agent
may rely upon any Proper Instruction reasonably believed by it to be genuine and
to have been properly issued by or on behalf of the Fund. The Fund shall give,
or cause to be given, timely Proper Instructions to the Administrative Agent as
necessary in regard to matters affecting its duties under this Agreement.
At any time, the Administrative Agent may apply to any officer of the Fund
for instructions and may consult with its own outside legal counsel or outside
counsel for the Fund or the independent accountants for the Fund at the expense
of the Fund, with respect to any matter arising in connection with the services
to be performed by the Administrative Agent under this Agreement, provided that
the Administrative Agent shall obtain the prior approval of the Fund for any
expenditure in excess of $5,000 in connection with seeking such advice. The
Administrative Agent shall not be liable, and shall be indemnified by the Fund,
for any action taken or omitted by it in good faith in reliance upon any such
instructions or advice or upon any paper or document believed by it to be
genuine and to have been signed by the
-7-
<PAGE> 8
proper person or persons. The Administrative Agent shall not be held to have
notice of any change of authority of any person until receipt of written notice
thereof from the Fund. Nothing in this paragraph shall be construed as imposing
upon the Administrative Agent any obligation to seek such instructions or
advice, or to act in accordance with such advice when received.
Section 10. STANDARD OF CARE; LIMITATION ON LIABILITY.
The Administrative Agent shall at all times exercise reasonable care and
diligence and act in good faith in the performance of its duties hereunder,
provided, however, that the Administrative Agent shall assume no responsibility
and shall be without liability for any loss, liability, claim or expense
suffered or incurred by the Fund unless caused by its own fraud, willful
default, gross negligence or willful misconduct or that of its agents or
employees. The Administrative Agent shall be responsible for the performance of
only such duties as are set forth in this Agreement and, except as otherwise
provided under Section 7, shall have no responsibility for the actions or
activities of any other party, including other service providers to the Fund. In
any event, the Administrative Agent's liability under this Agreement shall be
limited to $5,000,000 for any liability or loss suffered by the Fund arising
from or in connection with the services rendered by the Administrative Agent
pursuant to subsections (a), (b), (c), (e), (f), (n) and (o) of Section 5
hereof, including, but not limited to, any liability relating to qualification
of the Fund as a regulated investment company in the U.S. or any liability
relating to the Fund's compliance with any applicable tax or securities statute,
regulation or ruling of any jurisdiction. The foregoing limitation shall not
apply to any liability for losses or damages arising under other sections of
this Agreement.
The Administrative Agent shall exercise reasonable care so that no action is
taken or omitted by it under this Agreement which will result in the Fund
becoming resident for tax purposes in any jurisdiction where the Administrative
Agent performs its duties under this Agreement, provided that the Administrative
Agent shall have no responsibility or liability for the Fund becoming resident
for tax purposes in any jurisdiction where the Fund or its agents carry out
activities.
Without in any way limiting the generality of the foregoing, the
Administrative Agent shall in no event be liable for any loss or damage arising
from causes beyond its reasonable control, including, without limitation, delay
or cessation of services hereunder or any damages to the Fund resulting
therefrom as a result of any work stoppage (except a work stoppage by employees
of the Administrative Agent which is not part of a more general labor stoppage),
power or other mechanical failure, computer virus, natural disaster,
governmental action, communications disruption or other impossibility of
performance. The Administrative Agent shall not be liable for any special,
indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys' fees) in any way due to the Fund's
use of
-8-
<PAGE> 9
the services provided hereunder or the performance of or failure to perform the
Administrative Agent's obligations under this Agreement.
The Fund and any Third Party Agents or Authorized Price Sources from which
the Administrative Agent shall receive or obtain certain records, reports and
other data included in the accounting services provided hereunder are solely
responsible for the contents of such information, including, without limitation,
the accuracy thereof. The Administrative Agent shall have no responsibility to
review, confirm or otherwise assume any duty with respect to the accuracy or
completeness of any such information and shall be without liability for any loss
or damage suffered by the Fund as a result of the Administrative Agent's
reasonable reliance on and utilization of such information, except as otherwise
required by the terms of the Price Source Authorization form attached hereto as
Exhibit A with respect to the use of data obtained from Authorized Price
Sources. The Administrative Agent shall have no responsibility and shall be
without liability for any loss or damage caused by the failure of the Fund or
any Third Party Agent to provide it with the information required by Section 8
hereof.
The Administrative Agent shall have no liability and shall be kept
indemnified by the Fund against any loss, liability, claim or expense resulting
from the offer or sale of Shares in violation of any requirement under any
applicable securities laws or regulations including, but not limited to, the
laws of the U.S.
Section 11. INDEMNIFICATION.
The Fund hereby agrees to indemnify and hold harmless the Administrative
Agent from and against any loss, liability, claim or expense (including
reasonable attorney's fees and disbursements but excluding overhead expenses)
suffered or incurred by the Administrative Agent in connection with the
performance of its duties hereunder, including, without limitation, any
liability or expense suffered or incurred as a result of the acts or omissions
of the Fund or any Third Party Agent or Authorized Price Source whose data or
services, including records, reports and other information, the Administrative
Agent must rely upon in performing its duties hereunder or as a result of acting
upon any instructions reasonably believed by it to have been duly authorized by
the Fund; provided, however, that such indemnity shall not apply to any
liability or expense occasioned by or resulting from the fraud, willful default,
gross negligence or willful misconduct of the Administrative Agent in the
performance of its duties hereunder.
The Fund will be entitled to participate at its own expense in the defense,
or, if it so elects, to assume the defense of any suit brought to enforce any
liability subject to the indemnification provided above. In the event the Fund
elects to assume the defense of any such suit and retain counsel, the
Administrative Agent or any of its affiliated persons, named as defendant or
defendants in the suit, may retain additional counsel but shall bear the fees
and
-9-
<PAGE> 10
expenses of such counsel unless (i) the Fund shall have specifically authorized
the retaining of such counsel or (ii) the Administrative Agent shall have
determined in good faith that the retention of such counsel is required as a
result of a conflict of interest.
Section 12. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATIVE AGENT.
The Administrative Agent represents and warrants to the Fund that:
(a) It is a Massachusetts trust company, duly organized, existing and in
good standing under the laws of the Commonwealth of Massachusetts;
(b) It has the corporate power and authority to carry on its business in
Massachusetts and to perform and observe the terms and conditions of
the Agreement;
(c) All requisite corporate proceedings have been taken to authorize it to
enter into and perform this Agreement. This Agreement has been duly
executed on behalf of the Administrative Agent and constitutes its
legal, valid and binding agreement enforceable in accordance with its
terms; and
(d) Its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of the
Administrative Agent or any law or regulation applicable to it.
Section 13. REPRESENTATIONS AND WARRANTIES OF THE FUND.
The Fund represents and warrants to the Administrative Agent that:
(a) It is a business trust, duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts;
(b) It has the trust power and authority under applicable laws and by its
Charter Documents to enter into and perform this Agreement;
(c) All requisite proceedings have been taken to authorize it to enter into
and perform this Agreement;
(d) It is an investment company which shall be properly registered under
the 1940 Act prior to the date of the Initial Closing (as such term is
defined in the Placement Memorandum);
-10-
<PAGE> 11
(e) A registration statement under the 1940 Act with respect to the Fund
shall be filed and will be effective and remain effective during the
term of this Agreement. The Fund also warrants to the Administrative
Agent that all necessary filings, if any, under the securities laws of
the jurisdictions in which the Fund offers or sells its Shares will
have been made and will be current during the term of this Agreement;
(f) No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its duties
and obligations under this Agreement;
(g) Its entrance into this Agreement shall not cause a material breach or
be in material conflict with any other agreement or obligation of the
Fund or any law or regulation applicable to it; and
(h) The Fund is authorized to issue Shares, and it will initially offer
such Shares, only in the authorized amounts set forth on Schedule B to
this Agreement, which schedule shall be completed and submitted to the
Administrative Agent as soon as practicable after the date hereof and
in any event prior to the date of the Initial Closing.
Section 14. DATA ACCESS AND PROPRIETARY INFORMATION.
The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals which may be furnished to the Fund by the Administrative Agent as part
of the Fund's ability to access certain Fund-related data ("CUSTOMER DATA")
maintained by the Administrative Agent on data bases under the control and
ownership of the Administrative Agent ("DATA ACCESS SERVICES") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"PROPRIETARY INFORMATION") of substantial value to the Administrative Agent. The
Fund agrees to treat all Proprietary Information as proprietary to the
Administrative Agent and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as may be provided
hereunder. Without limiting the foregoing, the Fund agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations as may be designated in
writing by the Administrative Agent and solely in accordance with the
Administrative Agent's applicable user documentation;
(b) to refrain from copying or duplicating in any way the Proprietary
Information, provided, however, that the Fund may copy or duplicate
Proprietary Information to the extent incorporated in any computer
generated print-out or other written
-11-
<PAGE> 12
report containing Customer Data for internal use consistent with this
Agreement but only to the extent necessary to copy or duplicate such
Customer Data;
(c) to refrain from obtaining unauthorized access to any portion of the
Proprietary Information, and if such access is inadvertently obtained,
to inform the Administrative Agent in a timely manner of such fact and
dispose of such information in accordance with the Administrative
Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired hereunder
from being retransmitted to any other computer facility or other
location, except with the prior written consent of the Administrative
Agent;
(e) that the Fund shall have access only to those authorized transactions
agreed upon by the parties; and
(f) to honor all reasonable written requests made by the Administrative
Agent to protect at the Administrative Agent's expense the rights of
the Administrative Agent in Proprietary Information at common law,
under U.S. federal copyright law and under other U.S. federal or state
law.
Notwithstanding anything in this Section 14 to the contrary, the Fund may
disclose Proprietary Information, (i) if and to the extent required to do so by
applicable law or pursuant to an order of a court of competent jurisdiction or
other governmental agency having appropriate authority, in which case the Fund
shall, to the extent possible, provide the Administrative Agent with timely
notice prior to any such disclosure and (ii) if and to the extent such
information has become public other than as a result of a breach of this
Agreement by the Fund or any officer, trustee, employee or agent of the Fund.
Each party shall take reasonable efforts to advise its employees and agents
of their obligations pursuant to this Section 14. The obligations of this
Section shall survive any earlier termination of this Agreement.
The Fund hereby acknowledges that the data and information it may access
from the Administrative Agent utilizing the Data Access Services will be
unaudited and may not be accurate due to inaccurate pricing of securities,
delays of a day or more in updating the Fund's account and other causes for
which the Administrative Agent will not be liable to the Fund.
If the transactions available to the Fund include the ability to originate
electronic instructions to the Administrative Agent in order to (i) effect the
transfer or movement of cash or Shares or (ii) transmit Shareholder information
or other information (such transactions constituting a "COEFI"), then in such
event the Administrative Agent shall be entitled to rely on the validity and
authenticity of such instruction without undertaking any further inquiry as
-12-
<PAGE> 13
long as such instruction is undertaken in conformity with security procedures
established by the Administrative Agent from time to time.
Section 15. SUCCESSOR AGENT.
If a successor Administrative Agent shall be appointed by the Fund, the
Administrative Agent shall upon termination of this Agreement deliver to such
successor agent at the office of the Administrative Agent all books and records
of account of the Fund maintained by the Administrative Agent hereunder. In the
event this Agreement is terminated by either party without the appointment of a
successor agent, the Administrative Agent shall, upon receipt of Proper
Instructions, deliver such properties in accordance with such instructions.
In the event that no written order designating a successor agent or Proper
Instructions shall have been delivered to the Administrative Agent on or before
the effective date of such termination, then the Administrative Agent shall have
the right to deliver to a bank or a trust company of its own selection all
property of the Fund held by the Administrative Agent hereunder, provided that
such bank or trust company or its direct or indirect parent company has
aggregate capital, surplus and undivided profits, as shown by its last published
report, of not less than $200,000,000. Thereafter, and until a successor
administrative agent shall be named by the Fund, such bank or trust company
shall be the successor of the Administrative Agent under this Agreement.
Section 16. TERM OF AGREEMENT.
This Agreement shall be effective from the date first stated above and shall
remain in full force and effect until terminated as hereinafter provided. Either
party may, in its discretion, terminate this Agreement for any reason by giving
the other party at least sixty (60) days prior written notice of termination.
Notwithstanding the foregoing, the Fund may terminate this Agreement with
immediate effect by written notice to the Administrative Agent in the event that
the Initial Closing is cancelled without postponement to a later date.
Section 17. FEES AND EXPENSES.
The Fund agrees to pay the Administrative Agent such reasonable compensation
for its services and expenses as may be agreed upon from time to time in a
written fee schedule approved by the Fund and the Administrative Agent. The fees
shall be accrued daily and billed monthly and shall be due and payable upon
receipt of the invoice. Upon the termination of this Agreement before the end of
any month, the fee for the part of the month before such termination shall be
prorated according to the proportion which such part bears to the full monthly
period and shall be payable upon the date of termination of this Agreement. In
-13-
<PAGE> 14
addition, the Fund shall reimburse the Administrative Agent for its
out-of-pocket costs incurred in connection with this Agreement, in accordance
with the terms of the written fee schedule.
The Fund agrees promptly to reimburse the Administrative Agent for any
equipment and supplies specially ordered by or for the Fund through the
Administrative Agent and for any other expenses not contemplated by this
Agreement that the Administrative Agent may incur on the Fund's behalf at the
Fund's request or with the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and not
specifically assumed by the Administrative Agent. Expenses to be borne by the
Fund, include, but are not limited to: organizational expenses; cost of services
of independent accountants and outside legal and tax counsel (including such
counsel's review of the Fund's registration statement, placement memorandum,
proxy materials, U.S. federal and state tax qualification as a regulated
investment company and other reports and materials prepared by the
Administrative Agent under this Agreement); cost of any services contracted for
by the Fund directly from parties other than the Administrative Agent; cost of
trading operations and brokerage fees, commissions and transfer taxes in
connection with the purchase and sale of securities for the Fund; taxes,
insurance premiums and other fees and expenses applicable to its operation;
costs incidental to any meetings of Shareholders including, but not limited to,
legal and accounting fees, proxy filing fees and the costs of preparation,
printing and mailing of any proxy materials; costs incidental to Board meetings,
including fees and expenses of Board members; the salary and expenses of any
officer, trustee or employee of the Fund; costs incidental to the preparation,
printing and distribution of the Fund's registration statements and any
amendments thereto and Shareholder reports; cost of typesetting and printing of
prospectuses, placement memoranda; cost of preparation and filing of the Fund's
tax returns, if any, Form N-1A and Form N-SAR, and all notices, registrations
and amendments, if any, associated with any applicable U.S. federal and state
tax and securities laws; all applicable registration fees and filing fees, if
any, required under U.S. federal and state securities laws; fidelity bond and
Trustees' and officers' liability insurance; and cost of independent pricing
services used in computing the Fund's net asset value.
Section 18. CONFIDENTIALITY.
The Administrative Agent agrees on behalf of itself and its employees to
treat confidentially all records and other information related to the Fund,
except where required to be disclosed by law or where the Administrative Agent
has received the prior written consent of the Fund, which consent shall not be
unreasonably withheld.
-14-
<PAGE> 15
Section 19. NOTICES.
All notices shall be in writing and shall be deemed given when delivered in
person, by facsimile, by overnight delivery through a commercial courier
service, or by registered or certified mail, return receipt requested. Notices
shall be addressed to each party at its address set forth below, or such other
address as the recipient may have specified by earlier notice to the sender.
If to the Administrative
Agent: STATE STREET BANK AND TRUST COMPANY
1776 Heritage Drive
North Quincy, MA
Attention: Donald A. Gignac
Telephone: 617-985-0354
Telecopy: 617-985-3754
With a copy to: STATE STREET FUND SERVICES TORONTO INC.
100 King Street, West
Suite 3500
Toronto, Ontario M5X 1A9
Canada
Attention: Mike Larkin
Telephone: 416-956-2987
Telecopy: 416-956-2900
If to the Fund: OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
Richmond House
12 Par-la-Ville Road
Hamilton, HM 11
Bermuda
Attention: J.C.R. Collis
Telephone: 809-295-1422
Telecopy: 809-295-4720
Section 20. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign its
rights and obligations hereunder to a party controlling, controlled by, or under
common control with such party, provided that any such assignment does not
prejudice the tax status or operation of the Fund.
-15-
<PAGE> 16
Section 21. ENTIRE AGREEMENT.
This Agreement (including all schedules and attachments hereto and the
separate written fee schedule) constitutes the entire Agreement between the
parties with respect to the subject matter hereof.
Section 22. AMENDMENTS.
No amendment to this Agreement shall be effective unless it is in writing
and signed by a duly authorized representative of each party. The term
"Agreement", as used herein, includes all schedules and attachments hereto and
any future written amendments, modifications, or supplements made in accordance
herewith.
Section 23. HEADINGS NOT CONTROLLING.
Headings used in this Agreement are for reference purposes only and shall
not be deemed a part of this Agreement.
Section 24. SURVIVAL.
All provisions regarding indemnification, warranty, liability and limits
thereon shall survive following the expiration or termination of this Agreement.
Section 25. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Section 26. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which shall
be deemed to be an original, and all such counterparts taken together shall
constitute but one and the same Agreement.
-16-
<PAGE> 17
Section 27. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the
laws of the Commonwealth of Massachusetts, without regard for any choice of law
rules that would require application of the laws of another jurisdiction.
Section 28. LIMITATION ON LIABILITY OF TRUSTEES.
This Agreement is executed and made by the Trustees of the Fund not
individually, but as trustees under the Declaration of Trust of the Fund dated
as of September 1, 1995, and the obligations of this Agreement are not binding
upon any of such Trustees or upon any of the Shareholders of the Fund
individually, but bind only the trust estate of the Fund.
-17-
<PAGE> 18
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
STATE STREET BANK AND TRUST COMPANY
By: K.C. Cuocolo
----------------------------------
Its: Senior Vice President
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH
AFRICA FUND
By: William Langley
----------------------------------
Its: Treasurer
<PAGE> 19
EXHIBIT A
ADMINISTRATIVE SERVICES AGREEMENT
October 23, 1995
by and between
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
(the "FUND")
and
STATE STREET BANK AND TRUST COMPANY
(the "ADMINISTRATIVE AGENT")
Pursuant to the terms of the Administrative Services Agreement, the Fund has
directed the Administrative Agent to, inter alia, calculate the net asset value
of the Fund and to perform certain other accounting services in accordance with
the Constitutive Documents of the Fund (as such term is defined therein). The
Fund hereby authorizes and instructs the Administrative Agent to utilize the
pricing sources specified on the attached forms as sources for securities prices
in calculating the net asset value of the Fund and acknowledges and agrees that
the Administrative Agent shall have no liability for any incorrect data provided
by pricing sources selected by the Fund or otherwise authorized by Proper
Instructions (as such term is defined in the Administrative Services Agreement),
except as may arise from the Administrative Agent's lack of reasonable care in
performing the agreed-upon tolerance checks as to the data furnished and
calculating the net asset value of the Fund in accordance with the data
furnished and the Administrative Agent's performance of the agreed-upon
tolerance checks.
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
By: William Langley
------------------------------
Title: Treasurer
Date:
----------------------------
<PAGE> 20
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
FUND: __________________________________ SIGNATURE: ______________________
<TABLE>
<CAPTION>
SECURITY TELEKURS OPTIONS PRICE (3) (2) (1) (1)
TYPE NYSE NASDAQ REPORTING AUTHORITY MANUAL BACK-UP TOLERANCE
AMEX BID MEAN LS/BID LS/MEAN TELEKURS LS BID LS/MEAN QUOTES SOURCE INDEX PERCENTAGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I. LISTED EQUITIES
II. OTC EQUITIES
III. FOREIGN EQUITIES
IV. EQUITY OPTIONS
V. FUTURES N/A
</TABLE>
INSTRUCTIONS: For each security type, allowed by the Fund prospectus,
please indicate the primary price source and a back-up source to be used in
calculating Net Asset Value for the Fund identified above. Also, please indicate
a published market index and tolerance range (in terms of percent) to be used
for reasonability testing. If you do not wish to use a published index please
indicate N/A but do not leave blank.
(1) * INDEX/TOLERANCE CHECK: The price movement for a particular security is
compared to the index movement. If the security price movement exceeds the index
movement by more than the percentage authorized on this form, then the security
price will be verified using the back-up source authorized. The index and
tolerance information authorized here will be the basis for this reasonability
test.
(2) BACK-UP SOURCE: The following sources are available for back-up, price
verification and historical price and yield information: Bloomberg, Bridge,
Reuters, and Telerate. Please do not leave blank.
(3) MANUAL QUOTES AND PRIVATE PLACEMENTS: Please specify the source for private
placements or manual quotes as necessary. See page 3 to list additional
information if needed.
Page 1 of 3
<PAGE> 21
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
<TABLE>
<CAPTION>
SECURITY TYPE MERRILL INTERACTIVE
LYNCH STANDARD MULLER DATA KENNY (3) (2) (1) (1)
CAPITAL & POORS DATA SERVICES INFORMATION IDC/ MANUAL BACK-UP TOLERANCE
MARKETS MEAN BID MEAN BID MEAN BID SYSTEMS EXTEL QUOTES QUOTES INDEX PERCENTAGE
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VI. LISTED BONDS
IS LAST SALE
REQUIRED
WHEN
AVAILABLE
YES_____
NO______
VII. CORPORATE
BONDS
VIII. U.S.
GOVERNMENT
OBLIGATIONS
IX. MORTAGE -
BACKED
SECURITIES
X. MUNICIPAL
BONDS
XI. FIXED INCOME
OPTIONS
XII. FOREIGN BONDS
</TABLE>
Page 2 of 3
<PAGE> 22
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
XII. Private Placements and Other Manual Quotes Information
<TABLE>
<CAPTION>
SECURITY TYPE ADVISOR BROKER OTHER ADDITIONAL INFORMATION:
CONTACT NAME, TELEPHONE NUMBER
<S> <C> <C> <C> <C>
</TABLE>
INSTRUCTIONS: For all securities types which require manual quotes, please list
the source of the quotes and any additional information needed to obtain these
quotes.
Page 3 of 3
<PAGE> 23
SCHEDULE A
<TABLE>
<CAPTION>
REQUIRED INFORMATION RESPONSIBLE PARTY
- -------------------- -----------------
<S> <C>
Portfolio Trade Authorizations Fund
Currency Transactions Fund
Cash Transaction Report Custodian
Portfolio Prices Third Party Vendors/Fund
Exchange Rates Third Party Vendors/Fund
Dividend/Distribution Schedule Fund
Dividend/Distribution Declaration Fund
Corporate Actions Third Party Vendors/Custodian
Service Provider Fee Schedules Fund
Authorized Expense Budget Fund
Amortization Policy Fund
Accounting Policy/Complex Investments Fund
Audit Management Letter Auditor
Annual Shareholder Letter Fund
Annual/Semi-Annual Reports Fund
</TABLE>
<PAGE> 24
SCHEDULE B
[Authorized Shares]
<PAGE> 1
EXHIBIT 9(b)
CONFORMED COPY
DATED 23rd OCTOBER 1995
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (2)
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (3)
and
INTERNATIONAL FINANCE CORPORATION (4)
----------------------
STRUCTURING ENGAGEMENT
AGREEMENT
----------------------
Norton Rose
London
<PAGE> 2
THIS AGREEMENT is made on 23RD October 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(2) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND");
(3) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND"); and
(4) INTERNATIONAL FINANCE CORPORATION whose principal office is at 1818 H.
St. NW, Washington 20433 (the "IFC").
WHEREAS the Master Trust is being established as a fund investing in South
Africa and investors are being invited to participate in the Master Trust
through, in the case of US investors, the OMEGA Fund and through, in the case of
non-US investors, the SAGA Fund, this Agreement describes the structuring
services which the IFC has agreed to provide in return for a fee.
NOW IT IS HEREBY AGREED as follows:
1 IFC SERVICES
1.1 The IFC has provided and agrees to continue to provide consultation and
advisory services in connection with the establishment of the Master
Trust, the OMEGA Fund and the SAGA Fund (together the "FUNDS") in the
following areas:
(a) advice on the continuing development of the transaction
structure in relation to marketing, legal, accounting and
taxation issues;
(b) assisting in the preparation of the principal documentation
for the establishment of the Funds;
(c) advice on the form and constitution of the Funds;
(d) advice on the operational charging structure for the Funds,
including the level of management and other fixed charges; and
(e) assistance in the identification and appointment of suitable
directors and trustees.
1
<PAGE> 3
1.2 The IFC agrees with the Funds to act in the interests of the Funds and
to exercise reasonable care in providing the services described in
clause 1.1.
2 REMUNERATION
2.1 In consideration for the consultation and advisory services provided by
the IFC, the Master Trust agrees, subject to clause 2.2, to pay to the
IFC a fee of US$250,000.
2.2 The fee in clause 2.1 shall become due and payable on the first date by
which the US Placing Agreement and the Non-US Placing Agreement have
become fully unconditional.
2.3 In this Agreement, "NON-US PLACING AGREEMENT" means the agreement to be
entered into between the Master Trust, the SAGA Fund, South African
Mutual Life Assurance Society, Old Mutual Asset Managers (Bermuda)
Limited, Old Mutual Fund Holdings (Bermuda) Limited and Swiss Bank
Corporation and "US PLACING AGREEMENT" means the agreement to be
entered into between the Master Trust, the OMEGA Fund, South African
Mutual Life Assurance Society, Old Mutual Asset Managers (Bermuda)
Limited, Old Mutual Fund Holdings (Bermuda) Limited and SG Warburg &
Co. Inc. The IFC acknowledges that it understands the Swiss Bank
Corporation and SG Warburg & Co. Inc. will be the exclusive placement
agents for shares of the SAGA Fund and the OMEGA Fund, respectively,
subject to the terms of the Non-US Placing Agreement and the US Placing
Agreement, respectively.
3 GENERAL
3.1 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust of the Master Trust and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
Master Trust individually.
3.2 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
3.3 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
2
<PAGE> 4
4 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law and each of the parties hereby submits to the non-exclusive
jurisdiction of the High Court of Justice in England.
IN WITNESS whereof this Agreement has been entered into as a DEED the day and
year first above written.
Executed and delivered )
as a Deed by )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) WILLIAM BOYAN
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) KENNETH WILLIAMS
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
INTERNATIONAL FINANCE )
CORPORATION )
) JAYANT S. TATA
Duly authorised signatory
3
<PAGE> 1
EXHIBIT 9(c)
DATED 23rd OCTOBER 1995
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY (1)
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (2)
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (3)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (4)
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (5)
OLD MUTUAL GLOBAL ASSETS FUND LIMITED (6)
- and -
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED (7)
-------------------------
PORTFOLIO TRANSFER AND
SUBSCRIPTION AGREEMENT
-------------------------
Norton Rose
London
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C>
1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Transfer of the Portfolio and OMAM contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3 Transfer of the Global Fund Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4 Representations and warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5 Completion of transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7 Initial offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8 Establishment of the OMEGA Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9 Establishment of the SAGA Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Equalisation payments to OMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11 Further issues of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12 Ring fencing of Master Trust and Global Fund and liquidity facility . . . . . . . . . . . . . . . . . . . . . . . . 10
14 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
15 Conditions precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
19 Governing law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE> 3
THIS AGREEMENT is made on 23rd October 1995 BETWEEN:
(1) SOUTH AFRICAN MUTUAL LIFE ASSURANCE SOCIETY (incorporated in terms of
the South Africa Mutual Life Assurance (Private) Act, 1966 and
registered in South Africa as a long-term insurer in terms of the
Insurance Act, 1943) whose registered address is at Mutualpark, Jan
Smuts Drive, Pinelands 7405, Republic of South Africa ("OLD MUTUAL");
(2) OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (registered in Bermuda with
number EC21093) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda ("OMB");
(3) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(4) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND");
(5) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND");
(6) OLD MUTUAL GLOBAL ASSETS FUND LIMITED (registered in Bermuda with
number EC21103) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda (the "GLOBAL FUND"); and
(7) OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED (registered in Bermuda with
number EC21049) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda ("OMAM").
WHEREAS:
(A) Old Mutual is promoting the establishment of the Master Trust, the
OMEGA Fund and the SAGA Fund as funds investing in South Africa as
described in the Placement Memoranda;
(B) the Master Trust currently has no outstanding beneficial interest;
(C) the Global Fund currently has an issued share capital of US$12,000
divided into 12,000 shares of US$1 each, all of which are held (nil
paid) by OMB;
(D) Old Mutual is to transfer South African equity securities to the Master
Trust and to the Global Fund in exchange for OMB acquiring
substantially all of the
6 1
<PAGE> 4
beneficial interest in the Master Trust and for the paying up of the
12,000 shares and the issue of additional shares in the Global Fund
respectively;
(E) the Global Fund is to be established as part of the arrangements under
which liquidity is to be provided to the Master Trust to fund
redemptions as described in the Placement Memoranda;
(F) this Agreement provides, amongst other things, for the establishment of
the Funds, the transfer of the South African equity securities and the
provision of liquidity to the Master Trust;
(G) State Street Bank and Trust Company has been appointed as custodian and
State Street Cayman Trust Company, Ltd. has been appointed as
administrator to the Master Trust;
(H) OMB is an indirect and OMAM is a direct wholly owned subsidiary of Old
Mutual.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement (including its Recitals), unless the context
otherwise requires, the following expressions have the following
meanings:
"ADMINISTRATOR" means State Street Cayman Trust Company, Ltd., as
administrator of the Master Trust
"ADMISSION" means the admission to listing on the Irish Stock Exchange
of shares in the SAGA Fund
"ADVISORY AGREEMENT" means the investment advisory agreement dated 23rd
October 1995 between the Master Trust and OMAM
"BOOK CAPITAL ACCOUNT" has the meaning given in the Declaration of
Trust
"BUSINESS DAY" has the meaning given in the Placement Memoranda
"COMPLETION" means the completion of the steps set out in clause 5
"CUSTODIAN" means State Street Bank and Trust Company, as custodian of
the Master Trust
"DECLARATION OF TRUST" means the declaration of trust of the Master
Trust dated as of 1st September 1995
"FUNDS" means the Master Trust, the OMEGA Fund and the SAGA Fund
2
<PAGE> 5
"GLOBAL FUND PORTFOLIO" means the securities on the list provided under
clause 3.1 subject to adjustment under clause 3.4
"GLOBAL FUND PROSPECTUS" means the first prospectus issued for the
Global Fund
"INITIAL CLOSING DATE" means 10th November 1995
"INITIAL OFFERING" has the meaning given in the Placement Memoranda
"INITIAL OFFERING TERMINATION DATE" means 7th November 1995
"JSE" means The Johannesburg Stock Exchange
"MANAGEMENT FEE" means the fee payable to OMAM under the Advisory
Agreement
"NON-US PLACING AGREEMENT" means the agreement to be entered into
between the Master Trust, the SAGA Fund, Old Mutual, OMAM, OMB and
Swiss Bank Corporation relating to the placing of shares in the SAGA
Fund
"PLACEMENT MEMORANDA" means the private placement memorandum relating
to the OMEGA Fund dated 15th September 1995 (as amended by any
subsequent published supplements) and the draft placement memorandum
relating to the SAGA Fund dated 15th September 1995
"PORTFOLIO" means the securities on the list provided under clause 2.1
subject to adjustment under clause 2.7
"US PLACING AGREEMENT" means the agreement to be entered into between
the Master Trust, the OMEGA Fund, Old Mutual, OMAM, OMB and SG Warburg
& Co. Inc. relating to the placing of shares in the OMEGA Fund
"TRANSFER DATE" means 3rd November 1995
"VALUATION RULES" means the rules for the valuation of the assets of
the Master Trust as adopted at the meeting of its trustees held on 22nd
and 23rd October 1995.
1.2 The headings to clauses and schedules shall not affect their
interpretation.
1.3 Reference to clauses and schedules are reference to clauses of and
schedules to this Agreement.
3
<PAGE> 6
2 TRANSFER OF THE PORTFOLIO AND OMAM CONTRIBUTION
2.1 Old Mutual shall on 1st November 1995 provide to the Master Trust in
writing a list of securities. That list shall include the specified
types of securities issued by each of the issuers listed in schedule 1
(and no others). The percentage of the entire listed Portfolio which
each holding represents shall (when rounded to the nearest 0.1%) be
that specified in the third column of schedule 1. The list provided to
the Master Trust shall specify the aggregate value in US dollars of the
listed securities (based on the closing ruling prices on the JSE on
31st October 1995 and exchange rates prevailing at that close) and Old
Mutual shall procure that such value is within US$200,000 of
US$1,000,000,000. Old Mutual shall procure that that valuation is
carried out substantially in accordance with the Valuation Rules.
2.2 Old Mutual shall, on the Transfer Date, sell and transfer or procure
the sale and transfer of the Portfolio to the Master Trust free from
all liens, charges, encumbrances and equitable interests and with all
rights attached to the Portfolio as at the Transfer Date.
2.3 Old Mutual and the Master Trust shall procure that the Portfolio is
valued in US Dollars by the Administrator as at 10.00 a.m. (US Eastern
Time) on the Transfer Date in accordance with the Valuation Rules.
2.4 Old Mutual shall, on the Transfer Date, make a capital contribution of
US$4,750,000 to the Master Trust.
2.5 In consideration for the sale and transfer of the Portfolio and the
capital contribution under clause 2.4, the Master Trust shall on the
Transfer Date register OMB as a holder of beneficial interest in the
Master Trust and shall credit its Book Capital Account with the
aggregate of the value determined by the Administrator in accordance
with clause 2.3 and the amount of the capital contribution under clause
2.4.
2.6 Old Mutual shall procure that, on the Transfer Date, OMAM makes a
capital contribution to the Master Trust of US$100. In consideration
for such capital contribution, the Master Trust shall on the Transfer
Date register OMAM as a holder of beneficial interest in the Master
Trust and shall credit its Book Capital Account with the amount of such
capital contribution.
2.7 If between the close of the JSE on 31st October 1995 and the Transfer
Date Old Mutual shall determine that the value of the Portfolio has
increased or decreased by 5% or more, it may on or prior to Completion
with the prior consent of the Master Trust remove securities from the
Portfolio (as far as possible pro rata) or increase the number of
securities within the Portfolio holdings (as far as possible pro rata)
such that the value of the Portfolio on the Transfer Date approximates
more closely to US$1,000,000,000.
4
<PAGE> 7
3 TRANSFER OF THE GLOBAL FUND PORTFOLIO
3.1 Old Mutual shall on 1st November 1995 provide to the Global Fund in
writing a list of securities. That list shall include the specified
types of securities issued by each of the issuers listed in schedule 2
(and no others). The percentage of the entire listed Global Fund
Portfolio which each holding represents shall (when rounded to the
nearest 0.01%) be that specified in the third column of schedule 2. The
list provided to the Global Fund shall specify the aggregate value in
US dollars of the listed securities (based on the closing ruling prices
on the JSE on 31st October 1995 and exchange rates prevailing at that
close) and Old Mutual shall procure that such value is within
US$100,000 of US$500,000,000.
3.2 Old Mutual shall, on the Transfer Date, sell and transfer or procure
the sale and transfer of the Global Fund Portfolio to the Global Fund
free from all liens, charges, encumbrances and equitable interests and
with all rights attached to the Global Fund Portfolio as at the
Transfer Date.
3.3 In consideration for the sale and transfer of the Global Fund
Portfolio, the 12,000 shares in the Global Fund shall be paid up as to
their nominal value and a premium of US$49 and the Global Fund shall
allot and issue to OMB credited as fully paid such number of additional
shares of US$1 each in the Global Fund as is equal to the result of
dividing (a) the value in US dollars (based on the closing ruling
prices on the JSE on the Transfer Date and exchange rates prevailing at
that close) of the Global Fund Portfolio on the Transfer Date less
US$600,000 by (b) US$50.
3.4 If between the close of the JSE on 31st October 1995 and the Transfer
Date Old Mutual shall determine that the value of the Global Fund
Portfolio has increased or decreased by 5% or more, it may on or prior
to Completion remove securities from the Global Fund Portfolio (as far
as possible pro rata) or increase the number of securities within the
Global Fund Portfolio holdings (as far as possible pro rata) such that
the value of the Global Fund Portfolio on the Transfer Date
approximates more closely to US$500,000,000.
4 REPRESENTATIONS AND WARRANTIES
4.1 Old Mutual represents and warrants to each of the Funds as follows:
(a) Old Mutual has the power to execute, deliver and perform its
obligations under this Agreement;
(b) the execution and delivery of, and the performance of the
obligations of Old Mutual under, this Agreement have been duly
authorised by all necessary action on the part of Old Mutual
whether under its constitution or otherwise;
5
<PAGE> 8
(c) this Agreement constitutes, and the other documents which are
to be delivered by Old Mutual at Completion will, when
executed, constitute, legal, valid and binding obligations
enforceable in accordance with their respective terms;
(d) Old Mutual is or will be entitled at Completion to sell and
transfer to the Master Trust the full legal and beneficial
ownership of the Portfolio free from all liens, charges,
encumbrances and equitable interests and with all rights
attached thereto;
(e) all necessary consents and approvals (whether from any
governmental or administrative body or authority, the policy
holders of Old Mutual or from any other person or entity where
applicable) to or for the sale and transfer of the Portfolio
under this Agreement have been obtained and are and will be at
Completion in full force and effect, including (without
prejudice to the generality of the foregoing) the consent of
the South African Reserve Bank and of the South African
Registrar of Insurance;
(f) the Master Trust will, at Completion, acquire the Portfolio
free from any exchange control or other restrictions imposed by
any South African governmental or administrative body or
authority such that the Master Trust will be free to dispose of
the securities comprised in the Portfolio, to exchange any S.A.
Rand proceeds for US dollars and to remit those US dollars out
of South Africa.
4.2 Old Mutual agrees to indemnify and at all times to keep indemnified
each of the Funds against any liabilities, expenses (including legal
expenses), demands, proceedings or judgements whatsoever which may be
made, incurred, brought or established against any of the Funds which
result from any breach of the representations and warranties contained
in clause 4.1.
5 COMPLETION OF TRANSFERS
5.1 Completion of the transfers and the capital contributions provided for
in clause 2 and clause 3 shall take place in Johannesburg at the
offices of Standard Bank of South Africa Limited (as South African
sub-custodian to the Master Trust), in London at the branch offices of
the Custodian and in Bermuda at the offices of Conyers, Dill & Pearman
(Bermuda counsel to the Master Trust) (or at such other place or places
as may be agreed between Old Mutual and the Master Trust) on the
Transfer Date when all (but not part only unless Old Mutual and the
Master Trust shall so agree) of the following business shall be
transacted:
(a) Old Mutual shall deliver to the Master Trust (or as it shall
direct) transfers in respect of the Portfolio duly completed
and executed in favour of the Master Trust (or as it may
direct) together with the certificates therefor and such other
documents as may be reasonably required to give the Master
Trust a good title to the Portfolio and to
6
<PAGE> 9
enable the Master Trust or its or its custodian or sub-custodian's
nominee to become the registered holder thereof;
(b) Old Mutual shall pay the capital contribution under clause 2.4
and OMAM shall pay US$100 by telegraphic transfer to the
account of the Master Trust with the Custodian as notified by
the Master Trust to Old Mutual prior to the Transfer Date;
(c) the Master Trust shall deliver to Old Mutual a certified copy
of the resolution of the board of trustees of the Master Trust
(or a duly authorised committee thereof) directing that:
(i) OMB be registered as a holder of beneficial interest
in the Master Trust as described in clause 2.5;
(ii) OMAM be registered as a holder of beneficial interest
in the Master Trust as described in clause 2.6;
(d) Old Mutual shall deliver to the Global Fund (or as it shall
direct) transfers in respect of the Global Fund Portfolio duly
completed and executed in favour of the Global Fund (or as it
may direct) together with the certificates therefor and such
other documents as may be reasonably required to give the
Global Fund a good title to the Global Fund Portfolio and to
enable the Global Fund or its or its custodian or
sub-custodian's nominee to become the registered holder
thereof;
(e) the Global Fund shall credit as paid up the shares, and allot
and issue to OMB the consideration shares, as referred to in
clause 3.3.
5.2 Without prejudice to Old Mutual's obligations under clause 2.2, it is
agreed and understood between the Master Trust and Old Mutual that some
or all of the transfers provided for in clause 2.2 may be effected on
duly established branch registers of members of the relevant companies
outside South Africa and that, although Old Mutual will be the legal
and beneficial holder of all securities, the named transferor on
transfers delivered and the named holder on certificates delivered
pursuant to clause 5.1(a) may not be Old Mutual.
6 INDEMNITY
6.1 Old Mutual agrees with the Master Trust:
(a) to pay any stamp duty, transfer duty or other similar tax,
whether in South Africa, the United Kingdom or elsewhere
(including any late payment or other penalty or fine and any
duty levied under section 15(5) or 23(17) of the South African
Stamp Duties Act, 1968), due in respect of the transfers of the
Portfolio to be delivered by Old Mutual to the Master Trust at
Completion;
7
<PAGE> 10
(b) to indemnify and at all times keep indemnified the Master Trust
against any liabilities, expenses (including legal expenses),
demands, proceedings, judgements, penalties or fines whatsoever
which may be made, incurred, brought, established or imposed
against the Master Trust or its assets which result from any
breach of Old Mutual's obligations under this clause 6.
6.2 Old Mutual shall not be liable under clause 6.1(a) in repect of any
stamp duty, transfer duty or other similar tax incurred as a result of
a delay in the registation of the transfers referred to in that clause
by more than 6 months after the date of the transfers.
7 INITIAL OFFERING
7.1 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMB
shall submit a request to the Master Trust that OMB's interest in the
Master Trust be reduced by a capital withdrawal of an amount in US
dollars equal to the aggregate amount received by the OMEGA Fund in
respect of the Initial Offering by 9.30 a.m. (US Eastern time) on the
Initial Closing Date.
7.2 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMB
shall submit a request to the Master Trust that OMB's interest in the
Master Trust be reduced by a capital withdrawal of an amount in US
dollars equal to the aggregate amount received by the SAGA Fund in
respect of the Initial Offering by 9.30 a.m. (US Eastern time) on the
Initial Closing Date.
7.3 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMAM
shall submit a request to the Master Trust that OMAM's interest in the
Master Trust be redeemed (as defined in the Declaration of Trust) and
the Master Trust shall immediately following the capital contributions
in clauses 8.2 and 9.2 effect that redemption.
7.4 The Master Trust shall procure that its assets are valued by the
Administrator in US dollars as at 10.00 a.m. (US Eastern time) on the
Initial Closing Date in accordance with the Valuation Rules. The Master
Trust shall procure that the Administrator provides Old Mutual with
written notice of such valuation.
7.5 The maximum number of shares in the OMEGA Fund available in the Initial
Offering shall be determined by dividing the value of the assets of the
Master Trust determined pursuant to clause 7.4 (rounded down to the
nearest 100) by 100.
7.6 The maximum number of shares in the SAGA Fund available in the Initial
Offering shall be determined by dividing the value of the assets of the
Master Trust determined pursuant to clause 7.4 (rounded down to the
nearest 50) by 50.
8
<PAGE> 11
8 ESTABLISHMENT OF THE OMEGA FUND
8.1 The OMEGA Fund shall (a) prior to 10.00 a.m. (US Eastern time) on the
Initial Closing Date apply for an interest in the Master Trust of an
amount in US dollars equal to the aggregate amount received by the
OMEGA Fund in respect of the Initial Offering by 9.30 a.m. (US Eastern
time) on the Initial Closing Date; and (b) on the Initial Closing Date
apply the proceeds of the Initial Offering received by the OMEGA Fund
(without deduction or withholding) in making a capital contribution to
the Master Trust. The proportionate interest in the Master Trust
obtained by the OMEGA Fund by virtue of such capital contribution shall
be determined on the basis of the valuation carried out pursuant to
clause 7.4.
8.2 On receipt of the capital contribution from the OMEGA Fund, the Master
Trust shall with effect from the Initial Closing Date reduce the Book
Capital Account balance of OMB by an amount equal to that capital
contribution and shall within 7 days of such reduction pay to OMB an
amount in US dollars equal to that capital contribution.
9 ESTABLISHMENT OF THE SAGA FUND
9.1 The SAGA Fund shall (a) prior to 10.00 a.m. (US Eastern time) on the
Initial Closing Date apply for an interest in the Master Trust of an
amount in US dollars equal to the aggregate amount received by the SAGA
Fund in respect of the Initial Offering by 9.30 a.m. (US Eastern time)
on the Initial Closing Date; and (b) on the date of Admission apply the
proceeds of the Initial Offering received by the SAGA Fund (without
deduction or withholding) in making a capital contribution to the
Master Trust. The proportionate interest in the Master Trust obtained
by the SAGA Fund by virtue of such capital contribution shall be
determined on the basis of the valuation carried out pursuant to clause
7.4.
9.2 On receipt of the capital contribution from the SAGA Fund, the Master
Trust shall with effect from the date of Admission reduce the Book
Capital Account balance of OMB by an amount equal to that capital
contribution and shall within 7 days of such reduction pay to OMB an
amount in US dollars equal to that capital contribution.
10 EQUALISATION PAYMENT TO OMB
At 10.00 a.m. (United Kingdom time) on 13th November 1995 the Master
Trust shall become liable to pay to OMB an amount equal to 0.25% of the
value of the interest in the Master Trust which OMB retains or will
retain following the reductions in its Book Capital Account balance
made or to be made pursuant to clause 8.2 and 9.2.
9
<PAGE> 12
11 FURTHER ISSUES OF SHARES
If, on any Business Day when OMB is the holder of a beneficial interest
in the Master Trust, the aggregate of any capital contributions made to
the Master Trust by the OMEGA Fund and the SAGA Fund exceed the
aggregate of any capital withdrawals from the Master Trust made by the
OMEGA Fund and the SAGA Fund, the Master Trust shall procure that the
Administrator notifies OMB of the amount of such excess (the
"Contribution Excess") on such Business Day. OMB hereby submits a
standing request to the Master Trust that OMB's interest in the Master
Trust be reduced with effect from that Business Day by a capital
withdrawal of the lesser of the value of OMB's interest in the Master
Trust on that Business Day and the Contribution Excess, provided that
in no case shall OMB's Book Capital Account balance be reduced to less
than US$100.
12 RING FENCING OF MASTER TRUST AND GLOBAL FUND AND LIQUIDITY FACILITY
12.1 OMB agrees with each of the Funds:
(a) not to make any withdrawal from the Master Trust except
pursuant to clauses 8.2, 9.2, 11 or 15.4 or following the
termination or dissolution of the Master Trust;
(b) to apply the proceeds of any withdrawal from the Master Trust
made pursuant to clause 8.2, 9.2 or 11 in subscribing at net
asset value for shares in the Global Fund,
save that this clause 12.1 will not apply to any withdrawls
made by OMB from the Master Trust in respect of income or
realised capital gains.
12.2 OMB agrees with each of the Funds:
(a) not to redeem shares in the Global Fund or to receive any form
of income or capital distribution from the Global Fund except
for (i) redemptions made to comply with OMB's obligations
under clause 12.3 and (ii) dividend distributions made by the
Global Fund to OMB which comply with clause 12.5(g);
(b) to apply the proceeds of any redemption of shares in the
Global Fund in making capital contributions to the Master
Trust.
12.3 OMB undertakes to each of the Funds to apply, on request by or on
behalf of the Master Trust (which may be a standing request), the
amount to which OMB is entitled on the redemption of shares in the
Global Fund in making capital contributions to the Master Trust in US
dollars of an amount equal to that required by the Master Trust to fund
capital withdrawals requested on any Business Day by the OMEGA Fund or
the SAGA Fund (to the extent such
10
<PAGE> 13
capital withdrawals are not offset on such Business Day (the "relevant
Business Day") by capital contributions to the Master Trust by the
OMEGA Fund or the SAGA Fund).
12.4 OMB shall comply with its obligations under clause 12.3 as soon as is
practicable and in any event within 3 Business Days of the relevant
Business Day.
12.5 Old Mutual and OMB agree to procure that, without the prior written
consent of the Master Trust, the OMEGA Fund and the SAGA Fund:
(a) OMB remains the sole beneficial owner of shares in the Global
Fund;
(b) the management or other fees payable by the Global Fund do not
exceed those referred to in the Global Fund Prospectus;
(c) OMB does not borrow money of an amount exceeding US$1,000,000;
(d) the Global Fund does not incur borrowings of an amount
exceeding 5% of its net assets provided that, for this
purpose, "borrowings" shall not include short term borrowing
to fund redemptions;
(e) the investment objective and policies of the Global Fund do
not change materially from those described in the Global Fund
Prospectus and are complied with by the Global Fund;
(f) the Global Fund does not go into voluntary liquidation,
reorganise, reduce or repurchase its share capital or make any
form of capital distribution;
(g) in any calendar year, the amount per share distributed by the
Global Fund does not exceed 10 per cent. of its net asset
value per share at the end of that calendar year provided that
this restriction shall not apply to distributions made in
order to enable Old Mutual to ensure compliance with the
requirements of the South African Reserve Bank;
(h) the Global Fund does not dispose of its assets other than for
a fair value on arms' length terms.
12.6 The obligations of OMB under clause 12.3 do not apply for any period
during which the SAGA Fund and the OMEGA Fund have suspended or the
Master Trust has suspended the calculation of net asset value.
11
<PAGE> 14
13 REDEMPTION FEE AND MANAGEMENT FEE REBATE
13.1 For so long as OMB's obligations under clause 12 continue and are
complied with:
(a) the OMEGA Fund shall pay to OMB an amount equal to 1.75 per
cent. of the amount which becomes payable by the OMEGA Fund to
a redeeming shareholder on the redemption of shares of
beneficial interest in the OMEGA Fund (without, for the
purposes of this calculation, deducting any redemption fee
charged by the OMEGA Fund);
(b) the SAGA Fund shall pay to OMB an amount equal to 1.75 per
cent. of the amount which becomes payable by the SAGA Fund to a
redeeming shareholder on the redemption of shares in the SAGA
Fund (without, for the purposes of this calculation, deducting
any redemption fee charged by the SAGA Fund).
13.2 The amounts referred to in clause 13.1 shall be paid to OMB within 7
days of the date of the relevant redemption.
13.3 No amount shall be payable to OMB under clause 13.1(b) in respect of a
redemption of shares by the SAGA Fund pursuant to bye-law 10(7) of its
Bye-laws.
13.4 Following a termination of OMB's obligations under clause 12, any
redemption fee collected by the SAGA Fund or the OMEGA Fund shall be
paid to the Master Trust.
13.5 OMAM undertakes to rebate a portion of the Management Fee to the Master
Trust or to reduce the Management Fee accepted by OMAM (so as to allow
the Master Trust to make compensatory payments to the OMEGA Fund and/or
the SAGA Fund) so that the ordinary operating expenses accrued for by
each of the OMEGA Fund and the SAGA Fund do not exceed 1.00% per annum
of the average of the daily net assets of such Funds during any month
(or part of a month) for which the Management Fee is payable. Ordinary
operating expenses includes, without limitation, the Management Fee and
administration and custody fees and expenses but does not include (a)
extraordinary expenses (such as the cost of litigation), (b) placement
fees and amounts payable to OMB under clause 8.2, 9.2, 10 or 11, (c)
sales charges on shares in the OMEGA Fund or the SAGA Fund, (d)
brokerage expenses or (e) the redemption fee due to OMB under clause
13.1. If any dispute shall arise as to the amount of the rebate or
reduction of the Management Fee or as to what constitutes ordinary
operating expenses the matter shall be referred to the auditors of the
Master Trust for the time being whose determination shall be final and
binding, who shall act as experts not arbitrators and whose costs shall
be borne equally by the Master Trust and Old Mutual.
12
<PAGE> 15
14 TERMINATION
14.1 OMB's and Old Mutual's obligations under clause 11 and clause 12 shall
terminate with effect from 120 days after the service of written notice
by OMB on the holders of shares in the SAGA Fund and the OMEGA Fund
notifying them of the termination of the liquidity facility (and so
that requests received by OMB from the Master Trust under clause 12.3
on or before that 120th day shall be complied with by OMB pursuant to
that clause). OMAM's obligations under clause 13.5 shall terminate with
effect from 120 days after the service of written notice by OMAM on the
holders of shares in the SAGA Fund and the OMEGA Fund notifying them of
the termination of the undertaking in that clause. The Bye-laws of the
SAGA Fund and the By-laws of the OMEGA Fund shall apply for the
purposes of determining the effective date for the service of such
notices.
14.2 OMB may terminate OMB's and Old Mutual's obligations under clause 11
and clause 12 with immediate effect on service of written notice on the
Master Trust (specifying this clause of this Agreement) at any time
after OMAM ceases to be investment adviser to the Master Trust (other
than by reason of the voluntary termination of the Advisory Agreement
by OMAM).
14.3 OMAM may terminate its obligations under clause 13.5 with immediate
effect on service of written notice on the Master Trust (specifying
this clause of this Agreement) at any time after OMAM ceases to be the
sole investment adviser to the Master Trust.
15 CONDITIONS PRECEDENT
15.1 The transfer of the Portfolio pursuant to clause 2 and the transfer of
the Global Fund Portfolio pursuant to clause 3 shall not be subject to
any conditions precedent.
15.2 Clause 8, and the request submitted by OMB pursuant to clause 7.1, are
conditional on the US Placing Agreement becoming fully unconditional.
15.3 Clause 9, and the request submitted by OMB pursuant to clause 7.2, are
conditional on the Non-US Placing Agreement becoming fully
unconditional.
15.4 If the Initial Offering of the OMEGA Fund and/or the Initial Offering
of the SAGA Fund shall be terminated, OMB may make a capital withdrawal
or withdrawals from the Master Trust in accordance with the Declaration
of Trust so as to fund any expenses of the Initial Offering for which
Old Mutual is liable.
15.5 If, following Completion, neither clause 15.2 nor clause 15.3 become
unconditional on or before 10th December 1995 each party to this
Agreement (other than Old Mutual), if requested by Old Mutual, agrees
to take all lawful steps within its power for its dissolution or
winding up.
13
<PAGE> 16
16 NAME
In the event that OMAM ceases for any reason to serve as investment
adviser of the Master Trust:
(a) the OMEGA Fund shall forthwith on request by Old Mutual change
the OMEGA Fund's name so that it does not include the words
"Old Mutual" or "OMEGA" or any variation or combination
thereof;
(b) the SAGA Fund shall forthwith on request by Old Mutual procure
that a general meeting of the SAGA Fund is convened and held
within a period of 30 days of such request at which a
resolution is proposed for the change in the name of the SAGA
Fund to one not including the words "Old Mutual" or "SAGA" or
any variation or combination thereof. On and with effect from
the expiry of such 30 day period, pending such change of name
becoming effective, the SAGA Fund shall pay to Old Mutual a
licence fee for the use of those words, monthly in advance, of
an amount equal to 0.01 per cent. of the SAGA Fund's gross
asset value on the date of such request.
17 NOTICES
17.1 Any notice or demand given under this Agreement shall be in writing
and, without prejudice to any other effective mode of making the same,
be deemed to have been properly served if delivered or sent by letter,
telex or telefax:
(a) if to Old Mutual, to the registered office for the time being
of Old Mutual (attention M.J. Levett) (fax no (2721) 509 3899)
(or to such other address, person or number as may be notified
by Old Mutual to the Master Trust, the OMEGA Fund and the SAGA
Fund);
(b) if to OMB, to the registered office for the time being of OMB
(attention W. Langley) (fax no (809) 292 4720) (or to such
other address, person or number as may be notified by OMB to
the Master Trust, the OMEGA Fund and the SAGA Fund);
(c) if to the Master Trust, to its principal office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the Master Trust to the other parties);
(d) if to the OMEGA Fund, to its principal office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the OMEGA Fund to the other parties);
14
<PAGE> 17
(e) if to the SAGA Fund, to its registered office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the SAGA Fund to the other parties).
17.2 Any such notice shall be deemed to be served (in the case of a letter)
when delivered and (in the case of a telefax) when transmitted.
17.3 Any notice to be served on the Master Trust or the OMEGA Fund shall be
copied to Bingham, Dana & Gould of 150 Federal Street, Boston,
Massachusetts (or any replacement address) attention Roger Joseph.
18 GENERAL
18.1 Any time, date or period mentioned in this Agreement may be varied or
extended by agreement between Old Mutual and the Master Trust but not
to beyond 10th December 1995.
18.2 This Agreement sets forth the entire agreement and understanding
between the parties in connection with the matters described and
provided for in this Agreement.
18.3 Neither this Agreement nor any of the rights of the parties may be
assigned in whole or in part by any party except with the prior written
consent of each other party.
18.4 Old Mutual shall procure that each of OMB and OMAM complies with its
obligations under this Agreement.
18.5 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the trustees or officers of the Master Trust
individually.
18.6 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but, as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
18.7 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
15
<PAGE> 18
19 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to any
choice of law principles that would require application of the laws of
any other jurisdiction. The parties hereto absolutely and irrevocably
consent to the jurisdiction of the courts of the Commonwealth of
Massachusetts and of any Federal court located in said Commonwealth in
connection with any actions or proceedings arising out of or relating
to this Agreement and waive any objection to the convenience of any
such court.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
16
<PAGE> 19
SCHEDULE 1
PORTFOLIO
<TABLE>
<CAPTION>
Name of Company Type of security % holding to represent
- --------------- ---------------- ----------------------
of Portfolio (rounded
---------------------
to nearest 0.1%)
----------------
<S> <C> <C>
Anglo American Corporation of SA Ltd. Ordinary Shares 5.0
Barlow Ltd. Ordinary Shares 5.0
C.G. Smith Ltd. Ordinary Shares 5.0
De Beers Consolidated Mines Ltd. Ordinary Shares 5.0
Nedcor Ltd. Ordinary Shares 5.0
South African Breweries Ltd. Ordinary Shares 5.0
Safmarine and Rennies Holdings Ltd. Ordinary Shares 5.0
Standard Bank Investment Corp. Ltd. Ordinary Shares 5.0
Sasol Ltd. Ordinary Shares 4.8
Rembrandt Group Ltd. Ordinary Shares 4.3
Anglovaal Ltd. "N" Ordinary Shares 4.2
Wooltru Ltd. "N" Ordinary Shares 3.4
Gencor Ltd. Ordinary Shares 3.0
Anglovaal Industries Ltd. Ordinary Shares 2.8
Reunert Ltd. Ordinary Shares 2.4
Gold Fields of SA Ltd. Ordinary Shares 2.2
Lydenburg Platinum Ltd. Ordinary Shares 2.0
Sappi Ltd. Ordinary Shares 1.9
Rand Mines Ltd. Ordinary Shares 1.9
Iscor Ltd. Ordinary Shares 1.8
Trencor Ltd. Ordinary Shares 1.6
Foschini Ltd. Ordinary Shares 1.6
Anglo American Coal Corp. Ltd. Ordinary Shares 1.6
Johnnies Industrial Corporation Ltd. Ordinary Shares 1.5
African Oxygen Ltd. Ordinary Shares 1.1
JCI Ltd. Ordinary Shares 1.0
Anglo American Platinum Corporation Ltd. Ordinary Shares 1.0
Driefontein Consolidated Ltd. Ordinary Shares 0.8
Genbel Investments Ltd. Ordinary Shares 0.8
Liberty Life Association of Africa Ltd. Ordinary Shares 0.7
Middle Witwatersrand (Western Areas) Ltd. Ordinary Shares 0.7
Engen Ltd. Ordinary Shares 0.7
Samancor Ltd. Ordinary Shares 0.7
J.D. Group Ltd. Ordinary Shares 0.7
C.G. Smith Foods Ltd. Ordinary Shares 0.7
Impala Platinum Holdings Ltd. Ordinary Shares 0.7
Anglo Alpha Ltd. Ordinary Shares 0.6
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C> <C>
Bidvest Group Ltd. Convertible Debenture Stock 0.6
AECI Ltd. Ordinary Shares 0.6
Mutual & Federal Insurance Co. Ltd. Ordinary Shares 0.6
Murray & Roberts Holdings Ltd. Ordinary Shares 0.5
Tiger Oats Ltd. Ordinary Shares 0.5
Allied Electronics Corporation Ltd. Ordinary Shares 0.5
Nampak Ltd. Ordinary Shares 0.4
Omni Media Corporation Ltd. Ordinary Shares 0.4
Investec Holdings Ltd Ordinary Shares 0.4
Everite Holdings Ltd. Ordinary Shares 0.4
Malbak Ltd. Ordinary Shares 0.4
Sentrachem Ltd. Ordinary Shares 0.4
Imperial Holdings Ltd. Ordinary Shares 0.4
Metropolitan Life Ltd. Ordinary Shares 0.4
Associated Ore and Metal Corp. Ltd. Ordinary Shares 0.3
Amalgamated Banks of SA Ltd. Ordinary Shares 0.3
IBM South Africa Group Ltd. Ordinary Shares 0.3
Grintek Ltd. Ordinary Shares 0.3
Southvaal Holdings Ltd. Ordinary Shares 0.3
Vaal Reefs Exploration and Mining Co. Ltd. Ordinary Shares 0.2
Forward Corporation Ltd. Ordinary Shares 0.2
First National Bank Holdings Ltd. Ordinary Shares 0.2
Independent Newspapers Holdings Ltd. Ordinary Shares 0.2
</TABLE>
18
<PAGE> 21
SCHEDULE 2
GLOBAL FUND PORTFOLIO
<TABLE>
<CAPTION>
Name of Company Type of security % holding to represent of
- --------------- ---------------- -------------------------
Global Assets Portfolio
-----------------------
<S> <C> <C>
Anglo American Corporation of SA Ltd. Ordinary Shares 8.00
De Beers Consolidated Mines Ltd. Ordinary Shares 8.00
South African Breweries Ltd. Ordinary Shares 8.00
Barlow Ltd. Ordinary Shares 8.00
Gencor Ltd. Ordinary Shares 5.00
Liberty Life Association of Africa Ltd. Ordinary Shares 5.00
Anglovaal Ltd. Ordinary Shares 5.00
Genbel Investments Ltd. Ordinary Shares 5.00
Sasol Ltd. 8.5% Convertible Debentures 4.00
Anglovaal Industries Ltd. 5.5% Convertible Debentures 4.00
Tiger Oats Ltd. Ordinary Shares 4.00
Bidvest Group Ltd. Convertible Debentures 3.00
Imperial Holdings Ltd. Ordinary Shares 3.00
Trencor Ltd. 6% Convertible Debentures 3.00
Nedcor Ltd. Ordinary shares 2.00
Gold Fields of SA Ltd. Ordinary Shares 2.00
JCI Ltd. Ordinary Shares 2.00
Lyndenburg Platinum Ltd. Ordinary Shares 2.00
Johnnies Industrial Corporation Ltd. Ordinary Shares 2.00
Sappi Ltd Ordinary Shares 2.00
Safmarine and Rennies Holdings Ltd. Ordinary Shares 1.50
Rand Mines Ltd. Ordinary Shares 1.50
Anglo American Coal Corp. Ltd. Ordinary Shares 1.50
Rembrandt Group Ltd. Ordinary Shares 1.00
Wooltru Ltd. "N" Ordinary Shares 0.60
Reunert Ltd. Ordinary Shares 1.00
C.G. Smith Foods Ltd. Ordinary Shares 1.00
Standard Bank Investment Corp. Ltd. Ordinary Shares 1.00
Iscor Ltd. Ordinary Shares 1.00
Vaal Reefs Exploration and Mining Co. Ltd. Ordinary Shares 1.00
Middle Witwatersrand (Western Areas) Ltd. Ordinary Shares 1.00
Richemont Ltd. Ordinary Shares 1.00
Impala Platinum Holdings Ltd. Ordinary Shares 0.50
Fidelity Ltd. Convertible Loan stock 0.50
Citylodge Ltd. 11% Convertible Debentures 0.50
CNA Gallo Ltd. Ordinary Shares 0.40
</TABLE>
19
<PAGE> 22
SIGNED by MICHAEL LEVETT )
for and on behalf of )
SOUTH AFRICAN MUTUAL LIFE )
ASSURANCE SOCIETY )
in the presence of: ANDREW MITCHELL ) /s/ MICHAEL LEVETT
------------------
SIGNED by MICHAEL LEVETT )
for and on behalf of )
OLD MUTUAL FUND HOLDINGS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL ) /s/ MICHAEL LEVETT
------------------
/
SIGNED by WILLIAM BOYAN )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) /s/ WILLIAM BOYAN
-----------------
SIGNED by KENNETH WILLIAMS )
for and on behalf of )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) /s/ KENNETH WILLIAMS
--------------------
20
<PAGE> 23
SIGNED by MICHAEL DREW )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
------------
SIGNED by WILLIAM LANGLEY )
for and on behalf of )
OLD MUTUAL GLOBAL ASSETS )
FUND LIMITED )
in the presence of: ANDREW MITHCELLL ) WILLILAM LANGLEY
----------------
SIGNED by WILLIAM LANGLEY )
for and on behalf of )
OLD MUTUAL ASSET MANAGERS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL ) WILLIAM LANGLEY
---------------
21
<PAGE> 1
EXHIBIT 9(d)
CONFORMED COPY
DATED 23rd OCTOBER 1995
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (2)
- and -
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (3)
-----------------------------------
INVESTMENT RESTRICTIONS UNDERTAKING
-----------------------------------
Norton Rose
London
<PAGE> 2
THIS AGREEMENT is made on 23RD October 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(2) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND"); and
(3) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND").
WHEREAS:
(A) application has been made for shares in the SAGA Fund to be admitted to
listing on the Irish Stock Exchange;
(B) this Agreement sets out undertakings of the Master Trust as to changes
in its investment objective, policies and restrictions given in
connection with that application.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the following
expressions have the following meanings:
"DECLARATION OF TRUST" means the declaration of trust of the OMEGA Fund
dated as of 1st September 1995
"HOLDERS" means holders of beneficial interest in the OMEGA Fund
"PLACEMENT MEMORANDUM" means the placement memorandum relating to the
SAGA Fund dated 1st November 1995
"SHAREHOLDERS" means the registered holders of shares in the SAGA Fund.
1.2 The headings to clauses and schedules shall not affect their
interpretation.
1.3 Reference to clauses and schedules are reference to clauses of and
schedules to this Agreement.
1
<PAGE> 3
2 MASTER TRUST UNDERTAKINGS
2.1 The Master Trust hereby irrevocably undertakes to the OMEGA Fund and
the SAGA Fund that:
(a) the Master Trust will not make any material change in its
investment objective described under the heading "Investment
Objective" in the Placement Memorandum or to its investment
policies described under the heading "Investment Policies" in
the Placement Memorandum except in unforeseen circumstances and
with the approval of a majority vote of Shareholders and a
majority vote of Holders;
(b) the Master Trust will comply with the investment restrictions
set out in the schedule and will not change those restrictions
for so long as shares in the SAGA Fund are listed on the Irish
Stock Exchange.
2.2 If the Master Trust wishes to effect a change requiring approval under
clause 2.1(a), the SAGA Fund and the OMEGA Fund agree to procure the
holding of a meeting of Shareholders and Holders respectively at which
a resolution is put seeking such approval.
3 GENERAL
3.1 This Agreement is conditional on the SAGA Fund acquiring an interest in
the Master Trust and on shares in the SAGA Fund being admitted to
listing on the Irish Stock Exchange.
3.2 This Agreement shall cease to have effect on the earlier of the SAGA
Fund ceasing to hold an interest in the Master Trust and the shares in
the SAGA Fund ceasing to be listed on the Irish Stock Exchange.
3.3 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the trustees or officers of the Master Trust
individually.
3.4 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
3.5 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
4 GOVERNING LAW
2
<PAGE> 4
This Agreement shall be governed by and construed in accordance with
English law and each of the parties hereby submits to the non-exclusive
jurisdiction of the High Court of Justice in England.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
SCHEDULE 1
IRISH STOCK EXCHANGE INVESTMENT RESTRICTIONS
(i) No more than 20% of the gross assets of the Master Trust may be
lent to or invested in the securities of any one issuer;
(ii) the Master Trust will not take legal or management control of
investments in its portfolio;
(iii) not more than 10% of the gross assets of the Master Trust will
be invested in physical commodities;
(iv) not more than 10% of the gross assets of the Master Trust will
be invested in real estate;
(v) the Master Trust will not engage in any property development
activity;
(vi) the Master Trust will adhere to the principle of
diversification in relation to any derivative investments;
(vii) the Master Trust will not make any investment which would
expose it to unlimited liability, including participation in an
unlimited partnership;
(viii) the Master Trust will only enter into underwriting or
sub-underwriting contracts to a limited extent and incidental
to the investment activities of the Master Trust; and
(ix) the Master Trust will not have a net exposure to a single
financing counterparty that exceeds 20% of its gross assets.
3
<PAGE> 5
SIGNED by WILLIAM BOYAN )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) WILLIAM BOYAN
SIGNED by KENNETH WILLIAMS )
for and on behalf of )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) KENNETH WILLIAMS
SIGNED by MICHAEL DREW )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
4
<PAGE> 1
EXHIBIT 9(e)
November 8, 1995
Old Mutual Equity Growth Assets South
Africa Fund
Richmond House
12 Par-la-Ville Road
Hamilton, Bermuda
Ladies and Gentlemen:
The undersigned has today purchased 1,000 shares (the "Seed Money Shares")
of beneficial interest of Old Mutual Equity Growth Assets South Africa Fund, a
Massachusetts business trust (the "OMEGA South Africa Fund"), for a purchase
price of U.S.$100,000, which has been designated as "seed capital" for purposes
of Section 14(a) of the Investment Company Act of 1940, as amended.
This will confirm that, if the undersigned redeems any Seed Money Shares,
the proceeds of such redemption shall be reduced by a pro rata portion of the
then unamortized organization expenses of the OMEGA South Africa Fund, such pro
rata portion to be determined by multiplying the unamortized organization
expenses by a fraction the numerator of which is the number of Seed Money Shares
to be redeemed and the denominator of which is the total number of Seed Money
Shares outstanding at the time of the redemption. Unless otherwise specified by
the undersigned, any redemption of shares of beneficial interest in the OMEGA
South Africa Fund shall, to the fullest extent possible, be presumed to apply to
shares other than the Seed Money Shares.
Very truly yours,
OLD MUTUAL INVESTMENT
ADVISERS, INC.
By:
------------------
William Langley
Director
<PAGE> 1
EXHIBIT 9(f)
AGREEMENT RELATING TO INSURANCE
THIS AGREEMENT RELATING TO INSURANCE made as of November __, 1995 (this
"Agreement") by and among OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts
trust (the "Master Trust"), OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a
Massachusetts business trust (the "OMEGA Fund"), OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED, a Bermuda mutual fund (the "SAGA Fund"), and OLD MUTUAL
ASSET MANAGERS (BERMUDA) LIMITED, a Bermuda company (the "Adviser");
W I T N E S S E T H:
WHEREAS, the Master Trust invests in a portfolio consisting primarily
of South African securities;
WHEREAS, each of the OMEGA Fund and the SAGA Fund invests substantially
all of its investable assets in the Master Trust;
WHEREAS, the Adviser acts as investment adviser to the Master Trust and
may, from time to time hereafter, act in the same capacity with respect to other
clients, including other investment companies;
WHEREAS, all the parties hereto are named insureds under an errors and
omissions liability policy (as it may be amended and/or restated from time to
time, collectively the "E&O Policy") issued by Gulf Insurance Company, or such
other insurers as from time to time may provide the E&O Policy (the "E&O
Insurer");
WHEREAS, the Master Trust, the OMEGA Fund, and the SAGA Fund
(collectively, the "Funds" or the "Fund Parties") are named insureds under a
fidelity bond (as it may be amended and/or restated from time to time,
collectively the "Bond", and collectively with the E&O Policy, the "Policy")
issued by Gulf Insurance Company, or such other insurers as from time to time
may provide the Bond (together with the E&O Insurer as appropriate, the
"Insurer"); and
WHEREAS, the parties desire to establish (a) the criteria by which the
premium for the Policy shall be allocated among the parties and (b) the criteria
by which claims in excess of the applicable coverage limits of the Policy shall
be allocated among the parties.
<PAGE> 2
NOW, THEREFORE, it is agreed as follows:
1. ALLOCATION OF PREMIUMS.
(a) One half of the annual premium for each policy year with respect to
the E&O Policy shall be borne by the Adviser and the other half of such annual
premium (the "Funds Premium") shall be borne by the Funds.
(b) Each of the Funds shall for each policy year pay a portion of the
annual premium for the Bond and the Funds Premium that shall be determined as
follows: (i) for the initial policy year such premiums shall be allocated fifty
percent (50%) to the Master Trust and twenty-five percent (25%) to each of the
OMEGA Fund and the SAGA Fund, and (ii) for each following policy year such
premiums shall be allocated proportionately according to the respective net
asset value of each of the Funds on the last business day of the next preceding
policy year.
(c) Promptly after the determination of the annual Policy premium for
each policy year, the Adviser shall prepare a schedule (the "Allocation
Schedule") setting forth in reasonable detail the proposed allocation of the
premium for such year in accordance with this Section 1. The Adviser shall
promptly provide the Allocation Schedule to the administrator of each of the
Funds for review. If within ninety (90) days of provision of the Allocation
Schedule to the administrator of each of the Funds, none of the Funds has
objected to the Allocation Schedule, the allocation of the premium set forth
therein shall, absent manifest error, be conclusive and binding among the
parties.
2. ALLOCATION OF COVERAGE.
(a) The Adviser shall not with respect to any policy year collect
insurance payments under the E&O Policy (whether in respect of related or
unrelated claims) totaling more than fifty percent (50%) of the policy limit for
such policy year of the E&O Policy.
(b) In the event that the claims of loss of two or more insureds under
the E&O Policy are so related that the Insurer is entitled to assert that the
claims must be aggregated with the result that the claims exceed the applicable
coverage limits for such claims, or in the event that at any time the claims of
two or more insureds under the E&O Policy for any other reason exceed the
applicable coverage limits for such claims, the
-2-
<PAGE> 3
following rules for determining, as among such insureds, the priority of
satisfaction of the claims under the E&O Policy shall apply:
(i) All claims of the Adviser which have been duly proved and
established under the E&O Policy shall be satisfied in full
subject to the limit under Section 2(a). All claims of the
Funds which have been duly proved and established under the
E&O Policy shall be satisfied in full subject (as to not more
than fifty percent (50%) of the policy limit for the current
policy year) to any established or pending claims of the
Adviser, provided that, if any such pending claim is
subsequently disallowed, any claims of the Funds subject to
such pending claim shall, if permitted under the terms of the
E&O Policy, thereupon be reinstated.
(ii) If the claims of the Funds which have been duly proved and
established under the E&O Policy exceed the coverage of the
E&O Policy available to the Funds, the insurance proceeds
shall be applied to those claims, subject to any requirements
of the 1940 Act or other applicable laws or regulations, on a
ratable basis according to the allocation of premiums among
the Fund Parties as provided in Section 1 of this Agreement
with respect to the current policy year.
(c) In no case shall any Fund with respect to any policy year collect
payments under the Bond (whether in respect of related or unrelated claims)
totaling more than its ratable share of the coverage under the Bond determined
according to the allocation of premiums among the Fund Parties as provided in
Section 1 of this Agreement with respect to the current policy year. In the
event that the claims of loss of two or more Funds under the Bond are so related
that the Insurer is entitled to assert that the claims must be aggregated with
the result that the claims exceed the applicable coverage limits for such
claims, or in the event that at any time the claims of two or more Funds under
the Bond for any other reason exceed the applicable coverage limits for such
claims, the following rules for determining, as among such insureds, the
priority of satisfaction of the claims under the Bond shall apply:
(i) first, to each Fund such that it receives an amount at least
equal to the amount that it would have received had it
maintained a separate fidelity bond with the minimum coverage
required by paragraph (d)(1) of Rule 17g-1 under the 1940 Act
(or, if such Fund is not registered under the
-3-
<PAGE> 4
1940 Act, the amount that would be required were such Fund so
registered); and
(ii) second, subject to any requirements of the 1940 Act or other
applicable laws or regulations, on a ratable basis according
to the allocation of premiums among the Fund Parties as
provided in Section 1 of this Agreement with respect to the
current policy year.
3. RENEWAL AND TERMINATION.
(a) The Adviser shall at least thirty (30) days prior to the end of
each policy year of each of the E&O Policy and the Bond make a proposal to the
Funds regarding insurance arrangements for the next policy year with respect
thereto (including the coverage amount, the quoted premium, and the proposed
Insurer).
(b) Any party to this Agreement that is party to either the E&O Policy
or the Bond may cease to participate in the E&O Policy or the Bond, as the case
may be, and accordingly cease to be bound by the terms of this Agreement with
respect thereto, with effect from the end of any policy year applicable to the
E&O Policy or the Bond, as the case may be, on the giving of written notice to
each other party to this Agreement not less than fifteen (15) days prior to the
end of such policy year. Such notice shall have no effect with respect to the
allocation of premiums or coverage payable under or in respect of insurance in
force prior to the end of such policy year.
4. PRIOR AGREEMENTS. This Agreement hereby supersedes all prior
or contemporaneous agreements among the parties hereto (or any two or more of
them) (which other agreements may include other parties) relating to the subject
matter hereof.
5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
6. AMENDMENTS. This Agreement may be amended or modified with the
prior written consent of the parties hereto.
7. HEADINGS. The section references in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
-4-
<PAGE> 5
8. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original and all of which shall constitute one and the
same instrument. In proving this Agreement it shall not be necessary to submit
more than one counterpart executed by each party hereto.
9. PROTECTION OF TRUSTEES.
(a) This Agreement is executed by the Trustees of the Master Trust
not individually, but as Trustees under the Declaration of Trust of the Master
Trust dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such Trustees individually.
(b) This Agreement is executed by the Trustees of the OMEGA Fund
not individually, but as Trustees under the Declaration of Trust of the OMEGA
Fund dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such Trustees or on the shareholders of the OMEGA Fund
individually, but bind only the trust estate of the OMEGA Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their officers hereunto duly authorized all
as of the day and year first above written.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: _______________________________
Michael John Levett
Chairman of the Board of Trustees
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
By: _______________________________
Michael John Levett
Chairman of the Board of Trustees
-5-
<PAGE> 6
OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED
By: _______________________________
Michael John Levett
Chairman of the Board of Directors
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
By: _______________________________
William Langley
President
-6-
<PAGE> 1
EXHIBIT 15
PLACEMENT PLAN
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
WHEREAS, OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a business trust
organized and existing under the laws of the Commonwealth of Massachusetts (the
"Fund"), engages in business as an open-end management investment company and is
or is to be registered as such under the United States Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, the Fund is authorized to issue an unlimited number of shares of
beneficial interest ("Shares"); and
WHEREAS, the Fund invests (or is to invest) all of its investable assets in
the Old Mutual South Africa Equity Trust, a Massachusetts trust (the "Master
Trust"); and
WHEREAS, the trustees of the Fund as a whole, and the trustees who are not
interested persons of the Fund (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Fund and its
investors, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Fund hereby adopts this Plan in accordance with Rule
12b-1 under the 1940 Act, on the following terms and conditions:
1. Placement and Servicing Activities. Subject to the supervision of the
trustees of the Fund, the Fund may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Shares, which activities
may include, but are not limited to, the following: (a) employment of (i) S.G.
Warburg & Co., Inc. ("Warburg") as placement agent to the Fund for the initial
offering of Shares, (ii) Warburg and/or one or more other brokerage firms as
placement agents for further offerings of Shares and (iii) International Finance
Corporation as
<PAGE> 2
-2-
structuring agent to the Fund; (b) payments to the Fund's placement agents and
structuring agent and to securities dealers and others in respect of the sale of
Shares; (c) payments to the Fund's placement agents, structuring agent and other
parties of reimbursement for or fees in respect of marketing expenses incurred
in connection with the placement of Shares; (d) payment of compensation to and
expenses of personnel (including personnel of organizations with which the Fund
has entered into agreements related to this Plan) who engage in or support
placement of Shares or who render investor support services not otherwise
provided by the Fund's transfer agent, administrator, or custodian, including
but not limited to, answering inquiries regarding the Fund, processing investor
transactions, providing personal services and/or the maintenance of investor
accounts, providing other investor liaison services, responding to investor
inquiries, providing information on investments in Shares, and providing such
other investor services as the Fund may reasonably request; (e) formulation and
implementation of a private placement strategy for Shares in compliance with
Regulation D under the United States securities laws; (f) preparation, printing
and distribution of sales literature; (g) preparation, printing and distribution
of private placement memoranda and statements of additional information and
reports of the Fund for recipients other than existing investors in the Fund;
and (h) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Fund may, from time to time, deem
advisable. The Fund is authorized to engage in the activities listed above, and
in any other activities primarily intended to result in the sale of Shares,
either directly or through other persons with which the Fund has entered into
agreements related to this Plan.
2. Maximum Expenditures. The expenditures to be made by the Fund pursuant to
this Plan and the basis upon which payment of such expenditures will be made
shall be determined by the trustees of the Fund subject to the limitations of
this Section 2. The Fund may reimburse Old Mutual Asset Managers (Bermuda)
Limited, the investment adviser to the Master Trust (the "Adviser"), or another
party for certain marketing expenses incurred (or advanced to Warburg or others)
in the placement of Shares, provided the amount of such reimbursements in any
year will not exceed 0.05% of the average daily net assets of the Fund for such
year. The Fund may pay fees in connection with the placement of Shares as
determined by the Trustees, provided such fees for any year shall not, together
with any reimbursement of expenses under the next preceding sentence for such
year, exceed 0.05% of the average daily net assets of the Fund for such year.
<PAGE> 3
-3-
3. Term and Termination.
(a) This Plan shall become effective as of the date the registration
statement of the Fund is filed under the 1940 Act. Unless terminated as herein
provided, this Plan shall continue in effect for one year from the date hereof
and shall continue in effect for successive periods of one year thereafter, but
only so long as each such continuance is specifically approved by votes of a
majority of both (i) the trustees of the Fund and (ii) the Non-Interested
Trustees, cast at a meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time by a vote of a majority of the
Non-Interested Trustees or by a vote of a majority of the outstanding voting
securities of the Fund, as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase materially the
maximum expenditures permitted by Section 2 hereof unless such amendment is
approved by a vote of the majority of the outstanding voting securities of the
Fund, as defined in the 1940 Act, with respect to which a material increase in
the amount of expenditures is proposed, and no material amendment to this Plan
shall be made unless approved in the manner provided for annual renewal of this
Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect, the
selection and nomination of the Non-Interested Trustees of the Fund shall be
committed to the discretion of the disinterested trustees of the Fund (as
defined in the 1940 Act).
6. Quarterly Reports. The Treasurer of the Fund shall provide to the
trustees of the Fund and the trustees shall review quarterly a written report of
the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. Recordkeeping. The Fund shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Fund hereunder shall not
be binding upon any of the trustees, officers or investors in the Fund
personally, but shall bind only the assets and property of the Fund. The term
"Old Mutual Equity Growth Assets South Africa Fund" means
<PAGE> 4
-4-
and refers to the trustees from time to time serving under the Declaration of
Trust of the Fund, a copy of which is on file with the Secretary of State of the
Commonwealth of Massachusetts. This Plan has been authorized by the trustees,
acting as such and not individually, and such authorization by such trustees
shall not be deemed to have been made by any of them individually or to impose
any liability on any of them personally, but shall bind only the assets and
property of the Fund as provided in the Declaration of Trust.
<TABLE> <S> <C>
<ARTICLE> 6
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> NOV-8-1995
<PERIOD-END> NOV-8-1995
<EXCHANGE-RATE> 1
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 0
<ASSETS-OTHER> 100,000
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 100,000
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<OTHER-ITEMS-LIABILITIES> 0
<TOTAL-LIABILITIES> 0
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 100,000
<SHARES-COMMON-STOCK> 1,000
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<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,000
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,000
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
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<GROSS-ADVISORY-FEES> 0
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<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 100,000
<PER-SHARE-NAV-BEGIN> 100
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 100
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
