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As filed with the Securities and Exchange Commission on October 27, 1998
File No. 811-9136
SECURITIES AND EXCHANGE COMMISSION WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 4
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
22 CHURCH STREET, HAMILTON 11, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(441) 296-1201
MELANIE J. SAUNDERS
22 CHURCH STREET, HAMILTON 11, BERMUDA
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO: ROGER P. JOSEPH, BINGHAM DANA LLP,
150 FEDERAL STREET, BOSTON, MA 02110
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EXPLANATORY NOTE
Shares of beneficial interest in the Registrant are not registered under
the Securities Act of 1933, as amended (the "1933 Act"). Through August 17,
1998 the Registrant offered and sold its shares solely in private placement
transactions which did not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. On August 17, 1998 the Registrant terminated the
offering of its shares. This Registration Statement does not constitute an
offer to sell, or the solicitation of an offer to buy, any shares of beneficial
interest in the Registrant.
At a meeting held on August 17, 1998 the Board of Trustees of the
Registrant voted to liquidate the Registrant with effect from September 30,
1998, or such earlier date as may be approved on behalf of the Registrant. As
of September 18, 1998 all shares of the Registrant had been redeemed for cash.
As of September 23, 1998, the Registrant redeemed its entire interest in Old
Mutual South Africa Equity Trust, the registered investment company in which the
Registrant had previously invested all of its investable assets (the "Master
Trust"). On September 29, 1998 the Registrant applied to the Securities and
Exchange Commission on Form N-8F for an order declaring that the Registrant has
ceased to be an investment company under the Investment Company Act of 1940, as
amended (the "1940 Act").
On September 29, 1998 the Master Trust applied to the Securities and
Exchange Commission for an order declaring that the Master Trust has ceased to
be an investment company under the 1940 Act.
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Table Of Contents
Document Sections
Item 4. General Description of Registrant.
Item 5. Management of the Fund.
Item 6. Capital Stock and Other Securities.
Item 7. Purchase of Securities Being Offered.
Item 8. Redemption or Repurchase.
Item 9. Pending Legal Proceedings.
Item 10. Cover Page.
Item 11. Table of Contents.
Item 12. General Information and History.
Item 13. Investment Objective and Policies.
Item 14. Management of the Fund.
Item 15. Control Persons and Principal Holders of Securities.
Item 16. Investment Advisory and Other Services.
Item 17. Brokerage Allocation and Other Practices.
Item 18. Capital Stock and Other Securities.
Item 19. Purchase, Redemption and Pricing of Securities.
Item 20. Tax Status.
Item 21. Underwriters.
Item 22. Calculation of Performance Data.
Item 23. Financial Statements.
Item 24. Financial Statements and Exhibits.
Item 25. Persons Controlled by or under Common Control with Registrant.
Item 26. Number of Holders of Securities.
Item 27. Indemnification.
Item 28. Business and Other Connections of Investment Adviser.
Item 29. Principal Underwriters.
Item 30. Location of Accounts and Records.
Item 31. Management Services.
Item 32. Undertakings.
Exhibits
Exhibit 1(d)
Exhibit 9(k)
Exhibit 11(a)
Exhibit 11(b)
Exhibit 27
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Full Contents
Item 4. General Description of Registrant.
Item 5. Management of the Fund.
Item 6. Capital Stock and Other Securities.
Item 7. Purchase of Securities Being Offered.
Item 8. Redemption or Repurchase.
Item 9. Pending Legal Proceedings.
Item 10. Cover Page.
Item 11. Table of Contents.
Item 12. General Information and History.
Item 13. Investment Objective and Policies.
Item 14. Management of the Fund.
Item 15. Control Persons and Principal Holders of Securities.
Item 16. Investment Advisory and Other Services.
Item 17. Brokerage Allocation and Other Practices.
Item 18. Capital Stock and Other Securities.
Item 19. Purchase, Redemption and Pricing of Securities.
Item 20. Tax Status.
Item 21. Underwriters.
Item 22. Calculation of Performance Data.
Item 23. Financial Statements.
Item 24. Financial Statements and Exhibits.
Item 25. Persons Controlled by or under Common Control with Registrant.
Item 26. Number of Holders of Securities.
Item 27. Indemnification.
Item 28. Business and Other Connections of Investment Adviser.
Item 29. Principal Underwriters.
Item 30. Location of Accounts and Records.
Item 31. Management Services.
Item 32. Undertakings.
EXHIBIT INDEX
Exhibit 1(d)
Exhibit 9(k)
Exhibit 11
Exhibit 27
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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.
At a meeting held on August 17, 1998 the Board of Trustees of Old Mutual
Equity Growth Assets South Africa Fund (the "OMEGA South Africa Fund") voted to
liquidate the OMEGA South Africa Fund with effect from September 30, 1998, or
such earlier date as may be approved on behalf of the OMEGA South Africa Fund.
As of September 18, 1998 all shares of the OMEGA South Africa Fund had been
redeemed for cash. As of September 23, 1998, the OMEGA South Africa Fund
redeemed its entire interest in Old Mutual South Africa Equity Trust, the
registered investment company in which the OMEGA South Africa Fund had
previously invested all of its investable assets (the "Master Trust"). On
September 29, 1998 the OMEGA South Africa Fund applied to the Securities and
Exchange Commission on Form N-8F for an order declaring that the OMEGA South
Africa Fund has ceased to be an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
On September 29, 1998 the Master Trust applied to the Securities and
Exchange Commission for an order declaring that the Master Trust has ceased to
be an investment company under the 1940 Act.
Upon its liquidation, the OMEGA South Africa Fund ceased to pursue its
investment objective. For information concerning the investment objectives and
policies of the OMEGA South Africa Fund prior to that date, see "Investment
Objective and Policies," "South Africa," "Investment Considerations," and
"General Information" in the Private Placement Memorandum of the OMEGA South
Africa Fund dated June 1, 1997, which is attached hereto and incorporated herein
by reference. The OMEGA South Africa Fund terminated the offering of its shares
on August 17, 1998 and is no longer circulating this Private Placement
Memorandum to potential investors.
Item 5. Management of the Fund.
As stated above, the OMEGA South Africa Fund has redeemed its entire
beneficial interest in the Master Trust, which is advised by Old Mutual Asset
Managers (Bermuda) Limited. The OMEGA South Africa Fund has liquidated and
therefore has not retained an investment adviser subsequent to the redemption of
its interest in the Master Trust. In connection with its liquidation, the OMEGA
South Africa Fund has also terminated various contracts with service providers
governing the management of the Fund, including agreements with State Street
Bank and Trust Company relating to administrative and fund accounting services,
transfer agent and dividend disbursing agent services, and custodian services.
The Private Placement Memorandum attached hereto provides further information
regarding the management of the OMEGA South Africa Fund in response to Item 5,
including descriptions of investment advisory and other administrative, fund
accounting, transfer agency, and custodian services prior to the liquidation of
the Fund, under the captions "Management and Administration," "Offering of
Shares - Expense Reimbursement" and "General Information".
Item 6. Capital Stock and Other Securities.
The OMEGA South Africa Fund has no outstanding securityholders and is no
longer offering its shares of beneficial interest for purchase. The Private
Placement Memorandum attached hereto provides further information regarding the
OMEGA South Africa Fund's shares of beneficial interest in response to Item 6,
including its policy with respect to dividends and distributions and the tax
consequences of an investment in the Fund prior to September 18, 1998, under the
captions "Summary of the Offering-Dividends," "Valuation of Shares," "Tax
Matters," "General Information" and "Additional Information".
Item 7. Purchase of Securities Being Offered.
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As stated above, shares of beneficial interest in the OMEGA South Africa
Fund are no longer being offered. Accordingly, the OMEGA South Africa Fund has
terminated its contracts with placement agents. Its placement plan under Rule
12b-1 of the 1940 Act was terminated without being renewed on August 31, 1998.
The Private Placement Memorandum attached hereto provides further information in
response to Item 7 regarding the purchase of OMEGA South Africa Fund's
securities prior to August 17, 1998, including information regarding the OMEGA
South Africa Fund's former placement agents and former placement plan, under the
captions "Valuation of Shares," "Offering of Shares" and "General Information".
Item 8. Redemption or Repurchase.
As of September 18, 1998 all shares of the OMEGA South Africa Fund had been
redeemed for cash. Accordingly, OMEGA South Africa Fund has no outstanding
securityholders and procedures for redeeming shares in the Fund are
inapplicable. The Private Placement Memorandum attached hereto provides further
information in response to Item 8 regarding redemption procedures for shares of
beneficial interest of OMEGA South Africa Fund prior to September 18, 1998,
under the captions "Redemptions" and "General Information - Purchase Right".
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)
OFFERING OF
SHARES OF BENEFICIAL INTEREST
This document is to be distributed only when accompanied by a copy of the
most recent annual or semi-annual report of the Fund. The most recent annual or
semi-annual report of the Fund forms part of, and is incorporated by reference
in, this Private Placement Memorandum.
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. The Fund has
registered as an investment company under the Investment Company Act of 1940, as
amended. 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 Shares are subject to restrictions on transfer. There is no public
market for the Shares, and none is expected to develop.
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 Fund or a Placement Agent.
The Placement Agents have 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
Agents 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 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 Agents. 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.
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[FLEMING MARTIN LOGO] [RAND INTERNATIONAL SECURITIES LOGO] [SBC WARBURG INC. LOGO]
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PLACEMENT AGENTS
June 1, 1997
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INVESTMENT HIGHLIGHTS
OLD MUTUAL HAS CREATED A UNIQUE FUND STRUCTURE OFFERING INSTITUTIONAL
INVESTORS INSTANT ACCESS TO THE SOUTH AFRICAN MARKET. THE FUND COMBINES THE
LIQUIDITY OF AN OPEN-END FUND WITH THE PORTFOLIO STABILITY AND REDUCED TRADING
COSTS ASSOCIATED WITH A CLOSED-END FUND.
SOUTH AFRICA
- South Africa, with the largest economy in Africa, has exciting growth
potential no longer constrained by international sanctions.
- The earnings of companies included in The Johannesburg Stock Exchange
("JSE") Actuaries All Share Index are forecast to grow by approximately
18% over the twelve months to March 31, 1998 and by approximately 20% for
the subsequent twelve months to March 31, 1999. Assuming constant share
prices and projected earnings growth, the price earnings multiple of the
JSE Actuaries All Share Index, which at March 31, 1997 was 15.2 times,
would fall to 12.8 times at March 31, 1998 and to 10.7 times at March 31,
1999.*
OLD MUTUAL
- Old Mutual, the parent company of the Fund's Adviser, is South Africa's
largest financial institution with over U.S.$40 billion of assets under
management, which includes over U.S.$25 billion of equity securities.
- Old Mutual has actively managed South African equity portfolios for over
30 years and has a South Africa team of over 60 investment professionals.
THE FUND
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Size: Approximately U.S.$1 billion at March 31, 1997.
Investors can therefore establish significant
holdings.
Established Portfolio: Immediate exposure to the JSE without market impact or
initial acquisition costs for the portfolio's
underlying securities.
Redemptions: Any amount on any Business Day.
Liquidity: Redemptions funded by a separate pool of securities
held by Old Mutual Fund Holdings rather than through
sales of portfolio securities. This substantially
reduces Fund trading costs.
Management Fee: 0.60% per annum of daily net assets.
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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 earnings forecasts provided by Smith Borkum Hare (Pty)
Ltd; Deutsche Morgan Grenfell (SA) (Pty) Ltd; and Fleming Martin Securities
Ltd, three South African brokerage firms that are not affiliated with Old
Mutual. Fleming Martin Securities Ltd is affiliated with Fleming Martin Inc,
one of the Placement Agents.
2
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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.
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FUND.............................. Old Mutual Equity Growth Assets South Africa Fund (the
"OMEGA South Africa Fund") is a Massachusetts business
trust that seeks 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
invests 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") is 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 1996
year-end total assets) and oldest insurer in South
Africa. At June 30, 1996 Old Mutual had total assets
under management of over U.S.$40 billion. The OMEGA
South Africa Fund does not have a separate investment
adviser, because it invests all of its investable assets
in the Master Trust.
The Master Trust pays the Adviser a management fee of
0.60% per annum of the Master Trust's daily net assets
(the "Management Fee"). The Management Fee accrues daily
on an annualized basis and is paid monthly in arrears.
See "MANAGEMENT AND ADMINISTRATION -- Adviser".
INITIAL PORTFOLIO................. Shortly before the launch of the OMEGA South Africa
Fund, Old Mutual transferred to the Master Trust a
portfolio of South African securities (the "Initial
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Portfolio") from Old Mutual's main proprietary
investment portfolio (the "Old Mutual Main Fund") with a
market value of approximately U.S.$1 billion and
holdings in 60 South African issuers. At the time of its
transfer, the Initial Portfolio generally reflected the
equity holdings of the Old Mutual Main Fund.
As consideration for the acquisition of the Initial
Portfolio and for an initial capital contribution, the
Master Trust issued substantially all of its beneficial
interest to Old Mutual Fund Holdings (Bermuda) Limited
("Old Mutual Fund Holdings"), a wholly-owned subsidiary
of Old Mutual.
FUND STRUCTURE.................... The OMEGA South Africa Fund will invest the proceeds of
this offering of Shares (the "Offering") in the Master
Trust, which will then apply the proceeds to redeem a
corresponding portion of the interest of Old Mutual Fund
Holdings in the Master Trust.
Old Mutual Fund Holdings 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 invests in a portfolio of
South African and international securities (the "Global
Fund"). Old Mutual initially capitalized the Global Fund
with approximately U.S.$500 million of South African
securities. At March 31, 1997 the net assets of the
Global Fund were in excess of U.S.$649 million.
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 Fund Holdings is the sole
shareholder of the Global Fund. See "LIQUIDITY FACILITY
AND THE GLOBAL FUND".
VALUATION OF SHARES............... The net asset value per Share is 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 generally values JSE listed securities based on
their current JSE ruling price, and converts 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".
OFFERING AND SUBSCRIPTION
PROCEDURE......................... The OMEGA South Africa Fund is offering Shares on a
continuous basis at a price equal to their net asset
value. A sales charge of up to 0.35% of that price may
be applied by the Placement Agents. Investors that wish
to subscribe for Shares are required to complete the
subscription form circulated by the Placement Agents.
The office of the Transfer Agent will be open to accept
subscription forms from 12:00 noon to 4:00 p.m. (Eastern
time) on every
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4
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Business Day. Subscription forms received by 4:00 p.m.
(Eastern time) on any Business Day will be processed
based on the net asset value as determined on the next
Business Day. Subscription forms reaching the Transfer
Agent after 4:00 p.m. (Eastern time) on any Business Day
will be deemed to have been received at 12:00 noon
(Eastern time) on the next Business Day. Full payment
for Shares is due in cash by 3:00 p.m. (Eastern time) on
the second Business Day following receipt (or deemed
receipt) of the subscription form by the Transfer Agent.
The minimum purchase for any investor is U.S.$5 million,
provided the minimum purchase may, in particular
circumstances, be reduced for certain investors to not
less than U.S.$1 million.
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".
PLACEMENT ARRANGEMENTS............ The OMEGA South Africa Fund has engaged Fleming Martin
Inc., Rand International Securities LLC, and SBC Warburg
Inc. to act as placement agents for the Offering (the
"Placement Agents"). Each of the Placement Agents will
be entitled to apply a sales charge of up to 0.35% of
the net asset value of the Shares placed by it. Old
Mutual Fund Holdings may, from its own resources, make
additional payments to the Placement Agents or other
parties of 0.25% of the price of Shares sold in the
Offering. See "OFFERING OF SHARES -- Offering".
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.
Redemption requests reaching the Transfer Agent after
4:00 p.m. (Eastern time) on any Business Day will be
deemed to have been received at 12:00 noon (Eastern
time) on the next 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 Fund Holdings
will withdraw monies from the Global Fund and invest
those monies in the Master Trust (the "Liquidity
Facility"). Old Mutual Fund Holdings may not terminate
the Liquidity Facility without giving at least 120 days
notice to registered holders of Shares ("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 0.65% of redemption proceeds
(the "Redemption Fee"). For so long as Old Mutual Fund
Holdings provides the Liquidity Facility, the
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OMEGA South Africa Fund will pay to Old Mutual Fund
Holdings amounts collected in respect of the Redemption
Fee as compensation for the Liquidity Facility.
The Fund believes that the Liquidity Facility
substantially reduces the trading costs of the Fund. See
"REDEMPTIONS" and "LIQUIDITY FACILITY AND THE GLOBAL
FUND".
TRANSFER OF SHARES................ There is no public market for the Shares, and none is
expected to develop. Transfers of Shares are subject to
restrictions for purposes of complying with securities
laws. One or more broker-dealers, including the
Placement Agents, 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".
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
Shareholders semi-annually on or about the last day of
June and December of each year. 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.
NON-U.S. FUND..................... The Old Mutual SAGA Fund, a mutual fund organized under
the laws of Bermuda (the "Non-U.S. Fund"), also invests
in the Master Trust. Shares of the Non-U.S. Fund are
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 the same.
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
has registered 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
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6
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does not impose a limit on the number of Shares that may
be held by ERISA investors. See "ERISA MATTERS".
MANAGEMENT AND ADMINISTRATION..... The Fund is supervised by a board of trustees. State
Street Bank and Trust Company, either directly or
through an indirect wholly-owned subsidiary, provides
certain administrative services to the Fund. See
"MANAGEMENT AND ADMINISTRATION".
CUSTODIAN AND SUB-CUSTODIAN....... State Street Bank and Trust Company serves as custodian
for the Master Trust and the OMEGA South Africa Fund.
Standard Bank of South Africa serves as sub-custodian
for the Master Trust's South African registered assets.
TRANSFER AGENT.................... State Street Bank and Trust Company serves as transfer
agent for the OMEGA South Africa Fund (the "Transfer
Agent").
VOTING RIGHTS..................... Shareholders are 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 to Shareholders
audited annual financial statements for its fiscal years
ending June 30 and unaudited semi-annual financial
statements for the six month periods to December 31. In
addition, the OMEGA South Africa Fund will provide
annual tax information to Shareholders.
EXPENSES.......................... The OMEGA South Africa Fund and the Master Trust are
responsible for the ongoing expenses of conducting their
affairs. The Adviser will, if necessary, reduce or
rebate a portion of the Management Fee so that ordinary
operating expenses of the OMEGA South Africa Fund,
including its share of the Management Fee and the
amortization of certain organizational expenses, will
not exceed 1.00% per annum of its daily net assets. See
"GENERAL INFORMATION -- Expenses". The OMEGA South
Africa Fund will reimburse the Adviser for certain
marketing expenses incurred (or advanced to the
Placement Agents 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 invests primarily in securities of South
African issuers and is, as a result, 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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7
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INVESTMENT OBJECTIVE AND POLICIES
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 seeks to achieve its investment objective by
investing all of its investable assets in the Master Trust.
The Master Trust seeks 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.
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 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. The acquisition of the Initial Portfolio was not
subject to this limitation. The Fund may, therefore, hold securities of certain
issuers in which the Old Mutual Group owns in excess of 50% of the outstanding
equity interest.
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
8
<PAGE>
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).
LENDING OF SECURITIES. The Master Trust may lend its securities to approved
institutional borrowers. Any such loan will be required to be secured
continuously by collateral, including cash 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 value of the securities loaned will not exceed
33 1/3% of the value of the Master Trust's net assets.
PORTFOLIO TURNOVER. The Master Trust 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.
ADDITIONAL RESTRICTIONS
Certain other restrictions are described under "GENERAL INFORMATION --
Certain Conflicts of Interest". The registration statements of the OMEGA South
Africa Fund and the Master Trust under the 1940 Act contain additional
restrictions on the investment policies of the Fund. A copy of the registration
statement of each of the OMEGA South Africa Fund and the Master Trust will be
provided to potential investors upon request. The registration statement of each
of the OMEGA South Africa Fund and the Master Trust can be inspected without
charge at the office of the Securities and Exchange Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies may be
obtained therefrom at prescribed rates.
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.
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"
9
<PAGE>
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 registration statements of the OMEGA
South Africa Fund and the Master Trust 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 removed important obstacles to growth and created an environment that
is more conducive to both domestic and foreign investments. Negotiations on a
permanent constitution for South Africa were completed on schedule in May 1996.
After ratification by the Constitutional Court, the permanent constitution was
signed into law on December 10, 1996.
Although generally smooth, the transition to democratic rule has been
accompanied by localized violence and social unrest which may continue in the
future. At the end of June 1996, the National Party, which was a minority party
in the Government, left the Government. The Inkatha Freedom Party ("IFP") is
still a minority partner in the Government.
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. 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 growth rates of 1.3%, 2.7% and 3.4% were registered in the years
1993, 1994 and 1995, respectively. In 1996 a bumper farming season compensated
for a downturn in the goods-producing sectors of the economy, and real GDP rose
by an estimated 3.1%. Cheap imports, slower inventory building and another steep
fall in gold output were the main reasons for this downturn in production.
Growth prospects for 1997 were weakened by the increase in interest rates in
reaction to the weakening currency in 1996.
Between February and December 1996 the S.A. Rand per U.S. dollar exchange
rate weakened by more than 25%. This was due to a number of factors, including
initially a perceived
10
<PAGE>
overvaluation of the S.A. Rand, increasing pessimism regarding the longer term
growth potential and management of the economy, and worries about the health of
President Mandela. The draining of liquidity from the South African economy
through a sudden bout of capital outflows forced the South African Reserve Bank
to increase its Bank Rate by two percentage points during 1996.
However, the S.A. Rand per U.S. dollar exchange rate appreciated by more
than 7% during the first three months of 1997. This appreciation followed a
change in sentiment regarding the outlook for the expected improvement in
reserves, with capital inflows forecast to exceed a projected small current
account deficit. The Adviser does not expect a large or sustained net outflow of
capital during 1997 given the expected healthier current account, some progress
on privatization and tighter fiscal policy. This view is supported by the fact
that South Africa had a net inflow of capital in 1996 -- in spite of the
negative sentiment shift. However, the Adviser believes a large net inflow of
capital is also unlikely because substantial privatization proceeds might be
offset by further exchange control relaxation.
Despite the interruption caused by the currency depreciation, the Adviser
believes that the more competitive currency, stronger world economic growth in
1997, another good farming season and stable gold production should boost the
goods producing sectors that suffered in 1996. This, the Adviser believes,
combined with the Government's long-term macro-economic strategy, should lead to
increased domestic and international confidence in the South African economy.
The Government's macro-economic strategy, released during June 1996, includes
measures aimed at maintaining the competitive advantages resulting from the 1996
weakening of the exchange rate and achieving a faster reduction of the
Government's budget deficit (in effect a fiscal policy designed to be more
supportive of monetary policy). The strategy also seeks a further reduction in
inflation, an acceleration of tariff reductions, and a more flexible labor
market. The March 1997 Budget was drawn up within the guidelines of this
strategy -- with the budgeted deficit before borrowing at 4% of GDP. The Adviser
is of the opinion that this strategy will promote economic stability and
investor confidence.
Thus, although the currency depreciation in 1996 probably forced some
short-term slowdown on the economy, the Adviser believes that the long term
prospects remain good.
The following table shows the current real GDP growth forecasts for 1997,
1998, and 1999 of four prominent South African institutions:
REAL GDP GROWTH FORECASTS
% CHANGE
<TABLE>
<CAPTION>
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Bureau for Economic Research............................. 3.1 3.8 3.7
BOE NatWest Securities Ltd............................... 2.4 3.3 4.2
Deutsche Morgan Grenfell (SA) (Pty) Ltd.................. 2.0 3.5 4.0
Fleming Martin Securities Ltd.*.......................... 2.1 3.1 3.5
</TABLE>
* Fleming Martin Securities Ltd. is affiliated with Fleming Martin Inc.,
one of the Placement Agents.
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.$126 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 longer term.
11
<PAGE>
THE REMOVAL OF SANCTIONS. With the lifting of sanctions, South Africa has
had improving access to world markets and should continue to benefit from global
economic recovery. The Adviser believes that the removal of trade barriers,
together with South Africa's full participation in the Marrakech Agreement on
world trade, is leading to considerable changes in the economy, offering
attractive opportunities for domestic and foreign investors. South African
exporters are benefiting 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 continue to make substantial investments in infrastructure and
development projects. Housing, electrification, and water provision remain
important priorities, and several related sectors, such as construction,
engineering, and building materials, may benefit from development projects.
ACCESS TO FOREIGN CAPITAL. By the end of 1995 total outstanding foreign
debt amounted to U.S. $32.0 billion, or 24.0% of GDP, down from 42.9% of GDP in
1985. Between the beginning of 1985 and the end of 1995, 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, have allowed the
country access to international capital markets. This more favorable environment
has resulted in capital flows (not related to reserves) reversing from an
outflow of S.A. Rand 15.2 billion in 1993 to inflows of S.A. Rand 4.3 billion in
1994 and a further S.A. Rand 19.2 billion in 1995. In 1996, despite the
sentiment swings around the time of the Rand depreciation, inflows of S.A. Rand
3.9 billion were experienced. The Adviser does not expect a large or sustained
net outflow of capital this year (based on a healthier current account, some
progress on privatization and tighter fiscal policy). However, the Adviser
believes a large inflow of capital is also unlikely because substantial
privatization proceeds might be offset by exchange control relaxation.
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 supplier of gold, platinum,
chromium, diamonds, and other strategic minerals.
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 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 pursue the sale of certain state assets. These intentions of
the Government were reaffirmed in its macro-economic strategy document released
on June 14, 1996 and in the Budget for the 1997/1998 fiscal year released on
March 12, 1997.
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 in containing inflation, with average
inflation being reduced from 15.3% in 1991 to 7.4% in 1996. However, largely due
to the currency depreciation in 1996, the annual rate of inflation rose from a
low of 5.5% in April 1996 to 9.6% in March 1997. Nevertheless, the Adviser
expects the annual rate of inflation to move substantially lower over the next
12 months.
Furthermore, South Africa's relations with the International Monetary Fund
and the World Bank have been normalized, and the Adviser expects that this will
have a stabilizing effect upon economic management.
12
<PAGE>
THE JOHANNESBURG STOCK EXCHANGE
The aggregate market capitalization of South African equity securities
listed on the JSE was S.A. Rand 1,211 billion (U.S.$274 billion) as at March 31,
1997. 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 11.9% in the year ended March 31, 1997.
Although as at March 31, 1997 there were 618 listed companies on the JSE, market
capitalization and trading is concentrated in a relatively small number of
companies. As at that date the 15 largest companies by market capitalization
represented approximately 36% of the JSE Actuaries All Share Index. The average
annual dividend yield for companies comprising the JSE Actuaries All Share Index
as at March 31, 1997 was approximately 2.4%.
Legislation implementing fundamental changes to the JSE was approved by the
South African parliament late in 1995. This has had a profound impact on the
JSE, including a move from floor based trading to screen trading, the abolition
of single capacity trading, removal of restrictions on corporate membership, the
introduction of limited liability of members, and a move from fixed to
negotiated commissions.
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 11.1% in
MSCI's Emerging Markets Global Index, 8.2% in the IFC's Global Index, and 13.1%
in the IFC's Investable Index as of March 31, 1997.
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 March 31, 1997.
<TABLE>
<CAPTION>
PERIODS TO MARCH 31, 1997
-------------------------------------
3 YEARS 5 YEARS 10 YEARS
----------- ----------- -----------
<S> <C> <C> <C>
JSE Actuaries All Share Index*.................... 8.9% 20.5% 17.5%
S&P 500 Index..................................... 19.3% 13.4% 10.0%
</TABLE>
- ---------------
* Figures converted to U.S. dollars using the Financial S.A. Rand exchange rate
where applicable.
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 invests primarily in securities of South African issuers and, as a
result, is 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
13
<PAGE>
inter-tribal and inter-community antagonisms, channeled through political
rivalries, particularly between the ANC and the IFP, have been additional causes
of violence. There can be no assurance that the South African government 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. Senior ANC officials have
continued to confirm that privatization is official ANC and Government policy.
In the macro-economic strategy document released by the Ministry of Finance on
June 14, 1996, these market-oriented policies were announced as official
Government policy. These policies were reaffirmed in the March 1997 Budget.
However, there can be no assurance that market-oriented policies will be
pursued.
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 the ANC and the IFP. The
National Party left the Government at the end of June 1996 to become the
official opposition. The present term of the Government will end in 1999, and
under the terms of the recently enacted constitution, a constitutional coalition
government will not be required after 1999. With the prospect of single party
rule after 1999, the run-up to the next election may be characterized by intense
political rivalry which could include a flare-up in politically driven social
unrest. Such unrest may continue into the new government's term of office.
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 recently completed 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 the South African Government 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, and there
are many potential problems that could either inhibit or extinguish that growth.
However, there remain 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 the early 1990s, South African inflation had persisted at
annual rates of between 10% and 20%. More recently, the South African Reserve
Bank has played a major role in bringing that rate to below 10%, although
inflation rose again during the course of 1996 and into 1997 largely due to the
currency depreciation. Although the Government's macro-economic
14
<PAGE>
strategy, released in June 1996, sets out the reduction of inflation as one of
the main objectives of monetary policy, there can be no guarantee that the South
African Government 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 low levels of foreign debt, its foreign exchange reserves are
depleted, amounting at the end of March 1997 to only U.S.$2.8 billion or less
than 6 weeks of imports of goods and services. If South Africa 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 aspect 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 only 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 South African Reserve Bank are following a policy of
gradually easing exchange controls, (as was announced in the March 1997 Budget),
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.
15
<PAGE>
CURRENCY RISKS
The Master Trust's assets are invested in securities denominated in S. A.
Rand, and income from these investments is received in S.A. Rand. As a result,
the Fund's net asset value and distributions, which are 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 and between February and December 1996 the
S.A. Rand per U.S. dollar exchange rate weakened by more than 25%.
TAXATION RISKS
It is possible that the South African government 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, prior to November 1995, advised an
investment company registered under the 1940 Act.
16
<PAGE>
MANAGEMENT AND ADMINISTRATION
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 57), is the Chairman and Group
Chief Executive of Old Mutual, having been Chief Executive 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 Barlow Limited, an industrial company, Nedcor Limited,
a bank holding company, SASOL Limited, a chemicals company, and South African
Breweries Limited. His address is Mutualpark, Jan Smuts Drive, Pinelands, South
Africa.
WILLIAM LESTER BOYAN, American (aged 60), 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 49), 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 61), 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 1983, and
President in 1991. His address is 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 54), is President of the Adviser and
has been a member of the general management of Old Mutual since 1981. His
address is 61 Front Street, Hamilton, Bermuda.
KENNETH RIGBY WILLIAMS, British (aged 60), 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, John Lusty plc, a food
distribution company, 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. His address is 15 Lime Tree Walk, Virginia Park,
Virginia Water, 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 61 Front Street, Hamilton, Bermuda.
William Langley, President of the Adviser, has been responsible for the day
to day management of the Master Trust's assets since the Master Trust commenced
operations in November 1995. 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.
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Roddy Sparks, the current manager of the equity portion of the Old Mutual
Main Fund, has been responsible for providing in depth research on South African
companies to the Adviser since the Master Trust commenced operations in November
1995. 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.
Old Mutual provides investment research and information to the Adviser. Old
Mutual's investment division in South Africa employs over 60 investment
professionals, including 21 portfolio managers, 19 research analysts, and 6
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, 1996 Old Mutual had total assets under management of
over U.S.$40 billion.
Because the OMEGA South Africa Fund invests all of its investable assets in
the Master Trust, the OMEGA South Africa Fund does not have a separate
investment adviser.
The Master Trust pays the Adviser a Management Fee of 0.60% per annum of the
Master Trust's daily net assets. The Management Fee accrues daily on an
annualized basis and is paid monthly in arrears. The Adviser is responsible for
compensating Old Mutual for research and information provided to the Adviser.
ADMINISTRATOR
State Street Bank and Trust Company (the "OMEGA Fund Administrator")
provides, either directly or through an affiliate, 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"), provides certain administrative and fund accounting services to
the Master Trust pursuant to an administrative services agreement.
The Master Trust Administrator receives an annual administration fee from
the Master Trust calculated as a percentage of the Master Trust's average daily
net assets. The percentage ranges from 0.05% to 0.01% per annum according to the
net assets of the Master Trust. If the net assets of the Master Trust total
U.S.$1 billion during a year, the administration fee percentage for that year
would be 0.0375%. In addition, the OMEGA South Africa Fund pays the OMEGA Fund
Administrator an annual administration fee of U.S.$40,000.
TRANSFER AGENT
State Street Bank and Trust Company (the "Transfer Agent") serves 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 receives an annual fee of U.S.$18,000 from the OMEGA
South Africa Fund. The principal business address of the Transfer Agent is:
Transfer Agent Operations, P.O. Box 1978, Boston, Massachusetts 02105. State
Street Cayman Trust Company, Ltd., either directly or through an affiliated
entity, serves as registrar for the Master Trust.
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CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company (the "Custodian") serves as custodian
for the Master Trust's and the OMEGA South Africa Fund's assets. Standard Bank
of South Africa serves as sub-custodian for the Master Trust's South African
registered assets. All assets of the Master Trust and the OMEGA South Africa
Fund will be held in a segregated account in the name of the relevant Fund. The
Custodian receives an annual custody fee of 0.03% of the Master Trust's average
daily net assets. The Custodian is responsible for the fees of the
sub-custodians.
VALUATION OF SHARES
The net asset value per Share is 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 calculates 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 generally values 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
OFFERING
The OMEGA South Africa Fund is offering Shares on a continuous basis at a
price equal to their net asset value. A sales charge of up to 0.35% of that
price may be applied by the Placement Agents. The minimum purchase for any
investor is U.S.$5 million (exclusive of sales charge), provided the minimum
purchase may, in particular circumstances, be reduced for certain investors to
not less than U.S.$1 million (exclusive of sales charge).
The OMEGA South Africa Fund has engaged Fleming Martin Inc., Rand
International Securities LLC, and SBC Warburg Inc. to act as Placement Agents
for the Offering. Each of the Placement Agents will be entitled to charge a
sales charge of up to 0.35% of the net asset value of the Shares placed by it.
Old Mutual Fund Holdings may, from its own resources, make additional payments
to the Placement Agents or other parties of 0.25% of the price of Shares sold in
the Offering. The Fund has agreed to indemnify the Placement Agents against
certain liabilities, including liabilities under applicable securities laws.
The OMEGA South Africa Fund will, on receipt thereof, invest the proceeds of
the Offering in the Master Trust, and its interest in the Master Trust will be
increased accordingly. The Non-U.S. Fund will similarly invest the proceeds of
its offering of shares in the Master Trust. The Master Trust will then 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 Fund Holdings
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in the Master Trust. Old Mutual Fund Holdings will invest the proceeds of these
redemptions in the Global Fund.
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 Offering may be terminated or modified by the OMEGA South Africa Fund.
In the event that the terms of the Offering are materially modified, the new
terms will be set forth in a supplement to this Memorandum. Investors that
purchase Shares in the Offering will not have any pre-emptive rights with
respect to any further offerings.
SUBSCRIPTION PROCEDURE
Shares may be purchased on any Business Day. Investors that wish to
subscribe for Shares are required to complete the subscription form circulated
by the Placement Agents. Completed subscription forms should be returned to the
relevant Placement Agent, who, on behalf of the investors, will then forward
them to the Transfer Agent. All subscriptions are subject to acceptance by the
OMEGA South Africa Fund.
The office of the Transfer Agent will be open to accept subscription forms
from 12:00 noon to 4:00 p.m. (Eastern time) on every Business Day. Subscription
forms received by 4:00 p.m. (Eastern time) on any Business Day will be processed
based on the net asset value as determined on the next Business Day.
Subscription forms reaching the Transfer Agent after 4:00 p.m. (Eastern time) on
any Business Day will be deemed to have been received at 12:00 noon (Eastern
time) on the next Business Day. Full payment for Shares is due in cash by 3:00
p.m. (Eastern time) on the second Business Day following receipt (or deemed
receipt) of the subscription form by the Transfer Agent. The purchase price for
Shares subscribed for in the Offering will be payable by wire transfer to the
account of the Transfer Agent specified in the subscription form.
EXPENSE REIMBURSEMENT
The OMEGA South Africa Fund will reimburse the Adviser for certain marketing
expenses incurred (or advanced to the Placement Agents 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
placement plan 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 placement plan. The trustees of the
OMEGA South Africa Fund will review the continuation of the placement plan 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
0.65% 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. Redemption requests reaching the Transfer Agent after 4:00 p.m.
(Eastern time) on any
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Business Day will be deemed to have been received at 12:00 noon (Eastern time)
on the next 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 Fund Holdings provides the Liquidity Facility, the OMEGA South Africa
Fund will pay to Old Mutual Fund Holdings 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 substantially reduces 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 serves as investment adviser to Old Mutual Global Assets Fund
Limited, a mutual fund 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 Fund Holdings
is the sole shareholder of the Global Fund. The Global Fund invests 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.
Old Mutual initially capitalized the Global Fund with approximately U.S.$500
million of South African securities. At March 31, 1997 the net assets of the
Global Fund were in excess of U.S.$649 million. Upon each issuance of Shares (or
shares in the Non-U.S. Fund) the Master Trust will redeem a portion of the
interest of Old Mutual Fund Holdings in the Master Trust, and Old Mutual Fund
Holdings will invest the redemption proceeds in the Global Fund.
Old Mutual Fund Holdings 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 Fund Holdings will invest in the Master Trust
(the "Liquidity Facility"). Old Mutual Fund Holdings may not terminate the
Liquidity Facility without giving at least 120 days notice to Shareholders,
provided that Old Mutual Fund Holdings 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 disposing of its assets. Following termination of the Liquidity
Facility, Old Mutual Fund Holdings 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 Fund
Holdings 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
Fund Holdings 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.
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It is possible that at some time the value of Old Mutual Fund Holding'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 Fund Holdings 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 Initial 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.
Since 1995 the Government has embarked on a policy of gradually phasing out
exchange controls. In late 1995 the South African Reserve Bank permitted certain
"asset swaps" in which South African institutions were allowed to exchange a
certain percentage of their South African investments for non-South African
assets. During 1996 the exchange control regulations were further relaxed to
allow certain South African institutional investors to remit abroad during 1996
up to 3% of their net inflow of funds during the 1995 calendar year. This has
recently been renewed in respect of the 1996 calendar year. The March 1997
Budget speech announced a number of further measures that continue the
phasing-out of the remaining controls. 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 Fund Holdings 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 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. The foregoing
rules apply without regard to whether the dividends and distributions are paid
in cash or reinvested in additional Shares.
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.
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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.
The Fund's transactions in certain forward currency contracts will be
subject to special tax rules that may affect the amount, timing, and character
of Fund income. For example, certain positions held for the Fund on the last
business day of each taxable year will be marked to market (I.E., treated as if
closed out) on that day, and any gain or loss associated with the positions will
be treated as 60% long-term and 40% short-term capital gain or loss. Certain
positions held for the Fund that substantially diminish its risk of loss with
respect to other positions in its portfolio may constitute "straddles," and may
be subject to special tax rules that would cause deferral of Fund losses,
adjustments in the holding periods of Fund securities, and conversions of
short-term into long-term capital losses. Certain tax elections exist for
straddles that may alter the effects of these rules.
Foreign exchange gains and losses realized by the Fund or marked to market
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.
Certain uses of foreign currency and foreign currency forward contracts and
investment by the OMEGA South Africa Fund in certain "passive foreign investment
companies" may be limited, or a tax election may be made, if available, in order
to enable the OMEGA South Africa Fund to preserve its qualification as a
regulated investment company and to avoid imposition of a tax on the OMEGA South
Africa 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 may also pay taxes in countries other than the United
States and South Africa. 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.
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
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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 withholding tax on
dividends paid to non-residents was abolished during 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 AND MARKETABLE SECURITIES TAX ("MST"). Stamp duty is not payable
with respect to transactions effected through a brokerage firm, which are
subject to MST. Prior to April 1, 1996, the applicable rate of stamp duty/MST
payable by the transferee on the transfer of securities was 1%. The Government
has progressively reduced this rate to the current level of 0.25% as at April 1,
1997. In addition, with effect from July 1, 1997 the Government will delete the
arbitrage exemption in respect of stamp duties and the MST exemption in relation
to the purchase of shares by persons who are not ordinarily resident in South
Africa. Thus, from July 1, 1997, the applicable rate of stamp duty/MST payable
by the transferee on all transfers of securities will be 0.25%.
SECONDARY TAX ON COMPANIES ("STC"). To promote reinvestment of profits, a
system of STC 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. The current rate of STC is
12.5%. For dividends declared prior to March 13, 1996 the STC rate was 25%.
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.
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
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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 is 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 registered on November 8, 1995 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 registered on November 9, 1995 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 invests 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 also holds a beneficial interest in the Master Trust, 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.
In the event the Master Trust, by reason of a change in its investment
objective or otherwise, ceased to be a suitable investment for the OMEGA South
Africa Fund, the OMEGA South Africa Fund would withdraw its investment from the
Master Trust. In such a case the OMEGA South Africa Fund would have to consider
other means of achieving its investment objective, including engaging its own
investment adviser or investing its assets in another commingled fund with an
appropriate investment objective.
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TRANSFERS OF SHARES
The 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. The Transfer Agent maintains a register for
Shareholders.
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 (as of the date of this Private Placement
Memorandum, Old Mutual Fund Holdings) 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.
26
<PAGE>
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 March 31, 1997 the Old Mutual Group's JSE holdings
totaled S.A. Rand 122 billion, equal to approximately 10% of total JSE market
capitalization. At March 31, 1997 the Old Mutual Group held 5% or more of the
listed securities in 42% of the JSE traded companies, which companies
collectively represented 63% 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 were included in the Initial 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 (A) from unaffiliated brokers in open market transactions,
(B) in transactions effected pursuant to and in compliance with Rule 17a-7
under the 1940 Act and the procedures adopted by the Master Trust pursuant
to Rule 17a-7, or (C) if certain other conditions are met, including a
requirement that the purchase transaction be effected at not more than the
independent current market price of the security as defined in Rule 17a-7.
This restriction shall not apply to (A) transactions approved by order of
the Securities and Exchange Commission, (B) the acquisition of the Initial
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 and (B) 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. The acquisition of the Initial Portfolio was
not subject to this limitation. The Fund may, therefore, hold
27
<PAGE>
securities of certain issuers in which the Old Mutual Group owns in excess
of 50% of the outstanding equity interest.
The Fund may from time to time apply to the Securities and Exchange
Commission for an exemptive order under Section 17 of the 1940 Act with respect
to certain purchases of securities from issuers in which the Old Mutual Group
owns 5% or more of the equity interest. As at the date of this Private Placement
Memorandum one such application has been approved and another is pending.
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 acts as investment adviser to the Master
Trust, and to the Global Fund which holds 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.
Old Mutual 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 are 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 OMEGA South Africa Fund and the Master Trust are amortizing
certain organizational and offering expenses over a period of five years from
inception.
Each of the OMEGA South Africa Fund and the Master Trust has adopted a
placement plan pursuant to Rule 12b-1 under the 1940 Act, and each of these
plans provides for the OMEGA South Africa Fund or the Master Trust, as the case
may be, to reimburse marketing expenses and pay placement fees, provided such
reimbursements and fees for any year do not exceed 0.05% of average daily net
assets of the OMEGA South Africa Fund or the Master Trust for such year.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of the OMEGA South Africa Fund,
including its share of the Management Fee and the amortization of certain
organizational and offering expenses, will not exceed 1.00% per annum of its
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 Fund Holdings in connection with the initial placement of Shares,
(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.
28
<PAGE>
ADDITIONAL INFORMATION
The most recent annual or semi-annual report of the Fund is distributed
with, and forms part of, this Memorandum. Requests for more recent annual or
semi-annual reports should be directed to the Placement Agents.
The registration statements under the 1940 Act of the OMEGA South Africa
Fund and the Master Trust contain more detailed information about the Fund. A
copy of the registration statement of each of the OMEGA South Africa Fund and
the Master Trust will be provided to potential investors upon request. The
registration statement of each of the OMEGA South Africa Fund and the Master
Trust can be inspected without charge at the office of the Securities and
Exchange Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained therefrom at prescribed rates. The Commission
also maintains a Web site that contains the registration statement of each of
the OMEGA South Africa Fund and the Master Trust, as well as other information,
at http:\\www.sec.gov.
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 one of the Placement Agents.
29
<PAGE>
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 PORTFOLIO means a portfolio of South African securities transferred from
the Old Mutual Main Fund to the Master Trust shortly before the launch of the
OMEGA South Africa Fund.
JSE means The Johannesburg Stock Exchange.
LIQUIDITY FACILITY means the undertaking of Old Mutual Fund Holdings 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 or shares of the Non-U.S. Fund.
MANAGEMENT FEE means the management fee payable to the Adviser of 0.60% 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 South Africa Growth Assets Fund Limited ("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.
OFFERING means the offering of Shares on the terms and conditions of this
Memorandum.
OLD MUTUAL means the South African Mutual Life Assurance Society, a mutual
assurance society organized under the laws of South Africa.
OLD MUTUAL FUND HOLDINGS means Old Mutual Fund Holdings (Bermuda) Limited, a
Bermuda company that is an indirect wholly-owned subsidiary of Old Mutual.
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.
30
<PAGE>
OMEGA SOUTH AFRICA FUND means Old Mutual Equity Growth Assets South Africa Fund,
a Massachusetts business trust.
PLACEMENT AGENTS means Fleming Martin Inc., Rand International Securities LLC,
and SBC Warburg Inc. as the placement agents for the Offering.
REDEMPTION FEE means a redemption fee charged by the OMEGA South Africa Fund of
0.65% of redemption proceeds.
S.A. RAND means South African rand, the currency of South Africa.
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.
31
<PAGE>
OMEGA SOUTH AFRICA FUND
INVESTMENT ADVISER
Old Mutual Asset Managers (Bermuda) Limited
61 Front Street, Hamilton Bermuda
PLACEMENT AGENTS
Fleming Martin Inc.
320 Park Avenue
New York, NY 10022
Rand International Securities LLC
780 3rd Avenue
New York, NY 10017
SBC Warburg Inc.
277 Park Avenue, New York, NY 10172
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 2508GT
Elizabeth Square, George Town
Grand Cayman, Cayman Islands
TRANSFER AGENT
State Street Bank and Trust Company
P.O. Box 1978, Boston, MA 02105
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
FOR THE OMEGA SOUTH AFRICA FUND:
KPMG Peat Marwick LLP
One Boston Place, Boston, MA 02108
FOR THE MASTER TRUST:
KPMG Peat Marwick
Vallis Building, Hamilton HM 11, Bermuda
LEGAL COUNSEL
IN THE UNITED STATES:
Bingham, Dana & Gould LLP
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................................................... 3
Investment Objective and Policies......................................... 8
South Africa.............................................................. 10
Investment Considerations................................................. 13
Management and Administration............................................. 17
Valuation of Shares....................................................... 19
Offering of Shares........................................................ 19
Redemptions............................................................... 20
Liquidity Facility and the Global Fund.................................... 21
Tax Matters............................................................... 22
ERISA Matters............................................................. 24
General Information....................................................... 25
Additional Information.................................................... 29
Glossary.................................................................. 30
</TABLE>
<PAGE>
Part B
Item 10. Cover Page.
Not applicable
Item 11. Table of Contents.
Page
----
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
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objective and Policies.
At a meeting held on August 17, 1998 the Board of Trustees of Old Mutual
Equity Growth Assets South Africa Fund (the "OMEGA South Africa Fund") voted to
liquidate the OMEGA South Africa Fund with effect from September 30, 1998, or
such earlier date as may be approved on behalf of the OMEGA South Africa Fund.
As of September 18, 1998 all shares of the OMEGA South Africa Fund had been
redeemed for cash. As of September 23, 1998, the OMEGA South Africa Fund
redeemed its entire interest in Old Mutual South Africa Equity Trust, the
registered investment company in which the OMEGA South Africa Fund had
previously invested all of its investable assets (the "Master Trust"). On
September 29, 1998 the OMEGA South Africa Fund applied to the Securities and
Exchange Commission on Form N-8F for an order declaring that the OMEGA South
Africa Fund has ceased to be an investment company under the Investment Company
Act of 1940, as amended (the "1940 Act").
On September 29, 1998 the Master Trust applied to the Securities and
Exchange Commission for an order declaring that the Master Trust has ceased to
be an investment company under the 1940 Act.
Part A contains additional information about the investment objective and
policies of the OMEGA South Africa Fund prior to September 23, 1998. Part A
also contains a discussion of the various types of securities in which the Fund
invested prior to September 23, 1998 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 prior to September 23,
1998. However, despite the use of the present or future tense or references to
any present or future actions, the OMEGA South Africa Fund is no loner pursuing
the investment objective and policies described below. The Master Trust has not
liquidated and continues to pursue the investment objective and policies
described below.
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 or to the extent
such references no longer apply to the OMEGA South Africa Fund after its
liquidation. This Part B should be read in conjunction with Part A.
<PAGE>
Additional Information Regarding Investment Objective and Policies Prior to
Liquidation.
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 securities of South African issuers. Of course, there can
be no assurance that the Fund will achieve its investment objective.
The OMEGA South Africa Fund seeks to achieve its investment objective by
investing all of its investable assets in the Master Trust. The Master Trust
seeks 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 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 also
invests 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 of the OMEGA South Africa Fund ("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.
<PAGE>
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 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.
<PAGE>
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 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 would require
it to forgo a portion or all of the benefits of advantageous changes in such
rates.
<PAGE>
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.
The Fund has established 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.
<PAGE>
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. Loans of securities would be secured continuously by
collateral in cash, cash equivalents, U.S. Treasury obligations or debt
obligations of certain non-U.S. governments 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. Either
party has the right to terminate a loan at any time on customary industry
settlement notice (which will not usually exceed three business 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 with
respect to cash collateral would also receive compensation based on investment
of the collateral (subject to a rebate payable to the borrower). Where the
borrower provides the Fund with collateral consisting of U.S. Treasury
obligations or other government obligations, the borrower is also obligated to
pay the Fund a fee for use of the borrowed securities. 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. In
addition, the Fund could suffer loss if the borrower terminates the loan and the
Fund is forced to liquidate investments purchased with the cash collateral in
order to return the cash collateral to the buyer. 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 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).
<PAGE>
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 OMEGA South Africa Fund has no outstanding
voting securities. 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 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.
(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.
<PAGE>
(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).
(viii) The Master Trust may not invest more than 5% of its net asset value
in units in collective investment schemes (as defined in section 75 of the UK
Financial Services Act 1986) and no investment shall be made by the Master Trust
in a collective investment scheme unless it is one in which a UK authorized unit
trust or UK open-ended investment company may invest.
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:
(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.
<PAGE>
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;
(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 invested prior to
the redemption of its interest on September 23, 1998, 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
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.
<PAGE>
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 59), serves as 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 Old Mutual Global Assets Fund Limited (the "Global Fund"). Mr. Levett is the
Chairman and Group Chief Executive of South African Mutual Life Assurance
Society ("Old Mutual"), having been Chief Executive since 1985. He has held,
and continues to hold, a number of non-executive directorships, including Barlow
Limited, an industrial company, Nedcor Limited, a bank holding company, SASOL
Limited, a chemicals company, and South African Breweries Limited. His address
is Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
WILLIAM LESTER BOYAN, American (aged 61), 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 President and Chief Operations Officer from 1992 through
1997. In January 1998 Mr. Boyan was appointed as Vice Chairman of the Board of
John Hancock Mutual Life Insurance Company. His address is John Hancock Place,
200 Clarendon Street, Boston, Massachusetts.
THOMAS HASKINS DAVIS, Bermudian (aged 50), 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 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 62), 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 was instrumental in establishing 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 1983 and President in 1991. His address
is c/o International Services Limited, 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 55), serves as Treasurer and as a
trustee of the OMEGA South Africa Fund and the Master Trust, as Deputy Chairman
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 P.O. Box HM3085, Hamilton HMNX, Bermuda.
<PAGE>
KENNETH RIGBY WILLIAMS, British (aged 62), 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, John Lusty plc, a food distribution company, 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.
His address is 15 Lime Tree Walk, Virginia Park, Virginia Water, Surrey GU 25
4SW, United Kingdom.
OFFICERS
*MICHAEL JOHN LEVETT serves as President 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.
*MELANIE JANE SAUNDERS, British (aged 42), serves as Secretary of the OMEGA
South Africa Fund, the Non-U.S. Fund and the Master Trust. She is also the
Secretary of the Global Fund and the Adviser. Prior to joining the Adviser, Ms.
Saunders was an officer at The Bank of Bermuda Limited. Her address is 22
Church Street, Hamilton, Bermuda.
The Trustees of the OMEGA South Africa Fund received the following
remuneration from the Fund during the period from July 1, 1997 to June 30, 1998:
<TABLE>
<CAPTION>
TOTAL
PENSION OR COMPENSATION
AGGREGATE RETIREMENT ESTIMATED FROM REGISTRANT
COMPENSATION BENEFITS ACCRUED ANNUAL AND FUND
NAME OF PERSON, FROM AS PART OF FUND BENEFITS UPON COMPLEX PAID
POSITION(1) REGISTRANT EXPENSES RETIREMENT TO TRUSTEES
- --------------- ------------- ---------------- ------------- ---------------
<S> <C> <C> <C> <C>
MICHAEL JOHN LEVETT None None None None
TRUSTEE
WILLIAM LESTER BOYAN $5,000 None None $30,000
TRUSTEE
THOMAS HASKINS DAVIS $5,000 None None $20,000
TRUSTEE
MICHEL JOHN DREW $5,000 None None $25,000
TRUSTEE
WILLIAM LANGLEY None None None None
TRUSTEE
KENNETH RIGBY WILLIAMS $5,000 None None $30,000
TRUSTEE
</TABLE>
(1) Each of the above-named Trustees serves as a Trustee of the OMEGA South
Africa Fund and the Master Trust and as a Director of the Non-U.S. Fund.
<PAGE>
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.
As of September 18, 1998, the OMEGA South Africa Fund redeemed all of its
outstanding shares of beneficial interest for cash. Subsequent to such date,
the OMEGA South Africa Fund had no outstanding securityholders. Trustees and
officers as a group owned less than one percent of the outstanding securities of
the OMEGA South Africa Fund subsequent to September 18, 1998.
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 Fund Holdings"), 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 was
held on November 10, 1995, the OMEGA South Africa Fund invested the proceeds of
the Initial Offering in the Master Trust and was issued a proportionate
beneficial interest in the Master Trust. The Master Trust applied the proceeds
to redeem a corresponding portion of the interest of Old Mutual Fund Holdings in
the Master Trust. From December 31, 1995 to August 17, 1998, the OMEGA South
Africa Fund offered Shares on a continuous basis. As of September 23, 1998, the
OMEGA South Africa Fund redeemed its entire interest in the Master Trust. As of
September 24, 1998, Old Mutual Fund Holdings owned 89.6% of the beneficial
interest in the Master Trust and the OMEGA South Africa Fund owned 0.00% of the
beneficial interest in the Master Trust. The address of Old Mutual Fund
Holdings is 22 Church Street, Hamilton, Bermuda.
At the Initial Closing the Master Trust also issued a portion of its
beneficial interest to the Non-U.S. Fund. Upon completion of the Initial
Closing, the Non-U.S. Fund owned 2.8% of the beneficial interest in the Master
Trust. Since December 31, 1995 the Non-U.S. Fund has offered its shares on a
continuous basis. As of September 24, 1998, the Non-U.S. Fund owned 10.4% of
the beneficial interest in the Master Trust. The address of the Non-U.S. Fund
is 22 Church, Hamilton, Bermuda.
<PAGE>
Item 16. Investment Advisory and Other Services.
Adviser.
Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned indirect
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 does not have an
investment adviser and did not have an investment adviser prior to its
liquidation on September 23, 1998, because prior to its liquidation it invested
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 22 Church Street, Hamilton, Bermuda.
William Langley, the Treasurer and a trustee of the OMEGA South Africa Fund
and the Master Trust, is the Chairman and President and a director of the
Adviser and is a member of the general management of Old Mutual. Kevin James
Carter is the Deputy Chairman and a director of the Adviser and is a member of
the general management of Old Mutual. Melanie Jane Saunders, the Secretary of
the OMEGA South Africa Fund and the Master Trust, is the Secretary 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 will continue 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 has access to and benefits from investment research and
information generated and used by Old Mutual. The Adviser is responsible for
compensating Old Mutual for research and information provided to the Adviser.
The Master Trust pays the Adviser a management fee of 0.60% per annum of
the Master Trust's daily net assets (the "Management Fee"). The Management Fee
accrues daily on an annualized basis and is paid monthly in arrears.
For the periods from November 3, 1995 (commencement of operations of the
Master Trust) to June 30, 1996; July 1, 1996 to June 30, 1997; and July 1, 1997
to June 30, 1998, the fees payable to the Adviser under the Advisory Agreement
were U.S.$4,337,443 (of which amount U.S.$142,651 was voluntarily waived),
U.S.$5,803,304 (of which amount U.S.$135,019 was voluntarily waived), and
U.S.$5,805,025 (of which amount U.S.$92,500 was voluntarily waived),
respectively.
<PAGE>
Prior to the redemption of the OMEGA South Africa Fund's interest in the
Master Trust on September 23, 1998, the Adviser reduced or rebated a portion of
the Management Fee as necessary so that ordinary operating expenses of the OMEGA
South Africa Fund, including its share of the Management Fee and the
amortization of certain organizational and offering expenses, would not exceed
1.00% per annum of its daily net assets. This limitation did not apply to (i)
extraordinary expenses (such as the cost of litigation), (ii) the placement fee
and the amount payable to Old Mutual Fund Holdings in connection with the
Initial Offering, (iii) sales charges on Shares, (iv) brokerage expenses, or (v)
the redemption fee charged by the OMEGA South Africa Fund of 0.65% of redemption
proceeds. The Adviser could 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 could terminate this undertaking at any time
without prior notice if the Adviser ceased to be investment adviser to the
Master Trust.
Administrators.
Pursuant to an administrative services agreement (an "Administrative
Services Agreement"), State Street Bank and Trust Company (the "OMEGA Fund
Administrator"), either directly or through an indirect wholly-owned subsidiary
or an affiliated entity, provided certain administrative, transfer agency and
fund accounting services to the OMEGA South Africa Fund prior to September 30,
1998. The Administrative Services Agreement with the OMEGA South Africa Fund
was terminated with effect from September 30, 1998.
Pursuant to a separate administrative services agreement (also, an
"Administrative Services Agreement"), State Street Cayman Trust Company, Ltd.
(the "Master Trust Administrator"), either directly or through an indirect
wholly-owned subsidiary or an affiliated entity, provides certain
administrative, transfer agency and fund accounting services to the Master
Trust.
Pursuant to the respective Administrative Services Agreements, the OMEGA
Fund Administrator and the Master Trust Administrator served prior to September
30, 1998 (and continue to serve in the case of the Master Trust) as accounting
agent, registrar, transfer agent and dividend disbursing agent for each of the
OMEGA South Africa Fund and the Master Trust, and provided (and continue to
provide in the case of the Master Trust) 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.
The Administrative Services Agreement with the OMEGA South Africa Fund also
provided 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. 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
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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 receives an annual administration fee from
the Master Trust calculated as a percentage of the Master Trust's average daily
assets. The percentage will range from 0.05% to 0.01% per annum according to
the 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
administration fee percentage for that year will be 0.0375%. The OMEGA South
Africa Fund paid the OMEGA Fund Administrator an annual administration fee of
U.S.$40,000 prior to September 30, 1998.
For the periods from November 10, 1995 (commencement of operations of the
OMEGA South Africa Fund) to June 30, 1996; from July 1, 1996 to June 30, 1997;
and from July 1, 1997 to June 30, 1998, the fees paid to the OMEGA Fund
Administrator under its Administrative Services Agreement with the OMEGA South
Africa Fund were U.S.$25,246, U.S.$40,000, and U.S.$40,000, respectively. For
the periods from November 3, 1995 (commencement of operations of the Master
Trust) to June 30, 1996; July 1, 1996 to June 30, 1997; and July 1, 1997 to June
30, 1998, the fees paid to the Master Trust Administrator under its
Administrative Services Agreement with the Master Trust were U.S.$252,158,
U.S.$374,991, and U.S.$377,957, respectively.
The Master Trust Administrator is a wholly-owned subsidiary of State Street
Bank and Trust Company.
Placing Agents.
Prior to September 30, 1998, the OMEGA South Africa Fund had engaged
Fleming Martin Inc., Barnard Jacobs Mellet (USA) LLC (formerly Rand
International Securities LLC), and Warburg Dillon Read LLC (formerly SBC Warburg
Inc.) (collectively, the "Placing Agents") to act as placement agents to offer
and sell Shares (the "Offering") on a best efforts basis pursuant to a placing
agreement (the "Placing Agreement") with the Master Trust, the OMEGA South
Africa Fund, the Adviser and Old Mutual Fund Holdings.
Prior to September 30, 1998, a sales charge of up to 0.35% of the net asset
value of each Share sold to a subscriber ("Subscriber") could be applied by the
Placing Agents. The sales charge was paid by the Subscriber. Old Mutual Fund
Holdings could make additional payments to the Placing Agents or other parties
equal to 0.25% of the price of Shares sold in the Offering. Each of the OMEGA
South Africa Fund and the Master Trust had agreed to indemnify the Placing
Agents against certain liabilities, including liabilities under applicable
securities laws.
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The Master Trust and the OMEGA South Africa Fund each adopted a placement
plan in accordance with Rule 12b-1 under the 1940 Act (each, a "Placement
Plan"). The Placement Plans for the OMEGA South Africa Fund and the Master
Trust were terminated with effect from August 31, 1998.
The Placement Plan adopted by the Master Trust provided for the payment of
certain fees and amounts in connection with the placement of Shares.
Furthermore, the Master Trust Placement Plan provided that the Master Trust
could reimburse the Adviser, or another party, for certain marketing expenses
incurred (or advanced) in the placement of shares of the OMEGA South Africa Fund
and the Non-U.S. Fund, provided the amount of such reimbursements in any year
could not exceed 0.05% of the average daily net assets of the Master Trust for
such year. Under the Placement Plan, the Master Trust could 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
could 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 provided 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 could 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, would not exceed 0.05% of the average daily net
assets of the OMEGA South Africa Fund for such year.
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. For the period from July 1, 1997 to June 30,
1998 no payments were made under the Master Trust's Placement Plan. For the
period from July 1, 1997 to June 30, 1998 U.S.$6,938 in payments was made under
the OMEGA South Africa Fund's Placement Plan.
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 acted as custodian for the OMEGA
South Africa Fund prior to its liquidation on September 23, 1998 and continues
to act as custodian for the Master Trust. The principal business address of the
Custodian is 225 Franklin Street, Boston, MA 02110. The custodian contract
between the OMEGA South Africa Fund and State Street Bank and Trust Company was
terminated with effect from September 30, 1998.
The Master Trust has delegated certain responsibilities to its Custodian
with respect to the Master Trust's investments outside the United States, and
the Custodian will serve as the Master Trust's Foreign Custody Manager in
accordance with Rule 17f-5 under the 1940 Act. As Foreign Custody Manager, the
Custodian selects sub-custodians for the Master Trust's assets held in South
Africa and the United Kingdom.
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. As of October 22, 1998, Old Mutual held 21.53% 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.
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.
<PAGE>
Independent Accountants.
KPMG Peat Marwick LLP are the independent public accountants for the OMEGA
South Africa Fund. 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 following describes the Master Trust's brokerage allocation and other
practices. Prior to its liquidation in September 23, 1998, the OMEGA South
Africa Fund invested all of its investable assets in the Master Trust. The
primary consideration in placing the Master Trust'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.
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
<PAGE>
advisory services provided by Old Mutual and other affiliates of the Adviser to
their respective clients. For the periods from November 3, 1995 (commencement
of operations of the Master Trust) to June 30, 1996; from July 1, 1996 to June
30, 1997; and from July 1, 1997 to June 30, 1998, the Master Trust paid
brokerage commissions of approximately U.S.$117,778, U.S.$334,733 and
U.S.$1,476,423, respectively. The recent increase in the brokerage commissions
payable was directly related to the Master Trust portfolio turnover rate
increasing from 9.88% for the fiscal year ended June 30, 1997 to 40.24% for the
fiscal year ended June 30, 1998.
Item 18. Capital Stock and Other Securities.
Because the OMEGA South Africa Fund has liquidated as of September 23,
1998, the Fund is not conducting an Offering of its Shares and has no
securityholders. The information below summarizes certain provisions of the
OMEGA South Africa Fund's declaration of trust governing the Shares, voting
procedures, and other matters which, while still in effect, may not be
applicable because of the liquidation of the Fund.
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 Shares into a greater or
lesser number and may classify or reclassify any unissued Shares into one or
more series or classes of Shares. The Offering has not been registered under
the 1933 Act, and Shares are therefore "restricted securities.
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 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 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.
On August 17, 1998 Old Mutual notified the Trustees that it was waiving its
right of purchase of the Shares of the OMEGA South Africa Fund.
<PAGE>
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 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. On August 17, 1998, the Trustees voted to terminate the OMEGA
South Africa Fund and to file a notice of such termination with the Secretary of
State of The Commonwealth of Massachusetts upon the liquidation and
de-registration under the 1940 Act of the OMEGA South Africa Fund.
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 Non-U.S. Fund and formerly
including the OMEGA South Africa 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").
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 (adjusted to
<PAGE>
eliminate the effect of any capital contributions or distributions described in
clauses (c) or (d) below) 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 (adjusted to eliminate the effect of any capital contributions
or distributions described in clauses (c) or (d) below) 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) the Book Capital
Account Balance of each Investor shall be increased to reflect any capital
contributions, to the extent such Investor's Book Capital Account Balance has
not previously been increased to reflect the same; and (d) 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 (or deemed 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 that Investor
until the next calculation of that Investor's Book Capital Account Balance.
Item 19. Purchase, Redemption and Pricing of Securities.
Prior to September 18, 1998, the net asset value per Share was 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, Martin Luther King Jr. 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 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 calculates 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 final determination of net asset value of the OMEGA South Africa Fund
was made on September 18, 1998. On that date, the OMEGA South Africa Fund
redeemed all outstanding Shares of the Fund.
The Master Trust generally values 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.
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 occurred between the time when the exchange on which they are traded
closed and the time when the OMEGA South Africa Fund's net asset value was
calculated, such securities would have been 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
<PAGE>
Fund.
Prior to September 18, 1998, investors could 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 0.65% 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 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.
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
<PAGE>
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. 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.
Dividends and capital gains distributions from the OMEGA South Africa Fund
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 long-term capital
gains regardless of how long Shares have been held. The foregoing rules apply
without regard to whether the dividends and distributions are paid in cash or
reinvested in additional Shares.
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 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.
The OMEGA South Africa Fund's transactions in forward currency contracts
will be subject to special tax rules that may affect the amount, timing, and
character of OMEGA South Africa Fund income. For example, certain positions
held for the OMEGA South Africa Fund on the last business day of each taxable
year will be marked to market (i.e., treated as if closed out) on that day, and
any gain or loss associated with the positions will be treated as 60% long-term
and 40% short-term capital gain or loss. Certain positions held for the OMEGA
South Africa Fund that substantially diminish its risk of loss with respect to
other positions in its portfolio may constitute "straddles," and may be subject
to special tax rules that would cause deferral of Fund losses, adjustments in
the holding periods of OMEGA South Africa Fund securities, and conversion of
short-term into long-term capital losses. Certain tax elections exist for
straddles that may alter the effects of these rules.
Foreign exchange gains and losses realized by the OMEGA South Africa Fund
or marked to market will generally be treated as ordinary income and losses.
Use of foreign currencies for non-hedging purposes may have been limited in
order to avoid a tax on the OMEGA South Africa Fund.
<PAGE>
Certain uses of foreign currency and foreign currency forward contracts and
investment by the OMEGA South Africa Fund in certain "passive foreign investment
companies" may have been limited, or a tax election may have been made, if
available, in order to enable the OMEGA South Africa Fund to preserve its
qualification as a regulated investment company and to avoid imposition of a tax
on the OMEGA South Africa Fund.
Investment income received by the OMEGA South Africa Fund from non-U.S.
sources may be subject to non-U.S. taxes. 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 OMEGA South Africa Fund may also pay taxes in countries
other than the United States and South Africa. 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. 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 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
jurisdictions. The OMEGA South Africa Fund is also required in certain
circumstances to apply backup withholding at a rate of 31% on 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
<PAGE>
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 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.
The financial statements contained in the Annual Report of the OMEGA South
Africa Fund for the year ended June 30, 1998, as filed with the Securities and
Exchange Commission, via the EDGAR system, on September 4, 1998 (Accession
Number 0001047469-98-033774), are incorporated by reference into this Part B.
<PAGE>
PART C
Item 24. Financial Statements and Exhibits.
(a) Financial Statements:
Financial Statements Included in Part A: Not applicable.
Financial Statements Included in Part B:
Registrant:
Statement of Assets and Liabilities at June 30, 1998*
Statement of Operations for the year ended June 30, 1998*
Statement of Changes in Net Assets for the year ended June 30, 1997
and for the year ended June 30, 1998*
Financial Highlights for the period from November 10, 1995
(commencement of operations) to June 30, 1996, for the year ended June
30, 1997 and for the year ended June 30, 1998*
Notes to Financial Statements*
Old Mutual South Africa Equity Trust:
Schedule of Investments - June 30, 1998*
Statement of Assets and Liabilities at June 30, 1998*
Statement of Operations for the year ended June 30, 1998*
Statement of Changes in Net Assets for the year ended June 30, 1997
and for the year ended June 30, 1998*
Financial Highlights for the period from November 3, 1995
(commencement of operations) to
June 30, 1996, for the year ended June 30, 1997 and for the year ended
June 30, 1998*
Notes to Financial Statements*
* Financial information is incorporated by reference to the
Registrant's Annual Report for the fiscal year ended June 30,
1998 (Accession Number 0001047469-98-033774)
(b) Exhibits:
*1(a) Declaration of Trust of the Registrant
***1(b) Amendment to the Declaration of Trust of the Registrant
****1(c) Second Amendment to the Declaration of Trust of the Registrant
1(d) Third Amendment to the Declaration of Trust of the 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(a) Placing Agreement among SBC Warburg Inc., the Master Trust, the
Registrant, South African Mutual Life Assurance Society ("Old
Mutual"), the Adviser and Old Mutual Fund Holdings (Bermuda) Limited
("Old Mutual Fund Holdings")
**6(b) Placing Agreement among Fleming Martin Inc., Rand International
Securities, SBC Warburg Inc., the Master Trust, the Registrant, the
Adviser and Old Mutual Fund Holdings
***6(c) Placing Agreement among Fleming Martin Inc., Rand International
Securities LLC, SBC Warburg Inc., the Master Trust, the Registrant,
the Adviser and Old Mutual Fund Holdings
<PAGE>
*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 (the "Non-U.S. Fund")
and International Finance Corporation
*9(c) Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Fund Holdings, the Adviser, the Master Trust, the Registrant,
the Non-U.S. Fund and Old Mutual Global Assets Fund Limited
*9(d) Irish Stock Exchange Undertaking among the Master Trust, the
Registrant and the Non-U.S. Fund
*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, the Non-U.S.
Fund and the Adviser as to the allocation of insurance coverage
**9(g) Form of Agreement regarding termination of an agreement by Old Mutual
Fund Holdings to pay a servicing fee to S.G. Warburg & Co. Inc.
***9(h) Letter confirming final settlement of Structuring Agreement payments
owing to International Finance Corporation
****9(i) Amended and Restated Agreement Relating to Insurance
****9(j) Securities Lending Agreement
9(k) Notice of Redemption of Entire Interest in the Master Trust
11(a) Consent of Independent Auditors - KPMG Peat Marwick LLP
11(b) Consent of Independent Auditors - KPMG Peat Marwick
*15 Placement Plan of the Registrant
27 Financial Data Schedule
*Incorporated herein by reference to the Registrant's Registration Statement
on Form N-1A (File No. 811-9136) as filed with the Securities and Exchange
Commission on November 8, 1995.
**Incorporated herein by reference to Amendment No. 1 to the Registrant's
Registration Statement on Form N-1A (File No. 811-9136) as filed with the
Securities and Exchange Commission on May 2, 1996.
***Incorporated herein by reference to Amendment No. 2 to the Registrant's
Registration Statement on Form N-1A (File No. 811-9136) as filed with the
Securities and Exchange Commission on September 27, 1996.
****Incorporated herein by reference to Amendment No. 3 to the Registrant's
Registration Statement on Form N-1A (File No. 811-9136) as filed with the
Securities and Exchange Commission on September 29, 1997.
<PAGE>
Item 25. Persons Controlled by or under Common Control with Registrant.
The response to Item 15 in Part B to this Registration Statement is
incorporated herein by reference.
Item 26. Number of Holders of Securities.
As of September 23, 1998 all of the shares of the OMEGA South Africa
Fund had been redeemed for cash.
Number of Record Holders
Title of Class As of September 24, 1998
Shares of Beneficial Interest 0
Item 27. Indemnification
Reference is hereby made to (a) Article V of the Registrant's Declaration
of Trust, incorporated herein by reference and (b) Section 8 of the Placing
Agreement among the Registrant, Fleming Martin Inc., Barnard Jacobs Mellet (USA)
LLC (formerly known as Rand International Securities LLC), Warburg Dillon Read
LLC (formerly known as SBC Warburg Inc.) and certain other parties, incorporated
herein by reference.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are insured under an errors and omissions liability
insurance policy. The Registrant and its officers are 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
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: Kevin James Carter
Position: Director and Deputy Chairman of the Adviser and Director of Old Mutual
Asset Managers Holdings (Bermuda) Limited ("OMAM Holdings")
Director, Old Mutual Global Assets Fund Limited (22 Church Street,
Hamilton, Bermuda)
Director, Old Mutual Investment Advisers, Inc. (1 Exeter Plaza, 699
Boylston Street, Boston, Massachusetts)
Director, Fairbairn Fund Managers Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual International Asset Managers Services Ltd. (Fairbairn
House, Rohais, St. Peter Port, Guernsey)
Director, Salvation Army Trustee Company (101 Queen Victoria Street, London
EC2V, United Kingdom)
<PAGE>
Director, Old Mutual Asset Managers (Botswana) (Pty) Ltd. (c/o Deloitte &
Touche, Barclays House, Khama Crescent, Gaborone, Botswana)
Director, Old Mutual Asset Managers (Pty) Limited (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Old Mutual International Asset Managers (Guernsey) Limited
(Fairbairn House, Rohais, St. Peter Port, Guernsey)
Director and Chairman, Old Mutual International Asset Managers (Bermuda)
Limited (22 Church Street, Hamilton, Bermuda)
Director, Capel-Cure Myers Capital Management (Holdings) Limited (The
Registry, Royal Mint Court, London, United Kingdom)
Director, Old Mutual South Africa Trust plc (23 Cathedral Yard, Exeter,
United Kingdom)
Director, Argenta European Hedge Fund plc (2nd Floor, IFSC House,
International Financial Services Centre, Custom House Docks, Dublin,
Ireland)
Director, Old Mutual Asset Managers Holdings (UK) Limited (5th Floor, 80
Cheapside, London, United Kingdom)
Director, Old Mutual Asset Managers (UK) Ltd. (5th Floor, 80 Cheapside,
London, United Kingdom)
Director, Old Mutual Fund Holdings (Bermuda) Limited (22 Church Street,
Hamilton, Bermuda)
Name: Garth Griffin
Position: Director of the Adviser and Director and Deputy Chairman of OMAM
Holdings
Director, Barlow Limited (Barlow Park, Katherine Street, Sandton, South
Africa)
Managing Director, Fairbairn Investment Company Limited (Providence House,
2 Bartley Way, Hook, Hampshire, United Kingdom)
Director, Fairbairn Investment Holdings SA (Pty) Limited (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Director, Old Mutual Asset Managers South Africa (Pty) Limited (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Old Mutual Bermuda Holdings (SA) Limited (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Old Mutual Financial Services Botswana (Pty) Limited (c/o
Deloitte & Touche, Barclays House, Khama Crescent, Gaborone, Botswana)
Chairman, Old Mutual Group (UK) Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United Kingdom)
<PAGE>
Chairman, Old Mutual Asset Managers (Namibia) (Pty) Limited (Bank Windhoek
Bldg., 262 Independence Ave., Windhoek, Namibia)
Director, Old Mutual Investment Advisors, Inc. (One Exeter Plaza, 699
Boylston Street, Boston, MA, United States)
Chairman, Old Mutual Life Assurance Company Limited (Providence House, 2
Bartley Way, Hook, Basingstoke, Hampshire, United Kingdom)
Chairman, OMLA Holdings Limited (Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Managing Director and Member, South African Mutual Life Assurance Society
(Mutualpark, Jan Smuts Drive, Pinelands, South Africa)
Chairman, Fairbairn Ireland Limited (50 Dawson Street, Dublin, Ireland)
Director, Old Mutual Fund Holdings (Bermuda) Limited (22 Church Street,
Hamilton, Bermuda)
Chairman, Old Mutual International Financial Services Limited (Fairbairn
House, Rohais, St. Peter Port, Guernsey)
Chairman, Old Mutual International (Guernsey) Limited (Fairbairn House,
Rohais, St. Peter Port, Guernsey)
Director and Deputy Chairman, Old Mutual Group Limited (22 Church Street,
Hamilton, Bermuda)
Director and Chairman, Old Mutual International Asset Managers (Bahamas)
Limited (Euro Canadian Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual Global Assets Fund Limited (22 Church Street,
Hamilton, Bermuda)
Director and Chairman, Old Mutual International Limited (22 Church Street,
Hamilton, Bermuda)
Director and Deputy Chairman, Old Mutual International Holdings Limited (22
Church Street, Hamilton, Bermuda)
Director and Chairman, Old Mutual Group Services Limited (22 Church Street,
Hamilton, Bermuda)
Director and Chairman, Old Mutual International Developments Limited (22
Church Street, Hamilton, Bermuda)
Director, 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 Marketing Services Limited (P.O. Box 119, Commerce
House, St. Peter Port, Guernsey)
<PAGE>
Chairman, Merriman Services Limited (P.O. Box 119, Commerce House, St.
Peter Port, Guernsey)
Director, Old Mutual Group Achievements Limited (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Chairman, Old Mutual International (Isle of Man) Ltd. (Victory House,
Prospect Hill, Douglas, Isle of Man)
Chairman, Old Mutual International Marketing Services Ltd. (Providence
House, 2 Bartley Way, Hook, Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual Investment Services Ltd. (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Unit Trust Managers Limited (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Omiopt Limited (Mutualpark, Jan Smuts Drive, Pinelands, South
Africa)
Chairman, Old Mutual International (Ireland) Limited (50 Dawson Street,
Dublin, Ireland)
Director, Capel-Cure Myers Capital Management (Holdings) Limited (The
Registry, Royal Mint Court, London, United Kingdom)
Director, Capel-Cure Myers Capital Management Limited (The Registry, Royal
Mint Court, London, United Kingdom)
Director, Central Capital Acquisitions Limited (Providence House, 2 Bartley
Way, Hook, Basingstoke, Hampshire, United Kingdom)
Director, Mutual & Federal Investments Limited (Mutualpark, Jan Smuts
Drive, Pinelands 7405, Cape, South Africa)
Chairman, Old Mutual Asset Managers Holdings (UK) Limited, (5th Floor, 80
Cheapside, London, United Kingdom)
Director, Old Mutual International Holdings (UK) Limited (Providence House,
2 Bartley Way, Hook, Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual Properties (Pty) Limited (Mutualpark, Jan Smuts Drive,
Pinelands 7405, Cape, South Africa)
<PAGE>
Name: William Langley
Position: Chairman, President and Director of the Adviser and Director of OMAM
Holdings
Treasurer and Trustee of the Registrant and the Master Trust
Deputy Chairman and Director of Old Mutual South Africa Growth Assets Fund
Limited (22 Church Street, Hamilton, Bermuda)
Director and Treasurer, Old Mutual Global Assets Fund Limited (22 Church
Street, Hamilton, Bermuda)
Director, Old Mutual Investment Advisers, Inc. (1 Exeter Plaza, 699
Boylston Street, Boston, Massachusetts)
Director and Deputy Chairman, Old Mutual International Asset Managers
(Bermuda) Limited (22 Church Street, Hamilton, Bermuda)
Director, Old Mutual International Asset Managers (Guernsey) Limited
(Fairbairn House, Rohais, St. Peter Port, Guernsey)
Director, OMIAM Services Limited (Fairbairn House, Rohais, St. Peter Port,
Guernsey)
Director and Treasurer, Old Mutual Fund Holdings (Bermuda) Limited (22
Church Street, Hamilton, Bermuda)
Assistant General Manager, Old Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Alternate Director, Old Mutual Group Limited (22 Church Street, Hamilton,
Bermuda)
Alternate Director, Old Mutual International Holdings Limited (22 Church
Street, Hamilton, Bermuda)
Deputy Chairman and Director, Old Mutual Group Services Limited (22 Church
Street, Hamilton, Bermuda)
Alternate Director, Old Mutual International Developments Limited (22
Church Street, Hamilton, Bermuda)
Name: Susan Elizabeth Rouse
Position: Vice President and Alternate Director of the Adviser
Alternate Director of OMAM Holdings
Alternate Director, Old Mutual Global Assets Fund Limited (22 Church
Street, Hamilton, Bermuda)
Alternate Director, Old Mutual Fund Holdings (Bermuda) Limited (22 Church
Street, Hamilton, Bermuda)
<PAGE>
Alternate Director, Old Mutual International Asset Managers (Bermuda)
Limited (22 Church Street, Hamilton, Bermuda)
Alternate Director, Old Mutual Group Limited (22 Church Street, Hamilton,
Bermuda)
Director and Deputy Chairman, Old Mutual International Limited (22 Church
Street, Hamilton, Bermuda)
Alternate Director, Old Mutual International Holdings Limited (22 Church
Street, Hamilton, Bermuda)
Director and President, Old Mutual Group Services Limited (22 Church
Street, Hamilton, Bermuda)
Alternate Director, Old Mutual International Developments Limited (22
Church Street, Hamilton, Bermuda)
Director and Chairman of the Board, Millstream Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Name: Melanie Jane Saunders
Position: Secretary of the Adviser and of OMAM Holdings
Secretary of the Registrant and the Master Trust
Secretary of Old Mutual South Africa Growth Assets Fund Limited (22 Church
Street, Hamilton, Bermuda)
Secretary, Old Mutual Global Assets Fund Limited (22 Church Street,
Hamilton, Bermuda)
Secretary, Old Mutual Fund Holdings (Bermuda) Limited (22 Church Street,
Hamilton, Bermuda)
Secretary, Old Mutual Group Limited (22 Church Street, Hamilton, Bermuda)
Secretary, Old Mutual International Asset Managers (Bermuda) Limited (22
Church Street, Hamilton, Bermuda)
Secretary, Old Mutual International Asset Managers (Bahamas) Limited (Euro
Canadian Centre, Marlborough Street, Nassau, Bahamas)
Secretary, Millstream Ltd. (Euro Canadian Centre, Marlborough Street,
Nassau, Bahamas)
Secretary, Old Mutual International Limited (22 Church Street, Hamilton,
Bermuda)
Secretary, Old Mutual International Holdings Limited (22 Church Street,
Hamilton, Bermuda)
Secretary, Old Mutual Group Services Limited (22 Church Street, Hamilton,
Bermuda)
Secretary, Old Mutual International Developments Limited (22 Church Street,
Hamilton,
<PAGE>
Bermuda)
Item 29. Principal Underwriters.
(a) Warburg Dillon Read LLC (formerly SBC Warburg Dillon Read Inc.),
Barnard Jacobs Mellet (USA) LLC (formerly Rand International Securities LLC) and
Fleming Martin Inc., each a former placement agent of the Registrant, do not act
as underwriter/placement agent, depositor or investment adviser for any
registered investment company (other than the Registrant).
As of August 17, 1998, the OMEGA South Africa Fund ceased offering its
shares. The Placing Agreement with the placing agents was terminated with
effect from September 30, 1998.
(b) The information required by this Item 29 with respect to each director
and officer of Warburg Dillon Read LLC and Fleming Martin Inc. is incorporated
by reference to Schedule A of Form BD filed by Warburg Dillon Read LLC and
Fleming Martin Inc. pursuant to the Securities and Exchange Act of 1934 (File
No. 8-36859 for Warburg Dillon Read LLC and File No. 8-46232 for Fleming Martin
Inc.). The information required by this Item 29 with respect to each director
and officer of Barnard Jacobs Mellet (USA) LLC is incorporated by reference to
Schedule A of Form BD filed by Barnard Jacobs Mellet (USA) LLC pursuant to the
Securities and Exchange Act of 1934 (File No. 8-48591).
(c) Compensation received by each placing agent from the Registrant during
the period from July 1, 1997 to June 30, 1998:
<TABLE>
<CAPTION>
Net Placing Compensation
Name of Discounts and on Redemption Brokerage Other
Placing Agent Commissions and Repurchase Commissions Compensation
------------- ------------- -------------- ----------- ------------
<S> <C> <C> <C> <C>
Fleming Martin Inc. U.S. $2,400.00 - $482,717.15 -
Barnard Jacobs Mellett
(USA) LLC - - $ 39,640.82 -
Warburg Dillon Read LLC U.S. $37,865.92 - $212,543.59 -
</TABLE>
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:
Name Address
---- -------
State Street Bank and Trust Company State Street Bank and Trust Company
1776 Heritage Drive
Quincy, Massachusetts 02171
Old Mutual Asset Managers (Bermuda) Limited 22 Church Street
Hamilton HM 11, Bermuda
Item 31. Management Services.
<PAGE>
Not applicable.
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment to its Registration Statement on Form
N-1A to be signed on its behalf by the undersigned, thereunto duly authorized,
in Hamilton, Bermuda on the 27th day of October, 1998.
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
By: William Langley
William Langley
Treasurer of Old Mutual Equity Growth Assets South Africa Fund
<PAGE>
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940, Old
Mutual South Africa Equity Trust has duly caused this Amendment to the
Registration Statement on Form N-1A of Old Mutual Equity Growth Assets South
Africa Fund to be signed in Hamilton, Bermuda on the 27th day of October, 1998.
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
By: William Langley
William Langley
Treasurer of Old Mutual South Africa Equity Trust
<PAGE>
EXHIBIT INDEX
1(d) Third Amendment to the Declaration of Trust of the Registrant
9(k) Notice of Redemption of Entire Interest in the Master Trust
11(a) Consent of Independent Auditors - KPMG Peat Marwick LLP
11(b) Consent of Independent Auditors - KPMG Peat Marwick
27 Financial Data Schedule
<PAGE>
OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND
Third Amendment to the Declaration of Trust
The undersigned, being a majority of the Trustees of Old Mutual Equity Growth
Assets South Africa Fund (the "TRUST"), a Massachusetts business trust, acting
pursuant to Section 11.7 of the Declaration of Trust, dated as of September 1,
1995 (the "DECLARATION"), of the Trust, as amended by the First Amendment to the
Declaration of Trust dated as of May 27, 1996 and the Second Amendment to the
Declaration of Trust dated as of May 5, 1997, hereby amend the said Declaration
as follows:
1. AMENDMENT. That Section 11.7 of Article XI of the Declaration be, and it is
hereby, amended in its entirety to read as follows:
SECTION 11.7. PRINCIPAL OFFICE AND REGISTERED AGENT.
The name of the registered agent of the Trust is Melanie J. Saunders,
Washington Mall Phase II, 4th Floor, 22 Church Street, Hamilton, Bermuda.
The principal office of the Trust is Washington Mall Phase II, 4th Floor,
22 Church Street, Hamilton, Bermuda. The Trustees may, without the
approval of Holders, change the registered agent of the Trust and the
principal office of the Trust.
2. CONFIRMATION OF DECLARATION. The Declaration as amended hereby is confirmed
and reaffirmed in every particular.
3. PROTECTION OF TRUSTEES. This amendment to the Declaration is not made by
the Trustees of the Trust individually, but as Trustees under the Declaration,
and the obligations under this amendment to the Declaration are not binding upon
any of the Trustees of the Trust individually, but bind only the trust estate.
IN WITNESS WHEREOF, the undersigned have executed this amendment to the
Declaration in Hamilton, Bermuda as of the first day of June, 1998.
------------------------------------------
WILLIAM L. BOYAN
as Trustee
and not individually
John Hancock Mutual Life Insurance Company
John Hancock Place
200 Clarendon Street
Boston, Massachusetts 02116
U.S.A.
____________________________
* Because a Trustee of the Trust, William L. Boyan (John Hancock Mutual Life
Insurance Company, John Hancock Place, 200 Clarendon Street, Boston,
Massachusetts 02116), is a resident of the Commonwealth of Massachusetts,
the Declaration does not name a resident agent in the Commonwealth.
<PAGE>
---------------------------------------
THOMAS HASKINS DAVIS
as Trustee
and not individually
Winchester Global Trust Company Limited
Williams House
20 Reid Street
Hamilton, Bermuda
---------------------------------------
MICHEL JOHN DREW
as Trustee
and not individually
International Services Limited
22 Church Street
Hamilton HM 11, Bermuda
---------------------------------------
WILLIAM LANGLEY
as Trustee
and not individually
Old Mutual Asset Managers (Bermuda) Limited
Washington Mall Phase II, 4th Floor
22 Church Street
Hamilton, Bermuda
---------------------------------------
MICHAEL JOHN LEVETT
as Trustee
and not individually
South African Mutual Life Assurance Society
Mutualpark
Jan Smuts Drive
Pinelands,
<PAGE>
Cape Town, South Africa
<PAGE>
---------------------------------------
KENNETH RIGBY WILLIAMS
as Trustee
and not individually
15 Lime Tree Walk
Virginia Park
Virginia Water
Surrey, United Kingdom
<PAGE>
EXHIBIT 9(k)
Old Mutual Equity Growth Assets South Africa Fund
Washington Mall Phase II, 4th Floor
22 Church Street
Hamilton HM11
Bermuda
September 21, 1998
By Hand
Old Mutual South Africa Equity Trust
Washington Mall Phase II, 4th Floor
22 Church Street
Hamilton HM11
Bermuda
Dear Sirs,
This is a notice that the Old Mutual Equity Growth Assets South Africa Fund
(the "Fund") intends to redeem its entire beneficial interest in the Old Mutual
South Africa Equity Trust (the "Master Trust") effective the close of business
(Boston time) on September 23, 1998.
This notice 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 notice are not binding upon
any of such Trustees or the shareholders of the Fund individually, but bind only
the trust estate of the Fund.
Very truly yours,
Old Mutual Equity Growth Assets
South Africa Fund
By:
------------------------
William Langley
Treasurer
<PAGE>
Accepted and Agreed to this
_____ day of ____________, 1998.
Old Mutual South Africa Equity Trust
By:
--------------------------
William Langley
Treasurer
<PAGE>
EXHIBIT 11(a)
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Old Mutual Equity Growth Assets South Africa Fund:
We consent to the use of our report, dated July 24, 1998, except as to Note E
dated as of August 17, 1998, incorporated herein by reference and to the
reference to our firm under the heading "Independent Accountants" in Part B
of the registration statement.
KPMG Peat Marwick LLP
Boston, Massachusetts
October 26, 1998
<PAGE>
EXHIBIT 11(b)
CONSENT OF INDEPENDENT AUDITORS
The Board of Trustees
Old Mutual South Africa Equity Trust:
We consent to the use of our report, dated July 24, 1998, incorporated herein by
reference and to the reference to our firm under the heading "Independent
Accountants" in Part B of the registration statement.
KPMG Peat Marwick
Chartered Accountants
Hamilton, Bermuda
October 26, 1998
<TABLE> <S> <C>
<PAGE>
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<NAME> OMEGA SOUTH AFRICA FUND
<MULTIPLIER> 1,000
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<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
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