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As filed with the Securities and Exchange Commission on November 8, 1995
File No. 811-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
RICHMOND HOUSE, 12 PAR-LA-VILLE ROAD,
HAMILTON, BERMUDA
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(809) 292-3434
JOHN COLLIS
CLARENDON HOUSE, CHURCH STREET
HAMILTON, BERMUDA
(NAME AND ADDRESS OF AGENT FOR SERVICE)
COPY TO:
ROGER P. JOSEPH, BINGHAM, DANA & GOULD,
150 FEDERAL STREET, BOSTON, MA 02110
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EXPLANATORY NOTE
Beneficial interests in the Registrant are not registered under the
Securities Act of 1933, as amended (the "1933 Act"), because such interests are
issued solely in private placement transactions which do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Registrant generally may be made only by investment companies, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any beneficial interests in the Registrant.
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PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
paragraph 4 of Instruction F of the General Instructions to Form N-1A.
Item 4. General Description of Registrant.
See "Investment Objective and Policies," "South Africa," "The
Portfolio," "Investment Considerations" and "General Information" in the Private
Placement Memorandum for Old Mutual Equity Growth Assets South Africa Fund (the
"OMEGA South Africa Fund"), which is attached hereto.
Item 5. Management of the Fund.
See "Management," "Offering of Shares - Expense Reimbursement" and
"General Information" in the Private Placement Memorandum for the OMEGA South
Africa Fund, attached hereto.
State Street Cayman Trust Company, Ltd. (the "Transfer Agent") will
serve as transfer agent and dividend disbursing agent for Old Mutual South
Africa Equity Trust (the "Master Trust"). The Transfer Agent may delegate
certain of its functions to an affiliated entity. There is no additional fee
charged for transfer agency services for the Master Trust. The principal
business address of the Transfer Agent is P.O. Box 2508, Elizabeth Square,
George Town, Grand Cayman, British West Indies.
Item 6. Capital Stock and Other Securities.
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 over the net
asset value as last determined shall be allocated among the Investors in
accordance with the amounts of their respective Book Capital Account Balances,
and the amount so allocated shall be added to the Book Capital Account Balance
of each Investor; (b) the excess, if any, of the net asset value as last
determined over the net asset value as determined on such Business Day shall be
allocated among the Investors in accordance with the amounts of their respective
Book Capital Account Balances, and the amounts so allocated shall be subtracted
from the respective Book Capital Account Balance of each Investor; (c) after
effecting the adjustments under subparagraphs (a) and (b), the Book Capital
Account Balance of each Investor shall be increased to reflect any capital
contributions in
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respect of the increase of such Investor's interest ("Interest"), to the extent
such Investor's Book Capital Account Balance has not previously been increased
to reflect the same; and (d) after effecting the adjustments under subparagraphs
(a) and (b), the Book Capital Account Balance of each Investor shall be
decreased to reflect the amount of money or the fair market value of property
other than money (net of liabilities secured by such property that the Investor
is considered to assume or take subject to) distributed to such Investor by the
Master Trust in respect of the decrease or redemption of such Investor's
Interest (or in connection with a termination of the Master Trust), to the
extent such Investor's Book Capital Account Balance has not previously been
decreased to reflect the same. The Book Capital Account Balance of each Investor
as determined above shall be the Book Capital Account Balance of such Investor
until the next calculation of such Investor's Book Capital Account Balance.
Questions from Investors should be sent to the Master Trust's
administrator, State Street Cayman Trust Company, Ltd., P.O. Box 2508, Elizabeth
Square, George Town, Grand Cayman, British West Indies.
Subject to an Investor's right to make withdrawals as provided above,
the Master Trust does not make distributions to its Investors.
The Master Trust has determined that it is properly treated as a
partnership for U.S. federal and state income tax purposes. Accordingly, the
Master Trust is not subject to any U.S. federal or state income taxes, but each
Investor in the Master Trust must take into account its share of the Master
Trust's ordinary income and capital gains in determining its income tax
liability. The determination of such share is made in accordance with the
governing instruments of the Master Trust and the U.S. Internal Revenue Code of
1986, as amended, and regulations promulgated thereunder.
The Master Trust intends to conduct its activities so that it will not
be deemed to be engaged in the conduct of a U.S. trade or business for U.S.
federal income tax purposes. Therefore, it is not anticipated that an Investor
in the Master Trust, other than an Investor which would be deemed a "U.S.
person" for U.S. federal income tax purposes, will be subject to U.S. federal
income taxation (other than a 30% withholding tax on dividends and certain
interest income) solely by reason of its investment in the Master Trust. There
can be no assurance that the U.S. Internal Revenue Service may not challenge the
above conclusions or take other positions that, if successful, might result in
the payment of U.S. federal income taxes by Investors in the Master Trust.
See "Summary of the Offering - Portfolio," "Valuation of Shares,"
"Offering of Shares - Closing Procedure," "Tax Matters," "General Information"
and
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"Additional Information" in the Private Placement Memorandum for the OMEGA South
Africa Fund attached hereto.
Item 7. Purchase of Securities Being Offered.
Interests in the Master Trust are issued solely in private placement
transactions which do not involve any "public offering" within the meaning of
Section 4(2) of the Securities Act of 1933 (the "1933 Act"). Investments in the
Master Trust generally may only be made by investment companies, common or
commingled trust funds or similar organizations or entities which are
"accredited investors" within the meaning of Regulation D under the 1933 Act.
This Registration Statement does not constitute an offer to sell, or the
solicitation of an offer to buy, any "security" within the meaning of the 1933
Act.
An investment in the Master Trust is made without a sales load. All
investments are made at net asset value next determined after an order is
received by the Master Trust. There is no minimum initial or subsequent
investment in the Master Trust.
The Master Trust reserves the right to cease accepting investments at
any time or to reject any investment order.
See "Valuation of Shares," "Offering of Shares" and "General
Information" in the Private Placement Memorandum attached hereto.
Item 8. Redemption or Repurchase.
An Investor in the Master Trust may withdraw all or any portion of its
investment at any time after a withdrawal request in proper form is received by
the Master Trust from the Investor. The proceeds of a withdrawal will be paid by
the Master Trust in federal funds normally on the Business Day the withdrawal is
effected, but in any event within seven days. Investments in the Master Trust
may not be transferred. If so authorized by the Trustees with respect to all or
certain Interests, the Master Trust may at any time and from time to time,
charge fees for effecting any decrease or redemption, at such rates as the
Trustees may establish. However, the Trustees have not at this time established
or authorized any such fees.
The Master Trust may declare a suspension of the right to decrease or
redeem Interests or postpone the date of payment of the proceeds of a decrease
or redemption of an Interest 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 Master Trust of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the
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Master Trust fairly to determine the value of its net assets, or (d) during
which the Securities and Exchange Commission (the "Commission") for the
protection of Investors by order permits the suspension of the right of decrease
or redemption or postponement of the date of payment of the proceeds; provided
that applicable rules and regulations of the Commission shall govern as to
whether the conditions prescribed in (b), (c), or (d) exist. Such suspension
shall take effect at such time as the 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 to decrease or redeem
Interests or payment of the proceeds of a decrease or redemption of an Interest
until 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
Commission, the determination of the Master Trust shall be conclusive). In the
case of a suspension of the right to decrease or redeem Interests, an Investor
may either withdraw his request to decrease or redeem Interests or receive
payment based on the net asset value upon the termination of the suspension.
See "Redemptions" in the Private Placement Memorandum attached hereto.
Item 9. Pending Legal Proceedings.
Not applicable.
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CONFIDENTIAL Offeree:
PRIVATE PLACEMENT MEMORANDUM Number:
OMEGA SOUTH AFRICA FUND
(OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND)
INITIAL OFFERING
OF UP TO 10,000,000
SHARES OF BENEFICIAL INTEREST
AT U.S.$100 PER SHARE
The Shares offered hereby have not been and will not be registered under
the Securities Act of 1933, as amended, or any state securities laws. Neither
the Securities and Exchange Commission nor any state securities authority has
reviewed this Private Placement Memorandum or passed upon the merits of this
offering. The Fund will register as an investment company under the Investment
Company Act of 1940, as amended.
The Shares will be subject to restrictions on transfer, and there will be
no public market for the Shares.
This Private Placement Memorandum does not constitute an offer to sell, or
the solicitation of an offer to purchase, the Shares in any jurisdiction in
which such offer or solicitation is not authorized or to or from any person
unless the name of such person and a control number appear above on this cover
page.
This Private Placement Memorandum is confidential and is not to be
reproduced or circulated, in whole or in part, without the prior written
approval of the Placement Agent. This Private Placement Memorandum has been
prepared solely for use in connection with the Initial Offering of the Shares.
The Placement Agent has not independently verified any of the information
contained in this Private Placement Memorandum (financial, legal, or otherwise),
and no representation or warranty, express or implied, is made by the Placement
Agent as to the accuracy or completeness of the information contained herein. No
person is authorized to give any information or make any representation not
contained in this Private Placement Memorandum in connection with the Initial
Offering and, if given or made, such information or representation must not be
relied on as having been authorized by the Fund or the Placement Agent. The
delivery of this Private Placement Memorandum at any time does not imply that
information in this Private Placement Memorandum is correct as of any time
subsequent to the date of this Private Placement Memorandum.
S.G.WARBURG & CO. INC. INTERNATIONAL FINANCE CORPORATION
PLACEMENT AGENT STRUCTURING AGENT
September 15, 1995
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INVESTMENT HIGHLIGHTS
SOUTH AFRICA
- South Africa, with the largest economy in Africa, has exciting growth
potential no longer constrained by international sanctions.
- South Africa combines the potential of a developing economy with the
infrastructure and corporate culture more typical of an advanced
industrialized country.
- The earnings of companies included in The Johannesburg Stock Exchange
("JSE") Actuaries All Share Index are forecast to grow by 63% from
September 1995 through December 1997. Assuming constant share prices and
projected earnings growth, the price earnings multiple of the JSE
Actuaries All Share Index, which at August 31, 1995 was 15.9 times,
would fall to 11.9 times at December 31, 1996 and to 9.8 times at
December 31, 1997.*
OLD MUTUAL
- Old Mutual is South Africa's largest financial institution with over
U.S.$35 billion of assets under management, which includes over U.S.$20
billion of equity securities.
- Old Mutual has actively managed South African equity portfolios for over
30 years.
- Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned subsidiary
of Old Mutual, will be the investment adviser.
THE FUND
- The OMEGA South Africa Fund offers investors the opportunity to invest
in an established portfolio initially representing 60 South African
issuers.
<TABLE>
<S> <C>
Size: U.S.$1 billion, allowing investors to establish
significant holdings.
Portfolio: Created from an existing portfolio with an equity
portion that has achieved an average annual total
return for the seven fiscal years to June 30, 1995 of
4.6% above that of the JSE Actuaries All Share Index
over the same period. Allows immediate exposure to
the JSE without market impact.
Redemptions: Investors may request redemption of Shares on any
Business Day.
Liquidity: Provided by a separate pool of securities established
by Old Mutual to fund Share redemptions. This will
allow the Fund to remain fully invested and will
reduce its trading costs.
Operating Expenses: Ordinary operating expenses of the Fund, including
the Management Fee, will not exceed 1.00% per annum
of the Fund's daily net assets.
</TABLE>
The above Investment Highlights are qualified in their entirety by the
information set forth elsewhere in this Private Placement Memorandum (this
"Memorandum"). Investors should carefully review this Memorandum before
investing.
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*Based upon the average of earnings forecasts provided by Davis Borkum Hare &
Co. Inc.; Ivor Jones, Roy & Co. Inc.; and Martin & Co., three South African
brokerage firms that are not affiliated with Old Mutual.
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OLD MUTUAL
EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
SUMMARY OF THE OFFERING
This Summary is qualified in its entirety by the information set forth
elsewhere in this Private Placement Memorandum (this "Memorandum"). Investors
should carefully review this Memorandum before investing.
FUND.......................... Old Mutual Equity Growth Assets South Africa
Fund (the "OMEGA South Africa Fund") is a
Massachusetts business trust that will seek
long-term total return in excess of that of The
Johannesburg Stock Exchange ("JSE") Actuaries
All Share Index from investment in equity
securities of South African issuers. Under
normal circumstances, at least 95% of the
Fund's total assets will be invested in equity
securities of South African issuers that are
listed on a securities exchange.
For purposes of the Fund's investment policies,
a South African issuer is an issuer that meets
one of the following tests: (i) its principal
offices or operations are located in South
Africa; or (ii) it derives at least 50% of its
revenues from operations or investments in
South Africa. See "INVESTMENT OBJECTIVE AND
POLICIES".
MASTER TRUST.................. Rather than directly acquire and manage its own
portfolio of securities, the OMEGA South Africa
Fund will invest all of its investable assets
in Old Mutual South Africa Equity Trust (the
"Master Trust"), a Massachusetts trust with its
principal place of business in Bermuda that has
the same investment objective as the OMEGA
South Africa Fund.
ALL REFERENCES IN THIS MEMORANDUM TO THE "FUND"
APPLY TO BOTH THE OMEGA SOUTH AFRICA FUND AND
THE MASTER TRUST, EXCEPT AS OTHERWISE
INDICATED.
INVESTMENT ADVISER............ Old Mutual Asset Managers (Bermuda) Limited
(the "Adviser") will be the investment adviser
to the Master Trust. The Adviser is a
wholly-owned subsidiary of the South African
Mutual Life Assurance Society ("Old Mutual"),
which is the largest (in terms of 1994 year-end
total assets) and oldest insurer in South
Africa. At June 30, 1995 Old Mutual had total
assets under management of over U.S.$35
billion. The OMEGA South Africa Fund will not
have a separate investment adviser, because it
will invest all of its investable assets in the
Master Trust.
The Master Trust will pay the Adviser a
management fee of 0.85% per annum of the Master
Trust's daily net assets (the "Management
Fee"). The Management Fee will accrue
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daily on an annualized basis and be paid
monthly in arrears. See "MANAGEMENT --
Adviser".
INITIAL OFFERING.............. The OMEGA South Africa Fund is offering up to
10 million shares of its beneficial interest
(the "Shares") at a price of U.S.$100 per Share
(totaling U.S.$1 billion), payable in cash at
the closing of the initial issuance of Shares
(the "Initial Closing"). The minimum purchase
for any investor is 50,000 Shares (U.S.$5
million), provided the minimum purchase may, in
particular circumstances, be reduced for
certain investors to not less than 10,000
Shares (U.S.$1 million). The termination date
of the initial offering (the "Initial
Offering") is November 7, 1995 (the "Initial
Offering Termination Date"). No minimum size
for the Initial Offering has been established.
The Shares are being offered and sold only to
investors that are "accredited investors" as
defined in Regulation D under the Securities
Act of 1933, as amended (the "1933 Act"). See
"OFFERING OF SHARES -- Initial Offering".
PORTFOLIO..................... Old Mutual will, shortly before the Initial
Closing, transfer to the Master Trust a
portfolio of South African securities (the
"Portfolio") from Old Mutual's main proprietary
investment portfolio (the "Old Mutual Main
Fund"). At the time it is transferred to the
Master Trust, the Portfolio will have a market
value of approximately U.S.$1 billion and will
comprise holdings in 60 South African issuers.
The Portfolio will reflect the equity holdings
of the Old Mutual Main Fund, subject to
adjustments to exclude companies that are not
South African issuers under the Fund's
investment policies, to consolidate the
weightings of companies within a pyramid group
into a single holding, to reduce the weighting
of larger holdings, to exclude holdings that
represent an insignificant part of the Old
Mutual Main Fund, to consolidate holdings of
different classes of equity securities in the
same company into a single class, and to
exclude companies investing primarily in real
estate. Stamp duty due in respect of the
transfer of the Portfolio will be paid by Old
Mutual. See "THE PORTFOLIO". In addition, Old
Mutual will, shortly before the Initial
Closing, make a capital contribution of up to
U.S.$5 million to the Master Trust.
As consideration for the acquisition of the
Portfolio and for the capital contribution, the
Master Trust will issue substantially all of
its beneficial interest to Old Mutual Fund
Holdings (Bermuda) Limited ("Old Mutual
Bermuda"), a wholly-owned subsidiary of Old
Mutual.
INITIAL CLOSING............... The Initial Closing is expected to be held on
November 10, 1995 (or any earlier date on which
all Shares offered have
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been subscribed for). At the Initial Closing
the OMEGA South Africa Fund will issue the
Shares subscribed for in the Initial Offering.
The OMEGA South Africa Fund will invest the
proceeds of the Initial Offering in the Master
Trust and will be issued a proportionate
beneficial interest in the Master Trust. The
Master Trust will apply the proceeds to redeem
a corresponding portion of the interest of Old
Mutual Bermuda in the Master Trust.
Old Mutual Bermuda will, in turn, invest the
proceeds received from the Master Trust in Old
Mutual Global Assets Fund Limited, a mutual
fund organized under the laws of Bermuda that
will invest in a portfolio of South African and
international securities (the "Global Fund").
Old Mutual prior to the Initial Closing will
also arrange for the transfer to the Global
Fund of approximately U.S.$500 million of South
African securities. Investors in Shares will
not acquire any interest in the Global Fund.
Instead, the Global Fund is designed to provide
a pool of securities to fund redemptions of
Shares, as noted under "Redemptions and
Liquidity Facility" below. Old Mutual
established the Global Fund pursuant to the
approval of the South African Reserve Bank for
the transfer of the Portfolio out of South
Africa to the Master Trust. Old Mutual Bermuda
will be the sole shareholder of the Global
Fund. See "LIQUIDITY FACILITY AND THE GLOBAL
FUND".
VALUATION OF SHARES........... The net asset value per Share will be
determined as of 10:00 a.m. (Eastern time) on
each day on which the New York Stock Exchange
is open for trading (a "Business Day"). The
Fund will generally value JSE listed securities
based on their current JSE ruling price, and
convert prices from South African rand ("S.A.
Rand") to U.S. dollars using exchange rates
prevailing as of the time the net asset value
is to be determined. Trading may take place in
securities held by the Master Trust on days
that are not Business Days and on which it will
not be possible to purchase or redeem Shares.
See "VALUATION OF SHARES".
DIVIDENDS..................... Dividend income from the OMEGA South Africa
Fund is not expected to be a significant
portion of the long-term total return.
Substantially all of the Fund's net income from
dividends and interest will be distributed to
registered holders of Shares ("Shareholders")
semi-annually on or about the last day of June
and December of each year commencing in June
1996. The Fund's net realized capital gains
will be distributed to the Shareholders at
least annually. Dividends may be automatically
reinvested at the written election of the
investor, provided the OMEGA South Africa Fund
reserves the right to suspend or terminate this
reinvestment privilege.
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REDEMPTIONS AND LIQUIDITY
FACILITY..................... Investors may request redemption of Shares on
any Business Day. The office of the Transfer
Agent will be open to accept redemption
requests from 12:00 noon to 4:00 p.m. (Eastern
time) on every Business Day.
In order to fund redemptions, the OMEGA South
Africa Fund will redeem a corresponding portion
of its interest in the Master Trust. To the
extent required to provide funds for redeeming
Shares, Old Mutual Bermuda will withdraw monies
from the Global Fund and invest those monies in
the Master Trust (the "Liquidity Facility").
Old Mutual Bermuda may not terminate the
Liquidity Facility without giving at least 120
days notice to Shareholders for so long as the
Adviser serves as investment adviser to the
Master Trust. Any termination of the Liquidity
Facility would not affect Shareholder
redemption rights.
Shares will be redeemed at net asset value (as
next determined) subject to a redemption fee
charged by the OMEGA South Africa Fund of 1.75%
of redemption proceeds (the "Redemption Fee").
For so long as Old Mutual Bermuda provides the
Liquidity Facility, the OMEGA South Africa Fund
will pay to Old Mutual Bermuda amounts
collected in respect of the Redemption Fee as
compensation for the Liquidity Facility.
The Fund believes that the Liquidity Facility
will reduce the trading costs of the Fund. See
"REDEMPTIONS" and "LIQUIDITY FACILITY AND THE
GLOBAL FUND".
INITIAL OFFERING PLACEMENT
ARRANGEMENTS................. The OMEGA South Africa Fund has engaged
S.G.Warburg & Co. Inc. to act as the placement
agent for the Initial Offering (the "Placement
Agent"). The Master Trust will pay the
Placement Agent a placement fee equal to 0.25%
of the initial offering price of the Shares
sold in the Initial Offering. The Master Trust
will also pay Old Mutual Bermuda an amount
equal to 0.25% of the value of the interest it
retains in the Master Trust immediately
following the Initial Closing. The OMEGA South
Africa Fund's net asset value per Share
immediately following the Initial Closing is
expected to be U.S.$99.75. See "OFFERING OF
SHARES -- Initial Offering".
INITIAL OFFERING SUBSCRIPTION
PROCEDURE.................... Investors that wish to subscribe for Shares in
the Initial Offering are required to complete
the Subscription Booklet circulated by the
Placement Agent. All subscriptions are subject
to acceptance by the OMEGA South Africa Fund.
Investors will be provided with the
Subscription Booklet and
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payment instructions shortly before the Initial
Offering Termination Date. See "OFFERING OF
SHARES -- Subscription Procedure".
SECOND OFFERING............... After the Initial Closing, the OMEGA South
Africa Fund expects to offer any remaining
Shares at a price equal to their net asset
value plus a sales charge of 0.25% of the
offering price (the "Second Offering"). The
Second Offering will continue until the first
to occur of (i) the placement of all remaining
Shares, and (ii) the date 6 months following
the Initial Closing. During the Second
Offering, Shares will be offered continuously
and may be purchased on any Business Day. The
OMEGA South Africa Fund may engage broker-
dealers in addition to the Placement Agent to
offer and sell Shares in the Second Offering.
See "OFFERING OF SHARES -- Second Offering and
Further Offerings".
FURTHER OFFERINGS............. Following completion of the Second Offering,
the OMEGA South Africa Fund may, from time to
time, offer any Shares, including Shares unsold
in the Second Offering or redeemed by the OMEGA
South Africa Fund, upon prices and terms to be
determined by the OMEGA South Africa Fund,
provided that in no case will the OMEGA South
Africa Fund offer Shares for less than their
net asset value. See "OFFERING OF SHARES --
Second Offering and Further Offerings".
SERVICING FEE................. The Adviser (or another subsidiary of Old
Mutual) will, on the third anniversary of the
Initial Closing, pay an affiliate of the
Placement Agent from its own resources a
servicing fee with respect to Shares that are
(i) sold in the Initial Offering or Second
Offering, and (ii) continuously outstanding
through the third anniversary of the Initial
Closing ("Qualifying Shares"). The servicing
fee will be equal to 0.125% per annum of the
proportion of the Master Trust's daily net
assets represented by the Qualifying Shares
during the period ending on such third
anniversary. All or part of the servicing fee
may be reallowed to any other broker-dealers
that participate in the Second Offering. See
"OFFERING OF SHARES -- Servicing Fee".
TRANSFER OF SHARES............ There will be no public market for the Shares.
Transfers of Shares will be subject to
restrictions for purposes of complying with
securities laws. One or more broker-dealers,
including S.G. Warburg & Co. Inc., may on a
private basis arrange purchases and sales of
Shares. However, no party is obligated to
arrange purchases and sales of Shares, and
there can be no assurance that any private
market for Shares will, if established, be
continued. See "GENERAL INFORMATION --
Transfers of Shares".
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NON-U.S. FUND................. The Old Mutual SAGA Fund, a mutual fund
organized under the laws of Bermuda (the
"Non-U.S. Fund"), may also acquire a beneficial
interest in the Master Trust upon the same
terms and conditions as the OMEGA South Africa
Fund. Shares of the Non-U.S. Fund will be
offered outside of the U.S. to non-U.S.
investors. The operating expenses, distribution
policies, and sales charges of the OMEGA South
Africa Fund and the Non-U.S. Fund may not be
identical, although it is intended that the
sales charges for the OMEGA South Africa Fund
and the Non-U.S. Fund will be the same for the
Initial Offering and the Second Offering.
CERTAIN TAX MATTERS........... For investors subject to U.S. federal income
tax, OMEGA South Africa Fund dividends and
capital gains distributions will be subject to
federal income tax and may be subject to state
and local taxes. Prior to purchasing Shares,
investors should consult with their tax
advisers concerning the consequences of an
investment in the OMEGA South Africa Fund. See
"TAX MATTERS".
INVESTMENT COMPANY ACT........ Each of the OMEGA South Africa Fund and the
Master Trust will register prior to the Initial
Closing as an investment company under the
Investment Company Act of 1940, as amended (the
"1940 Act"). Neither the Securities and
Exchange Commission nor any state securities
authority has reviewed this Memorandum or
passed upon the merits of the Fund or the
Shares.
ERISA......................... Assets of the Fund will not be considered "plan
assets" of Shareholders that are pension or
benefit plans subject to the Employee
Retirement Income Security Act of 1974, as
amended ("ERISA"). The OMEGA South Africa Fund
does not impose a limit on the number of Shares
that may be held by ERISA investors. See "ERISA
MATTERS".
MANAGEMENT.................... The Fund is supervised by a board of trustees.
State Street Bank and Trust Company, either
directly or through an indirect wholly-owned
subsidiary, has agreed to provide certain
administrative services to the Fund. See
"MANAGEMENT".
STRUCTURING AGENT............. International Finance Corporation is acting as
structuring agent for the Fund and in that
capacity is providing advice on the
organization of the Fund and its business
arrangements. The Master Trust has agreed to
pay the structuring agent a structuring fee of
U.S.$250,000.
CUSTODIAN AND SUB-CUSTODIAN... State Street Bank and Trust Company will serve
as custodian for the Master Trust and the OMEGA
South Africa Fund. Standard Bank of South
Africa will serve as sub-
6
<PAGE> 15
custodian for the Master Trust's South African
registered assets.
TRANSFER AGENT................ State Street Bank and Trust Company will serve
as transfer agent for the OMEGA South Africa
Fund (the "Transfer Agent").
VOTING RIGHTS................. Shareholders will be entitled to vote on the
election of the trustees of the Fund and on
certain important matters, including (i)
certain amendments to the declarations of trust
of the OMEGA South Africa Fund and the Master
Trust, (ii) changes in the investment objective
and fundamental investment restrictions, and
(iii) material amendments to the investment
advisory agreement between the Master Trust and
the Adviser, or the adoption of a new
investment advisory agreement.
REPORTS TO SHAREHOLDERS....... The OMEGA South Africa Fund will furnish
audited annual financial statements and
unaudited semi-annual financial statements to
Shareholders. In addition, the OMEGA South
Africa Fund will provide annual tax information
to Shareholders.
EXPENSES...................... The OMEGA South Africa Fund and the Master
Trust will amortize their organizational and
offering expenses (other than the placement fee
and the amount payable to Old Mutual Bermuda at
the Initial Closing), which are estimated at
less than 0.20% of the net asset value of the
Master Trust at the Initial Closing, over a
period of five years. The OMEGA South Africa
Fund and the Master Trust will be responsible
for the ongoing expenses of conducting their
affairs. See "GENERAL INFORMATION -- Expenses".
The OMEGA South Africa Fund will reimburse the
Adviser for certain marketing expenses incurred
(or advanced to the Placement Agent or others)
by the Adviser in the placement of Shares,
provided the amount of such reimbursements in
any year will not exceed 0.05% of the average
daily net assets of the OMEGA South Africa Fund
for such year. See "OFFERING OF SHARES --
Expense Reimbursement".
INVESTMENT CONSIDERATIONS..... The Fund will invest primarily in securities of
South African issuers and will, as a result, be
particularly subject to risks affecting South
Africa. Investment in South Africa is subject
to various risks, including political
uncertainties. South African securities markets
are less liquid than securities markets in more
developed countries. See "INVESTMENT
CONSIDERATIONS".
7
<PAGE> 16
INVESTMENT OBJECTIVE AND POLICIES
INTRODUCTION
Old Mutual will, shortly before the Initial Closing, transfer to the Master
Trust an existing portfolio of South African securities which will provide
investors with immediate exposure to the South African market. The Portfolio
will comprise holdings in 60 South African issuers representing a substantial
cross-section of the JSE and was built up over a number of years by Old Mutual's
fund managers. The Portfolio will have an initial market value of approximately
U.S.$1 billion and will, following its transfer, be managed in accordance with
the investment objective and policies of the Master Trust described below.
INVESTMENT OBJECTIVE
The Fund's investment objective is long-term total return in excess of that
of the JSE Actuaries All Share Index from investment in equity securities of
South African issuers. There can be no assurance that the Fund will achieve its
investment objective.
INVESTMENT POLICIES
The OMEGA South Africa Fund will seek to achieve its investment objective
by investing all of its investable assets in the Master Trust.
The Master Trust will seek to achieve its investment objective by investing
in equity securities of South African issuers. Under normal circumstances, at
least 95% of the Master Trust's total assets will be invested in equity
securities of South African issuers that are listed on a securities exchange.
The Master Trust may invest up to 5% of its total assets in securities that are,
at the time of the investment, not listed on a securities exchange (although
such investments will generally be limited to securities that are expected to be
listed on an exchange within a reasonable period of time).
In managing the Master Trust's assets the Adviser will not speculate for
short-term gain but will focus on securities that, in the Adviser's opinion, are
likely to show long-term improvements in profits and cash flow. Less weight will
be accorded to short-term and cyclical factors. This approach is designed to
result in strong dividend growth and capital appreciation. Historically, South
African issuers have retained a high proportion of earnings and, if this policy
continues, it is likely that the long-term total return would largely be in the
form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common
stock, and securities that participate in profits in a similar manner to common
stock. Equity securities may be purchased in the form of American Depositary
Receipts, European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
CERTAIN RESTRICTIONS
Limitation on Investment in a Single Issuer. The Master Trust will not
purchase securities of any issuer if, upon completion of the purchase, (i) more
than 7.5% of the Master Trust's assets (taken at market value) would be invested
in securities of the issuer, or (ii) the Master Trust would own in excess of 10%
of the voting securities of the issuer.
8
<PAGE> 17
Limitation on Investment in Old Mutual Group Controlled Issuers. The Fund
will not purchase securities of any issuer in which Old Mutual, its wholly-owned
subsidiaries, and investment vehicles managed by Old Mutual or its wholly-owned
subsidiaries (collectively, the "Old Mutual Group") own in the aggregate in
excess of 50% of the outstanding equity interest or where the acquisition would
result in the Old Mutual Group owning in the aggregate in excess of 50% of the
outstanding equity interest, provided this restriction (i) will not apply to the
OMEGA South Africa Fund's investment in the Master Trust or to the acquisition
of the Portfolio and (ii) will not prohibit the Fund from electing to receive
dividends consisting of securities, or exercising rights issued in a rights
offering, upon the same terms generally available to other investors.
Limitation on Control or Participation in Takeovers. The Fund will not
participate in any effort to replace the management of any issuer or take legal
or management control of any issuer, provided this restriction will not prohibit
the Fund from (i) accepting a tender or takeover offer made generally to holders
of particular securities or (ii) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or indirectly,
organized by a member of the Old Mutual Group. This restriction will not apply
to the OMEGA South Africa Fund's investment in the Master Trust.
Borrowing. The Fund will not borrow money or purchase securities on
margin, except the Fund may, as a temporary measure for extraordinary or
emergency purposes, borrow from banks in an amount not to exceed 5% of the value
of the Fund's net assets.
Temporary Investments. For temporary defensive purposes, the Master Trust
may invest in high quality money market or short-term debt securities
denominated in U.S. dollars or another currency.
Short Positions. The Master Trust will not make short sales of securities
or maintain a short position.
Hedging and Derivative Securities. The Master Trust does not intend to
engage in currency hedging, although the Master Trust reserves the right to do
so. While the Master Trust is permitted to purchase derivative securities, it
does not expect that these will represent a significant portion of its
portfolio. Not more than 5% of the net assets of the Master Trust may be applied
to margin payments on futures contracts (other than hedging contracts).
Portfolio Turnover. The Master Trust will sell securities whenever the
Manager believes that an issuer's long-term potential to increase its cash flow
and dividends has been reduced or if cash is needed to invest in issuers which
have better long-term growth potential, without regard to the length of time the
securities have been held. The Adviser does not intend to pursue short-term
trading opportunities. The turnover rate of the Master Trust is not expected to
exceed 25% annually.
ADDITIONAL RESTRICTIONS
Certain other restrictions are described under "GENERAL INFORMATION --
Certain Conflicts of Interest". The Fund's registration statement under the 1940
Act will contain additional restrictions on the investment policies of the Fund.
The proposed form of the Fund's registration statement will be provided to
potential investors upon request.
GENERAL
The investment objective of the OMEGA South Africa Fund described under
"Investment Objective" above may not be changed materially except by a majority
vote of Shareholders.
9
<PAGE> 18
The Master Trust has undertaken to the OMEGA South Africa Fund and the
Non-U.S. Fund that it will not make any material change to its investment
objective described under "Investment Objective" above or to its investment
policies described under "Investment Policies" above except in unforeseen
circumstances and with the approval of a majority vote of the Shareholders and a
majority vote of shareholders of the Non-U.S. Fund.
Except as otherwise indicated, the investment policy and restrictions of
the OMEGA South Africa Fund and the investment restrictions of the Master Trust
may be changed without Shareholder approval.
The percentage limitations set forth above, as well as those described
elsewhere in this Memorandum and in the Fund's registration statement under the
1940 Act, are measured and applied only at the time an investment is made or
another relevant action is taken by the Fund.
SOUTH AFRICA
South Africa, with the largest economy in Africa in terms of GDP, has, in
the opinion of the Adviser, exciting growth potential no longer constrained by
international sanctions. The Adviser believes that South Africa combines the
potential of a developing economy with the infrastructure and corporate culture
more typical of an advanced industrialized country.
GENERAL
Until April 1994, political power in South Africa lay largely in the hands
of the white minority. The system of apartheid created considerable social and
political tensions and led to the progressive isolation of South Africa from the
world community. In April 1994, the Government of National Unity (the
"Government") was formed as a result of South Africa's first multi-racial, fully
democratic elections. The Government's majority party is the African National
Congress ("ANC"), which is led by President Nelson Mandela. The success of the
elections has removed important obstacles to growth and created an environment
that is more conducive to both domestic and foreign investments. Although
generally smooth, the transition to democratic rule has been accompanied by
localized violence and social unrest which may continue in the future.
THE STATE OF THE BUSINESS CYCLE
The South African economy has been in recovery from June 1993, following
the longest post-war recession from March 1989 to May 1993. During this
recession real GDP declined by more than 5% from peak to trough. The recovery
from around mid-1993 was partly of a cyclical nature in the form of rising
commodity prices, a sharp recovery in agricultural output following the end of
the drought in 1993, and rising exports owing to the upswing in the economies of
some of South Africa's trading partner countries. More fundamentally, in the
view of the Adviser, the relatively smooth political transition, the official
end of sanctions, and the gradual normalization of the country's international
relations strongly supported the recovery through improved business (local and
foreign) and consumer confidence.
Real GDP grew by 1.1% in 1993 and 2.3% in 1994. Growth was particularly
robust during the second half of 1994 when real GDP rose at an annualized rate
of over 5%. Although the pace of the recovery slowed significantly in the first
half of 1995 under the impact of declines in agricultural and mining production
and a more restrictive economic policy, the Adviser believes that the underlying
growth momentum is sufficient to register real GDP growth of close to 3% in
1995.
10
<PAGE> 19
Regarding longer term prospects, the South African Reserve Bank, in its
June 1995 Quarterly Bulletin, noted a number of favorable factors which, in the
view of the South African Reserve Bank, should ensure the continuation of
relatively strong economic growth for a fairly long period of time. These
include, among other things, ongoing global growth benefiting domestic
exporters, continued domestic consumer and business confidence in view of the
relatively stable political conditions in the country, more favorable conditions
for fixed capital expansion, and the low level of South Africa's foreign debt,
allowing room for foreign borrowing to finance the importation of capital goods.
The following table shows the current real GDP growth forecasts for 1995
and 1996 of four prominent South African institutions:
- --------------------------------------------------------------------------------
REAL GDP GROWTH FORECASTS
% CHANGE
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
Bureau for Economic Research................. 2.9 3.4
Davis Borkum Hare & Co. Inc. ................ 3.0 3.4
Ivor Jones, Roy & Co. Inc. .................. 3.0 3.5
Martin & Co. ................................ 3.0 3.3
</TABLE>
- --------------------------------------------------------------------------------
SOUTH AFRICA'S INHERENT STRENGTHS
The South African economy is substantial by the standard of the "emerging
market" countries. It is by far the largest economy in Africa, with a GDP of
over U.S.$120 billion, more than twice the size of any other African economy.
The Adviser believes that there are particular features that could enhance
the performance of the South African economy in the medium term.
The Removal of Sanctions. With the lifting of sanctions, South Africa has
improving access to world markets and should benefit from any global economic
recovery. The Adviser expects that the removal of trade barriers, together with
South Africa's full participation in the Marrakech Agreement on world trade,
will lead to considerable changes in the economy, offering attractive
opportunities for domestic and foreign investors. South African exporters stand
to benefit from new trade flows.
Public Sector Investment. Given the underdeveloped state of large parts of
South Africa and its rapid population growth, the Adviser expects that the
Government will make substantial investments in infrastructure and development
projects. Housing, electrification, and water provision are important
priorities, and several related sectors, such as construction, engineering, and
building materials, may benefit from development projects.
Access to Foreign Capital. South Africa has repaid large amounts of
foreign debt since 1986. By the end of 1994 total outstanding foreign debt
denominated in foreign currency amounted to U.S.$18.6 billion, or 14.6% of GDP,
down from U.S.$23.7 billion, or 47.8% of GDP in 1985. Over the same period the
share of export earnings absorbed by interest payments on the outstanding debt
declined from 11.5% to 6.4%. The Adviser believes that these lower levels of
foreign debt, combined with South Africa's enhanced international standing,
should allow the country renewed access to international capital markets. This
more favorable environment has already resulted in capital flows (not related to
reserves) reversing from an outflow of S.A. Rand 15.0 billion in 1993 to inflows
of S.A. Rand 5.2 billion in 1994 and a further S.A. Rand 9.8 billion during the
first half of 1995.
11
<PAGE> 20
A Sophisticated Business Environment. South Africa's corporate environment
is, in the opinion of the Adviser, generally characterized by large, well
organized companies, of which a number are world class in their respective
industries. Many of these companies have considerable technical expertise and
entrepreneurial skills. Furthermore, a strong framework of commercial law
exists.
Mineral wealth. South Africa is a leading world producer of gold,
platinum, chromium, diamonds, and other strategic minerals in terms of volumes
produced.
ECONOMIC MANAGEMENT
The Adviser believes that the economic policies of the Government are
broadly market-oriented and that the maintenance of macro-economic stability
will remain a high priority. Evidence of this is to be found in the recent
abolition of the financial rand system, South Africa's signing of the Marrakech
Agreement on world trade, and the stated intention of the Government to
gradually reduce the budget deficit and consider the sale of certain state
assets.
Over the past several years, the South African Reserve Bank has pursued a
conservative monetary policy aimed at protecting the exchange rate and reducing
inflation. This policy has brought results, with average inflation being reduced
from 15.3% in 1991 to 9.0% in 1994. The rate of Consumer Price Index inflation
from July 1994 to July 1995 was 9.0%.
Furthermore, South Africa's relations with the International Monetary Fund
and the World Bank are being normalized, and the Adviser expects that this will
have a stabilizing effect upon economic management.
THE JOHANNESBURG STOCK EXCHANGE
The aggregate market capitalization of South African equity securities
listed on the JSE was S.A. Rand 872 billion (U.S.$241 billion) as at July 31,
1995. The actual float for public trading is significantly smaller than the
aggregate market capitalization because of the large number of long-term
holdings by listed holding companies in listed subsidiaries and associates, the
existence of listed pyramid companies, and cross holdings between listed
companies. Historically, liquidity on the JSE (measured by reference to the
total market value of securities traded as a percentage of the total market
capitalization) has been low, being 6.5% on an annualized basis in the seven
month period ended July 31, 1995. Although as at July 31, 1995 there were 646
listed companies on the JSE, market capitalization and trading is concentrated
in a relatively small number of companies. As at July 31, 1995 the 15 largest
companies by market capitalization represented approximately 39% of the JSE
Actuaries All Share Index. As at July 31, 1995 the average annual dividend yield
for companies listed on the JSE was approximately 2.5%.
South Africa was included in both the Morgan Stanley Capital International
("MSCI") and the International Finance Corporation ("IFC") emerging market
indices in March and April 1995, respectively. South Africa has a significant
representation in these emerging markets indices with weightings of 11.0% in
MSCI's Emerging Markets Global Index, 12.9% in the IFC's Global Index, and 23.0%
in the IFC's Investable Index as of July 31, 1995.
12
<PAGE> 21
The following table shows the compound annual average increase, in U.S.
dollar terms, in the JSE Actuaries All Share Index compared with the S&P 500
Index over the periods listed below to August 31, 1995.
<TABLE>
<CAPTION>
PERIODS TO AUGUST 31, 1995
-----------------------------
3 YEARS 5 YEARS 7 YEARS
------- ------- -------
<S> <C> <C> <C>
JSE Actuaries All Share Index*.................................. 22.0% 14.4% 17.9%
------- ------- -------
S&P 500 Index................................................... 10.7% 11.7% 11.5%
------- ------- -------
</TABLE>
- ---------------
* Figures converted to U.S. dollars using the Financial S.A. Rand exchange rate
where applicable.
THE PORTFOLIO
Old Mutual will, shortly before the Initial Closing, transfer to the Master
Trust a portfolio of South African securities (the "Portfolio") from the Old
Mutual Main Fund. The holdings to be included in the Portfolio have been
identified by Old Mutual and are listed on Exhibit A to this Memorandum. At the
time it is transferred to the Master Trust, the Portfolio will have a market
value, based on latest available market prices, of approximately U.S.$1 billion,
and pro rata increases or decreases in the number of securities in each holding
set forth on Exhibit A will be made in order to achieve this market value.
At the time the Portfolio is transferred, it will reflect the equity
holdings of the Old Mutual Main Fund, subject to adjustments to exclude
companies that are not South African issuers under the Fund's investment
policies, to consolidate the weightings of companies within a pyramid group into
a single holding (a pyramid group is one where the parent has as its only
material asset an interest in another listed company), to reduce the weighting
of larger holdings so that none of them represents more than 5% of the
Portfolio, to exclude holdings that represent an insignificant part of the Old
Mutual Main Fund, to consolidate holdings of different classes of equity
securities in the same company into a single class, and to exclude companies
investing primarily in real estate. Stamp duty due in respect of the transfer of
the Portfolio will be paid by Old Mutual.
The Portfolio was built up over 30 years and includes a broad cross section
of blue-chip South African shares. It also includes a selection of medium and
small capitalization stocks. It is slightly underweight in mining stocks and
overweight in industrial issuers. At August 31, 1995 it had an historic price
earnings ratio of 19.2 and an annual dividend yield of 2.1%.
OLD MUTUAL MAIN FUND
The Old Mutual Main Fund is Old Mutual's principal investment fund and is
held generally for the benefit of Old Mutual policyholders.
The Old Mutual Main Fund comprises a balanced portfolio of equities, cash,
bonds, and real property, which at June 30, 1995 were held in the following
proportions:
<TABLE>
<S> <C>
Equities........................................... 72%
Bonds.............................................. 19%
Real Property...................................... 7%
Cash............................................... 2%
----
100%
=====
</TABLE>
Source: Old Mutual
The equity portion of the Old Mutual Main Fund was valued on an unaudited
basis at S.A. Rand 50 billion (U.S.$13.7 billion) as at June 30, 1995.
13
<PAGE> 22
The investment objective of the equity portion of the Old Mutual Main Fund
is to achieve superior long-term total return from a diversified portfolio. It
seeks to deliver returns in excess of the JSE Actuaries All Share Index and of
South African inflation. Due to the long-term nature of the life insurance
liabilities supported by the Old Mutual Main Fund the emphasis has always been
on longer term performance. This philosophy will be applied in relation to the
Fund.
The following table shows the compound annual average total return of the
equity portion of the Old Mutual Main Fund compared with the JSE Actuaries All
Share Index over the periods listed below to June 30, 1995.
<TABLE>
<CAPTION>
PERIODS TO JUNE 30, 1995
----------------------------------
3 YEARS 5 YEARS 7 YEARS**
------- ------- ----------
<S> <C> <C> <C>
Old Mutual Main Fund (equity portion)*..................... 18.43% 19.24% 26.11%
JSE Actuaries All Share Index.............................. 17.24% 15.49% 21.46%
</TABLE>
- ---------------
* Figures given as at June 30 year end for Old Mutual.
** Continuous figures for the equity portion of the Old Mutual Main Fund are not
available prior to June 1988.
The investments held by the Master Trust will vary from the investments of
the Old Mutual Main Fund. Therefore, the investment performance of the Fund and
the Old Mutual Main Fund will differ. There can be no assurance that the future
performance of the Fund will be the same as, or similar to, the past performance
of the Old Mutual Main Fund.
INVESTMENT CONSIDERATIONS
An investment in the Shares is subject to a number of risks. Certain of
these risks are set forth below.
CONCENTRATION IN SOUTH AFRICAN SECURITIES
The Fund will invest primarily in securities of South African issuers and
will, as a result, be particularly subject to risks affecting South Africa and
its economy and securities markets. Investors in the Fund may therefore be
subject to greater risk and volatility than investors in investment vehicles
with more geographically diverse investment portfolios.
SOCIAL AND POLITICAL RISKS
South Africa is undergoing a period of unprecedented social and political
change. This has been accompanied by high levels of crime, violence, and social
unrest in some areas, which may continue. While some of the reasons for this
unrest have been addressed by the recent constitutional changes, others, such as
inadequate housing, education, health care, and employment opportunities, remain
to be addressed for large segments of the population. In some areas inter-tribal
and inter-community antagonisms, channeled through political rivalries,
particularly between the ANC and the Inkatha Freedom Party ("IFP"), have been
additional causes of violence. There can be no assurance that the current or
future governments of South Africa will be able to bring this violence and
social unrest under control or create sufficient wealth to satisfy the
socio-economic needs of the less privileged sections of the population.
The ANC, which comprises the majority party in the Government, has in the
past espoused a socialist economic program, including nationalization of South
African industry and mineral resources and high levels of taxation. In recent
years prominent figures in the ANC have distanced themselves from socialism and
have supported more market-oriented policies. However, there can be no assurance
that market-oriented policies will be pursued.
14
<PAGE> 23
The ANC's national executive has indicated concern regarding the dominant
position of a number of conglomerates in the South African market. This may lead
to a tightening of antitrust rules, with uncertain results.
The Government is a coalition that includes, among others, the ANC, the
IFP, and the National Party. The term of the Government will end in 1999, and
the ANC has indicated that it may not continue the coalition arrangements
thereafter. If the ANC wins control of the next government and excludes other
parties from the government, there may be an increase in social unrest. In
addition, without the restraints of a coalition government, the ANC might pursue
less market-oriented policies than those of the Government.
Negotiations on a permanent democratic constitution for South Africa are
continuing. The negotiations are scheduled to be completed in May 1996, and the
permanent constitution would then become effective in 1999. Failure of the
parties to reach agreement on a permanent constitution, or the adoption of a
constitution that is thought to lack adequate protections for minorities,
regional interests, and private property, may result in further unrest and
economic uncertainty.
In terms of its social and political infrastructure, South Africa currently
has many of the characteristics of an emerging market. Investors should
recognize that investing in emerging market jurisdictions involves certain
considerations not usually associated with investing in securities in more
developed capital markets. Investors should carefully consider their ability to
assume such risks before making an investment in the Fund.
South Africa enjoys a developed legal and commercial infrastructure with a
strong and independent judiciary and central bank. While the Government has
indicated that it supports, and the interim constitution protects, their
continued independence, there remains the possibility that they will come under
greater political control. In particular, the South African Reserve Bank's
attempts to maintain a responsible monetary policy may conflict with the desire
of current and future governments to effect substantial and expensive social
programs.
President Mandela currently plays an important role in the South African
political structure. It is not possible to predict the consequences of a change
in President.
ECONOMIC RISKS
Growth. Economic growth is an essential element in raising standards of
living for underprivileged sectors of the South African population. Although in
its June 1995 Quarterly Bulletin, the South African Reserve Bank noted a number
of favorable factors pointing to continued growth, there are many potential
problems that could either inhibit or extinguish that growth. The Governor of
the South African Reserve Bank, in his address to shareholders of the Bank on
August 22, 1995, referred to a number of structural issues, such as balance of
payments vulnerability, the insufficiency of domestic savings in both the
private and public sectors, and uncompetitive production processes, which may
inhibit sustained economic growth in South Africa.
Inflation. Until recently, South African inflation had persisted at annual
rates of between 10% and 20%. More recently, the South African Reserve Bank has
been successful in bringing that rate to about 10%. There can be no guarantee
that current or future governments of South Africa will be able, or will have as
a primary objective the desire, to keep inflation under control.
Balance of Payments/Access to Foreign Capital. Although South Africa
currently has relatively low levels of foreign debt, its foreign exchange
reserves are depleted, amounting at the end of June 1995 to only U.S.$4.2
billion or 6 weeks of imports of goods and services. If South Africa
15
<PAGE> 24
fails to maintain a balance of payments surplus or is not able to access sources
of foreign capital, the government would probably have to raise interest rates
and deflate the economy.
Government Spending. A major plank of the current Government's policy is
to develop a more even distribution of wealth among the population. While the
Adviser believes that there is scope for limited tax increases, the risk remains
that, if taxes and/or government borrowings increase significantly, there could
be severe adverse consequences for the South African economy.
Commodities. Although approximately 10% of South Africa's GDP directly
involves mining and quarrying activities, the country remains exposed to any
steep fall in world commodity prices.
Agricultural Conditions. Rainfall patterns are variable in South Africa,
and droughts occur frequently in certain parts of the country, resulting in
major fluctuations in agricultural output. Fluctuations in agricultural output
can significantly influence economic and inflation trends.
Increased Competition/Lower Tariffs. Following the lifting of sanctions
and the election of a new government, foreign companies have begun to re-enter
the South African markets. The presence of foreign competition in South African
markets may affect the profitability and share price of some South African
listed companies. South Africa is also a signatory to the Marrakech Agreement on
tariff reduction. In future years the scaling back of tariff protection may
adversely impact the performance of certain South African companies.
Exchange Controls. South Africa has a system of strict exchange controls
applicable to residents, domestic institutions, and local companies. Foreign
investors are generally not subject to exchange controls. Currently foreign
investors can freely repatriate both capital and investment returns subject to
compliance with certain exchange control approval procedures. Although the
Government and the central bank are committed to easing exchange controls, there
can be no assurance that exchange controls will not be tightened or that
non-South African residents (such as the Master Trust) will not be made subject
to restrictions on dealings in assets located or realized in South Africa. In
addition there can be no assurance that a South African administration will not
seek to reverse or modify exchange control approvals granted in relation to the
establishment of the Fund. In the event exchange controls are lifted, the
volatility of South African financial markets may increase. In addition, South
Africa has on prior occasions imposed a dual currency system, and reimposition
of such a system might reduce the value of the Fund's assets.
MARKET CHARACTERISTICS
The securities markets of South Africa are comparatively small, with the
majority of market capitalization and trading volume concentrated in a
relatively small number of companies. In addition, there is a significant degree
of cross-ownership among companies and a concentration of ownership in a
relatively small number of persons, including the Old Mutual Group.
Consequently, the Fund's investments may experience greater price volatility and
lower liquidity than a portfolio invested in equity securities of U.S.
companies.
CURRENCY RISKS
The Master Trust's assets will be invested in securities denominated in S.
A. Rand, and income from these investments will be received in S.A. Rand. As a
result, the Fund's net asset value and distributions, which will be measured in
U.S. dollars, would be adversely affected if the value of the S. A. Rand
declines relative to the U.S. dollar. Historically, the S. A. Rand has tended to
depreciate against the U.S. dollar.
16
<PAGE> 25
TAXATION RISKS
It is possible that current or future South African governments will
significantly raise taxes. South Africa does not currently impose tax on capital
gains. There can be no assurance that a capital gains tax to which the Master
Trust may be subject will not be introduced in the future.
REPORTING STANDARDS
Companies in South Africa are subject to accounting, auditing, and
financial standards and requirements that differ, in some cases significantly,
from those applicable to U.S. companies. There is less publicly available
information about South African companies than about U.S. companies. South
African companies are not subject to the same degree of regulation as are U.S.
issuers with respect to such matters as insider trading rules, restrictions on
market manipulation, shareholder proxy requirements, and timely disclosure of
information.
TRANSACTION COSTS
Transaction costs, including brokerage commissions for transactions both on
and off the securities exchanges in South Africa, are generally higher than in
the U.S.
UNLISTED SECURITIES
The Master Trust may invest up to 5% of its total assets in securities that
are not listed on a securities exchange. These securities may be subject to more
abrupt or erratic changes in value than listed securities, and it may be
difficult and expensive for the Master Trust to dispose of these securities.
NON-DIVERSIFIED FUND
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. See "GENERAL INFORMATION --
Organization".
PRIOR EXPERIENCE OF THE ADVISER
While Old Mutual has substantial experience in investment management,
neither Old Mutual nor the Adviser has previously advised an investment company
registered under the 1940 Act.
MANAGEMENT
TRUSTEES
Each of the OMEGA South Africa Fund and the Master Trust is supervised by a
board of trustees, a majority of whom are not affiliated with the Adviser or Old
Mutual. The current trustees of the OMEGA South Africa Fund and the Master Trust
are the same and are listed below. Asterisks indicate those trustees that are
"interested persons" (as defined in the 1940 Act) of the Fund.
*MICHAEL JOHN LEVETT, South African (aged 56), has been Chairman and
Managing Director of Old Mutual since 1990 and Managing Director since 1985. He
serves as Chairman of the board of trustees of the OMEGA South Africa Fund and
the Master Trust. He has held, and continues to hold, a number of non-executive
directorships, including South African Breweries Limited, Barlow Limited, and
Nedcor Limited. His address is Mutualpark, Jan Smuts Drive, Pinelands, South
Africa.
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*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 72), acts as a
business consultant. He serves as Deputy Chairman of the board of trustees of
the OMEGA South Africa Fund and the Master Trust. He has been a non-executive
director of the South African Reserve Bank since 1982 and was, until his
retirement in 1978, Group Chairman of the Mobil Companies in South Africa. Mr.
Beck was a director of Old Mutual between 1988 and 1994. His address is P.O. Box
4854, Cape Town 8000, South Africa.
WILLIAM LESTER BOYAN, American (aged 58), has been a director of John
Hancock Mutual Life Insurance Company since 1983 and was appointed as President
and Chief Operations Officer in 1992. His address is John Hancock Place, Boston,
Massachusetts.
THOMAS HASKINS DAVIS, Bermudian (aged 47), is President and Chief Executive
Officer of Winchester Global Trust Company Limited. He was President of
Mid-Ocean Trust Company Limited from 1994 to 1995 and was Manager Corporate
Trust at Bank of Bermuda from 1979 to 1993. His address is Williams House, 20
Reid Street, Hamilton, Bermuda.
MICHEL JOHN DREW, Bermudian (aged 59), has been President and Chief
Executive Officer of International Services Limited, a corporate services
operation, since its inception in 1977. In 1969 he established Schroders
(Bermuda) Limited, the principal operating subsidiary in Bermuda of Schroders
plc, the London merchant banking house and acted as Chief Executive Officer
until his retirement in 1994, having been elected a director in 1993, and
President in 1991. His address is 22 Church Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 52), is President of the Adviser and
has been a member of the general management of Old Mutual since 1981. His
address is Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
KENNETH RIGBY WILLIAMS, British (aged 59), was executive Chairman of
Westgate Overseas Limited, an international investment company, from 1986 to his
retirement in 1994. He holds non-executive directorships with Charles Baynes plc
and Hudaco Industries Limited and was a director of South African Breweries
Limited from 1973 to 1994. His address is Hallams Court, Littleford Lane,
Blackheath, Guildford, Surrey, United Kingdom.
ADVISER
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a wholly-owned
subsidiary of Old Mutual, is the investment adviser to the Master Trust and the
Global Fund. The Adviser was organized in 1995 as a Bermuda company for the
purpose of advising the Master Trust and the Global Fund. The Adviser's address
is Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda.
William Langley, President of the Adviser, will be responsible for the day
to day management of the Master Trust's assets. He joined Old Mutual in 1963,
and since 1985 has been involved in the development of Old Mutual's
international businesses. Prior to 1985 he was a senior portfolio manager, and
his responsibilities included the Old Mutual Main Fund.
Roddy Sparks, the current manager of the equity portion of the Old Mutual
Main Fund, will be responsible for providing in depth research on South African
companies to the Adviser. He joined Old Mutual in 1986 and has managed the
equity portion of the Old Mutual Main Fund since January 1989. He is based in
Cape Town.
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Old Mutual will provide investment research and information to the Adviser.
Old Mutual's investment division in South Africa employs over 50 investment
professionals, including 19 portfolio managers, 19 research analysts, and 5
economists. Collectively they have considerable experience of the South African
investment market and form one of the largest investment teams in the country.
Old Mutual has an extensive and detailed proprietary economic and investment
database that covers substantially all South African listed companies.
Old Mutual has been a significant investor in the South African equity
market since the early 1960's. In developing its investment philosophy Old
Mutual has focused upon long-term returns and has sought to ignore short-term
fluctuations in the market. In the early 1970's Old Mutual was a pioneer in
developing a risk adjusted dividend discount model for equity valuation that has
since formed the foundation for its long-term fundamental value approach to
investment. At June 30, 1995 Old Mutual had total assets under management of
over U.S.$35 billion.
Because the OMEGA South Africa Fund will invest all of its investable
assets in the Master Trust, the OMEGA South Africa Fund will not have a separate
investment adviser.
The Master Trust will pay the Adviser a Management Fee of 0.85% per annum
of the Master Trust's daily net assets. The Management Fee will accrue daily on
an annualized basis and be paid monthly in arrears. The Adviser will be
responsible for compensating Old Mutual for research and information provided to
the Adviser.
ADMINISTRATOR
State Street Bank and Trust Company (the "OMEGA Fund Administrator") has
agreed to provide, either directly or through an indirect wholly-owned
subsidiary, certain administrative and fund accounting services (including
calculation of the net asset value of the OMEGA South Africa Fund) to the OMEGA
South Africa Fund pursuant to an administrative services agreement. State Street
Cayman Trust Company, Ltd., either directly or through an affiliated entity (the
"Master Trust Administrator"), will provide certain administrative and fund
accounting services to the Master Trust pursuant to an administrative services
agreement.
The Master Trust Administrator will receive an annual administration fee
from the Master Trust calculated as a percentage of the Master Trust's assets.
The percentage will range from 0.05% to 0.01% per annum according to the assets
of the Master Trust. If the assets of the Master Trust total U.S.$1 billion
during a year, the administration fee percentage for that year will be 0.0375%.
In addition, the OMEGA South Africa Fund will pay the OMEGA Fund Administrator
an annual administration fee of U.S.$40,000.
TRANSFER AGENT
State Street Bank and Trust Company (the "Transfer Agent") will serve as
transfer agent and dividend disbursing agent for the OMEGA South Africa Fund.
The Transfer Agent may delegate certain of its functions to an affiliated
entity. The Transfer Agent will receive an annual fee of U.S.$18,000 from the
OMEGA South Africa Fund. The principal business address of the Transfer Agent is
225 Franklin Street, Boston, Massachusetts. State Street Cayman Trust Company,
Ltd., either directly or through an affiliated entity, will serve as registrar
for the Master Trust.
CUSTODIAN AND SUB-CUSTODIAN
State Street Bank and Trust Company (the "Custodian") will serve as
custodian for the Master Trust's and the OMEGA South Africa Fund's assets.
Standard Bank of South Africa will serve as sub-custodian for the Master Trust's
South African registered assets. All assets of the
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Master Trust and the OMEGA South Africa Fund will be held in a segregated
account in the name of the relevant Fund. The Custodian will receive an annual
custody fee of 0.03% of the Master Trust's average daily net assets. The
Custodian will be responsible for the fees of the sub-custodians.
VALUATION OF SHARES
The net asset value per Share will be determined on each day on which the
New York Stock Exchange is open for trading (a "Business Day"). This
determination is made by the OMEGA Fund Administrator once each day as of 10:00
a.m. (Eastern time), being after the close of business of the JSE for that day,
by adding the market value of all securities and other assets of the OMEGA South
Africa Fund (including the value of its interest in the Master Trust), then
subtracting the OMEGA South Africa Fund's liabilities, and then dividing the
result by the number of outstanding Shares. The Master Trust Administrator will
calculate the net asset value of the Master Trust as of 10:00 a.m. (Eastern
time) on each Business Day by adding the market value of all securities and
other assets of the Master Trust and then subtracting the Master Trust's
liabilities.
The Master Trust will generally value JSE listed securities based on the
current JSE ruling price. The ruling price for a JSE listed security on any day
is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed by the trustees of the Master Trust to reflect their fair value. Values
are converted from S.A. Rand to U.S. dollars using exchange rates prevailing as
of the time the net asset value is to be determined. Trading may take place in
securities held by the Master Trust on days that are not Business Days and on
which it will not be possible to purchase or redeem Shares.
The Fund may, from time to time, revise its procedures relating to the
calculation of net asset value to reflect changes in JSE trading periods and
practices.
OFFERING OF SHARES
The OMEGA South Africa Fund expects to offer Shares in three stages. First,
the OMEGA South Africa Fund is conducting the Initial Offering to which this
Memorandum relates. Following the issuance of the Shares placed during the
Initial Offering, the OMEGA South Africa Fund expects to offer any remaining
Shares in the Second Offering. After completion of the Second Offering, the
OMEGA South Africa Fund may make additional offerings of Shares.
INITIAL OFFERING
The OMEGA South Africa Fund is offering up to 10 million Shares at a price
of U.S.$100 per Share (totaling U.S.$1 billion), payable in cash at the Initial
Closing. The minimum purchase for any investor is 50,000 Shares (U.S.$5
million), provided the minimum purchase may, in particular circumstances, be
reduced for certain investors to not less than 10,000 Shares (U.S.$1 million) in
the discretion of the Placement Agent.
The termination date of the Initial Offering is November 7, 1995 (the
"Initial Offering Termination Date"). No minimum size for the Initial Offering
has been established. If acceptable subscriptions for all Shares offered are
received prior to the Initial Offering Termination Date, the OMEGA South Africa
Fund may conclude the Initial Offering prior to the Initial Offering Termination
Date.
It is expected that the Initial Closing will be held on November 10, 1995
(or any earlier date on which all Shares offered have been subscribed for). The
OMEGA South Africa Fund will schedule
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<PAGE> 29
the Initial Closing and will notify investors that have submitted acceptable
subscriptions for Shares of the date thereof. At the Initial Closing the OMEGA
South Africa Fund will issue the Shares subscribed for in the Initial Offering.
The OMEGA South Africa Fund has engaged S.G.Warburg & Co. Inc. to act as
the exclusive placement agent for the Initial Offering (the "Placement Agent")
on a best efforts basis. The Master Trust will pay the Placement Agent a
placement fee equal to 0.25% of the initial offering price of the Shares sold in
the Initial Offering pursuant to a placement plan in accordance with Rule 12b-1
under the 1940 Act. The Master Trust will pay a corresponding placement fee to
an affiliate of the Placement Agent in respect of the sale of shares in the
Non-U.S. Fund. The Master Trust will also pay Old Mutual Bermuda an amount equal
to 0.25% of the value of the interest it retains in the Master Trust following
the Initial Closing. Old Mutual Bermuda may apply all or a portion of this
amount to compensate broker-dealers that assist in any subsequent placement of
Shares. The Fund has agreed to indemnify the Placement Agent against certain
liabilities, including liabilities under applicable securities laws.
The OMEGA South Africa Fund is offering the Shares without registration
under the 1933 Act as a private placement pursuant to Regulation D under the
1933 Act. The OMEGA South Africa Fund is also relying upon appropriate
exemptions from the registration requirements of applicable state securities or
blue sky laws. The Shares are being offered and sold in the U.S. only to
investors that are "accredited investors" as defined in Regulation D.
The Initial Offering may be terminated or modified. In particular, the
number of Shares offered may be reduced to reflect subscriptions for shares of
the Non-U.S. Fund, which will invest in the Master Trust upon the same terms and
conditions as the OMEGA South Africa Fund. In the event that the terms of the
Initial Offering are materially modified, the new terms will be set forth in a
supplement to this Memorandum.
SUBSCRIPTION PROCEDURE
Investors that wish to subscribe for Shares in the Initial Offering are
required to complete the Subscription Booklet circulated by the Placement Agent.
Completed subscription documents should be forwarded to the Placement Agent at
the following address: 277 Park Avenue, New York, NY 10172. Investors should
notify the OMEGA South Africa Fund or the Placement Agent of any subsequent
changes in the information provided. All subscriptions are subject to acceptance
by the OMEGA South Africa Fund.
The purchase price for Shares subscribed for in the Initial Offering will
be due and payable to the OMEGA South Africa Fund at the Initial Closing.
Investors will be provided with the Subscription Booklet and the payment
instructions for the purchase price of the Shares shortly before the Initial
Offering Termination Date. The price for Shares will be payable by wire transfer
to an account of the Transfer Agent.
CLOSING PROCEDURE
Shortly before the date of the Initial Closing, Old Mutual will transfer
the Portfolio to the Master Trust and will make a capital contribution of up to
U.S.$5 million to the Master Trust. As consideration for the acquisition of the
Portfolio and the up to U.S.$5 million capital contribution, the Master Trust
will issue to Old Mutual Bermuda (a wholly-owned subsidiary of Old Mutual)
substantially all of the beneficial interest in the Master Trust. Old Mutual has
agreed to pay stamp duty due on the transfer of the Portfolio.
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Following the close of JSE trading on the date of the Initial Closing, the
Portfolio will be valued for purposes of the Initial Closing by the Master Trust
Administrator as described under "VALUATION OF SHARES".
At the Initial Closing, the OMEGA South Africa Fund will invest the
proceeds of the Initial Offering in the Master Trust, and will be issued a
proportionate beneficial interest in the Master Trust. The Non-U.S. Fund will
similarly invest the proceeds of its initial offering in the Master Trust in
return for a beneficial interest in the Master Trust. The Master Trust will
apply the proceeds received from the OMEGA South Africa Fund (and the Non-U.S.
Fund) to redeem a corresponding portion of the interest of Old Mutual Bermuda in
the Master Trust. Old Mutual Bermuda will invest the proceeds of this redemption
in the Global Fund.
SECOND OFFERING AND FURTHER OFFERINGS
THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION
OF AN OFFER TO PURCHASE, SHARES IN ANY OFFERING OTHER THAN THE INITIAL OFFERING.
Separate offering and subscription materials will be circulated for any further
offerings of Shares.
After the Initial Closing, the OMEGA South Africa Fund expects to offer
Shares at a price equal to their net asset value plus a sales charge of 0.25% of
the offering price (the "Second Offering"). In the event all Shares offered
during the Initial Offering are sold at the Initial Closing, there will be no
Second Offering. The Second Offering will continue until the first to occur of
(i) the placement of all remaining Shares and (ii) the date 6 months following
the Initial Closing. During the Second Offering Shares will be offered
continuously and may be purchased on any Business Day. The OMEGA South Africa
Fund may engage broker-dealers in addition to the Placement Agent to offer and
sell Shares in the Second Offering.
Following completion of the Second Offering, the OMEGA South Africa Fund
may, from time to time, offer any Shares, including Shares unsold in the Second
Offering or redeemed by the OMEGA South Africa Fund, upon prices and selling
terms to be determined by the OMEGA South Africa Fund, provided that in no case
will the OMEGA South Africa Fund offer Shares for less than their net asset
value.
There can be no assurance that the OMEGA South Africa Fund will conduct the
Second Offering or any further offering of Shares or as to the terms upon which
the Second Offering or any further offering will be made. Investors that
purchase Shares in the Initial Offering will not have any pre-emptive rights
with respect to the Second Offering or any further offerings.
SERVICING FEE
The Adviser (or another subsidiary of Old Mutual) will, on the third
anniversary of the Initial Closing, pay an affiliate of the Placement Agent from
its own resources a servicing fee with respect to Shares that are (i) sold in
the Initial Offering or Second Offering and (ii) continuously outstanding
through the third anniversary of the Initial Closing ("Qualifying Shares"). The
servicing fee will be equal to 0.125% per annum of the proportion of the Master
Trust's daily net assets represented by the Qualifying Shares during the period
ending on such third anniversary. All or part of the servicing fee may be
reallowed to any other broker-dealers that participate in the Second Offering.
The servicing fee will not be paid by the Fund. The servicing fee is
intended to compensate the Placement Agent and other broker-dealers engaged by
the Fund for providing ongoing shareholder services.
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EXPENSE REIMBURSEMENT
The OMEGA South Africa Fund will reimburse the Adviser for certain
marketing expenses incurred (or advanced to the Placement Agent or others) by
the Adviser in the placement of Shares, provided the amount of such
reimbursements in any year will not exceed 0.05% of the average daily net assets
of the OMEGA South Africa Fund for such year. This reimbursement is authorized
pursuant to a plan of placement maintained by the OMEGA South Africa Fund. The
reimbursement will apply to marketing costs for the Shares, including costs
relating to meetings and communications with potential investors, travel, and
printing and distributing offering materials.
The OMEGA South Africa Fund will provide to its trustees quarterly a
written report of amounts reimbursed pursuant to the plan of placement. The
trustees of the OMEGA South Africa Fund will review the continuation of the plan
of placement on an annual basis.
REDEMPTIONS
Investors may request redemption of Shares on any Business Day at their net
asset value (as determined as of 10:00 a.m. (Eastern time) on the next Business
Day), subject to a Redemption Fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds. Redemption requests should be submitted in writing
to the Transfer Agent on a form available from the OMEGA South Africa Fund or
the Transfer Agent. The office of the Transfer Agent will be open to accept
redemption requests from 12:00 noon to 4:00 p.m. (Eastern time) on every
Business Day. The Transfer Agent may require evidence of the authority of
persons submitting any redemption request. Redemption proceeds will be paid in
federal funds within seven days following receipt of a redemption request in
proper form.
In order to fund redemptions, the OMEGA South Africa Fund will redeem a
corresponding portion of its interest in the Master Trust. For so long as Old
Mutual Bermuda provides the Liquidity Facility, the OMEGA South Africa Fund will
pay to Old Mutual Bermuda amounts collected in respect of the Redemption Fee as
compensation for the Liquidity Facility. Should the Liquidity Facility be
terminated, the OMEGA South Africa Fund will pay amounts collected in respect of
the Redemption Fee to the Master Trust.
The Fund believes that the Liquidity Facility will reduce the trading costs
of the Fund. The Redemption Fee will not apply to direct or indirect transfers
of Shares from one investor to another.
LIQUIDITY FACILITY AND THE GLOBAL FUND
The Adviser will serve as investment adviser to Old Mutual Global Assets
Fund Limited, a mutual fund newly organized under the laws of Bermuda (the
"Global Fund"). THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO PURCHASE, ANY SECURITIES OF THE GLOBAL FUND. Old
Mutual Bermuda will be the sole shareholder of the Global Fund. The Global Fund
will invest in broadly diversified portfolios of South African equities and
international equity, debt, and money market securities with the goal of
achieving a long-term total return. The Global Fund may only borrow to a limited
extent. The Global Fund is designed to provide a pool of securities to fund
redemptions of Shares and redemptions of shares of the Non-U.S. Fund.
Prior to the Initial Closing Old Mutual will transfer to the Global Fund
approximately U.S.$500 million of South African securities. In addition, at the
Initial Closing and upon subsequent issuances of Shares (or shares in the
Non-U.S. Fund) the Master Trust will redeem a portion of the
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interest of Old Mutual Bermuda in the Master Trust, and Old Mutual Bermuda will
invest the redemption proceeds in the Global Fund.
Old Mutual Bermuda has undertaken to the Master Trust and the OMEGA South
Africa Fund that it will, to the extent required to provide funds for redeeming
Shares, liquidate all or a portion of its interest in the Global Fund to
generate cash, which Old Mutual Bermuda will invest in the Master Trust. Old
Mutual Bermuda may not terminate the Liquidity Facility without giving at least
120 days notice to Shareholders, provided that Old Mutual Bermuda may terminate
the Liquidity Facility at any time without prior notice if the Adviser ceases to
be investment adviser to the Master Trust (other than by reason of the voluntary
termination of the investment advisory agreement with the Master Trust by the
Adviser). Any termination of the Liquidity Facility would not affect Shareholder
redemption rights. If the Liquidity Facility is terminated, the Master Trust may
fund redemptions by realizing its assets. Following termination of the Liquidity
Facility, Old Mutual Bermuda would be free to redeem all or part of its interest
in the Master Trust.
For so long as the Liquidity Facility is made available, Old Mutual Bermuda
will not withdraw monies from the Global Fund except as required for the
Liquidity Facility and except for dividends paid by the Global Fund. In
addition, for so long as the Liquidity Facility is made available, Old Mutual
Bermuda will not withdraw monies from the Master Trust except to withdraw cash
equivalent to amounts invested in the Master Trust by the OMEGA South Africa
Fund (or the Non-U.S. Fund) and except for its proportion of the income and
realized capital profits of the Master Trust.
It is possible that at some time the value of Old Mutual Bermuda's
investment in the Global Fund might be insufficient to fund the redemption of
all Shares submitted for redemption.
Additional investments by the OMEGA South Africa Fund in the Master Trust
that are not offset by redemptions of Master Trust interests (either by Old
Mutual Bermuda or the Non-U.S. Fund) will be applied to acquire additional
securities in accordance with the Master Trust's investment policies.
Old Mutual established the Global Fund pursuant to the approval of the
South African Reserve Bank for the transfer of the Portfolio out of South Africa
to the Master Trust. Under South African exchange control regulations, South
African residents are not, in general, permitted to transfer cash and investment
assets out of South Africa or to hold non-South African investments. Recently
the South African Reserve Bank has relaxed these regulations to permit certain
"asset swaps" in which South African institutions may exchange their South
African investments for non-South African assets. Asset swaps incorporate
safeguards intended to protect South African foreign exchange reserves. The
Global Fund is intended as a means of providing liquidity and assuring that,
when Shareholders liquidate their interests in the Master Trust by redeeming
Shares, Old Mutual Bermuda will acquire equivalent interests in the Master
Trust.
TAX MATTERS
This discussion is for general information only. Investors should consult
their own tax advisers about the tax consequences of an investment in the OMEGA
South Africa Fund before subscribing for Shares.
CERTAIN U.S. TAX MATTERS
The OMEGA South Africa Fund intends to meet the requirements of the U.S.
Internal Revenue Code of 1986, as amended (the "Code"), applicable to regulated
investment companies so
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that it will not be liable for any federal income or excise taxes, although the
OMEGA South Africa Fund's income may be subject to non-U.S. taxes. The Master
Trust intends to qualify as a "partnership" under the Code, with the result that
the OMEGA South Africa Fund will be required to take into account its pro rata
share of the Master Trust's income, gain, loss, expense, credit, and other
applicable items.
For investors subject to U.S. federal income tax, OMEGA South Africa Fund
dividends and capital gains distributions are subject to federal income tax and
may also be subject to state and local taxes. Generally, distributions from the
OMEGA South Africa Fund's net investment income and short-term capital gains
will be taxed as ordinary income. Distributions of net capital gains (i.e., the
excess of net long-term capital gains over net short-term capital losses) will
be taxed as such regardless of how long Shares have been held.
Any OMEGA South Africa Fund dividend that is declared in October, November,
or December of any calendar year, that is payable to shareholders of record in
such a month, and that is paid the following January will be treated as if
received by the shareholders on December 31 of the year in which the dividend is
declared. The OMEGA South Africa Fund will notify shareholders regarding the
federal tax status of its distributions after the end of each calendar year.
Any OMEGA South Africa Fund distribution will have the effect of reducing
the per Share net asset value of Shares by the amount of the distribution.
Shareholders purchasing Shares shortly before the record date of any
distribution may thus pay the full price for the Shares and then effectively
receive a portion of the purchase price back as a taxable distribution.
In general, any gain or loss realized upon a taxable disposition of Shares
by a Shareholder that holds such Shares as a capital asset will be treated as
long-term capital gain or loss if the Shares have been held for more than twelve
months and otherwise as a short-term capital gain or loss. However, any loss
realized upon a disposition of Shares held for six months or less will be
treated as a long-term capital loss to the extent of any distributions of net
capital gain made with respect to those Shares. Any loss realized upon a
disposition of Shares may also be disallowed under rules relating to wash sales.
Foreign exchange gains and losses realized by the Fund will generally be
treated as ordinary income and losses. Use of foreign currencies for non-hedging
purposes may be limited in order to avoid a tax on the Fund.
While, as discussed under "South African Taxation" below, there are
currently no South African taxes that would apply to the earnings of the Fund,
in the future the Fund may pay South African taxes on its investment income. The
OMEGA South Africa Fund expects to be able to elect to "pass through" to
Shareholders non-U.S. income taxes paid. If the OMEGA South Africa Fund so
elects, Shareholders will be required to treat their pro rata portion of the
non-U.S. income taxes paid by the OMEGA South Africa Fund as part of the amounts
distributed to them by the OMEGA South Africa Fund and thus includable in their
gross income for federal income tax purposes. Shareholders who itemize
deductions would then be allowed to claim a deduction or credit (but not both)
on their federal income tax returns for such amounts, subject to certain
limitations. Shareholders who do not itemize deductions would (subject to such
limitations) be able to claim a credit but not a deduction. No deduction for
such amounts will be permitted to individuals in computing their alternative
minimum tax liability. If the OMEGA South Africa Fund does not qualify or elect
to "pass through" to Shareholders non-U.S. income taxes paid by it, Shareholders
will not be able to claim any deduction or credit for any part of the non-U.S.
taxes paid by the OMEGA South Africa Fund.
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Dividends and certain other payments to persons who are not citizens or
residents of the United States or U.S. entities ("Non-U.S. Persons") are
generally subject to U.S. tax withholding at a rate of 30%. The OMEGA South
Africa Fund intends to withhold tax payments at the rate of 30% on taxable
dividends and other payments to Non-U.S. Persons that are subject to such
withholding, unless a lower rate is permitted under an applicable treaty. Any
amounts overwithheld may be recovered by such persons by filing a claim for
refund with the Internal Revenue Service within the time period appropriate to
such claims. Distributions received from the OMEGA South Africa Fund by Non-U.S.
Persons also may be subject to tax under the laws of their own jurisdiction. The
OMEGA South Africa Fund is also required in certain circumstances to apply
backup withholding of 31% of taxable dividends and redemption proceeds paid to
any Shareholder (including a Non-U.S. Person) who does not furnish to the OMEGA
South Africa Fund certain information and certifications or who is otherwise
subject to backup withholding. Backup withholding will not, however, be applied
to payments that have been subject to 30% withholding.
SOUTH AFRICAN TAXATION
Income Tax. The Master Trust will be treated as a trust for South African
tax purposes with the result that income passing through the Master Trust will
retain its nature in investors' hands. South African income tax is source based
and therefore only income derived from a South African or deemed South African
source would be taxable. Dividends are exempt from tax. The special withholding
tax on dividends payable from a South African source to non-residents ("NRST")
is to be abolished with effect from October 1, 1995. Interest from a source
within or deemed within South Africa accruing to non-residents or companies and
other associations which are managed and controlled outside South Africa is also
exempt from tax.
Gains realized by the Master Trust on the disposal of South African
securities would be taxable if they are of a revenue nature from a business of
trading in securities. The investment policy of the Master Trust should result
in the underlying securities being held as capital investments (gains in respect
of which would not be regarded as revenue profit).
Capital gains tax. South Africa has no capital gains tax and therefore
capital gains (as opposed to share-dealing gains) on the sale of shares are not
taxable.
Stamp duty or Marketable Securities Tax ("MST"). Stamp duty or MST at a
rate of 1% is payable by the transferee on the transfer of equities. Stamp duty
is not payable with respect to transactions effected through a brokerage firm,
which are subject to MST. Special exemptions from stamp duty and MST apply in
respect of the transfer of securities of South African issuers with a foreign
branch register.
Secondary Tax on Companies ("STC"). To promote reinvestment of profits a
system of STC, at a rate of 25%, payable by South African companies in respect
of net dividends distributed, was introduced during 1993. The level of dividends
payable to the Master Trust would therefore be influenced by STC.
BERMUDA TAXATION
There is no Bermuda income, corporation, or profits tax, withholding tax,
capital gains tax, capital transfer tax, estate duty, or inheritance tax payable
by the OMEGA South Africa Fund, the Master Trust, or the Shareholders, other
than Shareholders ordinarily resident in Bermuda.
26
<PAGE> 35
ERISA MATTERS
Shares of the OMEGA South Africa Fund are available for purchase by
fiduciaries acting on behalf of employee benefit plans subject to ERISA (an
"ERISA Plan"), which otherwise meet all applicable investor criteria. See
"OFFERING OF SHARES" above. In considering an investment in the OMEGA South
Africa Fund, a fiduciary acting on behalf of an ERISA Plan should consider in
the context of the Plan's particular circumstances whether the investment will
be consistent with its responsibilities and the special constraints imposed by
ERISA and the Code.
Because the Fund will be an investment company registered under the 1940
Act, under applicable Department of Labor regulations regarding the
identification of "plan assets" for purposes of ERISA and the prohibited
transaction provisions of the Code, the investment in the Fund by an ERISA Plan
will include the Shares acquired but will not, solely by reason of the
acquisition of such Shares, include any of the underlying assets of the Fund.
The foregoing discussion is merely a summary of certain issues any
fiduciary acting on behalf of an ERISA Plan should evaluate when considering an
investment in Shares of the OMEGA South Africa Fund.
GENERAL INFORMATION
ORGANIZATION
The OMEGA South Africa Fund is a Massachusetts business trust that was
organized in September 1995 and will register as a non-diversified open-end
management investment company under the 1940 Act. The Master Trust is a trust
that was organized in September 1995 under the laws of Massachusetts and will
also register as a non-diversified open-end management investment company under
the 1940 Act. The declaration of trust of the Master Trust provides that the
OMEGA South Africa Fund and any other entities investing in the Master Trust are
each liable for all obligations of the Master Trust. However, it is not expected
that the liabilities of the Master Trust would ever exceed its assets.
Each of the OMEGA South Africa Fund and the Master Trust is a
non-diversified investment company, which means that it is not limited by the
1940 Act in the proportion of its assets that may be invested in the securities
of a single issuer. Each of the OMEGA South Africa Fund and the Master Trust
intends, however, to comply with diversification requirements imposed on
regulated investment companies by the Code. Under these requirements not more
than 25% of the Master Trust's total assets will be invested in securities of
any one issuer, and at least 50% of the total assets of the Master Trust will be
represented by cash, securities of other investment companies, and other
securities not exceeding with respect to any issuer 5% of the assets of the
Master Trust or 10% of the outstanding securities of any issuer.
INVESTMENT STRUCTURE
Rather than directly acquire and manage its own portfolio of securities,
the OMEGA South Africa Fund will invest all of its investable assets in the
Master Trust, which has the same investment objective as the OMEGA South Africa
Fund. The Non-U.S. Fund and other investment vehicles, if any, may acquire
interests in the Master Trust upon the same terms and conditions as the OMEGA
South Africa Fund. The Non-U.S. Fund and other investment vehicles that invest
in the Master Trust may have different operating expenses and sales charges than
the OMEGA South Africa Fund, although it is intended that the sales charges for
the OMEGA South Africa Fund and the Non-U.S. Fund will be the same for the
Initial Offering and the Second Offering.
27
<PAGE> 36
TRANSFERS OF SHARES
The Initial Offering has not been registered under the 1933 Act, and the
Shares will therefore be "restricted securities". The OMEGA South Africa Fund
may require as a condition of any transfer of Shares receipt of an opinion of
counsel, in form and substance satisfactory to the OMEGA South Africa Fund, to
the effect that a proposed transfer may be made without registration under the
1933 Act or applicable state securities laws.
VOTING AND OTHER RIGHTS
Each Share gives the Shareholder one vote in elections for trustees of the
OMEGA South Africa Fund and other matters submitted to Shareholders for vote.
All Shares have equal voting rights. The OMEGA South Africa Fund may issue an
unlimited number of shares and may divide Shares into series and classes.
The OMEGA South Africa Fund's activities are supervised by its board of
trustees. As a Massachusetts business trust, the OMEGA South Africa Fund is not
required to hold annual Shareholder meetings. Shareholders will be entitled to
vote on the election of the trustees of the OMEGA South Africa Fund and certain
important matters, including (i) certain amendments to the declaration of trust
of the OMEGA South Africa Fund, and (ii) changes in the investment objective and
the fundamental investment restrictions of the OMEGA South Africa Fund. Trustees
of the OMEGA South Africa Fund may be removed by a vote of the Shareholders
holding two-thirds of outstanding Shares. Each Share is entitled to participate
equally in dividends and other distributions and the proceeds of any liquidation
of the OMEGA South Africa Fund.
The Master Trust's activities are supervised by its board of trustees.
Holders of the beneficial interest in the Master Trust, including the OMEGA
South Africa Fund, will be entitled to vote on the election of the trustees of
the Master Trust and certain important matters, including (i) certain amendments
to the declaration of trust of the Master Trust, (ii) changes in the investment
objective and the fundamental investment restrictions of the Master Trust, (iii)
material amendments to the investment advisory agreement between the Master
Trust and the Adviser, or the adoption of a new investment advisory agreement,
and (iv) continuation of the Master Trust upon the withdrawal of a holder of its
beneficial interest. The trustees of the Master Trust may be removed by a vote
of the holders of two-thirds of the outstanding beneficial interests in the
Master Trust.
If the Master Trust seeks the vote of the OMEGA South Africa Fund on any
matter (other than a vote to continue the Master Trust upon the withdrawal of
another investor in the Master Trust, in which circumstances the trustees of the
OMEGA South Africa Fund may vote to continue the Master Trust), the OMEGA South
Africa Fund shall submit the matter to a vote of the Shareholders and shall
exercise its Master Trust voting rights proportionately as instructed by the
Shareholders that participate in the vote. It is possible that a majority of the
investors in the Master Trust will exercise their Master Trust voting rights in
a manner contrary to the vote of the Shareholders. The OMEGA South Africa Fund
will be entitled to participate in distributions and the proceeds of any
liquidation of the Master Trust in proportion to its interest in the Master
Trust.
PURCHASE RIGHT
In the event that either the OMEGA South Africa Fund or the Master Trust
votes to dissolve, Old Mutual will be entitled to acquire all of the outstanding
Shares at a price equal to their net asset value. No Redemption Fee will apply
in this case.
28
<PAGE> 37
CERTIFICATES
The Transfer Agent maintains a share register for Shareholders. Share
certificates are not issued.
SECURITIES TRANSACTIONS
The primary consideration in placing the Fund's securities transactions
with broker-dealers for execution is to obtain and maintain the availability of
execution at the most favorable prices and in the most effective manner
possible.
CERTAIN CONFLICTS OF INTEREST
The Old Mutual Group is an important participant in the South African
securities markets. At July 31, 1995 the Old Mutual Group's JSE holdings totaled
S.A. Rand 72 billion, equal to approximately 8% of total JSE market
capitalization. At July 31, 1995 the Old Mutual Group held 5% or more of the
listed securities in 21% of the JSE traded companies, which companies
collectively represented 50% of the JSE market capitalization. As a result of
these holdings, the Old Mutual Group has a substantial interest in many of the
companies that are included in the Portfolio. The Fund has adopted the following
restrictions designed to address conflicts of interest arising from the Old
Mutual Group's position in the South African securities markets:
(i) The Fund will acquire securities of companies in which the Old
Mutual Group holds 5% or more of the equity interest ("OM Affiliated
Companies") only from unaffiliated brokers in open market transactions,
except for (A) transactions approved by order of the Securities and
Exchange Commission, (B) the acquisition of the Portfolio, and (C)
dividends consisting of securities, rights issued in a rights offering to
existing shareholders, and securities received upon exercise of such
rights. This restriction will not apply to the OMEGA South Africa Fund's
investment in the Master Trust.
(ii) The Fund will not participate in any effort to replace the
management of any issuer, or take legal or management control of any
issuer, provided this restriction will not prohibit the Fund from (A)
accepting a tender or takeover offer made generally to holders of a
particular security or (B) voting its securities, or granting a proxy to
vote its securities, in any proxy contest that is not, directly or
indirectly, organized by a member of the Old Mutual Group. This restriction
will not apply to the OMEGA South Africa Fund's investment in the Master
Trust.
(iii) The Fund will not engage in any purchases of securities of OM
Affiliated Companies, or defer its sales of such securities, for the
purpose of supporting the price thereof.
(iv) Fund purchases and sales of the securities of OM Affiliated
Companies, as well as purchases or sales of the same securities by other
members of the Old Mutual Group at similar times, will be reviewed by (A)
the Old Mutual Surveillance Team on a regular basis and (B) the Fund
trustees on at least a quarterly basis. Old Mutual will provide the Fund
trustees with such information as they may require for purposes of this
review.
(v) The Fund will not purchase securities of any issuer in which the
Old Mutual Group owns in the aggregate in excess of 50% of the outstanding
equity interest or where the acquisition would result in the Old Mutual
Group owning in the aggregate in excess of 50% of the outstanding equity
interest, provided this restriction (A) will not apply to the OMEGA South
Africa Fund's investment in the Master Trust or to the acquisition of the
Portfolio and (B) will not prohibit the Fund from electing to receive
dividends consisting of securities, or
29
<PAGE> 38
exercising rights issued in a rights offering, upon the same terms
generally available to other investors.
Old Mutual and companies in the Old Mutual Group act as investment manager
and adviser to a number of funds, customers, and proprietary accounts (including
the Old Mutual Main Fund). The Adviser will act as investment adviser to the
Master Trust, and to the Global Fund which will hold investments in South
African equities.
The South African equity investments of the Master Trust, the Global Fund,
and the Old Mutual Main Fund will ordinarily be managed pursuant to
substantially similar investment objectives and policies. However, the
composition of their respective portfolios, and the purchase and sale
transactions entered into on behalf of the Master Trust, the Global Fund, and
the Old Mutual Main Fund will not be identical.
The Adviser will use its best efforts to assure that the Master Trust has
the opportunity to participate in potential investments which fall within its
investment objective and policies such that the allocation of those investments
as between the Master Trust and the other funds, customers, and proprietary
accounts managed or advised by Old Mutual or one of its wholly-owned
subsidiaries is made on a fair and equitable basis.
EXPENSES
The OMEGA South Africa Fund and the Master Trust will amortize their
organizational and offering expenses (other than the placement fee and the
amount payable to Old Mutual Bermuda at the Initial Closing), which are
estimated at less than 0.20% of the net asset value of the Master Trust at the
Initial Closing, over a period of five years. The OMEGA South Africa Fund and
the Master Trust will be responsible for the ongoing expenses of conducting
their affairs, including (i) investment advisory, administration, custody, and
transfer agency fees and expenses, (ii) legal, audit, and accounting fees and
expenses, (iii) costs of reports to and other communications with investors,
(iv) costs of preparing and filing tax returns and reports and other
governmental filings, (v) fees and expenses of trustees, (vi) printing, copying,
travel, and communication costs, and (vii) costs of registering or qualifying
Fund securities under the securities laws of various jurisdictions.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of the Fund, including the
Management Fee, will not exceed 1.00% per annum of the Fund's daily net assets.
This limitation does not apply to (i) extraordinary expenses (such as the cost
of litigation), (ii) the placement fee and the amount payable to Old Mutual
Bermuda at the Initial Closing, (iii) sales charges on Shares, (iv) brokerage
expenses, or (v) the Redemption Fee. The Adviser may not terminate its
undertaking to so reduce or rebate a portion of the Management Fee without
giving at least 120 days notice to Shareholders, provided the Adviser may
terminate this undertaking at any time without prior notice if the Adviser
ceases to be investment adviser to the Master Trust.
ADDITIONAL INFORMATION
The Fund's registration statement under the 1940 Act will contain more
detailed information about the Fund. The proposed form of the Fund's
registration statement will be provided to potential investors upon request.
The Fund will provide to a prospective investor upon request such
additional information concerning the Fund and its proposed investments as the
Fund possesses or can obtain without unreasonable effort or expense. Requests
for additional information should be directed to S.G.Warburg & Co. Inc., 277
Park Avenue, New York, NY 10172 (212) 224-7970.
30
<PAGE> 39
GLOSSARY
ADVISER means Old Mutual Asset Managers (Bermuda) Limited, the investment
adviser to the Master Trust.
ANC means the African National Congress.
BUSINESS DAY means each day on which the New York Stock Exchange is open for
trading.
CODE means the Internal Revenue Code of 1986, as amended.
ERISA means the Employee Retirement Income Security Act of 1974, as amended.
ERISA PLAN means an employee benefit plan subject to ERISA.
FUND means the OMEGA South Africa Fund and the Master Trust except as otherwise
indicated.
GLOBAL FUND means Old Mutual Global Assets Fund Limited, a mutual fund organized
under the laws of Bermuda.
GOVERNMENT means the South African Government of National Unity.
IFP means the Inkatha Freedom Party.
INITIAL CLOSING means the closing on the Initial Offering scheduled on or about
November 10, 1995.
INITIAL OFFERING means the offering of up to 10 million Shares on the terms and
conditions of this Memorandum.
INITIAL OFFERING TERMINATION DATE means November 7, 1995.
JSE means The Johannesburg Stock Exchange.
LIQUIDITY FACILITY means the undertaking of Old Mutual Bermuda to apply the
assets of the Global Fund to make such additional investments in the Master
Trust as may be required from time to time in order to provide funds for
redeeming Shares.
MANAGEMENT FEE means the management fee payable to the Adviser of 0.85% per
annum of the Master Trust's daily net assets.
MASTER TRUST means Old Mutual South Africa Equity Trust, a Massachusetts trust.
MASTER TRUST ADMINISTRATOR means State Street Cayman Trust Company, Ltd., as
administrator of the Master Trust.
1940 ACT means the Investment Company Act of 1940, as amended.
1933 ACT means the Securities Act of 1933, as amended.
NON-U.S. FUND means Old Mutual SAGA Fund, a mutual fund organized under the laws
of Bermuda.
OM AFFILIATED COMPANIES means companies in which the Old Mutual Group holds 5%
or more of the equity interests.
OLD MUTUAL means the South African Mutual Life Assurance Society, a mutual
assurance society organized under the laws of South Africa.
OLD MUTUAL BERMUDA means Old Mutual Fund Holdings (Bermuda) Limited, a Bermuda
company that is a wholly-owned subsidiary of Old Mutual.
31
<PAGE> 40
OLD MUTUAL GROUP means Old Mutual, its wholly-owned subsidiaries, and investment
vehicles managed by Old Mutual or its wholly-owned subsidiaries, collectively.
OLD MUTUAL MAIN FUND means Old Mutual's principal investment fund.
OMEGA FUND ADMINISTRATOR means State Street Bank and Trust Company, as
administrator of the OMEGA South Africa Fund.
OMEGA SOUTH AFRICA FUND means Old Mutual Equity Growth Assets South Africa Fund,
a Massachusetts business trust.
PLACEMENT AGENT means S.G.Warburg & Co. Inc., as the placement agent for the
Initial Offering.
PORTFOLIO means a portfolio of South African securities to be transferred from
the Old Mutual Main Fund to the Master Trust.
QUALIFYING SHARES means Shares that are (i) sold in the Initial Offering or
Second Offering, and (ii) continuously outstanding through the third anniversary
of the Initial Closing.
REDEMPTION FEE means a redemption fee charged by the OMEGA South Africa Fund of
1.75% of redemption proceeds.
S.A. RAND means South African rand, the currency of South Africa.
SECOND OFFERING means the offer for up to 6 months after the Initial Closing of
Shares at a price equal to their net asset value plus a sales charge of 0.25% of
the offering price.
SHAREHOLDERS means the registered holders of Shares.
SHARES means the shares of beneficial interest of the OMEGA South Africa Fund.
TRANSFER AGENT means State Street Bank and Trust Company, as transfer agent for
the OMEGA South Africa Fund.
32
<PAGE> 41
EXHIBIT A
Set forth below are the securities to be included in the Portfolio. The
weighting of these holdings may be adjusted prior to the Initial Closing.
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
ANGLO AMERICAN CORPORATION OF SA LTD........... Mining Houses 5.0
BARLOW LTD..................................... Industrial Holding 5.0
CG SMITH LTD................................... Industrial Holding 5.0
DE BEERS CONSOLIDATED MINES LTD................ Diamonds 5.0
NEDCOR LTD..................................... Banks & Financial Services 5.0
SOUTH AFRICAN BREWERIES LTD.................... Beverages, Hotels & Leisure 5.0
SAFMARINE AND RENNIES HOLDINGS
LTD.......................................... Industrial Holding 5.0
STANDARD BANK INVESTMENT CORP
LTD.......................................... Banks & Financial Services 5.0
SASOL LTD...................................... Chemicals, Oils & Plastics 4.8
REMBRANDT GROUP LTD............................ Industrial Holding 4.3
ANGLOVAAL LTD*................................. Mining Houses 4.2
WOOLTRU LTD*................................... Stores 3.4
GENCOR LTD..................................... Mining Houses 3.0
ANGLOVAAL INDUSTRIES LTD....................... Industrial Holding 2.8
REUNERT LTD.................................... Electronics & Electrical 2.4
GOLD FIELDS OF SA LTD.......................... Mining Houses 2.2
LYDENBURG PLATINUM LTD......................... Platinum 2.0
SAPPI LTD...................................... Paper & Packaging 1.9
RAND MINES LTD................................. Mining Houses 1.9
ISCOR LTD...................................... Steel & Allied 1.8
TRENCOR LTD.................................... Transportation 1.6
FOSCHINI LTD................................... Stores 1.6
ANGLO AMERICAN COAL CORP LTD................... Coal 1.6
JOHNNIES INDUSTRIAL CORPORATION
LTD.......................................... Industrial Holding 1.5
AFRICAN OXYGEN LTD............................. Engineering 1.1
JCI LTD........................................ Mining Houses 1.0
ANGLO AMERICAN PLATINUM CORPORATION LTD........ Mining Houses 1.0
DRIEFONTEIN CONSOLIDATED LTD................... Gold 0.8
GENBEL INVESTMENTS LTD......................... Investment Trusts 0.8
LIBERTY LIFE ASSOCIATION OF AFRICA LTD......... Insurance 0.7
MIDDLE WITWATERSRAND (WESTERN AREAS) LTD....... Mining Holding 0.7
ENGEN LTD...................................... Chemicals, Oils & Plastics 0.7
SAMANCOR LTD................................... Manganese 0.7
JD GROUP LTD................................... Furniture & Household 0.7
CG SMITH FOODS LTD............................. Food 0.7
IMPALA PLATINUM HOLDINGS LTD................... Platinum 0.7
</TABLE>
33
<PAGE> 42
<TABLE>
<CAPTION>
COMPANY JSE SECTOR % OF HOLDINGS
- ----------------------------------------------- ------------------------------- -------------
<S> <C> <C>
ANGLO ALPHA LTD................................ Building, Construction, Allied 0.6
BIDVEST GROUP LTD**............................ Industrial Holding 0.6
AECI LTD....................................... Chemicals, Oils & Plastics 0.6
MUTUAL & FEDERAL INSURANCE CO LTD.............. Insurance 0.6
MURRAY & ROBERTS HOLDINGS LTD.................. Industrial Holding 0.5
TIGER OATS LTD................................. Food 0.5
ALLIED ELECTRONICS CORPORATION
LTD.......................................... Electronics & Electrical 0.5
NAMPAK LTD..................................... Paper & Packaging 0.4
OMNI MEDIA CORPORATION LTD..................... Printing & Publishing 0.4
INVESTEC HOLDINGS LTD.......................... Banks & Financial Services 0.4
EVERITE HOLDINGS LTD........................... Building, Construction, Allied 0.4
MALBAK LTD..................................... Industrial Holding 0.4
SENTRACHEM LTD................................. Chemicals, Oils & Plastics 0.4
IMPERIAL HOLDINGS LTD.......................... Industrial Holding 0.4
METROPOLITAN LIFE LTD.......................... Insurance 0.4
ASSOCIATED ORE AND METAL CORP LTD.............. Mining Holding 0.3
AMALGAMATED BANKS OF SA LTD.................... Banks & Financial Services 0.3
IBM SOUTH AFRICA GROUP LTD..................... Electronics & Electrical 0.3
GRINTEK LTD.................................... Electronics & Electrical 0.3
SOUTHVAAL HOLDINGS LTD......................... Gold 0.3
VAAL REEFS EXPLORATION AND MINING CO LTD....... Gold 0.2
FORWARD CORPORATION LTD........................ Industrial Holding 0.2
FIRST NATIONAL BANK HOLDINGS LTD............... Banks & Financial Services 0.2
INDEPENDENT NEWSPAPERS HOLDINGS LTD............ Printing & Publishing 0.2
-------------
100.0
==========
</TABLE>
All holdings are of ordinary shares except for:
* "N" (restricted voting) ordinary shares
** Convertible Debenture Stock
34
<PAGE> 43
OMEGA SOUTH AFRICA FUND
INVESTMENT ADVISER
Old Mutual Asset Managers (Bermuda) Limited
Richmond House, 12 Par-la-Ville Road, Hamilton
Bermuda
PLACEMENT AGENT
S.G.Warburg & Co. Inc.
277 Park Avenue, New York, NY 10172
STRUCTURING AGENT
International Finance Corporation
1818 H. Street N.W., Washington, DC 20433
ADMINISTRATOR
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
FOR THE MASTER TRUST:
State Street Cayman Trust Company,
Ltd.
P.O. Box 2508
Elizabeth Square, George Town
Grand Cayman, British West Indies
TRANSFER AGENT
FOR THE OMEGA SOUTH AFRICA FUND:
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
CUSTODIAN
State Street Bank and Trust Company
225 Franklin Street, Boston, MA 02110
AUDITORS
FOR THE OMEGA SOUTH AFRICA FUND:
KPMG Peat Marwick LLP
99 High Street, Boston, MA 02110
FOR THE MASTER TRUST:
KPMG Peat Marwick
Vallis Building, Hamilton HM 11 Bermuda
LEGAL COUNSEL
IN THE UNITED STATES:
Bingham, Dana & Gould
150 Federal Street, Boston, MA 02110
IN THE UNITED KINGDOM:
Norton Rose
Kempson House, Camomile Street
London EC3A 7AN
IN BERMUDA:
Conyers Dill & Pearman
Clarendon House, Church Street
Hamilton, Bermuda
TABLE OF CONTENTS
<TABLE>
<S> <C>
Summary of the Offering................. 1
Investment Objective and Policies....... 8
South Africa............................ 10
The Portfolio........................... 13
Old Mutual Main Fund.................... 13
Investment Considerations............... 14
Management.............................. 17
Valuation of Shares..................... 20
Offering of Shares...................... 20
Redemptions............................. 23
Liquidity Facility and the Global
Fund.................................. 23
Tax Matters............................. 24
ERISA Matters........................... 27
General Information..................... 27
Additional Information.................. 30
Glossary................................ 31
</TABLE>
<PAGE> 44
PART B
Item 10. Cover Page.
Not applicable.
Item 11. Table of Contents.
<TABLE>
<CAPTION>
Page
----
<S> <C>
General Information and History.............................................................. B-1
Investment Objective and Policies............................................................ B-1
Management of the Master Trust............................................................... B-11
Control Persons and Principal Holders of Securities.......................................... B-14
Investment Advisory and Other Services....................................................... B-15
Brokerage Allocation and Other Practices..................................................... B-21
Capital Stock and Other Securities........................................................... B-22
Purchase, Redemption and Pricing of Securities............................................... B-24
Tax Status................................................................................... B-26
Underwriters................................................................................. B-29
Calculation of Performance Data.............................................................. B-29
Financial Statements......................................................................... B-29
</TABLE>
Item 12. General Information and History.
Not applicable.
Item 13. Investment Objective and Policies.
Part A contains additional information about the investment objective
and policies of Old Mutual South Africa Equity Trust (the "Master Trust"), a
Massachusetts trust. This Part B should be read in conjunction with Part A.
The investment objective of the Master Trust 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 Master Trust will achieve its investment
objective.
Part A contains a discussion of the various types of securities in
which the Master Trust may invest and the risks involved in such investments.
The following supplements the
<PAGE> 45
information contained in Part A concerning the investment objective, policies
and techniques of the Master Trust.
The Master Trust will seek to achieve its investment objective by
investing in equity securities of South African issuers. Under normal
circumstances, at least 95% of the Master Trust's total assets will be invested
in equity securities of South African issuers that are listed on a securities
exchange. The Master Trust may invest up to 5% of its total assets in securities
that are, at the time of the investment, not listed on a securities exchange
(although such investments will generally be limited to securities that are
expected to be listed on an exchange within a reasonable period of time).
In managing the Master Trust's assets, Old Mutual Asset Managers
(Bermuda) Limited, the adviser to the Master Trust (the "Adviser"), will not
speculate for short-term gain but will focus on securities that, in the
Adviser's opinion, are likely to show long-term improvements in profits and cash
flow. Less weight will be accorded to short-term and cyclical factors. This
approach is designed to result in strong dividend growth and capital
appreciation. Historically, South African issuers have retained a high
proportion of earnings and, if this policy continues, it is likely that any
long-term total return would largely be in the form of capital appreciation.
For purposes of the Master Trust's investment policies, a South African
issuer is an issuer that meets one of the following tests: (i) its principal
offices or operations are located in South Africa; or (ii) it derives at least
50% of its revenues from operations or investments in South Africa. Equity
securities are defined as common stock, securities convertible into common stock
and securities that participate in profits in a similar manner to common stock.
Equity securities may be purchased in the form of American Depositary Receipts
("ADRs"), European Depositary Receipts, Global Depositary Receipts, or other
similar securities representing equity securities.
Old Mutual Equity Growth Assets South Africa Fund (the "OMEGA South
Africa Fund"), a registered investment company organized as a Massachusetts
business trust, and Old Mutual South Africa Growth Assets Fund Limited (the
"Non-U.S. Fund"), a Bermuda mutual fund whose shares are listed on the Irish
Stock Exchange, will each invest all of their investable assets in the Master
Trust. The Master Trust has undertaken to the OMEGA South Africa Fund and to the
Non-U.S. Fund that it will not make any material change to its investment
objective or to its investment policies described in the Private Placement
Memorandum included in Part A under "INVESTMENT OBJECTIVE AND POLICIES --
Investment Policies" except in unforeseen circumstances and with the approval of
a majority vote of the shareholders of the OMEGA South Africa Fund and a
majority vote of shareholders of the Non-U.S. Fund.
B-2
<PAGE> 46
Except as otherwise indicated, the investment policy and restrictions
of the Master Trust may be changed without the approval of holders of beneficial
interests ("Interests") in the Master Trust ("Investors").
The percentage limitations set forth above, as well as those described
elsewhere in this Part B are measured and applied only at the time an investment
is made or another relevant action is taken by the Master Trust.
REPURCHASE AGREEMENTS
The Master Trust may invest in repurchase agreements collateralized by
securities in which the Master Trust may otherwise invest. Repurchase agreements
are agreements by which the Master Trust 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 Investment Company Act of 1940, as amended (the
"1940 Act"), repurchase agreements may be considered to be loans by the buyer.
The Master Trust'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
Master Trust 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 Master Trust are fully collateralized, with such
collateral being marked to market daily.
CURRENCY EXCHANGE TRANSACTIONS
Because the Master Trust 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 Master Trust 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 Master Trust 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 Master
Trust 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 Master Trust's
assets are valued daily in terms of U.S. dollars, the Master Trust does not
intend to convert its holdings of non-U.S. currencies into U.S. dollars on a
daily
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basis.) The Master Trust does not currently intend to speculate in currency
exchange rates or forward contracts.
The Master Trust 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 Master Trust 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 Master Trust 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 Master Trust will
be able to protect against a possible loss resulting from an adverse change in
the relationship between the U.S. dollar and the non-U.S. currency during the
period between the date the security is purchased or sold and the date on which
payment is made or received.
While the Master Trust 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 Master
Trust 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
Master Trust'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 Master Trust does not enter into such forward contracts or maintain a net
exposure to such contracts where the consummation of the contracts obligates the
Master Trust to deliver an amount of non-U.S. currency in excess of the value of
the Master Trust's securities or other assets denominated in that currency.
The Master Trust generally would not enter into a forward contract with
a term greater than one year. At the maturity of a forward contract, the Master
Trust will either sell
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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 Master Trust retains the security and engages in an offsetting
transaction, the Master Trust will incur a gain or a loss (as described below)
to the extent that there has been movement in forward contract prices. If the
Master Trust 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 Master Trust 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 Master Trust
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 Master Trust
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
Master Trust's securities at the expiration of a forward contract. Accordingly,
it may be necessary for the Master Trust 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 Master Trust 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 Master Trust is obligated to deliver.
The Master Trust 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 Master Trust purchases a put option on a non-U.S. currency and the value of
the U.S. currency declines, the Master Trust 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 Master Trust which otherwise would
have resulted. Conversely, where a rise in the U.S. dollar value of another
currency is projected, and where the Master Trust anticipates investing in
securities traded in such currency, the Master Trust 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
Master Trust 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
Master Trust 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.
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The Master Trust 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 Master Trust 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 Master Trust 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 Master
Trust could write a put option on the S.A. Rand which, if rates move in the
manner projected, will expire unexercised and allow the Master Trust 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 Master Trust 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
Master Trust 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 Master Trust 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 Master Trust'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 Master Trust's dealings in non-U.S. currency contracts are limited
to the transactions described above. Of course, the Master Trust 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 Master Trust'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.
Prior to entering into forward contracts, the Master Trust will
establish procedures consistent with policies of the Securities and Exchange
Commission (the "SEC") concerning forward contracts. Since those policies
currently recommend that an amount of the Master
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Trust's assets equal to the amount of the purchase be held aside or segregated
to be used to pay for the commitment, the Master Trust expects always to have
cash, cash equivalents or high quality debt securities available sufficient to
cover any commitments under these contracts or to limit any potential risk.
LENDING OF SECURITIES
Consistent with applicable regulatory requirements and in order to
generate income, the Master Trust may lend its securities to broker-dealers and
other institutional borrowers. Such loans will usually be made only to member
banks of the U.S. Federal Reserve System and to member firms of the New York
Stock Exchange (and subsidiaries thereof). Loans of securities would be secured
continuously by collateral in cash, cash equivalents, or U.S. Treasury
obligations maintained on a current basis at an amount at least equal to the
market value of the securities loaned. The cash collateral would be invested in
high quality short-term instruments. The Master Trust would have the right to
call a loan and obtain the securities loaned at any time on customary industry
settlement notice (which will not usually exceed five days). During the
existence of a loan, the Master Trust would continue to receive the equivalent
of the interest or dividends paid by the issuer on the securities loaned and
would also receive compensation based on investment of the collateral. The
Master Trust would not, however, have the right to vote any securities having
voting rights during the existence of the loan, but would call the loan in
anticipation of an important vote to be taken among holders of the securities or
of the giving or withholding of their consent on a material matter affecting the
investment. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the collateral should the borrower fail
financially. However, the loans would be made only to entities deemed by the
Adviser to be of good standing, and when, in the judgment of the Adviser, the
consideration which can be earned currently from loans of this type justifies
the attendant risk. If the Adviser determines to make loans, it is not intended
that the value of the securities loaned by the Master Trust would exceed 33 1/3%
of the value of its net assets.
WHEN-ISSUED SECURITIES
The Master Trust may purchase securities on a "when-issued" or on a
"forward delivery" basis. It is expected that, under normal circumstances, the
Master Trust would take delivery of such securities. When the Master Trust
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 Master Trust's assets equal to the
amount of the purchase be held aside or segregated to be used to pay for the
commitment, the Master Trust 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 Master Trust 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
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may involve more risk than other types of purchases. For example, the Master
Trust 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 Master Trust 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
Master Trust's payment obligation).
INVESTMENT RESTRICTIONS
FUNDAMENTAL RESTRICTIONS
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 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 Master Trust present at a meeting at which the holders of more
than 50% of the outstanding voting securities of the Master Trust are present or
represented by proxy, or (ii) more than 50% of the outstanding voting securities
of the Master Trust. The term "voting securities" as used in this paragraph has
the same meaning as in the 1940 Act. The fundamental restrictions are that:
(i) 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 the
Master Trust may not purchase any securities at any time at which borrowings
exceed 5% of its total assets, taken at market value). It is intended that the
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) The Master Trust may not make short sales of securities or
purchase securities on margin, except that 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) The Master Trust may not underwrite securities issued by other
persons, 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.
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(iv) 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) 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) 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) the Master Trust may engage in currency hedging and invest in derivative
securities to the extent provided in Parts A and B of this Registration
Statement.
(vi) 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) 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).
FEDERAL AND STATE RESTRICTIONS
In order to comply with certain statutes and policies 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 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 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 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,
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including debt securities for which there is no established market and fixed
time deposits and repurchase agreements maturing in more than seven days.
(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 Master Trust or 10% of the
outstanding securities of such issuer.
(iv) Not more than 25% of its assets will be invested in securities of
any one issuer.
These restrictions may be changed by the Trustees of the Master Trust
without the approval of holders of beneficial interest in the Master Trust in
response to changes in applicable statutes and policies.
IRISH STOCK EXCHANGE RESTRICTIONS
The Master Trust has adopted investment restrictions in compliance with
the rules of the Irish Stock Exchange and has undertaken to the Non-U.S. Fund
and the OMEGA South Africa Fund not to change these restrictions for so long as
the shares of the Non-U.S. Fund are listed on the Irish Stock Exchange. These
restrictions are that:
(i) no more than 20% of the gross assets of the Master Trust may be
lent to or invested in the securities of any one issuer;
(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;
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(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 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.
Item 14. Management of the Master Trust.
The Trustees and officers of 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 Master
Trust.
TRUSTEES
*MICHAEL JOHN LEVETT, South African (aged 56), serves as Chairman of
the Board of Trustees and President of the OMEGA South Africa Fund and the
Master Trust and as Chairman of the Board of Directors of the Non-U.S. Fund. He
is also Chairman of the Board of Directors and a director of the Adviser and Old
Mutual Global Assets Fund Limited (the "Global Fund"). Mr. Levett has been
Chairman and Managing Director of Old Mutual since 1990 and Managing Director
since 1985. He has held, and continues to hold, a number of
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non-executive directorships, including South African Breweries Limited, Barlow
Limited, an industrial holding company. His address is Mutualpark, Jan Smuts
Drive, Pinelands, South Africa.
*WILLIAM FRANCOIS DE LA HARPE BECK, South African (aged 72), serves as
Deputy Chairman of the Board of Trustees of the OMEGA South Africa Fund and the
Master Trust and as Deputy Chairman of the Board of Directors of the Non-U.S.
Fund. Mr. Beck acts as a business consultant. He has been a non-executive
director of the South African Reserve Bank since 1982 and was, until his
retirement in 1978, Group Chairman of the Mobil Companies in South Africa. Mr.
Beck was a director of Old Mutual between 1988 and 1994. His address is P.O. Box
4854, Cape Town 8000, South Africa.
WILLIAM LESTER BOYAN, American (aged 58), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr. Boyan has been a director of John Hancock Mutual Life Insurance
Company since 1983 and was appointed as President and Chief Operations Officer
in 1992. His address is John Hancock Place, Boston, Massachusetts.
THOMAS HASKINS DAVIS, Bermudian (aged 47), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr. Davis is President and Chief Executive Officer of Winchester Global
Trust Company Limited. He was President of Mid-Ocean Trust Company Limited from
1994 to 1995 and was Manager Corporate Trust at Bank of Bermuda from 1979 to
1993. His address is Williams House, 20 Reid Street, Hamilton, Bermuda.
MICHAEL JOHN DREW, Bermudian (aged 59), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr. Drew has been President and Chief Executive Officer of International
Services Limited, a corporate services operation, since its inception in 1977.
In 1969 he established Schroders (Bermuda) Limited, the principal operating
subsidiary in Bermuda of Schroders plc, the London merchant banking house, and
acted as Chief Executive Officer until his retirement in 1994, having been
elected a director in 1993, and President in 1991. His address is 22 Church
Street, Hamilton, Bermuda.
*WILLIAM LANGLEY, South African (aged 52), serves as Treasurer and as a
trustee of the OMEGA South Africa Fund and the Master Trust, as Treasurer and as
a director of the Non-U.S. Fund, and as a director of the Global Fund. Mr.
Langley also is the President and a director of the Adviser. Mr. Langley has
been a member of the general management of Old Mutual since 1981. His address is
Mutualpark, Jan Smuts Drive, Pinelands, South Africa.
KENNETH RIGBY WILLIAMS, British (aged 59), serves as a trustee of the
OMEGA South Africa Fund and the Master Trust and as a director of the Non-U.S.
Fund. Mr.
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Williams was executive Chairman of Westgate Overseas Limited, an international
investment company, from 1986 to his retirement in 1994. He holds non-executive
directorships with Charles Baynes plc, a company engaged in distribution and
engineering, and Hudaco Industries Limited, a South African distributor of
industrial consumable goods, and was a director of South African Breweries
Limited from 1973 to 1994. Mr. Williams also currently serves as a director of
John Lusty plc, a food distribution company. His address is Hallams Court,
Littleford Land, Blackheath, Guildford, Surrey, United Kingdom.
OFFICERS
*MICHAEL JOHN LEVETT serves as Chairman of the Board of Trustees and
President of the Master Trust.
*WILLIAM FRANCOIS DE LA HARPE BECK serves as Deputy Chairman of the
Board of Trustees of the Master Trust.
*WILLIAM LANGLEY serves as Treasurer of the Master Trust.
*JOHN CHARLES ROSS COLLIS, Bermudian (aged 37), serves as Secretary of
the OMEGA South Africa Fund, the Non-U.S. Fund and the Master Trust. He is also
the Secretary and a director of the Global Fund and the Adviser. Mr. Collis is a
barrister/attorney and is a partner in the law firm of Conyers Dill & Pearman
(Bermuda). Conyers Dill & Pearman serves as the Bermudian legal counsel to the
Adviser, the OMEGA South Africa Fund, the Non-U.S. Fund and the Master Trust. As
a result of his position as legal counsel to certain companies and in order to
fulfill Bermuda law requirements, Mr. Collis serves as the director of numerous
Bermuda-incorporated companies. His address is Clarendon House, Church Street,
Hamilton, Bermuda.
The declaration of trust of 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 Master Trust, unless, as to liability to 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 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.
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Item 15. Control Persons and Principal Holders of Securities.
On November 3, 1995 South African Mutual Life Assurance Society ("Old
Mutual") transferred to the Master Trust a portfolio of South African securities
(the "Portfolio") from Old Mutual's main proprietary investment portfolio. At
the time it was transferred to the Master Trust, the Portfolio had a market
value of approximately U.S.$1 billion and comprised holdings in 60 South African
issuers. In addition, on November 3, 1995 Old Mutual made a capital contribution
of U.S.$4.75 million to the Master Trust.
As consideration for the transfer of the Portfolio and the capital
contribution of Old Mutual, the Master Trust issued substantially all of its
beneficial interest to Old Mutual Fund Holdings (Bermuda) Limited ("Old Mutual
Bermuda"), a company organized under the laws of Bermuda that is a wholly-owned
subsidiary of Old Mutual. At the closing (the "Initial Closing") of the initial
offering of the shares of beneficial interest of the OMEGA South Africa Fund
(the "OMEGA Initial Offering") and of the initial offering of the shares of the
Non-U.S. Fund (the "Non-U.S. Initial Offering"), which is expected to be held on
November 10, 1995, each of the OMEGA South Africa Fund and the Non-U.S. Fund
will invest the proceeds of its respective Initial Offering in the Master Trust
and will be issued a proportionate beneficial interest in the Master Trust. The
Master Trust will apply the proceeds of the OMEGA Initial Offering and the
Non-U.S. Initial Offering to redeem a corresponding portion of the interest of
Old Mutual Bermuda in the Master Trust. Prior to the Initial Closing, Old Mutual
Bermuda will hold at least 99% of the beneficial interest in the Master Trust.
The address of Old Mutual Bermuda is 61 Front Street, Hamilton, Bermuda. Thus,
Old Mutual Bermuda will, for a time, have effective voting control of the Master
Trust. Upon completion of the Initial Closing, each of the OMEGA South Africa
Fund and the Non-U.S. Fund may own more than 25% of the beneficial interest in
the Master Trust. The address of the OMEGA South Africa Fund and the Non-U.S.
Fund is Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda.
In addition, the Master Trust has undertaken to the OMEGA South Africa
Fund and the Non-U.S. Fund not to change the restrictions described in Item 13
under "Investment Restrictions -- Irish Stock Exchange Restrictions" for so long
as the shares of the Non-U.S. Fund are listed on the Irish Stock Exchange.
The Trustees and officers as a group currently own, and upon the
Initial Closing are expected to own, less than one percent of the outstanding
beneficial interests in the Master Trust.
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Item 16. Investment Advisory and Other Services.
Adviser.
Old Mutual Asset Managers (Bermuda) Limited, a wholly-owned subsidiary
of Old Mutual, is the investment adviser to the Master Trust and manages the
Master Trust's assets pursuant to an investment advisory agreement (the
"Advisory Agreement"). The Adviser was organized in 1995 as a Bermuda company
for the purpose of advising the Master Trust and the Global Fund. The Adviser's
address is 12 Par-la-Ville Road, Hamilton, Bermuda. Old Mutual will provide
investment research and information to the Adviser.
Michael John Levett, the Chairman of the Board of Trustees and the
President of the Master Trust, is the Chairman and Managing Director of Old
Mutual and is the Chairman of the Board and a director of the Adviser. William
Langley, the Treasurer and a Trustee of the Master Trust, is the President and a
director of the Adviser and is a member of the general management of Old Mutual.
John Charles Ross Collis, the Secretary of the Master Trust, is the Secretary
and a director of the Adviser.
The Adviser manages the Master Trust's securities and makes investment
decisions for the Master Trust subject to the organizational documents of the
Master Trust, the 1940 Act, the rules of the Irish Stock Exchange, and such
policies as the Board of Trustees of the Master Trust may, with notice to the
Adviser, establish. The Adviser furnishes at its own expense all services,
facilities and personnel necessary or convenient in connection with managing the
Master Trust's investments and effecting securities transactions for the Master
Trust. The Advisory Agreement continues in effect until October 23, 1997 and
thereafter as long as such continuance is specifically approved at least
annually by the Board of Trustees of the Master Trust or by a vote of a majority
of the outstanding voting securities of the Master Trust, and, in either case,
by vote of a majority of the Trustees who are not interested persons of the
Master Trust or the Adviser, at a meeting called for the purpose of voting on
the Advisory Agreement.
The Advisory Agreement provides that the Adviser may render services to
others. The Advisory Agreement is terminable without penalty on not more than 60
days' nor less than 30 days' written notice by the Master Trust when authorized
either by a vote of a majority of the outstanding voting securities of the
Master Trust or by a vote of a majority of the Board of Trustees of the Master
Trust, or by the Adviser on not more than 60 days' nor less than 30 days'
written notice, and will automatically terminate in the event of its assignment.
The Advisory Agreement provides that neither the Adviser nor its personnel shall
be liable for any error of judgment or mistake of law or for any loss arising
out of any investment or for any act or omission in the execution of security
transactions for the Master Trust, except for willful misfeasance, bad faith or
gross negligence in the performance of its
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or their duties or reckless disregard of its or their obligations and duties
under the Advisory Agreement.
The Master Trust will pay the Adviser a management fee of 0.85% per
annum of the Master Trust's daily net assets (the "Management Fee"). The
Management Fee will accrue daily on an annualized basis and be paid monthly in
arrears.
The Adviser will have access to and benefit from investment research
and information generated and used by Old Mutual. The Adviser will be
responsible for compensating Old Mutual for research and information provided to
the Adviser.
The Adviser will reduce or rebate a portion of the Management Fee as
necessary so that ordinary operating expenses of each of the OMEGA South Africa
Fund and the Non-U.S. Fund, including the Management Fee, will not exceed 1.00%
per annum of the OMEGA South Africa Fund's and the Non-U.S. Fund's,
respectively, daily net assets. This limitation does not apply to (i)
extraordinary expenses (such as the cost of litigation), (ii) the placement fee
and the amount payable to Old Mutual Bermuda at the Initial Closing, (iii) sales
charges on shares of the OMEGA South Africa Fund and the Non-U.S. Fund, (iv)
brokerage expenses, or (v) the redemption fee charged by the OMEGA South Africa
Fund and the Non-U.S. Fund of 1.75% of redemption proceeds. The Adviser may not
terminate its undertaking to so reduce or rebate a portion of the Management Fee
without giving at least 120 days notice to investors in the OMEGA South Africa
Fund and the Non-U.S. Fund, provided the Adviser may terminate this undertaking
at any time without prior notice if the Adviser ceases to be investment adviser
to the Master Trust.
Administrators.
Pursuant to an administrative services agreement (the "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, will provide certain administrative, transfer agency
and fund accounting services to the Master Trust.
Pursuant to the Administrative Services Agreement, the Master Trust
Administrator serves as accounting agent, registrar, transfer agent and dividend
disbursing agent for the Master Trust, and provides 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 Master Trust, reporting to the Board of Trustees of the Master
Trust regarding the performance of the custodian and independent public
accountants, overseeing and reviewing calculations of fees
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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 Master Trust remains in
effect until it is terminated and may be terminated without penalty by either
party on not less than 60 days' written notice. In addition, the Master Trust
may terminate the Administrative Services Agreement if the closing of the
initial offering of shares of the OMEGA South Africa Fund or the Non-U.S. Fund
is canceled without postponement to a later date.
The Administrative Services Agreement with the Master Trust also
provides that the Master Trust Administrator shall not be liable for any loss,
liability, claim or expense suffered or incurred by the Master Trust unless
caused by its own fraud, willful default, gross negligence or willful misconduct
or that of its agents or employees. The Master Trust Administrator's liability
under the 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 the Master Trust's compliance with any applicable tax or securities
statute, regulation or ruling of any jurisdiction.
The Master Trust Administrator will receive an annual administration
fee from the Master Trust calculated as a percentage of the Master Trust's
assets. The percentage will range from 0.05% to 0.01% per annum according to the
average assets of the Master Trust, as follows:
First U.S.$500 million 0.05%
Next U.S.$500 million 0.025%
Over U.S.$1 billion 0.01%
If the assets of the Master Trust total U.S.$1 billion during a year,
the effective administration fee percentage for that year will be 0.0375%.
The Master Trust Administrator is a wholly-owned subsidiary of State
Street Bank and Trust Company.
Placement Agent.
The Master Trust has not engaged any placement agent for purposes of
offering beneficial interests in the Master Trust for sale. S.G. Warburg & Co.
Inc. ("S.G. Warburg" or the "OMEGA Placement Agent") serves as the exclusive
placement agent for the OMEGA Initial Offering on a best efforts basis pursuant
to a placing agreement (the "OMEGA Placing
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Agreement") with the Master Trust, the OMEGA South Africa Fund, Old Mutual, the
Adviser and Old Mutual Bermuda. S.G. Warburg's engagement as exclusive Placement
Agent extends through the OMEGA Initial Offering. The OMEGA South Africa Fund
may engage other placement agents for any subsequent offerings. Unless otherwise
terminated, the OMEGA Placing Agreement continues until the close of the OMEGA
Initial Offering. The OMEGA Placing Agreement may be terminated without penalty
by a majority of the members of the Board of Trustees of the Master Trust or the
OMEGA South Africa Fund who are not interested persons of the Master Trust or
the OMEGA South Africa Fund, respectively, and have no direct or indirect
financial interest in the operation of the placement plan adopted by the Master
Trust or the OMEGA South Africa Fund or in any agreements related to such plan,
or by the vote of a majority of the outstanding voting securities of the Master
Trust or the OMEGA South Africa Fund, on not less than 60 days' written notice
to each other party to the OMEGA Placing Agreement. The OMEGA Placing Agreement
will automatically terminate in the event of its assignment, as defined in the
1940 Act by S.G. Warburg.
Pursuant to a placing agreement (the "Non-U.S. Placing Agreement")
between the Master Trust, the Non-U.S. Fund, Old Mutual, the Adviser, Old Mutual
Bermuda and Swiss Bank Corporation, through its division SBC Warburg (the
"Non-U.S. Placement Agent"), the Non-U.S. Placement Agent has agreed (as
exclusive agent for the Non-U.S. Fund) to use its reasonable endeavors to
procure placees for up to 20,000,000 shares of the Non-U.S. Fund, but the
Placement Agent is not itself under any obligation to subscribe for any shares.
In certain circumstances, the Non-U.S. Placement Agent is entitled to terminate
the Non-U.S. Placing Agreement, including where there has been a material breach
of certain of the representations and warranties contained in Non-U.S. Placing
Agreement. The Non-U.S. Fund may terminate the Non-U.S. Placing Agreement by
immediate written notice to the Non-U.S. Placement Agent in the event that the
Non-U.S. Placement Agent shall be in material breach of the Non-U.S. Placing
Agreement.
The Master Trust will pay the OMEGA Placement Agent a placement fee
equal to 0.25% of the initial offering price of the shares sold in the OMEGA
Initial Offering. The Master Trust will pay a corresponding placement fee to the
Non-U.S. Placement Agent in respect of the sale of shares in the Non-U.S. Fund.
The Master Trust will also pay Old Mutual Bermuda an amount equal to 0.25% of
the value of the interest it retains in the Master Trust following the Initial
Closing. Old Mutual Bermuda may apply all or a portion of this amount to
compensate broker-dealers that assist in any subsequent placement of shares of
the OMEGA South Africa Fund or the Non-U.S. Fund. Each of the OMEGA South Africa
Fund and the Non-U.S. Fund have agreed to indemnify its respective Placement
Agent and the Master Trust has agreed to indemnify the OMEGA and the Non-U.S.
Placement Agents against certain liabilities, including liabilities under
applicable securities laws.
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The Master Trust has adopted a placement plan in accordance with Rule
12b-1 under the 1940 Act (the "Placement Plan"). The Placement Plan provides for
the payment of the above-mentioned fees and amounts to each of the Placement
Agents, any affiliate of each of the Placement Agents and Old Mutual Bermuda.
The Placement Plan also provides for the payment by the Master Trust of a
structuring fee at the Initial Closing to International Finance Corporation, the
structuring agent for the OMEGA South Africa Fund and the Non-U.S. Fund, not to
exceed U.S.$250,000. Furthermore, the Placement Plan provides that the Master
Trust may reimburse the Adviser, or another party, for certain marketing
expenses incurred (or advanced to S.G. Warburg or others) in the placement of
shares of the OMEGA South Africa Fund and the Non-U.S. Fund, provided the amount
of such reimbursements in any year will not exceed 0.05% of the average daily
net assets of the Master Trust for such year. Under the Placement Plan, the
Master Trust may pay additional fees in connection with the placement of shares
of the OMEGA South Africa Fund and the Non-U.S. Fund as determined by the
Trustees, provided such fees for any year shall not, together with any
reimbursement of expenses under the next preceding sentence for such year,
exceed 0.05% of the average daily net assets of the Master Trust for such year.
The Placement Plan continues in effect if such continuance is
specifically approved at least annually by a vote of a majority of the Trustees
of the Master Trust and a majority of the Trustees who are not "interested
persons" of the Master Trust, and who have no direct or indirect financial
interest in the operation of the Placement Plan or in any agreement related to
such Plan (for purposes of this paragraph "Non-Interested Trustees"). The
Placement Plan requires that the Treasurer of the Master Trust provide to the
Master Trust's Board of Trustees, and the Board of Trustees review, at least
quarterly, a written report of the amounts expended (and the purposes therefor)
under the Placement Plan and any related agreement. The Placement Plan further
provides that the selection and nomination of the Non-Interested Trustees is
committed to the discretion of the disinterested Trustees (as defined in the
1940 Act) then in office. The Placement Plan may be terminated at any time by a
vote of a majority of the Non-Interested Trustees or by a vote of a majority of
the outstanding voting securities of the Master Trust. The Placement Plan may
not be amended to increase materially the amount of the Master Trust's permitted
expenditures thereunder without the approval of a majority of the outstanding
voting securities of the Master Trust and may not be materially amended in any
case without a vote of a majority of both the Trustees and Non-Interested
Trustees of the Master Trust. The Master Trust will preserve copies of the
Placement Plan and any agreements or reports made pursuant to the Placement Plan
for a period of not less than six years from the date of the Placement Plan, and
for the first two years such agreements and reports will be maintained in an
easily accessible place.
The Adviser (or another subsidiary of Old Mutual) will, on the third
anniversary of the Initial Closing, pay an affiliate of the OMEGA Placement
Agent a servicing fee with respect to shares of the OMEGA South Africa Fund and
the Non-U.S. Fund, respectively, that are (i) sold in the OMEGA Initial Offering
or the Non-U.S. Initial Offering or the second
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offering of shares of the OMEGA South Africa Fund (the "OMEGA Second Offering")
or the Non-U.S. Fund (the "Non-U.S. Second Offering") and (ii) continuously
outstanding through the third anniversary of the Initial Closing ("Qualifying
Shares"). The servicing fee will be equal to 0.125% per annum of the proportion
of the Master Trust's daily net assets represented by the Qualifying Shares
during the period ending on such third anniversary. All or part of the servicing
fee may be reallowed to any other broker-dealers that participate in the OMEGA
or the Non-U.S. Second Offering. The servicing fee will not be paid by the OMEGA
South Africa Fund, the Non-U.S Fund or the Master Trust. The servicing fee is
intended to compensate the OMEGA and the Non-U.S. Placement Agents and other
broker-dealers engaged by the OMEGA South Africa Fund and the Non-U.S. Fund for
providing ongoing shareholder services.
Custodian.
The Master Trust has entered into a custodian contract with State
Street Bank and Trust Company (the "Custodian") pursuant to which the Custodian
acts as custodian for the Master Trust. The principal business address of the
Custodian is 225 Franklin Street, Boston, MA 02110.
The Custodian has entered into subcustodian agreements (each a
"Subcustodian Agreement") with Standard Bank of South Africa Limited and with
State Street London Limited (each a "Subcustodian"), pursuant to which Standard
Bank of South Africa Limited and State Street London Limited provide custodial
services in South Africa and the United Kingdom, respectively, for assets of the
Master Trust. Old Mutual holds 24.2% of the outstanding voting securities of
Standard Bank of South Africa Limited. State Street London Limited is a
wholly-owned subsidiary of State Street Bank and Trust Company. The Trustees of
the Master Trust have approved and adopted each Subcustodian Agreement and have
found that maintaining the Master Trust's assets in South Africa and the United
Kingdom and with each Subcustodian is in the best interests of the Master Trust
on behalf of its Investors. Each Subcustodian will be paid, by the Custodian,
such compensation pursuant to each Subcustodian Agreement as may be mutually
agreed upon from time to time.
Structuring Agent.
International Finance Corporation (the "Structuring Agent") has acted
as structuring agent for the OMEGA South Africa Fund and the Non-U.S. Fund and
in that capacity has provided advice on the organization of the OMEGA South
Africa Fund and the Non-U.S. Fund and their business arrangements. The Master
Trust has agreed to pay the Structuring Agent a structuring fee of U.S.$250,000
at the Initial Closing. The principal address of the Structuring Agent is 1818
H. Street N.W., Washington D.C. 20433.
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Independent Accountants.
KPMG Peat Marwick, Vallis Building, Hamilton HM 11 Bermuda, are the
independent public accountants for the Master Trust, providing audit services,
and assistance and consultation with respect to the preparation of filings with
the SEC.
Item 17. Brokerage Allocation and Other Practices.
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 Master Trust which are designed to address
the substantial position of Old Mutual and its wholly-owned subsidiaries in the
South African securities markets.
The Management Fee will not be reduced as a consequence of the
Adviser's receipt of brokerage and research services. While such services are
not expected to reduce the expenses of the Adviser, the Adviser would, through
the use of the services, avoid the additional expenses which would be incurred
if it should attempt to develop comparable information through its own staff.
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In certain instances there may be securities that are suitable as an
investment for the Master Trust as well as for one or more of the Adviser's
other clients. Investment decisions for the Master Trust and for the Adviser's
other clients are made with a view to achieving their respective investment
objectives. It may develop that a particular security is bought or sold for only
one client even though it might be held by, or bought or sold for, other
clients. Likewise, a particular security may be bought for one or more clients
when one or more clients are selling the same security. Some simultaneous
transactions are inevitable when several clients receive investment advice from
the same investment adviser, particularly when the same security is suitable for
the investment objectives of more than one client. When two or more clients are
simultaneously engaged in the purchase or sale of the same security, the
securities are allocated among clients in a manner believed to be equitable to
each. It is recognized that in some cases this system could adversely affect the
price of or the size of the position obtainable for the security for the Master
Trust. When purchases or sales of the same security for the Master Trust and for
other portfolios managed by the Adviser occur contemporaneously, the purchase or
sale orders may be aggregated in order to obtain any price advantages available
to large volume purchases or sales. Similar considerations apply with respect to
investment advisory services provided by Old Mutual and other affiliates of the
Adviser to their respective clients.
Item 18. Capital Stock and Other Securities.
The beneficial interest in the Master Trust shall consist of
non-transferable Interests. Interests may be issued only to (a) any U.S.
regulated investment company, segregated asset account, non-U.S. investment
company, common trust fund, group trust, or other investment arrangement other
than an individual, S corporation, partnership or grantor trust beneficially
owned by an individual, S corporation or partnership, and/or (b) Old Mutual and
any wholly-owned direct or indirect subsidiary of Old Mutual, as may be approved
by the Trustees, for cash or other consideration acceptable to the Trustees,
subject to the requirements of the 1940 Act. The value of an Interest shall be
equal to the balance of the Investor's book capital account (the "Book Capital
Account Balance"). The number of Interests authorized under the declaration of
trust of the Master Trust is unlimited. The offering of Interests has not been
registered under the 1933 Act.
On each matter submitted to a vote of Investors, each Investor shall be
entitled to a vote proportionate to its Interest in the Master Trust as recorded
on the books of the Master Trust. If the Master Trust is divided into series,
each series shall vote as a separate class except (i) when required by the 1940
Act or the declaration of trust of the Master Trust to be voted in the
aggregate, (ii) in the election and removal of Trustees, (iii) for certain
amendments to the declaration of trust of the Master Trust, and (iv) when the
Trustees have determined that a matter affects the interests of Investors of all
series or classes of Interests and that the Interests shall vote as one class on
the matter. On each matter submitted to a
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vote of Investors, each Investor may apportion its vote with respect to a
proposal in the same proportion as its own shareholders voted with respect to
that proposal. As a Massachusetts trust, the Master Trust is not required to
hold, and has no present intention of holding, annual meetings of Investors but
the Master Trust will hold special meetings of Investors when in the judgment of
the Trustees it is necessary or desirable to submit matters for a Investor vote.
The Master Trust's activities are supervised by a Board of Trustees.
Investors 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 and (ii) changes in the investment
objective and fundamental investment restrictions of the Master Trust. Trustees
of the Master Trust may be removed by a vote of Investors holding at least
two-thirds of outstanding Interests.
The Master Trust 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 Interests of all series of the Master Trust voting
as a single class, or of the affected series of the Master Trust, as the case
may be, or by an instrument in writing without a meeting, consented to by the
vote of the holders of two-thirds of the outstanding Interests of all series of
the Master Trust voting as a single class, or of the affected series of the
Master Trust, as the case may be; provided, however, that if such merger,
consolidation, or transfer is recommended by the Trustees, the "vote of a
majority of the outstanding voting securities" of the Master Trust, as defined
in the 1940 Act ("Majority Interests 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 Master Trust may be terminated by a Majority Interests Vote,
by the Trustees, or upon the bankruptcy or dissolution of an Investor unless the
remaining Investors, by Majority Interests Vote, agree to continue the Master
Trust. Any series of the Master Trust may be terminated by a Majority Interests
Vote of that series, by the Trustees, or upon the bankruptcy or dissolution of
an Investor of that series unless the remaining Investors, by Majority Interests
Vote of the series, agree to continue the series.
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 (including the OMEGA South Africa Fund and the Non-U.S. Fund) are
each jointly and severally liable for the liabilities and obligations of the
Master Trust. However, the risk of an Investor 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.
The declaration of trust of the Master Trust further provides that
obligations of the Master Trust 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
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misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his or her office.
Each Investor in the Master Trust may add to or withdraw from its
investment in the Master Trust on each Business Day, as defined in Item 19.
Item 19. Purchase, Redemption and Pricing of Securities.
The Master Trust is offering the Interests without registration under
the 1933 Act as a private placement pursuant to Regulation D under the 1933 Act.
The Master Trust is also relying upon appropriate exemptions from the
registration requirements of applicable state securities or blue sky laws. The
Interests are being offered and sold in the U.S. only to investment companies,
common or commingled trust funds or similar organizations or entities which are
"accredited investors" as defined in Regulation D. This Registration Statement
does not constitute an offer to sell, or the solicitation of an offer to buy,
any "security " within the meaning of the 1933 Act.
The net asset value of the Master Trust is determined each day on which
the New York Stock Exchange is open for trading ("Business Day"). As of the date
of this Part B, the New York Stock Exchange is open for trading every weekday
except for the following holidays (or the days on which they are observed): New
Year's Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day. This determination of net asset value
is made by the Master Trust Administrator once each day as of 10:00 a.m.
(Eastern time), being after the close of business of the JSE for that day. The
net asset value of the Master Trust at any given time and from time to time
shall mean the difference of (a) the total assets then held by the Master Trust
including all cash and cash equivalents, stocks, bonds, and other debt
instruments (including accrued interest and original issue discount thereon),
mutual fund interests, stock options, open futures positions, other securities,
and declared dividends on equity securities after the record date for payment
thereof, minus (b) the face amount of all Master Trust debts and obligations.
Upon the determination of the net asset value of the Master Trust on
each Business Day, the Book Capital Account Balance shall then be adjusted as
follows: (a) the excess, if any, of the net asset value as determined on such
Business Day over the net asset value as last determined shall be allocated
among the Investors in accordance with the amounts of their respective Book
Capital Account Balances, and the amount so allocated shall be added to the Book
Capital Account Balance of each Investor; (b) the excess, if any, of the net
asset value as last determined over the net asset value as determined on such
Business Day shall be allocated among the Investors in accordance with the
amounts of their respective Book Capital Account Balances, and the amounts so
allocated shall be subtracted from the respective Book Capital Account Balance
of each Investor; (c) after effecting the adjustments under subparagraphs (a)
and (b), the Book Capital Account Balance of each Investor shall be
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increased to reflect any capital contributions in respect of the increase of
such Investor's Interest, to the extent such Investor's Book Capital Account
Balance has not previously been increased to reflect the same; and (d) after
effecting the adjustments under subparagraphs (a) and (b), the Book Capital
Account Balance of each Investor shall be decreased to reflect the amount of
money or the fair market value of property other than money (net of liabilities
secured by such property that the Investor is considered to assume or take
subject to) distributed to such Investor by the Master Trust in respect of the
decrease or redemption of such Investor's Interest (or in connection with a
termination of the Master Trust), to the extent such Investor's Book Capital
Account Balance has not previously been decreased to reflect the same. The Book
Capital Account Balance of each Investor as determined above shall be the Book
Capital Account Balance of such Investor until the next calculation of such
Investor's Book Capital Account Balance. The percentage interest of each
Investor in the Master Trust at any time for purposes of voting and otherwise
shall be the quotient of (i) the Book Capital Account Balance of such Investor
at such time divided by (ii) the sum of the Book Capital Account Balances of all
Investors at such time.
The Master Trust will generally value JSE listed securities based on
the current JSE ruling price. The ruling price for a JSE listed security on any
day is the last sale price, adjusted upward to any current higher bid price or
downward to any current lower offer price. If the securities did not trade on
the JSE on the date of the valuation, they may be valued on a different basis
believed to reflect their fair value. Values are converted from S.A. Rand to
U.S. dollars using exchange rates prevailing as of the time the net asset value
is to be determined. Trading may take place in securities held by the Master
Trust on days that are not Business Days and on which it will not be possible to
purchase or redeem shares of the OMEGA South Africa Fund or the Non-U.S. Fund.
The Master Trust may, from time to time, revise its procedures relating
to the calculation of net asset value to reflect changes in JSE trading periods
and practices.
Trading in securities on most non-U.S. exchanges and over-the-counter
markets is normally completed before the close of regular trading on the New
York Stock Exchange and may also take place on days on which the New York Stock
Exchange is closed. If events materially affecting the value of non-U.S.
securities occur between the time when the exchange on which they are traded
closes and the time when the Master Trust's net asset value is calculated, such
securities will be valued at fair value in accordance with procedures
established by and under the general supervision of the Board of Trustees of the
Master Trust.
Subject to compliance with applicable regulations, the Master Trust has
reserved the right to pay the redemption price of Interests, 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
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the net asset value for the Interests being sold. If a holder of Interests
received a distribution in kind, such holder could incur brokerage or other
charges in converting the securities to cash.
The Trustees shall have the power (but no obligation) at any time to
redeem all (but not less than all) the Interest in the Master Trust of any
Investor at a redemption price determined in accordance with the provisions of
the declaration of trust of the Master Trust if at such time the aggregate Book
Capital Account Balance of such Investor is less than a minimum amount, if any,
as determined from time to time by the Trustees. However, the Trustees have not
established any such minimum amount, and no action to establish a minimum amount
has been taken by the Trustees.
The Master Trust may declare a suspension of the right to decrease or
redeem Interests or postpone the date of payment of the proceeds of a decrease
or redemption of an Interest 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 Master Trust of securities owned by it is not reasonably practicable or
it is not reasonably practicable for the Master Trust fairly to determine the
value of its net assets, or (d) during which the SEC for the protection of
Investors by order permits the suspension of the right of decrease or redemption
or postponement of the date of payment of the 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 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 to decrease or redeem Interests or payment of the
proceeds of a decrease or redemption of an Interest until 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 Master
Trust shall be conclusive). In the case of a suspension of the right to decrease
or redeem Interests, an Investor may either withdraw his request to decrease or
redeem Interests or receive payment based on the net asset value upon the
termination of the suspension.
Item 20. Tax Status.
The Master Trust is organized as a Massachusetts trust. The Master
Trust has determined that it is properly treated as a partnership for U.S.
federal and Massachusetts income tax purposes. Accordingly, under those tax
laws, the Master Trust is not subject to any income tax, but each Investor in
the Master Trust must take into account its share of the
B-26
<PAGE> 70
Master Trust's ordinary income, capital gains, and other items in determining
its income tax liability. The determination of such share is made in accordance
with the governing instruments of the Master Trust and the U.S. Internal Revenue
Code of 1986, as amended (the "Code"), and regulations promulgated thereunder.
The Master Trust's taxable year-end ends June 30. Although, as
described above, the Master Trust is not subject to U.S. federal income tax, it
files appropriate U.S. federal income tax returns.
The Master Trust believes that, in the case of an Investor in the
Master Trust that seeks to qualify as a regulated investment company ("RIC")
under the Code, the Investor should be treated for U.S. federal income tax
purposes as an owner of an undivided interest in the assets and operations of
the Master Trust, and accordingly should be deemed to own a proportionate
interest in each of the assets of the Master Trust and should be entitled to
treat as earned by it the portion of the Master Trust's gross income
attributable to that interest. The Master Trust also believes that each such
Investor should be deemed to hold its proportionate interest of the Master
Trust's assets for the period the Master Trust has held the assets or for the
period the Investor has been a partner in the Master Trust, whichever is
shorter. Each Investor should consult its tax advisers regarding whether, in
light of its particular tax status and any special tax rules applicable to it,
this approach applies to its investment in the Master Trust, or whether the
Master Trust should be treated, as to it, as a separate entity as to which the
Investor has no direct interest in Master Trust assets or operations.
In order to enable an Investor that is otherwise eligible to qualify as
a RIC under the Code to so qualify, the Master Trust intends that it will
satisfy the requirements of Subchapter M of the Code relating to the nature of
the Master Trust's gross income and the composition (diversification) and
holding period of the Master Trust's assets as if those requirements were
directly applicable to the Master Trust and to allocate and permit withdrawals
of its net investment income and any net realized capital gains in a manner that
will enable an Investor that is a RIC to comply with the qualification
requirements imposed by Subchapter M of the Code.
The Master Trust will allocate at least annually among its Investors
each Investor's distributive share of the Master Trust's net investment income,
net realized capital gains, and any other items of income, gain, loss deduction,
or credit in a manner intended to comply with the Code and applicable U.S.
Treasury regulations.
To the extent the cash proceeds of any withdrawal or distribution
exceed an Investor's adjusted tax basis in its partnership interest in the
Master Trust, the Investor will generally realize gain for U.S. federal income
tax purposes. If, upon a complete withdrawal (i.e., a redemption of its entire
interest in the Master Trust), the Investor's adjusted tax basis in its
B-27
<PAGE> 71
partnership interest in the Master Trust exceeds the proceeds of the withdrawal,
the Investor will generally realize a loss for federal income tax purposes. An
Investor's adjusted tax basis in its partnership interest in the Master Trust
will generally be the aggregate price paid therefor, increased by the amounts of
its distributive shares of items of realized net income and gain (including
income, if any, exempt from U.S. Federal income tax), and reduced, but not below
zero, by the amounts of its distributive shares of items of net loss and the
amounts of any distributions received by the Investor.
The Master Trust may be subject to foreign withholding taxes with
respect to income on certain securities of non-U.S. issuers. These taxes may be
reduced or eliminated under the terms of an applicable U.S. income tax treaty if
and to the extent such treaty is available. There is no income tax treaty
presently in effect between the U.S. and South Africa. Foreign exchange gains
and losses realized by the Master Trust will generally be treated as ordinary
income and losses for federal income tax purposes. Certain uses of foreign
currency and foreign currency forward contracts and investment by the Master
Trust in certain "passive foreign investment companies" may be limited, or a tax
election may be made, if available, in order to enable an Investor that is a RIC
to preserve its qualification as a RIC and to avoid imposition of a tax on such
an Investor.
The Master Trust's transactions in forward currency contracts will be
subject to special tax rules that may affect the amount, timing, and character
of Master Trust income. For example, certain positions held for the Master Trust
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 Master Trust 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 Master Trust losses, adjustments in the holding periods of Master Trust
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.
There are certain tax issues which will be relevant to only certain
Investors, specifically, Investors which are segregated asset accounts and
Investors who contribute assets other than cash to the Master Trust. It is
intended that such segregated asset accounts will be able to satisfy
diversification requirements applicable to them and that such contributions of
assets will not be taxable provided certain requirements are met. Such Investors
are advised to consult their own tax advisors as to the tax consequences of an
investment in the Master Trust.
The Master Trust intends to conduct its activities so that it will not
be deemed to be engaged in the conduct of a U.S. trade or business for U.S.
federal income tax purposes. Therefore, it is not anticipated that an Investor
in the Master Trust, other than an Investor
B-28
<PAGE> 72
which would be deemed a "U.S. person" for U.S. federal income tax purposes, will
be subject to U.S. federal income taxation (other than a 30% withholding tax on
dividends and certain interest income) solely by reason of its investment in the
Master Trust. There can be no assurance that the U.S. Internal Revenue Service
may not challenge the above conclusions or take other positions that, if
successful, might result in the payment of U.S. federal income taxes by
Investors in the Master Trust.
The above discussion does not address the special tax rules applicable
to certain classes of Investors, such as tax-exempt entities, insurance
companies, and financial institutions, or the state, local, or non-U.S. tax laws
that may be applicable to certain Investors. Investors should consult their own
tax advisers with respect to the special tax rules that may apply in their
particular situations, as well as the state, local, or foreign tax consequences
to them of investing in the Master Trust.
Item 21. Underwriters.
Not applicable.
Item 22. Calculation of Performance Data.
Not applicable.
Item 23. Financial Statements.
See below.
B-29
<PAGE> 73
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Statement of Assets and Liabilities
November 3, 1995
(With Independent Auditors' Report Thereon)
<PAGE> 74
Independent Auditors' Report
The Board of Trustees
Old Mutual South Africa Equity Trust:
We have audited the statement of assets and liabilities of Old Mutual South
Africa Equity Trust (the "Trust") including the schedule of investments as of
November 3, 1995. The statement of assets and liabilities is the responsibility
of the Trust's management. Our responsibility is to express an opinion on the
statement of assets and liabilities based on our audit.
We conducted our audit in accordance with United States generally accepted
auditing standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement of assets and
liabilities is free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the statement of
assets and liabilities. Our procedures included confirmation of investments held
as of November 3, 1995 by correspondence with the custodian. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the statement of assets and liabilities as referred to above
presents fairly, in all material respects, the financial position of the Trust
as of November 3, 1995, in conformity with United States generally accepted
accounting principles.
KPMG Peat Marwick
Chartered Accountants
Hamilton, Bermuda
November 3, 1995
<PAGE> 75
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Statement of Assets and Liabilities
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<S> <C>
Assets:
Investments in securities at market value (cost $1,010,889,970) $ 1,010,889,970
Cash 4,750,100
Deferred organization expenses 1,800,000
----------------
Total assets 1,017,440,070
----------------
Liabilities:
Accrued organization expenses 1,800,000
----------------
Net assets $ 1,015,640,070
================
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE> 76
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- --------- --------------
<S> <C> <C>
MINING, COAL - (1.62%)
Anglo American Coal Corporation Ltd. 239,000 $ 16,384,452
--------------
MINING, DIAMONDS - (4.91%)
De Beers Consolidated Mines Ltd. 1,800,000 49,852,608
--------------
GOLD MINING, KLERKSDORP - (0.50%)
Southvaal Holdings Ltd. 111,000 2,526,359
Vaal Reefs Exploration and Mining Co. Ltd. 44,000 2,521,697
--------------
5,048,056
--------------
GOLD MINING, WEST WITS - (0.79%)
Driefontein Consolidated Ltd. 720,000 8,045,520
--------------
METALS & MINERALS, MANGANESE - (0.70%)
Samancor Ltd. 490,000 7,121,410
--------------
METALS & MINERALS, PLATINUM - (2.64%)
Impala Platinum Holdings Ltd. 330,000 6,877,357
Lydenburg Platinum Ltd. 1,300,000 19,962,981
--------------
26,840,338
--------------
MINING HOUSES - (18.27%)
Anglo American Corporation of SA Ltd. 870,000 51,172,962
Anglo American Platinum Corporation Ltd. 1,600,000 10,749,297
Anglovaal Industries Ltd. 1,100,000 42,229,382
Gencor Ltd. 8,400,000 29,944,471
Gold Fields of SA Ltd. 880,000 22,924,522
JCI Ltd. 1,200,000 9,871,804
Rand Mines Ltd. 1,600,000 18,646,740
--------------
185,539,178
--------------
MINING HOLDING - (1.05%)
Associated Ore and Metal Corp. Ltd. 44,000 3,257,695
Middle Witwatersrand (Western Areas) Ltd. 2,300,000 7,410,708
--------------
10,668,403
--------------
BANKS & FINANCIAL SERVICES - (11.07%)
Amalgamated Banks of SA Ltd. 710,000 3,407,143
First National Bank Holdings Ltd. 240,000 1,875,643
Investec Holdings Ltd. 300,000 4,853,637
Nedcor Ltd. 3,500,000 50,627,271
Standard Bank Investment Corp. Ltd. 1,300,000 51,689,861
--------------
112,453,555
--------------
</TABLE>
(Continued)
<PAGE> 77
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments (Continued)
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- ---------- -----------
<S> <C> <C>
INSURANCE - (1.65%)
Liberty Life Association of Africa Ltd. 280,000 7,370,947
Metropolitan Life Ltd. 290,000 3,499,006
Mutual & Federal Insurance Co. Ltd. 300,000 5,923,082
-----------
16,793,035
-----------
INVESTMENT TRUSTS - (0.76%)
Genbel Investments Ltd. 2,900,000 7,713,718
-----------
INDUSTRIAL HOLDING - (25.29%)
Anglovaal Ltd. 3,900,000 28,875,026
Barlow Ltd. 3,800,000 50,017,139
Bidvest Group Ltd. 1,100,000 6,334,407
C.G. Smith Ltd. 7,600,000 49,496,127
Forward Corporation Ltd. 1,300,000 1,069,445
Imperial Holdings Ltd. 340,000 3,729,348
Johnnies Industrial Corporation Ltd. 1,200,000 16,288,476
Malbak Ltd. 560,000 3,723,864
Murray & Roberts Holdings Ltd. 750,000 5,450,058
Rembrandt Group Ltd. 4,700,000 44,142,044
Safmarine and Rennies Holdings Ltd. 14,200,000 47,700,007
-----------
256,825,941
-----------
BEVERAGES, HOTEL & LEISURE - (4.86%)
South African Breweries Ltd. 1,500,000 49,359,018
-----------
BUILDING, CONSTRUCTION & ALLIED - (1.12%)
Anglo Alpha Ltd. 180,000 6,416,672
Everite Holdings Ltd. 2,400,000 4,935,902
-----------
11,352,574
-----------
CHEMICALS, OILS & PLASTICS - (6.33%)
AECI Ltd. 880,000 6,213,752
Engen Ltd. 1,200,000 7,897,443
Sasol Ltd. 5,500,000 46,753,959
Sentrachem Ltd. 960,000 3,422,225
-----------
64,287,379
-----------
ELECTRONICS - (3.62%)
Allied Electronics Corporation Ltd. 2,320,000 5,980,119
IBM South Africa Group Ltd. 1,100,000 3,016,384
Grintek Ltd. 2,500,000 2,742,168
Reunert Ltd. 4,100,000 25,015,425
-----------
36,754,096
-----------
</TABLE>
(Continued)
<PAGE> 78
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Schedule of Investments (Continued)
November 3, 1995
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Number of Market
Description Shares Value
----------- ---------- -----------------
<S> <C> <C>
ENGINEERING - (1.08%)
African Oxygen Ltd. 310,000 11,008,432
-----------------
FOOD - (1.19%)
C.G. Smith Foods Ltd. 360,000 7,058,340
Tiger Oats Ltd. 310,000 5,015,425
-----------------
12,073,765
-----------------
FURNITURE, HOUSEHOLD & ALLIED - (0.75%)
J.D. Group Ltd. 1,500,000 7,609,515
-----------------
PAPER & PACKAGING - (2.37%)
Nampak Ltd. 870,000 4,532,803
Sappi Ltd. 1,030,000 19,488,586
-----------------
24,021,389
-----------------
PRINTING & PUBLISHING - (0.53%)
Independent Newspapers Holdings Ltd. 270,000 1,036,539
Omni Media Corporation Ltd. 400,000 4,387,468
-----------------
5,424,007
-----------------
STEEL & ALLIED - (1.73%)
Iscor Ltd. 17,700,000 17,618,702
-----------------
STORES - (4.92%)
Foschini Ltd. 2,100,000 16,123,946
Wooltru Ltd. 6,100,000 33,872,626
-----------------
49,996,572
-----------------
TRANSPORTATION - (1.78%)
Trencor Ltd. 3,300,000 18,098,307
-----------------
Total investments (cost $1,010,889,970) - 99.53% of net assets $ 1,010,889,970
=================
</TABLE>
See accompanying notes to statement of assets and liabilities.
<PAGE> 79
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Notes to Statement of Assets and Liabilities
November 3, 1995
(1) THE TRUST
Old Mutual South Africa Equity Trust (the "Trust") is a trust organized
under the laws of Massachusetts pursuant to a Declaration of Trust
dated as of September 1, 1995 and has its principal place of business
in Bermuda. The Trust will be a registered investment company under
the United States Investment Company Act of 1940, as amended (the
"Act"). The Trust was formed to hold a portfolio of South African
equity securities transferred to it by South African Mutual Life
Assurance Society ("Old Mutual").
As of November 3, 1995, the entire beneficial interest in the Trust is
held by Old Mutual Fund Holdings (Bermuda) Limited and Old Mutual
Asset Managers (Bermuda) Limited, wholly-owned subsidiaries of Old
Mutual.
Beneficial interest in the Trust will be issued to Old Mutual Equity
Growth Assets South Africa Fund ("OMEGA South Africa Fund") and Old
Mutual South Africa Growth Assets Fund Limited ("Old Mutual SAGA
Fund"). OMEGA South Africa Fund is a Massachusetts business trust
organized pursuant to a Declaration of Trust dated as of September 1,
1995. It is offering shares to United States investors subject to the
terms of a Confidential Private Placement Memorandum dated September
15, 1995 with the termination date of the Initial Offering on November
7, 1995.
Old Mutual SAGA Fund is a company incorporated under the laws of Bermuda
on September 7, 1995. It is offering shares to nonUnited States
Investors, subject to the terms of a Placement Memorandum with the
Initial Offering also terminating on November 7, 1995.
It is expected that all of the investable assets of OMEGA South Africa
Fund and Old Mutual SAGA Fund will be invested in the Trust. The Trust
is expected to apply amounts so invested to redeem a portion of the
beneficial interest of Old Mutual Fund Holdings (Bermuda) Limited and
Old Mutual Asset Managers (Bermuda) Limited in the Master Trust. As a
result of such investment in the Trust and corresponding redemptions
by Old Mutual Fund Holdings (Bermuda) Limited and Old Mutual Asset
Managers (Bermuda) Limited, it is expected that substantially all of
the beneficial interest in the Trust will be owned by OMEGA South
Africa Fund and Old Mutual SAGA Fund.
(2) SIGNIFICANT ACCOUNTING POLICIES
The accompanying statement of assets and liabilities is prepared in
accordance with United States generally accepted accounting
principles. The following are the significant accounting policies
adopted by the Trust.
(a) Securities Valuation
Securities will be valued each day on which the New York Stock
Exchange is open for trading (a "Business Day") as at 10:00 am United
States Eastern time which is after the close of business for the
Johannesburg Stock Exchange ("JSE") for that day. JSE listed
securities will generally be valued based on the current JSE ruling
price which is generally the last sale price. If the securities did
not trade on the JSE on the date of valuation, they may be valued on a
different basis believed by the trustees of the Trust to reflect their
fair value. Securities valuations, which are denominated in South
Africa Rands, are translated to United States Dollars using the
exchange rate prevailing as of the time of valuation.
(Continued)
<PAGE> 80
2
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Notes to Statement of Assets and Liabilities
Security transactions will be accounted for on a trade-date basis.
Realized gains and losses on sale of securities are determined based
on identified cost. Realized gains and losses on sale of securities
and the change in unrealized gains or losses on securities held on a
valuation date will be included in the statement of operations and
will include realized and unrealized exchange losses on translation of
South African Rands to United States Dollars. Dividend income will be
recognized as income on the ex-dividend date.
(b) Organization Expenses
Organization expenses of the Trust will be amortized on a
straight-line basis over a period not to exceed five years beginning
with the day following the initial closing. The trustees consider
U.S.$100,000 of the $4,750,100 in cash invested as of November 3, 1995
to be the minimum required capital under the Act (the "Initial
Investment"). The amount paid by the Trust on any redemption of
beneficial interests from the Initial Investment will be reduced by
the pro rata portion of any unamortized organization expenses of the
Trust. Such pro rata portion is to be determined by multiplying the
unamortized expenses by a fraction the numerator of which is the
amount to be redeemed and the denominator of which is the amount, at
the time of redemption, of the book capital account of the beneficial
interest attributable to the Initial Investment.
<PAGE> 81
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:
Report of Independent Auditors - November 3, 1995
Statement of Assets and Liabilities at November 3, 1995
Schedule of Investments - November 3, 1995
Notes to Financial Statements - November 3, 1995
(b) Exhibits:
<TABLE>
<S> <C>
1 Declaration of Trust of Registrant
2 By-Laws of Registrant
5 Investment Advisory Agreement between the Registrant and Old Mutual
Asset Managers (Bermuda) Limited (the "Adviser")
6(a) Placing Agreement among S.G. Warburg & Co. Inc. ("S.G. Warburg"),
the Registrant, Old Mutual Equity Growth Assets South Africa Fund
(the "OMEGA Fund"), South African Mutual Life Assurance Society
("Old Mutual"), the Adviser and Old Mutual Fund Holdings (Bermuda)
Limited ("Old Mutual Bermuda")
6(b) Placing Agreement among Swiss Bank Corporation, the Registrant, Old
Mutual South Africa Growth Assets Fund Limited (the "SAGA Fund"),
Old Mutual, the Adviser and Old Mutual Bermuda
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 Cayman Trust Company, Ltd.
9(b) Structuring Agreement among the Registrant, the OMEGA Fund, the
SAGA Fund and International Finance Corporation
</TABLE>
<PAGE> 82
<TABLE>
<S> <C>
9(c) Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Bermuda Limited, the Adviser, the Registrant, the OMEGA
Fund, the SAGA Fund and Old Mutual Global Assets Fund Limited
9(d) Irish Stock Exchange Undertaking among the Registrant, the OMEGA
Fund and the SAGA Fund
9(e) Form of letter from Old Mutual Bermuda with respect to seed capital
9(f) Form of Agreement among the Registrant, the OMEGA Fund, the SAGA
Fund and the Adviser as to the allocation of insurance coverage
15 Placement Plan of the Registrant
27 Financial Data Schedule
</TABLE>
Item 25. Persons Controlled by or under Common Control with Registrant.
The Registrant has no subsidiaries. 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 Bermuda, a wholly-owned subsidiary of Old Mutual. The
following information is provided as to certain principal subsidiaries of Old
Mutual, which are under common control with the Registrant.
-2-
<PAGE> 83
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
COUNTRY
% OF
NAME OF SUBSIDIARY COMPANY PARENT COMPANY OWNED INCORPORATION NATURE OF BUSINESS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JSE LISTED SUBSIDIARY COMPANIES
Mutual & Federal
Mutual & Federal Insurance Company, Ltd. Investment Ltd. 85.85 SOUTH AFRICA Short-term Insurance
Lydenburg Platinum Limited Old Mutual 78.71 SOUTH AFRICA Investment company
Safmarine & Rennies Holdings Old Mutual 57.35 SOUTH AFRICA Holding company
Anglo-Transvaal Collieries Old Mutual 56.76 SOUTH AFRICA Coal mining company
Nedcor Bank Limited Old Mutual 56.37 SOUTH AFRICA Banking
UNLISTED SUBSIDIARY COMPANIES
Ashtree Investments Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Capital Securities Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Highlight Investments (Pty) Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Mutual & Federal Investments Limited Old Mutual 51 SOUTH AFRICA Investment holding co.
Old Mutual Actuaries & Consultants (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment advisory co.
Rodina Investments (Pty) Limited Old Mutual 100 SOUTH AFRICA Investment holding co.
Fairbairn Investment Holdings SA (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment holding co.
Old Mutual Securities (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Investment trading co.
Old Mutual Asset Managers (Pty) Ltd. Old Mutual 100 SOUTH AFRICA Portfolio management co.
Old Mutual Health Benefits Administrators (Pty) Old Mutual 100 SOUTH AFRICA Admin health benefit man.
Ltd.
Old Mutual Health Insurance Limited Old Mutual 100 SOUTH AFRICA Short-term health insurer
Old Mutual Syfrets Trust Ltd. Old Mutual 100 SOUTH AFRICA Administration of Estates
Old Mutual Bermuda Holdings (SA) Ltd. Old Mutual 100 SOUTH AFRICA Hold Co. Fund Hold Bermuda
South African Mutual Unit Trust Management Old Mutual 100 SOUTH AFRICA Unit Trust management co.
Company Ltd.
Old Mutual Health Insurance Limited (external) Old Mutual 100 NAMIBIA South-term health insurer
Old Mutual International Asset Managers (Namibia) (Pty) Old Mutual 100 NAMIBIA Portfolio management co.
Ltd.
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
-3-
<PAGE> 84
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Old Mutual Namibia Medical Administrators (Pty) Old Mutual 100 NAMIBIA Admin health benefit man.
Ltd.
Old Mutual Unit Trust Management Company Namibia Ltd. Old Mutual 100 NAMIBIA Unit Trust management co.
South African Mutual Unit Trust Management Company Old Mutual 100 NAMIBIA Unit Trust management co.
Ltd.
Old Mutual Investment Corporation (Private) Ltd. Old Mutual 100 ZIMBABWE Investment holding co.
Old Mutual Property Investment Corporation Old Mutual 100 ZIMBABWE Investment in fixed property
(Private) Ltd.
Old Mutual International Asset Managers (UK) Old Mutual Group 100 UNITED KINGDOM Asset Managing Co.
Ltd.
OMLA Holdings Ltd. Old Mutual Group 100 UNITED KINGDOM Investment holding co.
Old Mutual Fund Managers Ltd. Old Mutual Group 100 UNITED KINGDOM Man authorized Unit Trusts
Fairbairn International S.A. Old Mutual 100 LUXEMBOURG Holding company
Fairbairn Ireland Ltd. Old Mutual 100 IRELAND Holding company
Old Mutual International Ltd. Fairbairn Ireland Limited 100 IRELAND Long-term life assurer
Old Mutual Fund Managers Ltd. Fairbairn Ireland Limited 100 IRELAND Man authorized Unit Trusts
Fairbairn Holdings Ltd. Old Mutual 100 GUERNSEY Holding company
OMIAM Services Ltd. Old Mutual 100 GUERNSEY Service co. to Group
OMIAM Properties Ltd. Old Mutual 100 GUERNSEY Property Co.
Old Mutual International Asset Managers Old Mutual 100 GUERNSEY Asset managing company
(Guernsey) Ltd.
Old Mutual Holdings Ltd. Fairbairn Hold. Ltd. 100 KENYA Holding company
Old Mutual Insurance Company Ltd. Old Mutual Holdings Ltd. 61 KENYA Insurance company
- ------------------------------------------------------------------------------------------------------------
</TABLE>
-4-
<PAGE> 85
<TABLE>
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Old Mutual International Asset Managers Old Mutual 100 BAHAMAS Asset managing co.
(Bahamas) Ltd.
Old Mutual International Asset Managers Old Mutual 100 BERMUDA Asset managing co.
(Bermuda) Ltd.
Old Mutual Fund Holdings (Bermuda) Ltd. Old Mutual 100 BERMUDA Hold Co. for Global Asset Fund
Old Mutual Asset Managers (Bermuda) Ltd. Old Mutual 100 BERMUDA Investment manager
Old Mutual Global Assets Fund Ltd. Old Mutual 100 BERMUDA Asset managing co.
Old Mutual Investment Advisers, Inc. Old Mutual 100 USA Old Mutual Marketing
- --------------------------------------------------------------------------------------------------
</TABLE>
-5-
<PAGE> 86
Item 26. Number of Holders of Securities.
<TABLE>
<CAPTION>
Number of Record Holders
Title of Class As of November 8, 1995
-------------- ----------------------
<S> <C>
Shares of Beneficial Interest 2
</TABLE>
Item 27. Indemnification.
Reference is hereby made to (a) Article V of the Registrant's
Declaration of Trust, filed herewith; (b) Section 9 of the Placing Agreement
among the Registrant, S.G. Warburg and certain other parties filed herewith and
(b) Section 11 of the Placing Agreement between the Registrant, Swiss Bank
Corporation and certain other parties, filed herewith.
The Trustees and officers of the Registrant and the personnel of the
Registrant's administrator are (or prior to the Initial Closing will be) insured
under an errors and omissions liability insurance policy. The Registrant and its
officers are (or prior to the Initial Closing will be) also insured under the
fidelity bond required by Rule 17g-1 under the Investment Company Act of 1940.
Item 28. Business and Other Connections of Investment Adviser.
Old Mutual Asset Managers (Bermuda) Limited (the "Adviser"), a company
newly-organized under the laws of Bermuda, serves as the investment adviser to
the Registrant 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.
<TABLE>
<CAPTION>
Name: Affiliation:
- ----- ------------
<S> <C>
Kevin James Carter Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
</TABLE>
-6-
<PAGE> 87
Director, Old Mutual Investment Advisers,
Inc. (1 Exeter Plaza, 699 Boylston Street,
Boston, Massachusetts)
Managing Director, Old Mutual Portfolio
Managers Ltd. (Providence House, 2 Bartley
Way, Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Fairbairn Investment Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House,
12 Par-la-Ville Road, Hamilton, Bermuda)
Director, Fairbairn European Smaller
Companies Index Trust plc (23 Cathedral
Yard, Exeter, United Kingdom)
Director, Old Mutual South Africa Trust plc
(23 Cathedral Yard, Exeter, United Kingdom)
Director, Lydenburg Platinum Limited
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Argenta European Hedge Fund plc
(2nd Floor, IFSC House, International
Financial Services Centre, Custom House
Docks, Dublin, Ireland)
-7-
<PAGE> 88
Director, Old Mutual International Asset
Managers (UK) Ltd. (Providence House, 2
Bartley Way, Hook, Basingstoke, Hampshire,
United Kingdom)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers Services Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
John Charles Ross Secretary and Director of the Adviser
Collis
Secretary of the Registrant and the OMEGA
Fund
Secretary of the SAGA Fund (Richmond House,
12 Par-la-Ville Road, Hamilton, Bermuda)
Secretary and Director, Old Mutual Global
Assets Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Partner, Conyers Dill & Pearman (Clarendon
House, Church Street, Hamilton, Bermuda)
William Langley President and Director of the Adviser
Treasurer and Trustee of the Registrant and
the OMEGA Fund
Treasurer and Director of the SAGA Fund
(Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
-8-
<PAGE> 89
Director, Old Mutual Investment Advisers,
Inc. (1 Exeter Plaza, 699 Boylston Street,
Boston, Massachusetts)
Director, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House,
12 Par-la-Ville Road, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, OMIAM Services Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Assistant General Manager, Old Mutual
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Michael John Chairman of the Board and Director of the
Levett Adviser
Chairman of the Board of Trustees and
President of the Registrant and the OMEGA
Fund
Chairman of the Board of Directors of the
SAGA Fund (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Chairman and Director, Old Mutual Global
Assets Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
-9-
<PAGE> 90
Chairman and Managing Director, Old Mutual
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Chairman, Ashtree Investments Limited
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Chairman, South African Mutual Unit Trust
Management Company Ltd. (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Director, The South African Breweries
Limited (2 Jan Smuts Avenue, Johannesburg,
South Africa)
Chairman, Ubuntu Medical Scheme (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Barlow Limited (Barlow Park,
Katherine Street, Sandton, South Africa)
Chairman, Capital Securities Limited
(Mutual Park, Pinelands, South Africa)
Director, Central Africa Building Society
(Northend Close, Northridge Park,
Borrowdale, Harare, Zimbabwe)
Chairman, Fairbairn Holdings Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
-10-
<PAGE> 91
Chairman, Fairbairn International S.A. (35
Rue Glesener 10-11, Luxembourg)
Chairman, Fairbairn Ireland Limited (9-11
Lower Mount Street, Dublin, Ireland)
Chairman, Fairbairn Marketing Services
Limited (P.O. Box 119, Commerce House, St.
Peter Port, Guernsey)
Chairman, Fairbairn Properties Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Chairman, Highlight Investments (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Lydenburg Platinum Limited
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Chairman, Merriman Services Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Nedcor Limited (100 Main Street,
Johannesburg, South Africa)
Director, Nedcor Bank Limited (100 Main
Street, Johannesburg, South Africa)
Director, Netherdale Investments (Pty)
Limited (c/o Deloitte & Touche, 1st Floor,
Sanclare, Dreyer Street, Claremont, South
Africa)
Chairman, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Bermuda Holdings (S.A.)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Chairman, Old Mutual Group (UK) Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
-11-
<PAGE> 92
Chairman, Old Mutual Health Insurance
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Old Mutual Holdings Limited
(Mutual Building, Kimathi Street, Nairobi,
Kenya)
Director, Old Mutual Insurance Company
Limited (Mutual Building, Kimathi Street,
Nairobi, Kenya)
Chairman, Old Mutual International Financial
Services Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
Chairman, Old Mutual International Asset
Managers (Bahamas) Limited (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Chairman, Old Mutual International Asset
Managers (Bermuda) Limited (Richmond House,
12 Par-la-Ville Road, Hamilton, Bermuda)
Chairman, Old Mutual International Asset
Managers (Guernsey) Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Namibia) (Pty) Ltd. (8th Floor,
CDM Building, 10 Bulow Street, Windhoek,
Namibia)
Chairman, Old Mutual International (Ireland)
Limited (9-11 Lower Mount Street, Dublin,
Ireland)
Chairman, Old Mutual Investment Corporation
(Private) Limited (Mutual Gardens, 100 The
Chase (West), Emerald Hill, Harare,
Zimbabwe)
Chairman, Old Mutual Investment Managers
Limited (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
-12-
<PAGE> 93
Chairman, Old Mutual Kenya Staff Provident
Fund (Mutual Building, Kimathi Street,
Nairobi, Kenya)
Chairman, Old Mutual Life Assurance Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Chairman, Old Mutual Malawi Staff Pension
Fund (Old Mutual Building, Glyn Jones Road,
Blantyre, Malawi)
Chairman, Old Mutual Namibia Staff Pension
Fund (Mutual Building, 299 Independence
Avenue, Windhoek, Namibia)
Chairman, Old Mutual South Africa Fund
Limited (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
Chairman, Fairbairn Investment Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Chairman, Fairbairn Investment Holdings S.
A. (Pty) Ltd. (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Chairman, Mumed 850 Plan (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Chairman, Mutual & Federal Insurance Company
Limited (28th Floor, Mutual & Federal
Centre, 69 President Street, Johannesburg,
South Africa)
Chairman, Mutual & Federal Investments
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, National Business Initiative for
Growth, Development and Democracy (17th
Floor, Metal Box Centre, 25 Owl Street,
Auckland Park, South Africa)
Director, Old Mutual South Africa Trust plc
(23 Cathedral Yard, Exeter, United Kingdom)
Chairman, Old Mutual Staff Benefit Plan,
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Chairman, OMLA Holdings Limited (Providence
House, 2 Bartley Way, Hook, Basingstoke,
Hampshire, United Kingdom)
Chairman, Ommed Plan (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
-13-
<PAGE> 94
Director, RM Insurance Company (Private)
Limited (Royal Mutual House, Baker Avenue
Harare, Zimbabwe)
Chairman, Rodina Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Safmarine and Rennies Holdings
Limited (2300 Safmarine House, 22 Riebeeck
Street, Cape Town, South Africa)
Director, Sasol Limited (1 Sturdee Avenue,
Rosebank, South Africa)
Trustee and Council Member, South Africa
Foundation (Pilrig Place, 5 Eton Road,
Parktown, South Africa)
Chairman, South African Mutual Life
Assurance Society Pension Fund (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
-14-
<PAGE> 95
Chairman, South African Mutual Life
Assurance Society Staff Medical Aid Fund
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Donald Harrigan Director of the Adviser
Malcolm
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Senior Associate, Conyers Dill & Pearman
(Clarendon House, Church Street, Hamilton,
Bermuda)
Susan Elizabeth Vice President of the Adviser
Rouse
Alternate Director, Old Mutual Global Assets
Fund Limited (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Manager of International Operations, Old
Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Gerhard Schalk Deputy Chairman and Director of the Adviser
Van Niekerk
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Chief Operating Officer and Director, Old
Mutual (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Ashtree Investments Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Capital Securities Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
-15-
<PAGE> 96
Director, Central Africa Building Society
(Northend Close, Northridge Park,
Borrowdale, Harare, Zimbabwe)
Director, C. G. Smith Limited (36 Wierda
Road West, Wierda Valley, South Africa)
Director, Fairbairn Holdings Ltd. (P.O. Box
119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Investment Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Fairbairn Investment Holdings S.A.
(Pty) Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, GSVN Beleggings (Pty) Ltd. (c/o
Deloitte & Touche, 1st Floor Sanclare,
Dreyer Street, Claremont, South Africa)
Director, Highlight Investments (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Lydenburg Platinum Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Committee Member, Mumed 850 Plan
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Mutual & Federal Investments Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Old Mutual Asset Managers (Pty)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
-16-
<PAGE> 97
Director, Old Mutual Bermuda Holding (S.A.)
Limited (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, Old Mutual Fund Holdings (Bermuda)
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Director, Old Mutual Group (UK) Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Old Mutual Health Insurance Ltd.
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Director, Old Mutual Holdings Ltd. (Mutual
Building, Kimathi Street, Nairobi, Kenya)
Director, Old Mutual Insurance Co. Ltd.
(Mutual Building, Kimathi Street, Nairobi,
Kenya)
Director, Old Mutual International Asset
Managers (Bahamas) Ltd. (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Ltd. (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, Old Mutual International Asset
Managers (Guernsey) Ltd. (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Namibia) (Pty) Ltd. (8th Floor,
CDM Centre, Bulow Street, Windhoek, Namibia)
Director, Old Mutual Investment Corporation
(Pvt) Ltd. (Mutual Gardens, 100 The Chase
(West), Emerald Hill, Harare, Zimbabwe)
-17-
<PAGE> 98
Director, Old Mutual Kenya Staff Provident
Fund (Mutual Building, Kimathi Street,
Nairobi, Kenya)
Director, Old Mutual Life Assurance Company
Limited (Providence House, 2 Bartley Way,
Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Old Mutual Malawi Staff Pension
Fund (Old Mutual Building, Glyn Jones Road,
Blantyre, Malawi)
Committee Member, Old Mutual Namibia Staff
Pension Fund (Mutual Building, 299
Independence Avenue, Windhoek, Namibia)
Trustee, Old Mutual Staff Benefit Plan
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Chairman, Old Mutual Unit Trust Management
Company Namibia Ltd. (8th Floor, CDM Centre,
Bulow Street, Windhoek, Namibia)
Director, OMLA Holdings Limited (Providence
House, 2 Bartley Way, Hook, Basingstoke,
Hampshire, United Kingdom)
Committee Member, Ommed Plan (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
Director, Rodina Investments (Pty) Limited
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Alternate Director, Small Business
Development Corporation Ltd. (Small Business
Centre, 5 Wellington Road, Parktown, South
Africa)
Director and Member, Old Mutual (Mutualpark,
Jan Smuts Drive, Pinelands, South Africa)
-18-
<PAGE> 99
Director and Member, South African Mutual
Life Assurance Society Pension Fund
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Member and Committee Member, South African
Mutual Life Assurance Society Staff Medical
Aid Fund (Mutualpark, Jan Smuts Drive,
Pinelands, South Africa)
Director, South African Mutual Unit Trust
Management Company Ltd. (Mutualpark, Jan
Smuts Drive, Pinelands, South Africa)
Director, Transnet Ltd. (Transnetpark,
Hillside Road, Parktown, South Africa)
Board Member, Ubuntu Medical Scheme
(Mutualpark, Jan Smuts Drive, Pinelands,
South Africa)
Member of University Council, University of
Stellenbosch (Stellenbosch, Cape Province,
South Africa)
Frits Vleggaar Director of the Adviser
Director, Old Mutual Global Assets Fund
Limited (Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda)
Managing Director of the International
Group, Old Mutual (Mutualpark, Jan Smuts
Drive, Pinelands, South Africa)
Director, Old Mutual International Financial
Services Ltd. (Fairbairn House, The Rohais,
St. Peter Port, Guernsey)
Director, Old Mutual International
(Guernsey) Limited (Fairbairn House, The
Rohais, St. Peter Port, Guernsey)
-19-
<PAGE> 100
Director, L&S Properties Ltd. (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Naftiaux Holdings Ltd. (Courtil
Naftiaux, La Rue des Naftiaux, St. Andrew,
Guernsey)
Director, Providence Capitol Fund Managers
Int. Ltd. (Fairbairn House, The Rohais, St.
Peter Port, Guernsey)
Director, Finexco International Ltd.
(Fairbairn House, The Rohais, St. Peter
Port, Guernsey)
Director, Finexco Personnel Services Ltd.
(Providence House, 2 Bartley Way, Hook,
Basingstoke, Hampshire, United Kingdom)
Director, Pioneer International Ltd.
(Fairbairn House, The Rohais, St. Peter
Port, Guernsey)
Director, Fairbairn Guaranteed Futures
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton,
Bermuda)
Director, Fairbairn Futures Trading
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton,
Bermuda)
Director, Fairbairn US Futures Trading
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton,
Bermuda)
Director, Fairbairn Reads Trust Company Ltd.
(Fairbairn House, The Rohais, St. Peter
Port, Guernsey)
Director, Pegasus Trustees Ltd. (Craigmuir
Chambers, Road Town, Tortola, British Virgin
Islands)
-20-
<PAGE> 101
Director, Fairbairn Futures Trading (1992)
(Bermuda) Ltd. (Bermuda Commercial Bank
Building, 44 Church Street, Hamilton,
Bermuda)
Director, Fairbairn US Futures Trading
(1992) (Bermuda) Ltd. (Bermuda Commercial
Bank Building, 44 Church Street, Hamilton,
Bermuda)
Director, Fairbairn Managed Futures Ltd.
(Euro Canadian Centre, Marlborough Street,
Nassau, Bahamas)
Director, Rohais Managed Futures (Holding)
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Rohais Series Fire Futures Trading
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Marketing
Services Ltd. (Providence House, 2 Bartley
Way, Hook, Basingstoke, Hampshire, United
Kingdom)
Director, Poplar Services Inc. (Euro
Canadian Centre, Marlborough Street, Nassau,
Bahamas)
Director, Rohais Series Six Futures Trading
(Bahamas) Ltd. (Euro Canadian Centre,
Marlborough Street, Nassau, Bahamas)
Director, FRT Directors Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
FRT Secretarial Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Spectrum Nominees Limited (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
-21-
<PAGE> 102
The Collingwood Group Limited (Genesis
Building, George Town, Grand Cayman, Cayman
Islands)
Fairbairn Ireland Limited (9-11 Lower Mount
Street, Dublin, Ireland)
Director, Old Mutual International (Ireland)
Limited (9-11 Lower Mount Street, Dublin,
Ireland)
Director, Old Mutual International Fund
Managers (9-11 Lower Mount Street, Dublin,
Ireland)
Director, Old Mutual International Asset
Managers (Guernsey) Ltd. (Fairbairn House,
The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual International Asset
Managers (Bahamas) Ltd. (Euro Canadian
Centre, Marlborough Street, Nassau, Bahamas)
Director, Old Mutual International Asset
Managers (Bermuda) Ltd. (Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda)
Director, OMIAM Properties Limited
(Fairbairn House, The Rohais, St. Peter
Port, Guernsey)
Director, OMIAM Services Limited (Fairbairn
House, The Rohais, St. Peter Port, Guernsey)
Director, Old Mutual Assets Fund Ltd.
(Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
Director, Old Mutual Fund Holdings (Bermuda)
Ltd. (Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda)
-22-
<PAGE> 103
Director, Fairbairn International S.A. (35
Rue Glesener, Luxembourg)
Director, Fairbairn Marketing Services
Limited (P.O. Box 119, Commerce House, St.
Peter Port, Guernsey)
Director, Fairbairn Properties Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Holdings Limited (P.O.
Box 119, Commerce House, St. Peter Port,
Guernsey)
Director, Fairbairn Actuaries and
Consultants (Fairbairn House, The Rohais,
St. Peter Port, Guernsey)
Director, Fairbairn International S.A. (35
Rue Glesener, Luxembourg)
Item 29. Principal Underwriters.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
Item 30. Location of Accounts and Records.
The accounts and records of the Registrant are located, in whole or in
part, at the office of the Registrant and the following locations:
<TABLE>
<CAPTION>
Name Address
---- -------
<S> <C>
State Street Bank and Trust Company State Street Bank and Trust
Company
1776 Heritage Drive
Quincy, Massachusetts 02171
</TABLE>
-23-
<PAGE> 104
<TABLE>
<S> <C>
State Street Cayman Trust Company, Ltd. P.O. Box 2508
Elizabeth Square,
George Town
Grand Cayman
British West Indies
Old Mutual Asset Managers (Bermuda) Limited Richmond House,
12 Par-la-Ville Road,
Hamilton, Bermuda
</TABLE>
Item 31. Management Services.
Not applicable.
-24-
<PAGE> 105
Item 32. Undertakings.
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
-25-
<PAGE> 106
SIGNATURE
Pursuant to the requirements of the Investment Company Act of 1940,
the Registrant has duly caused this Registration Statement on Form N-1A to be
signed on its behalf by the undersigned, thereunto duly authorized, in Hamilton,
Bermuda on the 8th day of November, 1995.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: Michael John Levett
--------------------------
Michael John Levett,
Chairman of the Board and
President of Old Mutual
South Africa Equity Trust
<PAGE> 107
EXHIBIT INDEX
1 Declaration of Trust of Registrant
2 By-Laws of Registrant
5 Investment Advisory Agreement between the Registrant and
Old Mutual Asset Managers (Bermuda) Limited (the
"Adviser")
6(a) Placing Agreement among S.G. Warburg & Co. Inc. ("S.G.
Warburg"), the Registrant, Old Mutual Equity Growth Assets
South Africa Fund (the "OMEGA Fund"), South African Mutual
Life Assurance Society ("Old Mutual"), the Adviser and Old
Mutual Fund Holdings (Bermuda) Limited ("Old Mutual
Bermuda")
6(b) Placing Agreement among Swiss Bank Corporation, the
Registrant, Old Mutual South Africa Growth Assets Fund
Limited (the "SAGA Fund"), Old Mutual, the Adviser and Old
Mutual Bermuda
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 Cayman Trust Company, Ltd.
9(b) Structuring Agreement among the Registrant, the OMEGA
Fund, the SAGA Fund and International Finance Corporation
9(c) Subscription and Portfolio Transfer Agreement among Old
Mutual, Old Mutual Bermuda Limited, the Adviser, the
Registrant, the OMEGA Fund, the SAGA Fund and Old Mutual
Global Assets Fund Limited
9(d) Irish Stock Exchange Undertaking among the Registrant, the
OMEGA Fund and the SAGA Fund
9(e) Form of letter from Old Mutual Bermuda with respect to
seed capital
9(f) Form of agreement among the Registrant, the OMEGA Fund,
the SAGA Fund and the Adviser as to the allocation of
insurance coverage
15 Placement Plan of the Registrant
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 1
EXECUTION COPY
OLD MUTUAL
SOUTH AFRICA EQUITY TRUST
----------------------------------
DECLARATION OF TRUST
Dated as of September 1, 1995
<PAGE> 2
TABLE OF CONTENTS
PAGE
ARTICLE I--Name and Definitions 1
Section 1.1 Name 1
Section 1.2 Definitions 1
Section 1.3 Rules of Interpretation 4
ARTICLE II--Trustees 4
Section 2.1 Number of Trustees 5
Section 2.2 Term of Office of Trustees 5
Section 2.3 Resignation and Appointment of Trustees 6
Section 2.4 Vacancies 6
Section 2.5 Delegation of Power to Other Trustees 7
ARTICLE III--Powers of Trustees 7
Section 3.1 General 7
Section 3.2 Investments 8
Section 3.3 Legal Title 9
Section 3.4 Issuance, Decreases and Redemptions
of Interests 10
Section 3.5 Borrowing Money; Lending Trust Property 10
Section 3.6 Delegation; Committees 10
Section 3.7 Collection and Payment 10
Section 3.8 Expenses 11
Section 3.9 Manner of Acting; By-Laws 11
Section 3.10 Miscellaneous Powers 11
Section 3.11 Principal Transactions 12
ARTICLE IV--Investment Adviser, Placement Agent, and
Administrator 12
Section 4.1 Investment Adviser 12
Section 4.2 Placement Agent 13
Section 4.3 Administrator 13
Section 4.4 Structuring Agent 13
Section 4.5 Parties to Contract 13
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ARTICLE V--Liability of Holders; Limitations of Liability of
Trustees and Others 14
Section 5.1 Liability of Holders 14
Section 5.2 Limitation on Liability of Trustees, Officers and
Others 15
Section 5.3 Non-Liability of Trustees, etc. 15
Section 5.4 Mandatory Indemnification; Insurance 15
Section 5.5 No Bond Required of Trustees 17
Section 5.6 No Duty of Investigation; Notice in Trust
Instruments, etc. 17
Section 5.7 Reliance on Experts, etc. 18
ARTICLE VI--Interests 18
Section 6.1 Beneficial Interest 18
Section 6.2 Rights of Holders 18
Section 6.3 Trust Only 19
Section 6.4 Issuance of Interests 19
Section 6.5 Register 19
Section 6.6 Transfer of Interests 20
Section 6.7 Notices 20
Section 6.8 Voting Powers 20
Section 6.9 Series Designation 21
ARTICLE VII--Increases, Decreases, and Redemptions
of Interests 23
Section 7.1 General 23
Section 7.2 Suspension of Right to Decrease or Redeem
Interests 23
Section 7.3 Disclosure of Holding 24
Section 7.4 Redemptions of Accounts of Less than
Minimum Amount 24
Section 7.5 Redemptions of Certain Holders 24
ARTICLE VIII--Determination of Book Capital Account Balances, and
Distributions 25
Section 8.1 Book Capital Account Balances 25
Section 8.2 Allocations and Distributions to Holders 25
Section 8.3 Power to Modify Foregoing Provisions 25
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ARTICLE IX--Duration; Termination of Trust; Amendment;
Mergers, etc. 26
Section 9.1 Duration 26
Section 9.2 Termination of Trust 26
Section 9.3 Amendment Procedure 27
Section 9.4 Merger, Consolidation, and Sale of Assets 28
Section 9.5 Incorporation, Reorganization 29
Section 9.6 Incorporation or Reorganization of Series 29
ARTICLE X--Reports to Holders and Holder Communications 30
ARTICLE XI--Miscellaneous 30
Section 11.1 Filing 30
Section 11.2 Section Headings 30
Section 11.3 Governing Law 31
Section 11.4 Counterparts 31
Section 11.5 Reliance by Third Parties 31
Section 11.6 Provisions in Conflict with Law or Regulations 31
Section 11.7 Principal Office and Registered Agent 32
Section 11.8 Notices to Old Mutual and Investment Adviser 32
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DECLARATION OF TRUST
OF
OLD MUTUAL
SOUTH AFRICA EQUITY TRUST
----------------------------------
Dated as of September 1, 1995
----------------------------------
WHEREAS, the Trustees desire to establish a trust for the investment
and reinvestment of funds contributed thereto; and
WHEREAS, it is proposed that the trust assets be composed of money and
other property, such assets to be held and managed in trust for the holders of
the beneficial interests in the Trust;
NOW, THEREFORE, the Trustees and any successor Trustees elected or
appointed in accordance with this Declaration of Trust hereby declare that all
money and property contributed to the trust established hereunder shall be held
and managed in trust for the benefit of such holders and subject to the
provisions hereof.
ARTICLE I
NAME AND DEFINITIONS
SECTION 1.1. NAME. The name of the trust created hereby is "Old Mutual
South Africa Equity Trust".
SECTION 1.2. DEFINITIONS. Wherever they are used herein, the following
terms have the following respective meanings:
"Administrator" means a party furnishing services to the Trust
pursuant to any contract described in Section 4.3 hereof.
"Book Capital Account" shall mean for any Holder at any time,
the Book Capital Account of the Holder at such time with respect to the Holder's
beneficial interest in the Trust Property, the balance of which shall be
determined in accordance with the method established by the Trustees pursuant to
Section 8.1. If the Trust is divided into series, the
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Trust shall maintain separate records of the Book Capital Accounts for each such
series.
"By-Laws" means the By-laws referred to in Section 3.9 hereof.
"Code" means the United States Internal Revenue Code of 1986.
"Commission" has the meaning specified in the 1940 Act.
"Custodian" means a Person employed by the Trust to furnish
services as described in Article X of the By-Laws.
"Declaration" means this Declaration of Trust.
"Entity" means any corporation, company, partnership, trust,
unincorporated association, joint venture, limited liability company, mutual
fund, or other legal or business entity.
"Fiscal Year" means an annual period determined by the Trustees
that ends on June 30 of each year or on such other day as is permitted or
required by the Code.
"Government Authority" means the government of the United
States or any other country, any government of any political subdivision of the
United States or any other country, or any court, tribunal, administrative or
regulatory agency, taxing or revenue authority, central bank or banking
regulatory authority, commission, or body of any of the foregoing having in any
case appropriate jurisdiction.
"Government Mandate" means any statute, law, rule, regulation,
code, or ordinance duly adopted by any Government Authority, any treaty or
compact between two or more Government Authorities, any judgment, order, decree,
ruling, finding, determination, or injunction of any Government Authority, and
any policy or procedure having the force of law of any Government Authority.
"Holder" means the record holder of any Interest.
"Institutional Investor" means (a) any U.S. regulated
investment company, segregated asset account, non-U.S. investment company,
common trust fund, group trust, or other investment arrangement other than an
individual, S corporation, partnership or grantor trust beneficially owned by an
individual, S corporation or partnership, and/or (b) Old Mutual and any
wholly-owned direct or indirect subsidiary of Old Mutual.
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"Interest" means the beneficial interest of a Holder in the
Trust Property (or, if the Trust is divided into series, in the Trust Property
of any series), including all rights, powers, and privileges accorded to Holders
by this Declaration, which interest may be expressed as a percentage determined
by calculating, at such times and on such basis as the Trustees shall from time
to time determine, the ratio of each Holder's Book Capital Account balance to
the total of all Holders' Book Capital Account balances. Reference herein to a
specified percentage of, or fraction of, Interests, means Holders whose combined
Book Capital Account balances represent such specified percentage or fraction of
the combined Book Capital Account balances of all, or a specified group of,
Holders.
"Interested Person" has the meaning given that term in the 1940 Act.
"Investment Adviser" means a Person furnishing services to the Trust
pursuant to any contract described in Section 4.1 hereof.
"Majority Interests Vote" means a "vote of a majority of the
outstanding voting securities", as defined in the 1940 Act, with respect to the
Interests, provided that a "Majority Interests Vote of a series" means a "vote
of a majority of the outstanding voting securities", as defined in the 1940 Act,
with respect to the Interests of that particular series. At the date of this
Declaration, Section 2(a)(42) of the 1940 Act provides in pertinent part as
follows:
The vote of a majority of the outstanding voting securities of a
company means the vote, at the annual or a special meeting of the
security holders of such company duly called, (A) of 67 per centum
or more of the voting securities present at such meeting, if the
holders of more than 50 per centum of the outstanding voting
securities of such company are present or represented by proxy; or
(B) of more than 50 per centum of the outstanding voting
securities of such company, whichever is less.
"1940 Act" means the Investment Company Act of 1940 and the
rules and regulations of the Commission thereunder.
"Old Mutual" means the South African Mutual Life Assurance Society.
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"Person" means any individual, Entity, or Government Authority.
"Placement Agent" means a Person furnishing services to the
Trust pursuant to any contract described in Section 4.2 hereof.
"Redemption" means the complete withdrawal of an Interest of a
Holder, the result of which is to reduce the Book Capital Account balance of
such Holder to zero, and "redeem" shall mean to effect a Redemption.
"Transfer" means to sell, convey, transfer, assign, lease,
exchange, quitclaim, donate, or otherwise dispose of, or, as appropriate, any
sale, conveyance, transfer, assignment, lease, exchange, quitclaim, donation, or
other disposition.
"Trust" refers to the Massachusetts voluntary association established
by this Declaration.
"Trust Property" means any and all property, real or personal,
tangible or intangible, which is owned or held by or for the account of the
Trust or the Trustees, including any and all property allocated or belonging to
any series of Interests pursuant to Section 6.9 hereof.
"Trustees" means the persons who have signed this Declaration,
so long as they shall continue in office in accordance with the terms hereof,
and all other persons who may from time to time be duly elected or appointed,
qualified, and serving as Trustees in accordance with the provisions hereof, and
reference herein to a Trustee or the Trustees shall refer to such persons in
their capacity as trustees hereunder.
"United States" means the United States of America, including
the fifty states, the District of Columbia, all territories and possessions, and
any other areas subject to its jurisdiction.
SECTION 1.3. RULES OF INTERPRETATION. The following rules shall apply
in the construction and interpretation of this Declaration:
(a) The singular includes the plural, and the plural includes the
singular.
(b) A reference to any gender includes each other gender.
(c) A reference to any Person includes its legal successors and
permitted assigns.
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(d) A reference to any contract, instrument, agreement, or other
document, including any registration statement under the 1940 Act and any
private placement memorandum or other offering document for the Interests, shall
include any written amendment, supplement, or modification thereto and any
replacement thereof.
(e) A reference to any Government Mandate shall include any amendment
or modification thereto and any replacement thereof.
(f) A reference to any Section refers to that Section of this
Declaration unless otherwise indicated.
(g) The words "include," "includes," and "including" are not limiting.
(h) The words "hereof," "herein," and "hereunder" and words of similar
import shall refer to this Declaration as a whole and not to any particular
Section or subdivision of this Declaration.
ARTICLE II
TRUSTEES
SECTION 2.1. NUMBER OF TRUSTEES. The number of Trustees shall be such
number as shall be fixed from time to time by a majority of the Trustees,
provided, however, that the number of Trustees shall in no event be less than
three nor more than 15. Except as determined from time to time by resolution of
the Trustees, no decrease in the number of Trustees shall have the effect of
removing any Trustee from office prior to the expiration of his term, but the
number of Trustees may be decreased in conjunction with the removal of a Trustee
pursuant to Section 2.2 hereof.
SECTION 2.2. TERM OF OFFICE OF TRUSTEES. Subject to the provisions of
Section 16(a) of the 1940 Act, the Trustees shall hold office during the
lifetime of the Trust and until its termination as hereinafter provided; except
that (a) any Trustee may resign his trust (without need for prior or subsequent
accounting) by an instrument in writing signed by him and delivered to the other
Trustees, which shall take effect upon such delivery or upon such later date as
is specified therein; (b) any Trustee may be removed with cause, at any time by
written instrument signed by at least two-thirds of the remaining Trustees,
specifying the date when such removal shall become effective; (c) any Trustee
who has attained a
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mandatory retirement age established pursuant to any written policy adopted from
time to time by at least two-thirds of the Trustees shall, automatically and
without action of such Trustee or the remaining Trustees, be deemed to have
retired in accordance with the terms of such policy, effective as of the date
determined in accordance with such policy; (d) any Trustee who has become
incapacitated by illness or injury as determined by a majority of the other
Trustees, may be retired by written instrument signed by a majority of the other
Trustees, specifying the date of his retirement; and (e) a Trustee may be
removed by a vote of Holders of two-thirds of the outstanding Interests. For
purposes of the foregoing clause (b), the term "cause" shall include willful
misconduct, gross negligence, dishonesty, fraud, a felony conviction, or failure
to comply with such written policies as may from time to time be adopted by at
least two-thirds of the Trustees with respect to the conduct of Trustees and
attendance at meetings. Upon the resignation, retirement, or removal of a
Trustee, or his otherwise ceasing to be a Trustee, he shall execute and deliver
such documents as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust Property held in the
name of the resigning, retiring, or removed Trustee. Upon the incapacity or
death of any Trustee, his legal representative shall execute and deliver on his
behalf such documents as the remaining Trustees shall require as provided in the
preceding sentence. The Trust shall promptly notify the Investment Adviser and
each Holder of the resignation, retirement, or removal of any Trustee.
SECTION 2.3. RESIGNATION AND APPOINTMENT OF TRUSTEES. In case of a
vacancy as a result of the death, resignation, retirement, removal, or inability
of any of the Trustees, by reason of an increase in number, or for any other
reason, a majority of the remaining Trustees shall fill such vacancy by
appointing such other individual as they in their discretion shall see fit. Any
such appointment shall not become effective, however, until the person named in
the written instrument of appointment shall have accepted in writing such
appointment and agreed in writing to be bound by the terms of this Declaration.
The power of appointment is subject to the provisions of Section 16(a) of the
1940 Act.
SECTION 2.4. VACANCIES. The death, resignation, retirement, removal, or
incapacity of the Trustees, or any one of them, shall not operate to annul the
Trust or to revoke any existing agency created pursuant to the terms of this
Declaration. Whenever a vacancy in the number of Trustees shall occur, until
such vacancy is filled as provided in Section 2.3, or the number of Trustees as
fixed is reduced, the Trustees in office, regardless of their number, shall have
all the powers granted to
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the Trustees and shall discharge all the duties imposed upon the Trustees by
this Declaration.
SECTION 2.5. DELEGATION OF POWER TO OTHER TRUSTEES. Any Trustee may, by
power of attorney, delegate his rights, power, and authority under this
Declaration for a period not exceeding six months at any one time to any other
Trustee; provided that in no case shall fewer than two Trustees personally
exercise the powers granted to the Trustees under this Declaration except as
herein otherwise expressly provided.
ARTICLE III
POWERS OF TRUSTEES
SECTION 3.1. GENERAL.
(a) The Trustees shall have exclusive and absolute control over the
Trust Property and over the business of the Trust to the same extent as if the
Trustees were the sole owners of the Trust Property and business in their own
right, but with such powers of delegation as may be permitted by this
Declaration. The Trustees shall have power to conduct the business of the Trust
and carry on its operations and maintain offices anywhere in the world both
within and without the Commonwealth of Massachusetts and the United States, and
to do all such other things and execute all such instruments as the Trustees
deem necessary, convenient, or desirable in order to promote the interests of
the Trust although such things are not herein specifically mentioned. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. The provisions of this Declaration shall be
construed so as to expand, to the fullest extent possible, the power and
authority of the Trustees on behalf of the Trust.
(b) The Trustees in all instances shall act as principals, and are and
shall be free from the control of the Holders except as otherwise expressly
provided herein. The Trustees shall have full power and authority to do any and
all acts and to make and execute any and all contracts and instruments that they
may consider necessary, convenient, or desirable in connection with the
management of the Trust subject to this Declaration. The Trustees shall not in
any way be bound or limited by present or future laws or customs in regard to
trust investments (except as otherwise required by Government Mandate), but
shall have full authority and power to make any and all investments which they,
in
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their uncontrolled discretion, shall deem proper to accomplish the purposes of
the Trust.
(c) The Trust shall be of the type commonly called a Massachusetts
business trust, and, without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a trust.
(d) The enumeration of any specific power herein shall not be construed
as limiting the power of the Trustees. The powers of the Trustees may be
exercised without order of or resort to any Government Authority.
SECTION 3.2. INVESTMENTS.
(a) The Trustees shall have the power:
(i) to conduct, operate, and carry on the business of an investment
company;
(ii) to subscribe for, invest in, reinvest in, purchase or otherwise
acquire, own, hold, pledge, Transfer, exchange, distribute, lend, or otherwise
deal in or dispose of U.S. and non-U.S. currencies, any form of gold or other
precious metal, commodity contracts, any form of option contract, contracts for
the future acquisition or delivery of fixed income or other securities, shares
of, or any other interest in, any investment company as defined in the 1940 Act,
and securities and related derivatives of every nature and kind, including all
types of bonds, debentures, stocks, negotiable or non-negotiable instruments,
obligations, evidences of indebtedness, certificates of deposit or indebtedness,
commercial paper, repurchase agreements, bankers acceptances, and other
securities of any kind, issued, created, guaranteed, or sponsored by any and all
Persons, including:
(A) any Government Authority, including the government of the
Republic of South Africa or any province of South Africa and any
agency, authority, or instrumentality of any such government;
(B) any international or supranational instrumentality,
(C) any bank or savings institution organized under the laws of
the United States, any other country, or any political subdivision of
any other country, or
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(D) any Entity organized under the laws of the United States,
any other country, or any political subdivision of any other country;
or in "when issued" contracts for any such securities, to retain Trust assets in
cash and from time to time to change the securities or obligations in which the
assets of the Trust are invested; and to exercise any and all rights, powers,
and privileges of ownership or interest in respect of any and all such
investments of every kind and description, including the right to consent and
otherwise act with respect thereto, with power to designate one or more Persons
to exercise any of said rights, powers, and privileges in respect of any of said
investments;
(iii) to hold any security or property in a form not indicating any
trust, whether in bearer, unregistered, or other negotiable form; or either in
the Trust's own name or in the name of a custodian or a nominee, subject in
either case to proper safeguards according to the usual practice of
Massachusetts trust companies or investment companies;
(iv) to definitively interpret the investment objectives, policies, and
limitations of the Trust or any series; and
(v) to carry on any other business in connection with or incidental to
any of the foregoing powers, to do everything necessary, convenient, or
desirable for the accomplishment of any purpose, the attainment of any object,
or the furtherance of any power herein set forth, and to do every other act or
thing incidental or appurtenant to or connected with the aforesaid purposes,
objects, or powers.
(b) The Trustees shall not be limited to investing in securities or
obligations maturing before the possible termination of the Trust.
(c) The Trustees shall have the power in their discretion without any
requirement of approval by Holders to invest either all or a portion of the
Trust Property in another investment company that is registered under the 1940
Act.
SECTION 3.3. LEGAL TITLE. Legal title to all Trust Property shall be
vested in the Trustees as joint tenants except that the Trustees shall have
power to cause legal title to any Trust Property to be held by or in the name of
one or more of the Trustees, or in the name of the Trust, or in the name of any
other Person or nominee, on such terms as the Trustees may determine. The right,
title, and interest of the Trustees in the Trust Property shall vest
automatically in each Person who may hereafter
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become a Trustee. Upon the resignation, removal, insolvency, or death of a
Trustee, such Trustee shall automatically cease to have any right, title, or
interest in any of the Trust Property, and the right, title, and interest of
such Trustee in the Trust Property shall vest automatically in the remaining
Trustees. Such vesting and cessation of title shall be effective whether or not
Transfer documents have been executed and delivered.
SECTION 3.4. ISSUANCE, DECREASES AND REDEMPTIONS OF INTERESTS.
The Trustees, in their discretion, may, from time to time, without a
vote of the Holders, permit increases, decreases, and Redemptions of Interests
as provided in Article VII.
SECTION 3.5. BORROWING MONEY; LENDING TRUST PROPERTY. The Trustees
shall have power to (a) borrow money or otherwise obtain credit and to secure
the same by mortgaging, pledging, granting security interests in, or otherwise
using as security the Trust Property, (b) endorse, guarantee, or undertake the
performance of any obligation, contract, or engagement of any other Person and
(c) lend Trust Property.
SECTION 3.6. DELEGATION; COMMITTEES. The Trustees shall have power to
delegate from time to time to committees of Trustees or others or to officers,
employees, independent contractors, or agents of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Trustees or otherwise as the Trustees may deem expedient. The
Trustees may specify, modify, limit, and terminate the rights, power, and
authority of any such committees, officers, employees, contractors, and agents.
The Trustees may specify and modify the rules, policies, and procedures
governing any such committees, officers, employees, contractors, and agents or
may authorize such committees, officers, employees, contractors, and agents to
adopt and modify such rules, policies, and procedures (subject in each case to
the power of the Trustees to amend, modify, supplement, or repeal the same).
SECTION 3.7. COLLECTION AND PAYMENT. Subject to Section 6.9, the
Trustees shall have power to collect all property due to the Trust; to pay all
claims, including taxes, against the Trust Property; to prosecute, arbitrate,
defend, compromise, or abandon any claims relating to the Trust Property; to
foreclose any security interest securing any obligations owing to the Trust; and
to enter into releases, agreements, and other instruments in connection with the
foregoing.
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SECTION 3.8. EXPENSES. Subject to Section 6.9(b), the Trustees shall
have the power to incur and pay any expenses which in the opinion of the
Trustees are necessary or incidental to carry out any of the purposes of this
Declaration, and to pay reasonable compensation from the funds of the Trust to
themselves as Trustees. The Trustees shall fix the compensation of all officers,
employees, contractors, agents, and Trustees. The Trustees shall be reimbursed
from the Trust Property, or the assets belonging to the appropriate series, for
their expenses and disbursements and for all losses and liabilities by them
incurred in administering the Trust; and for the payment of such expenses,
disbursements, losses, and liabilities, the Trustees shall have a lien on the
Trust Property, or the assets belonging to the appropriate series, prior to any
rights or interests of the Holders, or the Holders of such series, thereto.
SECTION 3.9. MANNER OF ACTING; BY-LAWS. Except as otherwise provided
herein or in the By-Laws, any action to be taken by the Trustees may be taken by
a majority of the Trustees present at a meeting of Trustees at which a quorum
(as determined in the ByLaws) is present, including any meeting held by means of
a conference telephone circuit or similar communications equipment by means of
which all persons who have given notice to the presiding officer that they wish
to participate in the meeting can hear each other, or by written consents of all
of the Trustees. The Trustees may adopt By-Laws not inconsistent with this
Declaration to provide for the conduct of the business of the Trust and may
amend or repeal such By-Laws to the extent such power is not reserved to the
Holders.
SECTION 3.10. MISCELLANEOUS POWERS. The Trustees shall have the power
to: (a) employ or contract with such Persons as the Trustees may deem desirable
for the transaction of the business of the Trust; (b) enter into joint ventures,
partnerships, and any other combinations or associations; (c) purchase, and pay
for out of Trust Property, insurance policies insuring any Holders,
Administrators, Trustees, officers, employees, agents, Investment Advisers,
Placement Agents, selected dealers, or independent contractors of the Trust
against all claims arising by reason of holding any such position or by reason
of any action taken or omitted by any such Person in such capacity, whether or
not constituting negligence, or whether or not the Trust would have the power to
indemnify such Person against such liability; (d) establish pension,
profit-sharing, and other retirement, incentive, and benefit plans for any
Trustees, officers, employees, contractors, or agents of the Trust; (e) to the
extent permitted by Government Mandate, indemnify any person with whom the Trust
has dealings, including any Investment Adviser,
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Administrator, Custodian, Placement Agent, dealer, or other agent or independent
contractor, to such extent as the Trustees shall determine; (f) guarantee
indebtedness or contractual obligations of others; (g) determine and change the
Fiscal Year of the Trust and the method by which its accounts shall be kept; (h)
adopt a seal for the Trust, provided that the absence of such seal shall not
impair the validity of any instrument executed on behalf of the Trust; (i) set
record dates for any purpose; (j) subject to Section 9.4 and Section 9.6, merge
or consolidate the Trust or any series with any other Entity and Transfer all or
substantially all of the assets of the Trust to another Person; and (k) set
apart, from time to time, out of any funds of the Trust reserves for any proper
purpose, and abolish any such reserves.
SECTION 3.11. PRINCIPAL TRANSACTIONS. Except in transactions that are
not prohibited by the 1940 Act, or that are permitted by any order of exemption
issued by the Commission, the Trustees shall not, on behalf of the Trust, buy
any securities (other than Interests) from or Transfer any securities (other
than Interests) to, or lend any assets of the Trust to, any Trustee or officer
of the Trust or any firm of which any such Trustee or officer is a member acting
as principal, or have any such dealings with any Investment Adviser,
Administrator, Custodian (other than repurchase agreements), or Placement Agent,
or with any Interested Person of such Person; but the Trust may, upon customary
terms, employ any such Person, or any firm or company in which such Person is an
Interested Person, as broker, legal counsel, registrar, or custodian.
ARTICLE IV
INVESTMENT ADVISER, PLACEMENT AGENT,
AND ADMINISTRATOR
SECTION 4.1. INVESTMENT ADVISER. Subject to a Majority Interests Vote
of each series affected thereby, the Trustees may in their discretion from time
to time enter into one or more investment advisory or management contracts
whereby the other party to each such contract shall undertake to furnish the
Trust such management, investment advisory, statistical, and research facilities
and services, and such other facilities and services, if any, with respect to
one or more series of Interests, as the Trustees shall from time to time
consider necessary, convenient, or desirable and all upon such terms and
conditions as the
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Trustees may in their discretion determine. Notwithstanding any provision of
this Declaration, the Trustees may delegate to the Investment Adviser authority
(subject to such general or specific instructions as the Trustees may from time
to time adopt) to effect purchases, sales, loans, or Transfers of assets of the
Trust on behalf of the Trustees or may authorize any officer, employee, or
Trustee to effect such purchases, sales, loans, or Transfers pursuant to
recommendations of the Investment Adviser (and all without further action by the
Trustees). Any of such purchases, sales, loans, or Transfers shall be deemed to
have been authorized by all the Trustees. Such services may be provided by one
or more Persons.
SECTION 4.2. PLACEMENT AGENT. The Trustees may in their discretion from
time to time enter into one or more placement agreements providing for the sale
of Interests whereby the Trust may either agree to issue Interests to the other
party to any such contract or appoint any such other party its sales agent for
Interests. In either case, any such contract shall be on such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of this
Declaration or the By-Laws; and such contract may also provide for the
repurchase or sale of Interests by such other party as principal or as agent of
the Trust and may provide that such other party may enter into selected dealer
and sales agreements with registered securities dealers and depository
institutions to further the purpose of the placement or repurchase of the
Interests. Such services may be provided by one or more Persons.
SECTION 4.3. ADMINISTRATOR. The Trustees may in their discretion from
time to time enter into one or more contracts for the provision of
administrative services to the Trust as the Trustees shall from time to time
consider necessary, convenient, or desirable and all upon such terms and
conditions as the Trustees may in their discretion determine, provided that such
terms and conditions are not inconsistent with the provisions of this
Declaration or the By-Laws. Such services may be provided by one or more
Persons.
SECTION 4.4. STRUCTURING AGENT. The Trustees may in their discretion
from time to time enter into one or more agreements for the provision of
structuring services and advice to the Trust on such terms and conditions as the
Trustees may in their discretion determine, provided that such terms and
conditions are not inconsistent with the provisions of this Declaration or the
By-Laws. Such services may be provided by one or more Persons.
SECTION 4.5. PARTIES TO CONTRACT. Any contract of the character
described in Section 4.1, 4.2, 4.3, or 4.4 or any Custodian contract as
described in Article X of the By-Laws may be entered into with any
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Person, although one or more of the Trustees or officers of the Trust may be an
officer, partner, director, trustee, shareholder, or member of such other party
to the contract, or otherwise interested in such contract, and no such contract
shall be invalidated or rendered voidable by reason of the existence of any such
relationship; nor shall any Person holding such relationship be liable merely by
reason of such relationship for any loss or expense to the Trust under or by
reason of any such contract or accountable for any profit realized directly or
indirectly therefrom, provided that the contract when entered into was not
inconsistent with the provisions of this Article IV or the By-Laws.
ARTICLE V
LIABILITY OF HOLDERS;
LIMITATIONS ON LIABILITY OF TRUSTEES AND OTHERS
SECTION 5.1. LIABILITY OF HOLDERS. Each Holder of an Interest (or, if
the Trust is divided into series, each Holder of an Interest in a series) shall
be jointly and severally liable with every other Holder of an Interest (or every
other Holder of an Interest in that series), with rights of contribution
inter se in proportion to their respective Interests in the Trust (or
that series) for the liabilities and obligations of the Trust (or that series
and no other series) in the event that the Trust (or that series) fails to
satisfy such liabilities and obligations from its assets. To the extent assets
of the Trust (or that series) are available, the Trust shall indemnify and hold
each Holder harmless from and against any claim or liability to which such
Holder may become subject by reason of being or having been a Holder of an
Interest (or an Interest in that series) to the extent that such claim or
liability imposes on the Holder an obligation or liability that, when compared
to the obligations and liabilities imposed on other Holders of Interests (or
Interests in the series), is greater than such Holders' proportionate share
according to such Holder's Interest, and shall reimburse such Holder for all
legal and other expenses reasonably incurred by such Holder in connection with
any such claim or liability. The rights accruing to a Holder under this Section
5.1 shall not exclude any other right to which such Holder may be lawfully
entitled, nor shall anything contained herein restrict the right of the Trust to
indemnify or reimburse a Holder in any appropriate situation even though not
specifically provided herein. Notwithstanding the indemnification procedure
described above, it is intended that each Holder of an Interest shall remain
jointly and severally liable to the creditors of the Trust (or of a particular
series) as a legal matter. In the event the Trust is divided into series, the
liabilities of a particular series and the right to indemnification granted
hereunder to
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Holders of interests in particular series shall not be enforceable against any
other series or Holders of Interests in any other series.
SECTION 5.2. LIMITATION ON LIABILITY OF TRUSTEES, OFFICERS, AND OTHERS.
No Trustee, officer, or employee of the Trust shall be subject to any personal
liability whatsoever to any Person, other than the Trust or its Holders, in
connection with Trust Property or the affairs of the Trust, and all Persons
other than the Trust or the Holders shall look solely to the Trust Property for
satisfaction of claims of any nature arising in connection with the affairs of
the Trust.
SECTION 5.3. NON-LIABILITY OF TRUSTEES, ETC. No Trustee, officer, or
employee of the Trust shall be liable to the Trust or to any Holder, Trustee,
officer, employee, or agent of the Trust for any action or failure to act
(including the failure to compel in any way any former or acting Trustee to
redress any breach of trust), or for any error of judgment or mistake of fact or
law, except for his own bad faith, willful misfeasance, gross negligence, or
reckless disregard of his duties.
SECTION 5.4. MANDATORY INDEMNIFICATION; INSURANCE.
(a) Subject to the exceptions and limitations contained in paragraph
(b) below:
(i) every person who is or has been a Trustee, officer, or employee of
the Trust shall be indemnified by the Trust, to the fullest extent permitted by
Government Mandate (including the 1940 Act) against all liability and against
all expenses reasonably incurred or paid by him in connection with any claim,
action, suit, or proceeding in which he becomes involved as a party or otherwise
by virtue of his being or having been a Trustee, officer, or employee and
against amounts paid or incurred by him in the settlement thereof; and
(ii) for all purposes of this Article V, the words "claim," "action,"
"suit," or "proceeding" shall apply to all claims, actions, suits, or
proceedings (civil, criminal, administrative, or other, including appeals),
actual or threatened; and the words "liability" and "expenses" shall include
attorneys' fees, costs, judgments, amounts paid in settlement, fines, penalties,
and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee,
officer, or employee:
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(i) against any liability to the Trust or the Holders by reason of a
final adjudication by the Government Authority before which the proceeding was
brought that he engaged in willful misfeasance, bad faith, gross negligence, or
reckless disregard of the duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been finally
adjudicated not to have acted in good faith in the reasonable belief that his
action was in the best interest of the Trust; or
(iii) in the event of a settlement involving a payment by a Trustee,
officer, or employee or other disposition not involving a final adjudication as
provided in paragraph (b) (i) or (b) (ii) above resulting in a payment by a
Trustee, officer, or employee, unless there has been either a determination that
such Trustee, officer, or employee did not engage in willful misfeasance, bad
faith, gross negligence, or reckless disregard of the duties involved in the
conduct of his office by the Government Authority approving the settlement or
other disposition or by a reasonable determination, based upon a review of
readily available facts (as opposed to a full trial-type inquiry) that he did
not engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested Trustees then in
office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) Subject to the provisions of the 1940 Act, the Trust may maintain
insurance for the protection of the Trust Property and the Trust's present or
former Holders, Trustees, officers, employees, independent contractors, and
agents in such amounts as the Trustees shall deem adequate to cover possible
tort liability (whether or not the Trust would have the power to indemnify such
Persons against such liability), and such other insurance as the Trustees in
their sole judgment shall deem advisable.
(d) The rights of indemnification herein provided shall be severable,
shall not affect any other rights to which any Trustee, officer, or employee may
now or hereafter be entitled, shall continue as to a Person who has ceased to be
such a Trustee, officer, or employee, and shall inure to the benefit of the
heirs, executors, and administrators of such Person. Nothing contained herein
shall affect any rights to indemnification to which personnel other than
Trustees, officers, and
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employees may be entitled by contract or otherwise under Government Mandate.
(e) Expenses of preparation and presentation of a defense to any claim,
action, suit, or proceeding of the character described in paragraph (a) of this
Section 5.3 shall be advanced by the Trust prior to final disposition thereof
upon receipt of an undertaking by or on behalf of the recipient to repay such
amount if it is ultimately determined that he is not entitled to indemnification
under this Section 5.3, provided that either:
(i) such undertaking is secured by a surety bond or some other
appropriate security or the Trust shall be insured against losses arising out of
any such advances; or
(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act on
the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a full
trial-type inquiry), that there is reason to believe that the recipient
ultimately will be found entitled to indemnification.
As used in this Section 5.3 a "Disinterested Trustee" is one
(i) who is not an "Interested Person" of the Trust (including anyone who has
been exempted from being an "Interested Person" by any rule, regulation, or
order of the Commission), and (ii) against whom none of such actions, suits, or
other proceedings or another action, suit, or other proceeding on the same or
similar grounds is then or had been pending.
SECTION 5.5. NO BOND REQUIRED OF TRUSTEES. No Trustee shall be
obligated to give any bond or other security for the performance of any of his
duties hereunder.
SECTION 5.6. NO DUTY OF INVESTIGATION; NOTICE IN TRUST INSTRUMENTS,
ETC. No purchaser, lender, or other Person dealing with the Trustees or any
officer, employee, or agent of the Trust shall be bound to make any inquiry
concerning the validity of any transaction purporting to be made by the Trustees
or by said officer, employee, or agent or be liable for the application of money
or property paid, loaned, or delivered to or on the order of the Trustees or of
said officer, employee, or agent. Every obligation, contract, instrument,
certificate, Interest, other security of the Trust, or undertaking, and every
other act or thing whatsoever executed in connection with the Trust shall be
conclusively presumed to have been executed or done by the executors thereof
only in their capacity as Trustees under this Declaration or in their capacity
as officers, employees,
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or agents of the Trust. Every written obligation, contract, instrument,
certificate, Interest, other security of the Trust, or undertaking made or
issued by the Trustees shall recite that the same is executed or made by them
not individually, but as Trustees under this Declaration, and that the
obligations of any such instrument are not binding upon any of the Trustees
individually, and may contain any further recital which they or he may deem
appropriate, but the omission of such recital shall not operate to bind any of
the Trustees individually.
SECTION 5.7. RELIANCE ON EXPERTS, ETC. Each Trustee and officer or
employee of the Trust shall, in the performance of his duties, be fully and
completely justified and protected with regard to any act or any failure to act
resulting from reliance in good faith upon the books of account or other records
of the Trust, upon an opinion of counsel, or upon reports made to the Trust by
any of its officers or employees or by any Investment Adviser, Placement Agent,
selected dealers, accountants, appraisers, or other experts or consultants
selected with reasonable care by the Trustees, officers, or employees of the
Trust, regardless of whether such counsel or expert may also be a Trustee.
ARTICLE VI
INTERESTS
SECTION 6.1. BENEFICIAL INTEREST. The beneficial interest in the Trust
shall consist of non-transferable Interests. Interests may be issued only to
Institutional Investors, as may be approved by the Trustees, for cash or other
consideration acceptable to the Trustees, subject to the requirements of the
1940 Act. The value of an Interest shall be equal to the Book Capital Account
balance of the Holder of the Interest. The number of Interests authorized
hereunder is unlimited.
SECTION 6.2. RIGHTS OF HOLDERS. The ownership of the Trust Property of
every description and the right to conduct any business hereinbefore described
are vested exclusively in the Trustees, and the Holders shall have no interest
therein other than the beneficial interest conferred by their Interests, and
they shall have no right to call for any partition or division of any property,
profits, rights, or interests of the Trust. The Interests shall be personal
property giving only the rights specifically set forth in this Declaration. The
Interests shall not entitle the holder to preference, preemptive, appraisal,
conversion, or exchange rights, except as the Trustees may determine. Every
Holder by virtue of having acquired an Interest shall be held expressly to have
assented and
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agreed to the terms of this Declaration and to have become a party hereto.
SECTION 6.3. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and the
Holders. It is not the intention of the Trustees to create a general
partnership, limited partnership, joint stock association, corporation,
bailment, or any form of legal relationship other than a trust. Nothing in this
Declaration shall be construed to make the Holders, either by themselves or with
the Trustees, partners or members of a joint stock association.
SECTION 6.4. ISSUANCE OF INTERESTS. The Trustees shall have the power,
from time to time, without a vote of the Holders, to offer, sell, and issue to
any Institutional Investor an Interest (or, if the Trust is divided into series,
an Interest in any series) for such type of consideration, including cash or
property other than cash, at such times and on such terms as the Trustees may
determine to be necessary, convenient, or desirable, and may in such manner
acquire other assets (including the acquisition of assets subject to, and in
connection with the assumption of, liabilities) and businesses. Individuals, S
corporations, partnerships, and grantor trusts that are beneficially owned by an
individual, S corporation, or partnership may not purchase Interests. The
Trustees, in their discretion, may refuse to sell an Interest (or an Interest in
any series) to any Person without any cause or reason therefor. A Holder that
has Redeemed its Interest (or its Interest in a series) may, except as otherwise
determined by the Trustees, not be permitted to purchase an Interest (or an
Interest in such series) until the later of 60 days next following the date of
such Redemption or the first day of the Fiscal Year next succeeding the Fiscal
Year during which such Redemption occurred. The Trustees may impose a sales
charge or commission on all or certain issuances or increases of Interests or
authorize a Placement Agent to impose such a sales charge or commission.
SECTION 6.5. REGISTER. A register shall be kept at the principal office
of the Trust, which register shall contain the name, address, and Book Capital
Account balance of each Holder. Such register shall be conclusive as to the
identity of the Holders. No Holder shall be entitled to receive payment of any
distribution, nor to have notice given to it as herein or in the By-Laws
provided, until such Holder has given its address to such officer or agent of
the Trust as is keeping such register for entry thereon. The Trust shall be
entitled to treat the holder of record of any Interest as the holder in fact
thereof and shall not be bound to recognize
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any equitable or other claim or interest in such Interest on the part of any
other Person, except as may be otherwise required by Government Mandate.
SECTION 6.6. TRANSFER OF INTERESTS. A Holder may not transfer its
Interest.
SECTION 6.7. NOTICES. Any and all notices to which any Holder may be
entitled and any and all communications shall be deemed duly served or given if
mailed, postage prepaid, addressed to any Holder at its last known address as
recorded on the register of the Trust.
SECTION 6.8. VOTING POWERS.
(a) The Holders shall have power to vote only (i) for the election of
Trustees as provided in Section 16 of the 1940 Act, (ii) for the removal of
Trustees as provided in Section 2.2, (iii) with respect to any investment
advisory or management contract as provided in Section 4.1, (iv) with respect to
termination of the Trust as provided in Section 9.2, (v) with respect to any
amendment of this Declaration to the extent and as provided in Section 9.3, (vi)
with respect to any merger, consolidation, or sale of assets as provided in
Sections 9.4 and 9.6, (vii) with respect to incorporation of the Trust or any
series to the extent and as provided in Sections 9.5 and 9.6, (viii) to the same
extent as the stockholders of a Massachusetts business corporation as to whether
or not a court action, proceeding, or claim should or should not be brought or
maintained derivatively or as a class action on behalf of the Trust or the
Holders, and (ix) with respect to such additional matters relating to the Trust
as may be required by this Declaration, the By-Laws, or applicable Government
Mandate, or as the Trustees may consider necessary, convenient, or desirable.
The Trust shall promptly notify the Investment Adviser and each Holder of any
vote under this Declaration by the Holders, provided that a failure to give any
such notice shall not have any effect on the validity of any vote.
(b) On each matter submitted to a vote of the Holders, each Holder
shall be entitled to a vote proportionate to its Interest as recorded on the
books of the Trust. If the Trust is divided into series, each series shall vote
as a separate class except as provided in Section 6.9(d). On each matter
submitted to a vote of the Holders, each Holder may apportion its vote with
respect to a proposal in the same proportion as its own shareholders voted with
respect to that proposal. The By-Laws may include further provisions for Holder
votes, quorums, meetings, and related matters.
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(c) Until Interests are issued, the Trustees may exercise all rights of
Holders and may take any action required by Government Mandate, this
Declaration, or the By-Laws to be taken by Holders.
SECTION 6.9. SERIES DESIGNATION. The Trustees, in their discretion and
without a vote of the Holders, may divide the Trust and Trust Property into one
or more series, each of which shall be a separate subtrust and the Interests in
which shall be separate and distinct from the Interests in any other series. The
Trustees shall promptly notify the Investment Adviser of any new series,
provided that a failure to give any such notice shall not affect the validity of
any series. Any different series shall be established and designated, and the
variations in the relative rights, privileges, and preferences as between the
different series shall be fixed and determined by the Trustees subject in all
respects to the following provisions:
(a) All consideration received by the Trust for the issuance or sale of
Interests of a particular series, together with all assets in which such
consideration is invested or reinvested, all income and earnings thereon,
profits therefrom, and proceeds thereof, including any proceeds derived from the
sale, exchange, or liquidation of such assets, and any funds or payments derived
from any reinvestment of such proceeds in whatever form the same may be, shall
be held in trust for the benefit of Holders of that series for all purposes,
subject only to the rights of creditors of such series, and shall be so recorded
upon the books of account of the Trust. In the event that there are any assets,
income, earnings, profits, proceeds, funds, or payments which are not readily
identifiable as held for the benefit of Holders of any particular series, the
Trustees shall allocate them to and among any one or more of the series
established and designated from time to time in such manner and on such basis as
the Trustees, in their sole discretion, deem fair and equitable. Each such
allocation by the Trustees shall be conclusive and binding upon the Holders of
all series for all purposes. No Holder of any particular series shall have any
claim on or right to any assets allocated or belonging to any other series.
(b) The assets belonging to each particular series shall be charged
with the liabilities of the Trust in respect of that series and any expenses,
costs, charges, and reserves attributable to that series. Any general
liabilities, expenses, costs, charges or reserves of the Trust which are not
readily identifiable as belonging to any particular series shall be allocated
and charged by the Trustees to and among any one or more of the series
established and designated from time to time in such manner
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and on such basis as the Trustees, in their sole discretion, deem fair and
equitable. Each allocation of liabilities, expenses, costs, charges, and
reserves by the Trustees shall be conclusive and binding upon the Holders of all
series for all purposes. The Trustees shall have full discretion, to the extent
not inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Holders. Under no circumstances shall
the assets allocated or belonging to any particular series be charged with
liabilities, expenses, costs, charges, or reserves attributable to any other
series. All Persons who have extended credit that has been allocated to a
particular series, or who have a claim or contract that has been allocated to
any particular series, shall look only to the assets of that particular series
for payment of such credit, claim, or contract.
(c) The power of the Trustees to invest and reinvest the Trust Property
allocated or belonging to any particular series shall be governed by Section 3.2
unless otherwise provided in the instrument of the Trustees establishing such
series which is hereinafter described.
(d) On any matter submitted to a vote of the Holders of the Trust, all
Interests then entitled to vote shall be voted by individual series, except that
(i) when required by the 1940 Act or Section 9.3 to be voted in the aggregate,
Interests shall not be voted by individual series, (ii) the Interests shall vote
as one class in the election and removal of Trustees, (iii) amendments to this
Declaration shall be adopted as provided in Section 9.3, and (iv) when the
Trustees have determined that the matter affects the interests of Holders of all
series or classes of Interests and that the Interests shall vote as one class on
the matter.
(e) The establishment and designation of any series shall be effective
upon the execution by a majority of the Trustees of an instrument setting forth
such establishment and designation and the relative rights and preferences of
such series, or as otherwise provided in such instrument, or upon a resolution
adopted by a majority of the Trustees and the execution by an officer of the
Trust on behalf of the Trustees of an instrument setting forth such
establishment and designation and the relative rights and preferences of such
series, or as otherwise provided in such instrument. At any time that there are
no Interests outstanding of any particular series previously established and
designated, the Trustees may by an instrument executed by a majority of their
number abolish that series and the establishment and designation thereof. Each
instrument referred to in this paragraph shall have the status of an amendment
to this Declaration.
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ARTICLE VII
INCREASES, DECREASES, AND REDEMPTIONS
OF INTERESTS
SECTION 7.1. GENERAL. Subject to applicable law, to the provisions of
this Declaration, and to such restrictions as may from time to time be adopted
by the Trustees, each Holder may vary its Interest in the Trust (or any series)
at any time by increasing through a capital contribution (of cash or property
other than cash, as determined by the Trustees) or decreasing (through a capital
withdrawal) its Interest or by a Redemption of its Interest. An increase in the
Interest of a Holder shall be reflected as an increase in the Book Capital
Account balance of that Holder (in the Trust or a series of the Trust, as the
case may be), and a decrease in the Interest of a Holder or Redemption of the
Interest of that Holder shall be reflected as a decrease in the Book Capital
Account balance of that Holder (in the Trust or a series of the Trust, as the
case may be). The Trust shall, upon appropriate and adequate notice from any
Holder, increase, decrease, or redeem such Holder's Interest for an amount
determined by the application of a formula adopted for such purpose by
resolution of the Trustees; provided that (a) the amount received by the Holder
upon any such decrease or Redemption shall not exceed the decrease in the
Holder's Book Capital Account balance effected by such decrease or Redemption of
its Interest, and (b) if so authorized by the Trustees with respect to all or
certain Interests, the Trust may at any time and from time to time, charge fees
for effecting any such decrease or Redemption, at such rates as the Trustees may
establish. The procedures for effecting increases, decreases or Redemptions
shall be as determined by the Trustees from time to time.
SECTION 7.2. SUSPENSION OF RIGHT TO DECREASE OR REDEEM INTERESTS. The
Trust may declare a suspension of the right to decrease or redeem Interests or
postpone the date of payment of the proceeds of a decrease or Redemption of an
Interest for the whole or any part of any period (a) during which the New York
Stock Exchange is closed other than customary week-end and holiday closings, (b)
during which trading on the New York Stock Exchange is restricted, (c) during
which an emergency exists as a result of which disposal by the Trust of
securities owned by it is not reasonably practicable or it is not reasonably
practicable for the Trust fairly to determine the value of its net assets, or
(d) during which the Commission for the protection of Holders by order permits
the suspension of the right of decrease or Redemption or postponement of
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the date of payment of the proceeds; provided that applicable rules and
regulations of the Commission shall govern as to whether the conditions
prescribed in (b), (c), or (d) exist. Such suspension shall take effect at such
time as the Trust shall specify but not later than the close of business on the
business day next following the declaration of suspension, and thereafter there
shall be no right to decrease or redeem Interests or payment of the proceeds of
a decrease or Redemption of an Interest until the Trust shall declare the
suspension at an end, except that the suspension shall terminate in any event on
the first day on which the New York Stock Exchange shall have reopened or the
period specified in (b) or (c) shall have expired (as to which, in the absence
of an official ruling by the Commission, the determination of the Trust shall be
conclusive). In the case of a suspension of the right to decrease or redeem
Interests, a Holder may either withdraw his request to decrease or redeem
Interests or receive payment based on the net asset value upon the termination
of the suspension.
SECTION 7.3. DISCLOSURE OF HOLDING. The Holders shall upon request
disclose to the Trustees in writing such information with respect to direct and
indirect ownership of Interests as the Trustees deem necessary or convenient to
comply with the Code, or any other applicable Government Mandate. Upon the
failure of a Holder to comply with such a request of the Trustees, the Trust
shall have the power to redeem the Interests of such Holder for such Holder's
Book Capital Account balance.
SECTION 7.4. REDEMPTIONS OF ACCOUNTS OF LESS THAN MINIMUM AMOUNT. The
Trustees shall have the power (but no obligation) at any time to redeem all (but
not less than all) the Interest of any Holder at a redemption price determined
in accordance with Section 7.1 if at such time the aggregate Book Capital
Account balance of such Holder is less than a minimum amount, if any, as
determined from time to time by the Trustees.
SECTION 7.5. REDEMPTIONS OF CERTAIN HOLDERS. The Trustees shall have
the power (but no obligation) at any time to redeem all (but not less than all)
the Interest of any Holder at a redemption price determined in accordance with
Section 7.1 if such Holder shall (a) dissolve, terminate, or liquidate or
commence, consent to, or fail to contest proceedings for the same, (b) commence,
consent to, or fail to contest any proceeding under any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, or similar Government
Mandate, (c) be subject to any involuntary proceeding under any bankruptcy,
insolvency, reorganization, arrangement, readjustment of debt, or similar
Government Mandate that is not dismissed within 60 days, (d) be subject to a
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Government Mandate appointing a receiver, custodian, liquidator, or similar
official that is not dismissed within 60 days, (e) admit in writing its
inability to pay its debts as they become due, or (f) make an assignment for the
benefit of creditors.
ARTICLE VIII
DETERMINATION OF BOOK CAPITAL ACCOUNT
BALANCES AND DISTRIBUTIONS
SECTION 8.1. BOOK CAPITAL ACCOUNT BALANCES. The Book Capital Account
balances of Holders with respect to the Trust (or a particular series) shall be
calculated on such days and at such times as the Trustees may determine. The
Trustees shall adopt resolutions setting forth the method of determining the
Book Capital Account balance of each Holder. The power and duty to make
calculations pursuant to such resolutions may be delegated by the Trustees to
the Investment Adviser, Administrator, custodian, or such other Person as the
Trustees may determine. Upon the Redemption of an Interest, the Holder of that
Interest shall be entitled to receive the balance of its Book Capital Account. A
Holder may not transfer its Book Capital Account balance.
SECTION 8.2. ALLOCATIONS AND DISTRIBUTIONS TO HOLDERS. The Trustees
shall, in compliance with the Code, the 1940 Act, and generally accepted
accounting principles, establish the procedures by which the Trust shall make
(a) the allocation of unrealized gains and losses, taxable income and tax loss,
and profit and loss, or any item or items thereof, to each Holder, (b) the
payment of distributions, if any, to Holders upon liquidation or otherwise, and
(c) upon liquidation, the final distribution of items of taxable income and
expense. Such procedures shall be set forth in writing and be furnished to the
Trust's accountants. The Trustees may amend the procedures adopted pursuant to
this Section 8.2 from time to time. The Trustees may retain from the net profits
of the Trust, or any series, such amount as they may deem necessary to pay the
liabilities and expenses of the Trust, or such series.
SECTION 8.3. POWER TO MODIFY FOREGOING PROCEDURES. Notwithstanding any
of the foregoing provisions of this Article VIII, the Trustees may prescribe, in
their absolute discretion, such other bases and times for determining the net
income and net assets of the Trust and of any series, the allocation of income
of the Trust and of any series, the Book Capital Account balance of each Holder,
or the payment of distributions to the Holders as they may deem necessary or
desirable to
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enable the Trust, or any series, to comply with any provision of the 1940 Act or
any order of exemption issued by the Commission or under the Code.
ARTICLE IX
DURATION; TERMINATION OF TRUST;
AMENDMENT; MERGERS, ETC.
SECTION 9.1. DURATION. Subject to possible dissolution or termination
in accordance with the provisions of this Article IX, the Trust shall continue
until the expiration of 20 years after the death of the last survivor of (a) the
initial Trustees named herein and (b) the descendants of George H. W. Bush, 41st
president of the United States, living on the date of this Declaration.
SECTION 9.2. TERMINATION OF TRUST.
(a) The Trust may be terminated by a Majority Interests Vote, by the
Trustees, or upon the bankruptcy or dissolution of a Holder unless the remaining
Holders, by Majority Interests Vote, agree to continue the Trust. Any series of
the Trust may be terminated by a Majority Interests Vote of that series, by the
Trustees, or upon the bankruptcy or dissolution of a Holder of that series
unless the remaining Holders, by Majority Interests Vote of the series, agree to
continue the series. Upon the termination of the Trust or any series of the
Trust:
(i) The Trust or series of the Trust shall carry on no business except
for the purpose of winding up its affairs.
(ii) The Trustees shall give prompt notice of the termination of the
Trust or any series to Old Mutual. No action under Section 9.2(a)(iii) or (iv)
shall be taken until 60 days after the date of such notice, unless Old Mutual
waives such 60 day period in writing.
(iii) The Trustees shall proceed to wind up the affairs of the Trust or
series of the Trust and all the powers of the Trustees under this Declaration
shall continue until the affairs of the Trust or series of the Trust shall have
been wound up, including the power to (A) fulfill or discharge the contracts of
the Trust, (B) collect the assets of the Trust or series of the Trust, (C)
Transfer all or any part of the remaining Trust Property of the Trust or series
of the Trust to one or more Persons at public or private sale for consideration
which may consist in whole or in
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part of cash, securities, or other property of any kind, (D) discharge or pay
the liabilities of the Trust or series of the Trust, and (E) do all other acts
necessary, convenient, or desirable in the discretion of the Trustees to
liquidate the business of the Trust or series of the Trust.
(iv) After the Trust has paid or made adequate provision for the
payment of all liabilities and the Trustees have received such releases,
indemnities, and refunding agreements as they deem necessary, convenient, or
desirable, the Trustees may distribute the remaining Trust Property of the Trust
or series of the Trust, in cash or in kind, or partly in cash and partly in
kind, among the Holders of the Trust or series of the Trust according to their
respective rights as set forth in the procedures established pursuant to Section
8.2.
(b) After termination of the Trust (or any series of the Trust) and a
liquidating distribution to the Holders of the Trust (or such series of the
Trust) as herein provided, a majority of the Trustees shall execute and lodge
among the records of the Trust an instrument in writing setting forth the fact
of such termination, and the Trustees shall thereupon be discharged from all
further liabilities and duties hereunder with respect to the Trust (or such
series of the Trust), and the rights and interests of all Holders of the Trust
(or such series of the Trust) shall thereupon cease.
SECTION 9.3. AMENDMENT PROCEDURE. All rights granted to Holders
hereunder are granted subject to a right to amend this Declaration, except as
otherwise provided.
(a) This Declaration may be amended by a Majority Interests Vote or by
any instrument in writing, without a meeting, signed by a majority of the
Trustees and consented to by the holders of not less than a majority of the
Interests. The Trustees may also amend this Declaration without the vote or
consent of Holders to designate series in accordance with Section 6.9, to change
the name of the Trust, to supply any omission, to cure, correct, or supplement
any ambiguous, defective, or inconsistent provision hereof, or to conform this
Declaration to the requirements of applicable Government Mandates or the
regulated investment company provisions of the Code, but the Trustees shall not
be liable for failing to make any such amendments.
(b) An amendment that the Trustees have determined would affect the
rights, privileges, or interests of a particular series, but not the rights,
privileges, or interests of all series generally, and which would otherwise
require a Majority Interests Vote under paragraph (a) of this
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Section 9.3, may be made by a Majority Interests Vote of such series rather than
a Majority Interests Vote.
(c) No amendment to this Declaration may change any rights with respect
to the Interests, or any series of Interests, by reducing the amount payable
thereon upon liquidation of the Trust or by diminishing or eliminating any
voting rights pertaining thereto, except with the Majority Interests Vote, or a
Majority Interests Vote of that series. No amendment to this Declaration may
impair the exemption from personal liability of the Trustees, officers,
employees, and agents of the Trust.
(d) A certificate signed by a majority of the Trustees setting forth an
amendment and reciting that it was duly adopted by the Holders or by the
Trustees as aforesaid, and executed by a majority of the Trustees, shall be
conclusive evidence of such amendment when lodged among the records of the
Trust.
(e) Prior to the issuance of any Interests, this Declaration may be
amended in any respect by the affirmative vote of a majority of the Trustees or
by an instrument signed by a majority of the Trustees.
(f) Neither Section 9.2(a)(ii), this Section 9.3(f), Section 11.6, nor
Section 11.8, nor any provision hereof relating to the interpretation or
enforcement of any of such Sections, may be amended or modified without the
prior written consent in each instance of Old Mutual.
(g) Prompt notice of any amendment to this Declaration shall be given
to the Investment Adviser and each Holder, provided, however, that a failure to
give any such notice shall not have any effect on the validity of any amendment.
SECTION 9.4. MERGER, CONSOLIDATION, AND SALE OF ASSETS. The Trust may
merge or consolidate with any other Entity or may Transfer all or substantially
all of the Trust Property (or all or substantially all of the Trust Property
allocated or belonging to a particular series of the Trust) including its good
will, upon such terms and conditions and for such consideration when and as
authorized at any meeting of Holders called for such purpose by the vote of the
Holders representing two-thirds of the Interests of all series of the Trust
voting as a single class, or of the affected series of the Trust, as the case
may be, or by an instrument in writing without a meeting, consented to by the
vote of the Holders representing two-thirds of the Interests of all series of
the Trust voting as a single class, or of the affected series of the Trust, as
the case may be; provided, however, that (a) if such merger, consolidation, or
Transfer is
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recommended by the Trustees, the vote or written consent by Majority Interests
Vote shall be sufficient authorization; and any such merger, consolidation, or
Transfer shall be deemed for all purposes to have been accomplished under and
pursuant to the statutes of the Commonwealth of Massachusetts, and (b) no Holder
approval shall be required for Transfers in connection with a termination of the
Trust under Section 9.2. Prior to taking any action pursuant to a Holder vote
authorizing a merger, consolidation, or Transfer of all or substantially all of
the Trust Property (or all or substantially all of the Trust Property allocated
or belonging to a particular series of the Trust), the Trustees shall notify the
Investment Adviser thereof. Nothing contained herein shall be construed as
requiring approval of Holders for any Transfer of assets in the ordinary course
of the business of the Trust.
SECTION 9.5. INCORPORATION, REORGANIZATION. With a Majority Interests
Vote, the Trustees may (a) cause to be organized or assist in organizing an
Entity under the laws of any jurisdiction to acquire all or part of the Trust
Property or to carry on any business in which the Trust shall directly or
indirectly have any interest, (b) Transfer all or part of the Trust Property to
any such Entity in exchange for the shares or securities thereof or otherwise,
and (c) lend money to, subscribe for the shares or securities of, and enter into
any contracts with any such Entity in which the Trust holds or is about to
acquire shares or any other interest. Subject to Section 9.4, the Trustees may
also cause a merger or consolidation between the Trust and any such Entity if
and to the extent permitted by Government Mandate. The Trustees shall notify the
Investment Adviser of any such Majority Interests Vote prior to taking any
action pursuant thereto. Nothing contained in this Section 9.5 shall be
construed as requiring approval of Holders for the Trustees to organize or
assist in organizing an Entity and Transferring a portion of the Trust Property
to such Entity in the ordinary course of the business of the Trust.
SECTION 9.6. INCORPORATION OR REORGANIZATION OF SERIES. With a Majority
Interests Vote of any series, the Trustees may (a) cause to be organized or
assist in organizing an Entity under the laws of any jurisdiction to acquire all
or part of the Trust Property of such series or to carry on any business in
which such series shall directly or indirectly have any interest, (b) Transfer
all or part of the Trust Property of such series to any such Entity in exchange
for the shares or securities thereof or otherwise, and (c) lend money to,
subscribe for the shares or securities of, and enter into any contracts with any
such Entity in which such series holds or is about to acquire shares or any
other interest. Subject to Section 9.4, the Trustees may also cause a merger or
consolidation
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between such series and any such Entity if and to the extent permitted by
Government Mandate. The Trustees shall notify the Investment Adviser of any such
Majority Interests Vote prior to taking any action pursuant thereto. Nothing
contained in this Section 9.6 shall be construed as requiring approval of
Holders of any series for the Trustees to organize or assist in organizing an
Entity and Transferring a portion of the Trust Property of such series to such
Entity in the ordinary course of the business of such series.
ARTICLE X
REPORTS TO HOLDERS AND HOLDER COMMUNICATIONS
The Trustees shall at least semi-annually submit to the Holders a
written financial report of the transactions of the Trust, including financial
statements which shall at least annually be certified by independent public
accountants.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. FILING. This Declaration and any amendment hereto shall
be filed in the office of the Secretary of the Commonwealth of Massachusetts and
in such other place or places as may be required under the Government Mandates
of the Commonwealth of Massachusetts and may also be filed or recorded in such
other places as the Trustees deem appropriate. Each amendment shall be signed by
a majority of the Trustees or shall be accompanied by a certificate of an
appropriate officer of the Trust stating that such amendment was properly
approved. Unless such amendment or certificate sets forth a later date on which
it shall take effect, any amendment shall take effect as of its approval. A
restated Declaration, integrating into a single instrument all of the provisions
of this Declaration which are then in effect and operative, may be executed from
time to time by a majority of the Trustees and shall be conclusive evidence of
all amendments contained therein and may thereafter be referred to in lieu of
this original Declaration and the various amendments thereto.
SECTION 11.2. SECTION HEADINGS. Section headings are placed herein for
convenience of reference only and shall not affect the meaning or interpretation
of this Declaration.
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SECTION 11.3. GOVERNING LAW. This Declaration shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to any choice of law rules that would require application of the
Government Mandates of any other jurisdiction.
SECTION 11.4. COUNTERPARTS. This Declaration may be simultaneously
executed in several counterparts, each of which shall be deemed to be an
original, and such counterparts, together, shall constitute one and the same
instrument, which shall be sufficiently evidenced by any such original
counterpart.
SECTION 11.5. RELIANCE BY THIRD PARTIES. Any certificate executed by a
Trustee certifying to: (a) the number or identity of Trustees or Holders, (b)
the due authorization or execution of any instrument or writing on behalf of the
Trust, (c) the form of any vote passed at a meeting of Trustees or Holders or
adopted by written consent of the Trustees or Holders, (d) the fact that the
number of Trustees or Holders present at any meeting or executing any written
instrument satisfies the requirements of this Declaration, (e) the form of any
ByLaws adopted by or the identity of any officers of the Trust, or (f) the
existence of any fact that in any manner relates to the affairs of the Trust,
shall be conclusive evidence, absent actual fraud or manifest error, as to the
matters so certified in favor of any Person to whom such certificate is
addressed.
SECTION 11.6. PROVISIONS IN CONFLICT WITH LAW OR REGULATIONS.
(a) The provisions of this Declaration are severable, and if the
Trustees shall determine, with the advice of counsel, that any such provision is
in conflict with the 1940 Act, the regulated investment company provisions of
the Code, or with other applicable Government Mandates, the conflicting
provision shall be deemed never to have constituted a part of this Declaration;
provided however, that (i) such determination shall not affect any of the
remaining provisions of this Declaration or render invalid or improper any
action taken or omitted prior to such determination, (ii) the Trust shall
promptly notify the Investment Adviser of any such determination, and (iii) the
Trustees shall notify Old Mutual of any such determination with respect to
Section 9.2(a)(ii), Section 9.3(f), this Section 11.6(a), or Section 11.8.
(b) If any provision of this Declaration shall be held invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall
attach only to such provision in such jurisdiction and shall not in any
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manner affect such provision in any other jurisdiction or any other provision of
this Declaration in any jurisdiction.
SECTION 11.7. PRINCIPAL OFFICE AND REGISTERED AGENT. The name of the
registered agent of the Trust is John Collis, Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda. The principal office of the Trust is Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda. The Trustees may, without the approval of
Holders, change the registered agent of the Trust and the principal office of
the Trust.
SECTION 11.8. NOTICES TO OLD MUTUAL AND INVESTMENT ADVISER. All notices
required to be given to Old Mutual or the Investment Adviser under this
Declaration shall be submitted in writing (a) to Old Mutual at Mutualpark, Jan
Smuts Drive, Pinelands, 7405, South Africa or at such other address as Old
Mutual may, from time to time, request with notice to the Trustees and (b) to
the Investment Adviser at the then effective address for notices to the
Investment Adviser under its advisory agreement with the Trust. Any notice to
Old Mutual or the Investment Adviser shall be effective only upon its actual
receipt.
--SIGNATURE PAGE FOLLOWS--
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<PAGE> 37
IN WITNESS WHEREOF, the undersigned have executed this instrument as of
the date first set forth above.
William Francois de la Harpe Beck
---------------------------------
William Francois de la Harpe Beck
as Trustee
and not individually
P.O. Box 4854
Cape Town 8000
South Africa
William L. Boyan
---------------------------------
William L. Boyan
as Trustee
and not individually
John Hancock Mutual Life Insurance
Company P.O. Box 111 Boston,
Massachusetts 02117
U.S.A.
Thomas Haskins Davis
---------------------------------
Thomas Haskins Davis
as Trustee
and not individually
13 Commonland Point Road
Hamilton Parish CR01
Bermuda
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<PAGE> 38
Michael John Drew
---------------------------------
Michael John Drew
as Trustee
and not individually
International Services Limited
P.O Box HM1186
Hamilton HM EX
Bermuda
William Langley
---------------------------------
William Langley
as Trustee
and not individually
South African Mutual Life Assurance
Society
P.O. Box 66
Cape Town 8000
South Africa
Michael John Levett
---------------------------------
Michael John Levett
as Trustee
and not individually
South African Mutual Life Assurance
Society
P.O. Box 66
Cape Town 8000
South Africa
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<PAGE> 39
Kenneth Rigby Williams
---------------------------------
Kenneth Rigby Williams
as Trustee
and not individually
Druid Lodge
Grantley Avenue
Wonersh Park
Guildford
Surrey GU5 0QN
United Kingdom
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<PAGE> 1
EXHIBIT 2
BY-LAWS OF OLD MUTUAL
SOUTH AFRICA EQUITY TRUST
ARTICLE I
DEFINITIONS AND RULES OF INTERPRETATION
SECTION 1. DEFINITIONS. Capitalized terms used in these By-Laws without
definition shall have the respective meanings assigned to them in the
Declaration of Trust of Old Mutual South Africa Equity Trust dated as of
September 1, 1995 (the "Declaration").
SECTION 2. RULES OF INTERPRETATION. The rules of interpretation set
forth in Section 1.03 of the Declaration shall apply to these By-Laws as if set
forth herein, provided that references in such rules of interpretation to the
Declaration shall, when such rules are applied to these By-Laws, instead be
references to these By-Laws.
SECTION 3. PERCENTAGES OF HOLDERS. Reference herein to a specified
percentage of, or fraction of, Interests, means Holders whose combined Book
Capital Account balances represent such specified percentage or fraction of the
combined Book Capital Account balances of all, or a specified group of, Holders.
ARTICLE II
OFFICES
The Trust may have offices in such places without as well as within the
Commonwealth of Massachusetts and the United States as the Trustees may from
time to time determine.
ARTICLE III
HOLDERS
SECTION 1. MEETINGS. A meeting of Holders may be called at any time by
a majority of the Trustees. A meeting shall be called by any Trustee upon
written request, which shall specify the purpose or purposes for which such
meeting is to be called, of Holders of not less than ten percent (10%) of the
<PAGE> 2
outstanding Interests entitled to vote on the matters specified in such written
request. Any such meeting shall be held within or without the Commonwealth of
Massachusetts and the United States on such day and at such time as the Trustees
shall designate. The holders of fifty percent (50%) of outstanding Interests
entitled to vote present in person or by proxy shall constitute a quorum at any
meeting of the Holders. In the absence of a quorum, the Holders of a majority of
outstanding Interests entitled to vote present in person or by proxy may adjourn
the meeting from time to time until a quorum shall be present.
Whenever a matter is required to be voted by Holders of the Trust in
the aggregate under Section 6.8 and Section 6.9 of the Declaration, the Trust
may either hold a meeting of Holders of all series, as defined in Section 6.9 of
the Declaration, to vote on such matter, or hold separate meetings of Holders of
each of the individual series to vote on such matter, provided that (i) such
separate meetings shall be held within one year of each other, and (ii) a quorum
consisting of the holders of fifty percent (50%) of outstanding Interests of the
individual series entitled to vote present in person or by proxy shall be
present at each such separate meeting.
SECTION 2. NOTICE OF MEETINGS. Notice of all meetings of Holders,
stating the time, place, and purposes of the meeting, shall be given by the
Trustees, by mail (postage prepaid) or by an internationally recognized courier
service (such as Federal Express or DHL), to each Holder entitled to vote at
such meeting at his address as recorded on the register of the Trust, mailed at
least ten (10) days and not more than sixty (60) days before the meeting. Only
the business stated in the notice of the meeting shall be considered at such
meeting. Any adjourned meeting may be held as adjourned without further notice.
No notice need be given to any Holder who shall have failed to inform the Trust
of his current address or if a written waiver of notice, executed before or
after the meeting by the Holder or his attorney thereunto authorized, is filed
with the records of meeting. Where separate meetings are held for Holders of
each of the individual series to vote on a matter required to be voted on by
Holders of the Trust in the aggregate, as provided in Article III, Section 1,
notice of each such separate meeting shall be provided in the manner described
above in this Section 2 to Holders of the respective series entitled to vote at
such meeting.
SECTION 3. RECORD DATE. The Trustees may fix a date not more than sixty
(60) days prior to the date of any meeting of Holders or distribution or other
action as a record date for the purpose of determining the Holders who are
entitled to notice of and to vote at such meeting or any adjournment thereof or
to participate in such distribution or for the purpose of such other action. If
the Trustees do not establish a record date for any meeting, distribution, or
other action, the record date shall be the close of business on the second
business day next preceding the date of the Trustees' action authorizing such
meeting, distribution, or other action. Where separate meetings are held for
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<PAGE> 3
Holders of each of the individual series to vote on a matter required to be
voted on by Holders of the Trust in the aggregate, as provided in Article III,
Section 1, the record date of each such separate meeting, for purposes of
determining the Holders who are entitled to notice of and to vote at such
meeting or any adjournment thereof, shall be determined in the manner described
above in this Section 3. The Trustees shall, to the extent practicable, provide
the Holders with advance notice of the record date for any meeting,
distribution, or other action, although failure to provide such notice shall not
in any case invalidate any such meeting, distribution, or other action or any
vote taken or consent granted at any such meeting or pursuant to any such
action.
SECTION 4. PROXIES. At any meeting of Holders, any holder of Interests
entitled to vote thereat may vote by proxy, provided that no proxy shall be
voted at any meeting unless it shall have been placed on file with the
Secretary, or with such other officer or agent of the Trust as the Secretary may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a vote of a majority of the Trustees, proxies may be solicited in
the name of the Trust or one or more Trustees or officers of the Trust. Only
Holders of record shall be entitled to vote. When any Interest is held jointly
by several persons, any one of them may vote at any meeting in person or by
proxy in respect of such Interest, but if more than one of them shall be present
at such meeting in person or by proxy, and such joint owners or their proxies so
present disagree as to any vote to be cast, such vote shall not be received in
respect of such Interest. A proxy purporting to be executed by or on behalf of a
Holder shall be deemed valid unless challenged at or prior to its exercise, and
the burden of proving invalidity shall rest on the challenger. If the holder of
any such Interest is subject to the legal control of any other Person as regards
the charge or management of such Interest, such Interest may be voted by such
other person appointed or having such control, and such vote may be given in
person or by proxy. Unless otherwise specifically limited by their terms,
proxies shall entitle the holder thereof to vote at any adjournment of a
meeting.
SECTION 5. INSPECTION OF RECORDS. The records of the Trust shall be
open to inspection by Holders to the same extent as is permitted shareholders of
a Massachusetts business corporation.
SECTION 6. ACTION WITHOUT MEETING. Any action which may be taken by
Holders may be taken without a meeting if Holders of all of the Interests
consent to the action in writing and the written consents are filed with the
records of the meetings of Holders. Such consent shall be treated for all
purposes as a vote taken at a meeting of Holders.
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<PAGE> 4
ARTICLE IV
TRUSTEES
SECTION 1. MEETINGS OF THE TRUSTEES. The Trustees may in their
discretion provide for regular or stated meetings of the Trustees. Notice of
regular or stated meetings need not be given. Meetings of the Trustees other
than regular or stated meetings shall be held whenever called by the Chairman or
by any Trustee. Notice of the time and place of each meeting other than regular
or stated meetings shall be given by the Secretary or an Assistant Secretary or
by the officer or Trustee calling the meeting and shall be sent to each Trustee
at his business address either by (i) mail (postage prepaid) at least ten (10)
days before the meeting, (ii) an internationally recognized courier service
(such as Federal Express or DHL) at least five (5) days before the meeting,
(iii) fax at least two (2) days before the meeting, or (iv) personal delivery or
telephone at least one (1) day before the meeting. Notwithstanding the
foregoing, at least ten (10) days prior notice shall be given of the time and
place of any meeting to be conducted in person. Notice of a meeting need not be
given to any Trustee if a written waiver of notice, executed by him before or
after the meeting, is filed with the records of the meeting, or to any Trustee
who attends the meeting without protesting prior thereto or at its commencement
the lack of notice to him. A notice or waiver of notice need not specify the
purpose of any meeting. The Trustees may meet by means of a telephone conference
circuit or similar communications equipment by means of which all persons
participating in the meeting can hear each other, which telephone conference
meeting shall be deemed to have been held at a place designated by the Trustees
at the meeting. Any action required or permitted to be taken at any meeting of
the Trustees may be taken by the Trustees without a meeting if all the Trustees
consent to the action in writing and the written consents are filed with the
records of the Trustees' meetings. Such consents shall be treated as a vote for
all purposes.
SECTION 2. QUORUM AND MANNER OF ACTING. A majority of the Trustees
shall constitute a quorum for the transaction of business at any regular or
special meeting of the Trustees and (except as otherwise required by law, the
Declaration, or these By-Laws) the act of a majority of the Trustees present at
any such meeting, at which a quorum is present, shall be the act of the
Trustees. In the absence of a quorum, a majority of the Trustees present may
adjourn the meeting from time to time until a quorum shall be present. Notice of
an adjourned meeting need not be given.
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<PAGE> 5
ARTICLE V
COMMITTEES AND ADVISORY BOARD
SECTION 1. EXECUTIVE AND OTHER COMMITTEES. The Trustees by vote of a
majority of all the Trustees may elect from their own number an Executive
Committee to consist of not less than two (2) Trustees to hold office at the
pleasure of the Trustees. While the Trustees are not in session, the Executive
Committee shall have the power to conduct the current and ordinary business of
the Trust, including the purchase and sale of securities and such other powers
of the Trustees as the Trustees may, from time to time, delegate to the
Executive Committee except those powers which by law, the Declaration, or these
By-Laws the Trustees are prohibited from so delegating. The Trustees may also
elect from their own number other Committees from time to time, the number
composing such Committees, the powers conferred upon the same (subject to the
same limitations as with respect to the Executive Committee), and the term of
membership on such Committees to be determined by the Trustees. The Trustees may
designate a chairman of any such Committee. In the absence of such designation a
Committee may elect its own chairman. The Trustees may abolish any Committee at
any time. The Trustees shall have power to rescind any action of any Committee,
but no such rescission shall have retroactive effect.
SECTION 2. MEETINGS, QUORUM, AND MANNER OF ACTING. The Trustees may (i)
provide for stated meetings of any Committee, (ii) specify the manner of calling
and notice required for special meetings of any Committee, (iii) specify the
number of members of a Committee required to constitute a quorum and the number
of members of a Committee required to exercise specified powers delegated to
such Committee, (iv) authorize the making of decisions to exercise specified
powers by written assent of the requisite number of members of a Committee
without a meeting, and (v) authorize the members of a Committee to meet by means
of a telephone conference circuit. Unless the Trustees so provide, all the
Committees shall be governed by the same rules that apply to the full Board.
Each Committee may, but is not required to, keep regular minutes of its
meetings and records of decisions taken without a meeting and cause them to be
recorded in a book designated for that purpose and kept in the office of the
Trust.
SECTION 3. ADVISORY BOARD. The Trustees may appoint an Advisory Board
to consist in the first instance of not less than two (2) members. Members of
such Advisory Board shall not be Trustees or officers and need not be Holders. A
member of such Advisory Board shall hold office for such period as the Trustees
may by vote provide and may resign therefrom by a written
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<PAGE> 6
instrument signed by him which shall take effect upon its delivery to the
Trustees. The Advisory Board shall have no legal powers and shall not perform
the functions of Trustees in any manner, such Advisory Board being intended
merely to act in an advisory capacity. Such Advisory Board shall meet at such
times, upon such notice, and in accordance with such procedures as the Trustees
may by vote provide.
SECTION 4. CHAIRMAN. The Trustees may, by a majority vote of all the
Trustees, elect from their own number a Chairman and one or more Deputy
Chairmen, each to hold office until his successor shall have been duly elected
and qualified. The Chairman and any Deputy Chairman may be, but need not be,
Shareholders. The Chairman shall preside at all meetings of the Trustees and
shall have such other duties as from time to time may be assigned to him by the
Trustees. In the absence or disability of the Chairman, the Deputy Chairman or,
if there are more than one Deputy Chairman, any Deputy Chairman designated by
the Trustees shall perform all the duties of the Chairman. Each Deputy Chairman
shall perform such other duties as may be assigned to him from time to time by
the Trustees or the Chairman.
ARTICLE VI
OFFICERS
SECTION 1. GENERAL PROVISIONS. The officers of the Trust shall be a
President, a Treasurer, and a Secretary, each of whom shall be elected by the
Trustees. The Trustees may elect or appoint such other officers or agents as the
business of the Trust may require, including one or more Vice Presidents, one or
more Assistant Treasurers, and one or more Assistant Secretaries. The Trustees
may delegate to any officer or committee the power to appoint any subordinate
officers or agents.
SECTION 2. TERM OF OFFICE AND QUALIFICATIONS. Except as otherwise
provided by law, the Declaration, or these By-Laws, each of the President, any
Vice President, the Treasurer, and the Secretary shall hold office until his
respective successor shall have been duly elected and qualified, and all other
officers shall hold office at the pleasure of the Trustees. Any person may hold
up to two offices of the Trust at the same time (in addition, if applicable, to
such person's service as a Trustee), provided the President may hold no other
office (except the President may be a Trustee). Except as above provided, any
two offices may be held by the same person. Any officer may be, but need not be,
a Trustee.
SECTION 3. REMOVAL. The Trustees, at any regular or special meeting of
the Trustees, may remove any officer with or without cause by a vote of a
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majority of the Trustees. Any officer or agent appointed by any officer or
committee may be removed with or without cause by such appointing officer or
committee.
SECTION 4. POWERS AND DUTIES OF THE PRESIDENT. The President, unless
the Chairman, if any, is so appointed by the Trustees, shall be the principal
executive officer of the Trust. Subject to the control of the Trustees and any
committee of the Trustees, the President shall at all times exercise a general
supervision and direction over the affairs of the Trust. The President shall
have the power to employ attorneys and counsel for the Trust and to employ such
subordinate officers, agents, clerks, and employees as he may find necessary,
convenient, or desirable to transact the business of the Trust. The President
shall also have the power to grant, issue, execute, or sign such powers of
attorney, proxies, or other documents as may be deemed necessary, convenient, or
desirable in the furtherance of the interests of the Trust. The President shall
have such other powers and duties as, from time to time, may be conferred upon
or assigned to him by the Trustees.
SECTION 5. POWERS AND DUTIES OF VICE PRESIDENTS. In the absence or
disability of the President, the Vice President or, if there are more than one
Vice President, any Vice President designated by the Trustees shall perform all
the duties and may exercise any of the powers of the President, subject to the
control of the Trustees. Each Vice President shall perform such other duties as
may be assigned to him from time to time by the Trustees or the President.
SECTION 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall be
the principal financial and accounting officer of the Trust. The Treasurer shall
deliver all funds of the Trust which may come into his hands to such custodian
as the Trustees may employ pursuant to Article X hereof. The Treasurer shall
render a statement of condition of the finances of the Trust to the Trustees as
often as they shall require the same and shall in general perform all the duties
incident to the office of Treasurer and such other duties as from time to time
may be assigned to him by the Trustees. The Treasurer shall give a bond for the
faithful discharge of his duties, if required to do so by the Trustees, in such
sum and with such surety as the Trustees shall require. The Treasurer shall be
responsible for the general supervision of the Trust's funds and property and
for the general supervision of the Trust's custodian.
SECTION 7. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall keep
the minutes of all meetings of the Holders; shall keep the minutes of all
meetings of the Trustees; shall have custody of the seal of the Trust; and shall
have charge of the Interest records unless the same are in the charge of the
agent of the Trust. The Secretary shall attend to the giving and serving of all
notices by the Trust in accordance with the provisions of these By-Laws and as
required by law; and subject to these By-Laws, shall in general perform all the
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<PAGE> 8
duties incident to the office of Secretary and such other duties as from time to
time may be assigned to him by the Trustees.
SECTION 8. POWERS AND DUTIES OF ASSISTANT TREASURERS. In the absence or
disability of the Treasurer, any Assistant Treasurer designated by the Trustees
shall perform all the duties, and may exercise any of the powers, of the
Treasurer. Each Assistant Treasurer shall perform such other duties as from time
to time may be assigned to him by the Trustees. Each Assistant Treasurer shall
give a bond for the faithful discharge of his duties, if required to do so by
the Trustees, in such sum and with such surety or sureties as the Trustees shall
require.
SECTION 9. POWERS AND DUTIES OF ASSISTANT SECRETARIES. In the absence
or disability of the Secretary, any Assistant Secretary designated by the
Trustees shall perform all of the duties, and may exercise any of the powers, of
the Secretary. Each Assistant Secretary shall perform such other duties as from
time to time may be assigned to him by the Trustees.
SECTION 10. COMPENSATION OF OFFICERS, TRUSTEES, AND MEMBERS OF THE
ADVISORY BOARD. Subject to any applicable law or provision of the Declaration,
the compensation of the officers, Trustees, and members of the Advisory Board
shall be fixed from time to time by the Trustees or, in the case of officers, by
any committee of officers upon whom such power may be conferred by the Trustees.
No officer shall be prevented from receiving such compensation as such officer
by reason of the fact that he is also a Trustee.
SECTION 11. EXECUTION OF PAPERS. Except as the Trustees may generally
or in particular cases authorize, all deeds, leases, transfers, contracts,
bonds, notes, checks, drafts, and other obligations made, accepted, or endorsed
by the Trust shall be executed by the President, any Vice President, or the
Treasurer, or by whomever else shall be designated for that purpose by the
Trustees, and need not bear the seal of the Trust.
ARTICLE VII
FISCAL YEAR
The Fiscal Year of the Trust shall be determined by the Trustees,
provided, however, that the Trustees may from time to time change the Fiscal
Year.
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<PAGE> 9
ARTICLE VIII
SEAL
The Trustees may adopt a seal which shall be in such form as the
Trustees may from time to time prescribe.
ARTICLE IX
NOTICES AND WAIVERS OF NOTICE
SECTION 1. GENERAL PROVISIONS FOR NOTICES. Any notice shall be deemed
to be given (i) in the case of notices sent by mail, courier service, or fax,
when the same shall be mailed, submitted to a courier company for shipment, or
faxed, and (ii) in the case of notices sent by personal delivery or telephone,
when the same shall be delivered or when delivery is duly attempted and refused.
A notice shall be deemed to have been faxed when the sending fax machine or
service generates a confirmation indicating that all pages of the fax have been
successfully transmitted.
SECTION 2. WAIVERS OF NOTICES. Whenever any notice is required to be
given by law, the Declaration, or these By-Laws, a waiver thereof in writing,
signed by the person entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
ARTICLE X
CUSTODIAN
SECTION 1. APPOINTMENT AND DUTIES. The Trustees shall at all times
employ a bank or trust company having a capital, surplus, and undivided profits
of at least $5,000,000 as custodian with authority as agent of the Trust, but
subject to such restrictions, limitations, and other requirements, if any, as
may be contained in the Declaration, these By-Laws, and the 1940 Act:
(i) to hold the securities owned by the Trust and deliver
the same upon written order;
(ii) to receive and receipt for any monies due to the
Trust and deposit the same in its own banking
department or elsewhere as the Trustees may direct,
provided such monies shall always be separately
identified as funds of the Trust;
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<PAGE> 10
(iii) to disburse such funds upon orders or vouchers;
(iv) if authorized by the Trustees, to keep the books and
accounts of the Trust and furnish clerical and
accounting services; and
(v) if authorized by the Trustees, to compute the net
income of the Trust and the net asset value of
Interests;
all upon such basis of compensation as may be agreed upon between the Trustees
and the custodian.
The Trustees may also authorize the custodian to employ one or more
sub-custodians from time to time to perform such of the acts and services of the
custodian and upon such terms and conditions as may be agreed upon between the
custodian and such sub-custodian and approved by the Trustees. Subject to the
approval of the Trustees, the custodian may enter into arrangements with
securities depositories. All such custodial, sub-custodial, and depository
arrangements shall be subject to, and comply with, the provisions of the 1940
Act.
SECTION 2. CENTRAL CERTIFICATE SYSTEM. Subject to such rules,
regulations, and orders as the Commission may adopt, the Trustees may direct the
custodian to deposit all or any part of the securities owned by the Trust (i) in
a system for the central handling of securities established by a national
securities exchange or a national securities association registered with the
Commission under the U.S. Securities Exchange Act of 1934, pursuant to which
system all securities of any particular class or series of any issuer deposited
within the system are treated as fungible and may be transferred or pledged by
bookkeeping entry without physical delivery of such securities, provided that
all such deposits shall be subject to withdrawal only upon the order of the
Trust or its custodian; or (ii) with such other person as may be permitted by
the Commission, or otherwise in accordance with the 1940 Act.
SECTION 3. ACCEPTANCE OF RECEIPTS IN LIEU OF CERTIFICATES. Subject to
such rules, regulations, and orders as the Commission may adopt, the Trustees
may direct the custodian to accept written receipts or other written evidences
indicating purchases of securities held in book-entry form in the U.S. Federal
Reserve System in accordance with regulations promulgated by the Board of
Governors of the Federal Reserve System and the local Federal Reserve Banks in
lieu of receipt of certificates representing such securities.
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<PAGE> 11
ARTICLE XI
AMENDMENTS
These By-Laws, or any of them, may be amended or repealed, or new
By-Laws may be adopted, (i) by the Holders by a Majority Interests Vote, or (ii)
by the Trustees, provided, however, that no By-Law may be amended, adopted, or
repealed by the Trustees if such amendment, adoption, or repeal requires,
pursuant to law, the Declaration, or these By-Laws, a vote of the Holders.
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<PAGE> 1
EXHIBIT 5
INVESTMENT ADVISORY AGREEMENT
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
THIS INVESTMENT ADVISORY AGREEMENT, dated as of October 23, 1995 (this
"Agreement"), by and between Old Mutual South Africa Equity Trust, a
Massachusetts trust (the "Trust"), and Old Mutual Asset Managers (Bermuda)
Limited (the "Adviser");
WITNESSETH:
WHEREAS, the Trust will engage in business as an open-end investment
company registered under the United States Investment Company Act of 1940
(collectively with the rules and regulations promulgated thereunder, the "1940
Act"),
WHEREAS, Old Mutual Fund Holdings (Bermuda) Limited, a Bermuda company,
Old Mutual Equity Growth Assets South Africa Fund, a Massachusetts business
trust that will register under the 1940 Act, and Old Mutual South Africa Growth
Assets Fund, a Bermuda mutual fund that is to be listed on the Irish Stock
Exchange (the "ISO"), are expected to acquire beneficial interests in the Trust,
and
WHEREAS, the Trust wishes to engage the Adviser to provide certain
investment advisory services for the Trust, and the Adviser is willing to
provide such investment advisory services for the Trust on the terms and
conditions hereinafter set forth,
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein set forth, the parties covenant and agree as
follows:
1. Duties of the Adviser. The Trust engages the Adviser as
investment adviser to the Trust upon the terms and conditions of this Agreement,
and the Adviser accepts such engagement. The Adviser shall act as investment
adviser of the Trust and in that capacity shall:
(a) provide the Trust with such investment advice and supervision
as the Trust may from time to time consider necessary for the
proper supervision of the Trust's investment assets,
<PAGE> 2
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(b) determine from time to time what securities shall be
purchased, sold or exchanged and what portion of the assets of
the Trust shall be held uninvested, and
(c) make recommendations as to the manner in which voting rights,
rights to consent to corporate action and any other rights
pertaining to the Trust's securities shall be exercised,
provided, however, the Adviser's performance of such duties shall be subject
always to the restrictions contained within:
(a) the Trust's Declaration of Trust, dated as of September 1,
1995 (the "Declaration"),
(b) the Trust's By-laws (the "By-laws"),
(c) the 1940 Act,
(d) the rules of the ISO,
(e) the then-current Registration Statement of the Trust under the
1940 Act, and
(f) such determinations of investment policy for the Trust as the
Board may from time to time establish with notice to the
Adviser (provided the Adviser shall be bound by any such
policy for the period, if any, specified in such notice or
until similarly notified that such policy has been revoked).
The Adviser shall take, on behalf of the Trust, all actions which it deems
necessary to implement the investment policies of the Trust, and in particular
to place all orders for the purchase or sale of securities for the Trust's
account with the brokers or dealers selected by the Adviser, and to that end the
Adviser is authorized as the agent of the Trust to give instructions to the
custodian (and any subcustodians) of the Trust as to deliveries of securities
and payments of cash for the account of the Trust. In connection with the
selection of brokers or dealers for the Trust and the placing of such orders,
the Adviser is directed to seek for the Trust in its best judgment, prompt
execution in an effective manner at the most favorable price. Subject to this
requirement of seeking the most favorable price, securities may be bought from
or sold to broker-dealers who have furnished statistical, research and other
information or services to the Adviser or the Trust, subject to any applicable
laws, rules and regulations.
<PAGE> 3
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2. Allocation of Charges and Expenses. The Adviser shall furnish
at its own expense all services, facilities and personnel necessary or
convenient to perform its duties under Section 1 above. The Trust will pay from
its assets all of its own expenses allocable to the Trust including compensation
of Trustees not employed by the Adviser or a parent company of the Adviser;
governmental fees; interest charges; taxes; membership dues in the Investment
Company Institute allocable to the Trust; fees and expenses of independent
auditors and of legal counsel of the Trust; expenses of issuing and redeeming
beneficial interests in the Trust and servicing Holder (as defined in the
Declaration) accounts; expenses of preparing, printing and mailing, notices,
proxy statements and reports to governmental officers and commissions and to
Holders; expenses connected with the execution, recording and settlement of
security transactions; insurance premiums; fees and expenses of the custodian
(and any subcustodians) for all services to the Trust, including safekeeping of
funds and securities and maintaining required books and accounts; expenses of
calculating the net asset value of the Trust; and expenses of meetings of the
Trustees and Holders.
3. Compensation of the Adviser. For the services to be rendered
under this Agreement, the Trust shall pay to the Adviser from the assets of the
Trust a management fee of 0.85% per annum of the Trust's daily net assets (the
"Management Fee"). The Management Fee shall accrue daily on an annualized basis
and be paid monthly in arrears. If the Adviser serves under this Agreement for
less than the whole of any period specified in this Section 3, the Management
Fee shall be prorated for such partial period.
4. Covenants of the Adviser. The Adviser shall throughout the
term of this Agreement:
(a) not deal with itself, or with the Trustees of the Trust as
principals, in making purchases or sales of securities or
other property for the account of the Trust, except as
permitted by the 1940 Act and the rules of the ISO,
(b) not take a long or short position in shares of the Trust
except as permitted by the Declaration,
(c) comply with all other provisions of the 1940 Act, the ISO
rules, the Declaration, the By-laws and the then-current 1940
Act Registration Statement of the Trust relative to the
Adviser and its directors and officers, and
<PAGE> 4
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(d) maintain its registration under the United States Investment
Advisers Act of 1940, comply with rules thereunder and notify
the Trustees of any proceedings to revoke, suspend or modify
such registration.
5. Limitation of Liability of the Adviser. The Adviser shall not
be liable for any error of judgment, mistake of law, loss arising out of any
investment or act or omission in the execution of securities transactions for
the Trust, except for willful misfeasance, bad faith or gross negligence in the
performance of its duties, or by reason of reckless disregard of its obligations
and duties hereunder. As used in this Section 5, the term "Adviser" shall
include directors, officers and employees of the Adviser.
6. Activities of the Adviser. The engagement of the Adviser under
this Agreement shall not be exclusive, and the Adviser shall be free to render
investment advisory and/or other services to others. The Trust shall have no
right or interest in any income from any such services. It is understood that
Trustees, officers, and Holders of the Trust are or may be or may become
interested in the Adviser, as directors, officers, employees, or otherwise and
that directors, officers and employees of the Adviser are or may become
similarly interested in the Trust and that the Adviser and/or its affiliates may
be or may become interested in the Trust as a Holder or otherwise.
7. Duration, Termination and Amendment of this Agreement.
(a) This Agreement shall become effective as of the day and year
first above written and shall govern the relations between the
parties hereto thereafter, and shall remain in force until
October 23, 1997 on which date it will terminate unless its
continuance after October 23, 1997 is "specifically approved
at least annually" (i) by the vote of a majority of the
Trustees of the Trust who are not "interested persons" of the
Trust or of the Adviser at a meeting specifically called for
the purpose of voting on such approval, and (ii) by the Board
of Trustees of the Trust or by "vote of a majority of the
outstanding voting securities" of the Trust.
(b) This Agreement may be terminated at any time without the
payment of any penalty by the Trustees or by the "vote of a
majority of the outstanding voting securities" of the Trust,
or by the Adviser, in each case on not more than 60 days' nor
less than 30 days' written notice to the other party. This
<PAGE> 5
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Agreement shall automatically terminate in the event of its
"assignment."
(c) This Agreement may be amended only if such amendment is
approved by the "vote of a majority of the outstanding voting
securities" of the Trust.
(d) The terms "specifically approved at least annually," "vote of
a majority of the outstanding voting securities,"
"assignment," "affiliated person," and "interested persons,"
when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner
consistent with, the 1940 Act, subject, however, to such
exemptions as may be granted by the United States Securities
and Exchange Commission under said Act.
8. Trust Obligations. The obligations of the Trust hereunder
shall not be binding upon any of the Trustees, Holders, nominees, officers,
agents or employees of the Trust, personally, but shall bind only the assets and
property of the Trust as provided in the Declaration.
9. Name of Trust. In the event the Adviser ceases for any reason
to serve as investment adviser of the Trust, the Trust shall forthwith upon
request by the Adviser (i) change its name so that it does not include the words
"Old Mutual", "OMEGA", "SAGA" or any variation or combination of any thereof,
and (ii) require any Holders to do the same (other than any Holder whose
continued use of such name is consented to in writing by the Adviser).
10. Notices. All notices, requests, and other communications
hereunder shall be in writing and shall be delivered by hand to an officer of
the addressee or sent by courier service or certified mail return receipt
requested, postage prepaid, addressed to the respective address of the
addressee. Any notice given pursuant to this Agreement shall be deemed to have
been given when delivered or when delivery is duly attempted and refused.
11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
subject to the applicable provisions of the 1940 Act, without regard to any
choice of law principles that would require application of the laws of any other
jurisdiction. The parties hereto absolutely and irrevocably consent to the
jurisdiction of the courts of the Commonwealth of Massachusetts and of any
Federal court located in said
<PAGE> 6
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Commonwealth in connection with any actions or proceedings arising out of or
relating to this Agreement and waive any objection to the convenience of any
such court.
12. Headings. The descriptive section headings have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
13. Severability. If any term of this Agreement shall be held to
be invalid, illegal or unenforceable, the validity of all other terms hereof
shall be in no way affected thereby, and this Agreement shall be construed and
be enforceable as if such invalid, illegal or unenforceable term had not been
included herein.
14. Entire Agreement. This Agreement sets forth the entire
agreement of the parties hereto with respect to the subject matter hereof and
supersedes any prior negotiations, understandings or arrangements.
15. Counterparts. This Agreement may be executed in several
counterparts, each of which when executed and delivered is an original, but all
of which together shall constitute one instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.
16. Rules of Interpretation. The following rules shall apply in
the construction and interpretation of this Agreement:
(a) The singular includes the plural, and the plural includes the
singular.
(b) A reference to any gender includes each other gender.
(c) A reference to any Person includes its legal successors and
permitted assigns.
(d) A reference to any contract, instrument, agreement or other
document, including any registration statement under the 1940 Act, shall include
any written amendment, supplement or modification thereto and any replacement
thereof.
(e) A reference to any statute, law, rule or regulation shall
include any amendment or modification thereto and any replacement thereof.
<PAGE> 7
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(f) The words "include," "includes" and "including" are not
limiting.
(h) The words "hereof," "herein" and "hereunder" and words of
similar import shall refer to this Agreement as a whole and not to any
particular part of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
The undersigned Trustee or officer of the Trust has executed this
Agreement not individually, but as Trustee or officer under the Trust's
Declaration of Trust, dated as of September 1, 1995, as amended, and the
obligations of this Agreement are not binding upon any of the Trustees or
officers of the Trust individually.
OLD MUTUAL SOUTH AFRICA OLD MUTUAL ASSET
EQUITY TRUST MANAGERS (BERMUDA)
LIMITED
By: Michael J. Levett By: William Langley
--------------------------- -----------------------
Michael J. Levett William Langley
Chairman of the Board President
<PAGE> 1
EXHIBIT 6(a)
PLACING AGREEMENT
relating to shares of
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
dated as of October 27, 1995
among
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED
and
S.G. WARBURG & CO. INC.
<PAGE> 2
THIS AGREEMENT is made as of October 27, 1995 by and among OLD MUTUAL
SOUTH AFRICA EQUITY TRUST, a Massachusetts trust organized as an open-end
investment company (the "MASTER TRUST"), OLD MUTUAL EQUITY GROWTH ASSETS SOUTH
AFRICA FUND, a Massachusetts business trust organized as an open-end investment
company (the "OMEGA FUND"), SOUTH AFRICAN MUTUAL LIFE ASSURANCE SOCIETY,
(incorporated in terms of the South Africa Mutual Life Assurance (Private) Act,
1966 and registered in South Africa as a long-term insurer in terms of the
Insurance Act, 1943) ("OLD MUTUAL"), OLD MUTUAL ASSET MANAGERS (BERMUDA)
LIMITED, a company incorporated under the laws of Bermuda ("OMAM"), OLD MUTUAL
FUND HOLDINGS (BERMUDA) LIMITED, a company incorporated under the laws of
Bermuda ("OLD MUTUAL BERMUDA"), and S.G. WARBURG & CO. INC., a company
incorporated under the laws of the State of New York ("S.G. WARBURG").
WHEREAS, OMAM and Old Mutual Bermuda are, respectively, direct and
indirect wholly owned subsidiaries of Old Mutual;
WHEREAS, OMAM will be the investment adviser to the Master Trust and to
Old Mutual Global Assets Fund Limited (the "GLOBAL FUND"), an open-end
investment company incorporated under the laws of Bermuda which will be a wholly
owned subsidiary of Old Mutual Bermuda;
WHEREAS, the Master Trust has agreed to acquire a portfolio of South
African securities from Old Mutual in exchange for Old Mutual Bermuda acquiring
substantially all of the beneficial interest in the Master Trust;
WHEREAS, the OMEGA Fund will seek to achieve its investment objective
by investing all of its investable assets in the Master Trust;
WHEREAS, the Old Mutual South Africa Growth Assets Fund Limited, a
company organized under the laws of Bermuda (the "SAGA FUND"), will seek to
achieve its investment objective by investing all of its investable assets in
the Master Trust;
WHEREAS, by resolution of the board of trustees of the OMEGA Fund
passed on October 23, 1995 it was resolved to offer up to 10,000,000 shares of
beneficial interest in the OMEGA Fund at a price of $100 per share pursuant to
the Initial Offering on and subject to the terms and conditions set forth herein
and in the Private Placement Memorandum;
WHEREAS, SBC Warburg, pursuant to a Placement Agreement dated the date
hereof made with the SAGA Fund and others (the "NON-US PLACEMENT AGREEMENT") has
agreed, as agent of the SAGA Fund, to use its reasonable endeavors to offer and
sell shares of the SAGA Fund outside the United States; and
WHEREAS, the OMEGA Fund wishes to engage S.G. Warburg as its agent for
the purpose of soliciting offers to purchase Shares pursuant to the Initial
Offering and S.G.
<PAGE> 3
Warburg, on the terms, subject to the conditions and in reliance on the
representations, warranties, covenants and agreements of the other parties
hereto contained herein, wishes to accept such engagement:
NOW IT IS HEREBY AGREED as follows:
1. DEFINITIONS. In this Agreement the following words and expressions
shall have the following meanings:
"AFFILIATE" means, in relation to any person, any entity that controls,
is controlled by, or is under common control with such person within
the meaning of Rule 405 under the Securities Act and Rule 12b-2 under
the Exchange Act
"BUSINESS DAY" means any day which is not a day on which banking
institutions in London or New York are generally obligated or
authorized by law or executive order to close
"COMMISSION" means the Securities and Exchange Commission
"ENGAGEMENT LETTER" means two letters dated September 1, 1995 from SBC
Warburg to Old Mutual relating to, inter alia, the Initial Offering
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
"FUND AGREEMENTS" means each of the agreements listed in Schedule I
hereto
"INITIAL CLOSING DATE" means November 10, 1995, or such earlier or
later Business Day (not being later than December 10, 1995) as S.G.
Warburg may in agreement with the OMEGA Fund and Old Mutual determine
on which the closing of the Initial Offering is to occur
"INITIAL OFFERING" means the offer and sale to investors that are
institutional "accredited investors" as defined in Regulation D under
the Securities Act of up to 10,000,000 Shares at the Offering Price and
otherwise on the terms and conditions set forth in this Agreement and
the Issue Documents
"INITIAL OFFERING TERMINATION DATE" means November 7, 1995, or such
earlier or later Business Day (not being later than December 10, 1995)
as may be agreed by S.G. Warburg, the OMEGA Fund and Old Mutual, after
which no further subscriptions for Shares pursuant to the Initial
Offering will be accepted
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended
2
<PAGE> 4
"ISSUE DOCUMENTS" means the Private Placement Memorandum and the
Subscription Agreement
"LIBOR" means the offered rate in the London Interbank Market quoted at
or about 11.00 a.m. (London time) on the Initial Closing Date for
overnight US dollar deposits on the page "LIBOR" of the Reuters Monitor
Money Rates Services or, if more than one rate is offered, the
arithmetic mean thereof
"MAJORITY OF OUTSTANDING VOTING SECURITIES" has the meaning assigned
thereto in the Investment Company Act
"MASTER TRUST 12B-1 PLAN" means the placement plan adopted by the
Master Trust pursuant to Rule 12b-1 under the Investment Company Act
"NON-US PLACEMENT MEMORANDUM" means the placement memorandum dated
October 27, 1995 prepared by the SAGA Fund in connection with the offer
and sale of the shares of the SAGA Fund
"OFFERING PRICE" means the sum of $100 per Share
"OMEGA FUND 12B-1 PLAN" means the placement plan adopted by the OMEGA
Fund pursuant to Rule 12b-1 under the Investment Company Act
"PORTFOLIO" means the portfolio of South African securities to be
transferred from Old Mutual to the Master Trust as described in the
Private Placement Memorandum
"PORTFOLIO TRANSFER DATE" means the date on which the Portfolio is to
be transferred from Old Mutual to the Master Trust pursuant to the
Portfolio Transfer and Subscription Agreement
"PORTFOLIO TRANSFER AND SUBSCRIPTION AGREEMENT" means the agreement
dated October 23, 1995 by and among Old Mutual, Old Mutual Bermuda, the
Master Trust, the OMEGA Fund, the SAGA Fund, the Global Fund and OMAM
relating to the transfer of the Portfolio to the Master Trust
"PRIVATE PLACEMENT MEMORANDUM" means the private placement memorandum
dated September 15, 1995 prepared by the OMEGA Fund in connection with
the offer and sale of the Shares and provided to S.G. Warburg, as the
same may be amended and supplemented from time to time up to and
including the Initial Closing Date
"PRIVATE PLACEMENT PROCEDURES" means the memorandum dated September 11,
1995 entitled "Placement Procedures for U.S. Private Institutional
Offering" prepared by Bingham, Dana & Gould and furnished to S.G.
Warburg
3
<PAGE> 5
"QUALIFYING SHARES" means Shares that are (i) sold in the Initial
Offering or, if they are sold to "Category C Clients" as referred to in
the Engagement Letter, in the Second Offering and (ii) continuously
outstanding during the period ending on the third anniversary of the
Initial Closing Date
"REGULATION S" means Regulation S under the Securities Act
"REGISTRATION STATEMENTS" means the registration statements to be filed
by the OMEGA Fund and the Master Trust under the Investment Company Act
"RULES AND REGULATIONS" means the rules and regulations of the
Commission as then in effect
"SECOND OFFERING" means the offer for up to six months after the
Initial Closing Date of any remaining Shares at a price equal to their
net asset value plus a sales charge
"SECURITIES ACT" means the Securities Act of 1933, as amended
"SHARES" means shares of beneficial interest of the OMEGA Fund
"SUBSCRIBER" means a person who agrees, on the terms and subject to the
conditions set out or referred to in a Subscription Agreement, to
purchase Shares pursuant to the Initial Offering
"SUBSCRIPTION AGREEMENT" means an agreement, in the form of Exhibit 1
hereto, on the terms and subject to the conditions of which Subscribers
may subscribe for Shares pursuant to the Initial Offering
"TRUSTEES" means the trustees of the OMEGA Fund
"US DOLLARS" and "$" means the lawful currency of the United States of
America
"WARRANTORS" means each of the Master Trust, the OMEGA Fund, Old
Mutual, OMAM and Old Mutual Bermuda
2. REPRESENTATIONS AND WARRANTIES. Each Warrantor, severally and not
jointly, represents and warrants to and agrees with S.G. Warburg, for the
benefit of S.G. Warburg and each agent appointed pursuant to Section 3(b)
hereof, as set forth in Annex A hereto. Each of the representations, warranties
and agreements made in such Annex A shall be deemed made on and as of the date
hereof and on and as of the Initial Closing Date with the same effect as if made
on and as of such date.
4
<PAGE> 6
3. APPOINTMENT OF AGENT.
(a) The OMEGA Fund, pursuant to the OMEGA Fund 12b-1 Plan, hereby
irrevocably appoints S.G. Warburg to act as the exclusive agent of the OMEGA
Fund for the purpose of soliciting offers to purchase Shares pursuant to the
Initial Offering, and S.G. Warburg hereby accepts such appointment.
(b) Without prejudice to the generality of subsection (a) above, the
OMEGA Fund hereby authorizes S.G. Warburg to appoint, on behalf of the OMEGA
Fund, with the prior approval in each case of the OMEGA Fund and Old Mutual, one
or more agents (each, an "AUTHORIZED AGENT") for the purpose of soliciting
offers to purchase Shares pursuant to the Initial Offering, which shall be the
agents of the OMEGA Fund and not of S.G. Warburg. Such appointments shall be on
such terms as the OMEGA Fund and Old Mutual shall approve, such approvals not to
be unreasonably delayed or withheld. S.G. Warburg shall have no liability
whatsoever for the acts or omissions of any Authorized Agent, or for the
negligence, fraud or default of any such agent, unless such agent is an
Affiliate of S.G. Warburg.
(c) On the terms, subject to the conditions and in reliance on the
representations, warranties, covenants and agreements of the other parties
hereto set forth herein, S.G. Warburg hereby undertakes, as agent for the OMEGA
Fund, to use its best efforts to solicit offers to purchase Shares on the terms
and subject to the conditions set forth in this Agreement and the Issue
Documents. S.G. Warburg S.G. Warburg shall have no liability to the OMEGA Fund
or any other party hereto in the event any such purchase is not consummated for
any reason.
(d) Nothing in this Agreement shall oblige S.G. Warburg to purchase any
Shares pursuant to the Initial Offering or otherwise or impose an absolute
obligation on S.G. Warburg or any Authorized Agent to procure Subscribers
therefor pursuant to the Initial Offering or otherwise.
(e) If it should appear reasonably likely that the aggregate amount of
all subscriptions for Shares in the Initial Offering plus all subscriptions for
shares of the SAGA Fund in the Initial Offering (as defined in the Non-US
Placement Agreement) will be less than $1,000,000,000, the parties hereto will,
as soon as practicable after the execution of this Agreement, negotiate in good
faith with each other and with Fleming Martin and Rand International with a view
to entering into a separate agreement relating to the Second Offering as soon as
practicable. Such negotiations will be with a view to S.G. Warburg, Fleming
Martin and Rand International acting as agents for the purpose of soliciting
offers to purchase Shares pursuant to the Second Offering and the Second
Offering being made on substantially the terms and conditions described or
referred to in the Private Placement Memorandum and in the Engagement Letter.
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<PAGE> 7
4. OFFERING BY AGENT; OTHER WARRANTIES. S.G. Warburg represents and
warrants to and agrees with the OMEGA Fund, the Master Trust and Old Mutual
that:
(i) it has duly authorized and executed this Agreement and, assuming
its due authorization and execution by each other party hereto, this
Agreement constitutes the legal, valid, binding and enforceable
obligation of S.G. Warburg, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity;
(ii) it is duly registered as a broker-dealer under the Exchange Act
and is in compliance with all applicable registration and reporting
requirements thereunder, to the extent material to its obligations
under this Agreement as agent for the solicitation of offers to
purchase Shares in the Initial Offering;
(iii) it has not taken and will not take any action or actions that,
without more, would cause the offering of the Shares pursuant to the
Initial Offering to be subject to registration under the Securities
Act;
(iv) it has not offered and will not offer the Shares in the Initial
Offering in contravention of any applicable state securities laws;
(v) it has not offered and will not offer the Shares in the Initial
Offering in contravention of the restrictions set forth in the sections
captioned "OFFERING OF SHARES - Initial Offering" and "GENERAL
INFORMATION - Transfers of Shares" in the Private Placement Memorandum;
and
(vi) it has not taken and will not take any action or actions in
connection with the offering of the Shares in the Initial Offering that
contravene, in any material respect, the Private Placement Procedures.
5. FEES AND EXPENSES.
(a) For the services rendered by S.G. Warburg under this Agreement:
(i) the Master Trust shall pay to or to the order of S.G.
Warburg a placement fee equal to 0.25 per cent of an amount determined
by multiplying (x) the total number of Shares sold in the Initial
Offering by (y) the Offering Price; and
(ii) OMAM shall pay to or to the order of S.G. Warburg an
amount equal to the out-of-pocket expenses (including but not limited
to legal and accounting fees and disbursements in any jurisdiction)
reasonably incurred by S.G. Warburg in connection with the Initial
Offering.
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<PAGE> 8
The amount payable pursuant to clause (i) above shall become due and payable to
or to the order of S.G. Warburg by the Master Trust at 3:00 p.m., New York time,
on the Initial Closing Date. The amount payable pursuant to clause (ii) above
shall be payable to or to the order of S.G. Warburg by OMAM on demand, and OMAM
shall thereafter be reimbursed for such payment by the OMEGA Fund in accordance
with the OMEGA Fund 12b-1 Plan.
(b) Subject to Section 10 of this Agreement and to the OMEGA Fund 12b-1
Plan and the Master Trust 12b-1 Plan, respectively, each of the OMEGA Fund and
the Master Trust hereby agrees with S.G. Warburg that it shall be liable for,
and shall promptly pay, all its organizational and offering expenses, including
without limitation, all accounting and legal expenses in any jurisdiction and
public relations consultants', design consultants' and other professional fees,
the costs of printing, advertising and circulating the Issue Documents and any
related documents, and all costs of marketing the Initial Offering (including,
without limitation, roadshows).
(c) All sums payable to S.G. Warburg under this Section 5 or otherwise
under this Agreement shall be paid free and clear of all deductions or
withholdings unless the deduction or withholding is required by law, in which
event the party required to make such payment shall pay to S.G. Warburg such
additional amount as shall be required to ensure that the net amount retained by
S.G. Warburg is equal to the full amount that would have been received had no
such deduction or withholding been made, and the same shall apply with respect
to all sums paid to the order of S.G. Warburg under this Agreement.
(d) OMAM shall, on the third anniversary of the Initial Closing Date,
pay or procure the payment to SBC Warburg, for providing or procuring the
provision of ongoing services for holders of Shares, a servicing fee in respect
of all Qualifying Shares in an amount equal to 0.125 per cent per annum of the
proportion of the Master Trust's daily net assets represented by the Qualifying
Shares during the period ending on such third anniversary.
(e) Each of OMAM and Old Mutual agrees with S.G. Warburg that it shall
at its own expense take such steps as may be necessary and as shall be
reasonably satisfactory to S.G. Warburg in order to ensure that Qualifying
Shares are at all times capable of being identified for the purpose of
determining the amount of the servicing fee payable to SBC Warburg pursuant to
subsection (d) above and each of the OMEGA Fund and the Master Trust agrees to
facilitate the taking of such steps by OMAM and Old Mutual to the extent
practicable. For the purpose of determining such servicing fee if a holder of
both Shares which are eligible to become Qualifying Shares ("Eligible Shares")
and other Shares redeems any Shares he shall be deemed not to have redeemed any
Eligible Shares until all such other Shares have been redeemed by him. Any
dispute or difference as to such servicing fee shall be referred to the auditors
of the Master Trust for the time being who shall be deemed to be acting as
experts and not as arbitrators and whose certificate as to such servicing fee
shall be final and binding on the parties. The fees of such auditors shall be
borne by Old Mutual and S.G. Warburg equally and such parties shall undertake
liability to such auditors for the payment of their fees.
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<PAGE> 9
(f) OMAM shall provide or cause to be provided to the boards of
trustees of the Master Trust and the OMEGA Fund, respectively, such written
reports regarding the amount and purpose of any expenditures made pursuant to
the Master Trust 12b-1 Plan and the OMEGA Fund 12b-1 Plan, respectively, as may
be required by Rule 12b-1(b)(3)(ii) under the Investment Company Act.
6. UNDERTAKINGS.
(a) The OMEGA Fund agrees (i) to make no amendment or
supplement to the Private Placement Memorandum (other than as described in
clause (ii) below) without the prior written consent of S.G. Warburg, which
consent shall not be unreasonably withheld or delayed, (ii) if , prior to the
Initial Closing Date, any event shall have occurred as a result of which the
Private Placement Memorandum would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it should be necessary to amend or supplement the
Private Placement Memorandum to comply with applicable law, to prepare an
amended Private Placement Memorandum or supplement to the Private Placement
Memorandum which will correct such statement or omission or will effect such
compliance and (iii) to furnish without charge to S.G. Warburg as many copies as
S.G. Warburg may from time to time reasonably request of any such amended
Private Placement Memorandum or supplement thereto. If for any reason referred
to in clause (ii) above the Private Placement Memorandum must be amended or
supplemented, then, (x) from and after receipt by S.G. Warburg of notice from
the OMEGA Fund that the OMEGA Fund is preparing an amended Private Placement
Memorandum or a supplement thereto, S.G. Warburg will distribute the Private
Placement Memorandum only as so amended or supplemented and (y) as soon as
practicable after receipt of a sufficient number of copies of such amended
Private Placement Memorandum or supplement thereto, S.G. Warburg will furnish
copies thereof to each investor to which it previously furnished a copy of the
Private Placement Memorandum.
(b) Each Warrantor agrees with S.G. Warburg that it shall notify S.G.
Warburg promptly after becoming aware that any of its representations or
warranties set forth in Annex A hereto is untrue or inaccurate in any material
respect or would, if repeated by reference to the facts and circumstances
existing at any time prior to the Initial Closing Date, be untrue or inaccurate
in any material respect.
(c) Old Mutual agrees with S.G. Warburg that it shall ensure (i) that
each of Old Mutual Bermuda and OMAM complies with its obligations under this
Agreement and (ii) that prior to the Initial Closing Date, each of the OMEGA
Fund and the Master Trust is duly registered as an open-end management company
under the Investment Company Act.
(d) Each of the Warrantors agrees with S.G. Warburg that it shall
comply with the obligations undertaken by it under the Portfolio Transfer and
Subscription Agreement.
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<PAGE> 10
(e) The Master Trust agrees with S.G. Warburg and the OMEGA Fund that
it shall not (i) within a period of 12 months from the Initial Closing Date
without prior consultation with S.G. Warburg and the OMEGA Fund, issue any
beneficial interests in the Master Trust to investors other than OMAM, the OMEGA
Fund, the SAGA Fund and Old Mutual Bermuda in accordance with the arrangements
described in the Portfolio Transfer and Subscription Agreement, the Private
Placement Memorandum and the Non-US Placement Memorandum or (ii) issue any
beneficial interests in the Master Trust if the result of such issue would be to
prejudice the interests of the OMEGA Fund.
(f) Each of the OMEGA Fund and the Master Trust agrees with S.G.
Warburg that (i) prior to termination of this Agreement, it shall not file any
amendment to its Registration Statement without prior notice to S.G. Warburg, it
being understood that nothing contained in this Agreement shall in any way limit
the right of the OMEGA Fund or the Master Trust to file any such amendment to
its Registration Statement it may deem advisable, (ii) it shall promptly advise
S.G. Warburg of (x) any request of the Commission for any amendment of its
Registration Statement or for any additional information relating to or that
could affect disclosure in such Registration Statement and (y) the issuance by
the Commission of any order suspending its registration under the Investment
Company Act, or the institution or (to the best of its knowledge) threatening of
any proceeding for that purpose, (iii) it shall use its best efforts to prevent
the issuance by the Commission of any such order or suspension and, if issued,
to obtain as soon as possible the withdrawal or suspension thereof, (iv) as soon
as practicable (giving effect to the normal periodic reporting requirements
under the Investment Company Act and the Rules and Regulations thereunder), it
shall make generally available to S.G. Warburg (with sufficient copies for any
Authorized Agents) a report containing the financial statements required under
Section 30(d) of the Investment Company Act and Rule 30d-1 thereunder and (v) at
all times after the date hereof until the date on which the OMEGA Fund's audited
accounts for the period ending June 30, 1996 are published, notify S.G. Warburg
in advance of and forward to S.G. Warburg for comment final proofs of (x) all
documents to be sent by the OMEGA Fund to the holders of Shares, (y) all
documents to be filed with the Commission pursuant to the Investment Company Act
and the Rules and Regulations thereunder and (z) any announcement of profits or
losses and dividends of the OMEGA Fund or the Master Trust.
(g) The OMEGA Fund agrees with S.G. Warburg that, except as may be
required by any regulatory authority or under any applicable laws or by any
provision of this Agreement, neither the OMEGA Fund nor any person on its behalf
will at any time prior to the date on which the OMEGA Fund's audited accounts
for the period ending June 30, 1996 are published make any public announcement,
public statement or public communication regarding the OMEGA Fund which is
material in relation to the Initial Offering or the Shares, whether in response
to inquiries or otherwise, without the prior consent of S.G. Warburg, which
consent shall not be unreasonably withheld or delayed.
9
<PAGE> 11
7. CLOSING, SETTLEMENT AND ALLOTMENT.
(a) Allocations of Shares pursuant to the Initial Offering
shall be determined by S.G. Warburg at its discretion after consultation with
Old Mutual and the OMEGA Fund, and S.G. Warburg shall notify Old Mutual and the
OMEGA Fund if it wishes to reject any proposed subscription in whole or in part;
provided, however, that no allocation of Shares pursuant to the
Initial Offering shall be made (i) to any investor which, together with its
Affiliates, proposes to subscribe for 1,500,000 or more Shares without the
consent of the OMEGA Fund and Old Mutual or (ii) to any investor that the OMEGA
Fund, after consultation with S.G. Warburg, reasonably believes is not an
"accredited investor" within the meaning of Regulation D under the Securities
Act. The OMEGA Fund shall, as soon as practicable following fulfillment or
waiver of the conditions set forth herein and in any event not later than 5:00
p.m. (Bermuda time) on the Initial Closing Date issue to each Subscriber the
number of Shares such Subscriber has purchased pursuant to the Initial Offering
in such proportions and such names as S.G. Warburg shall previously have
notified to the OMEGA Fund.
(b) The Subscription Agreements will require Subscribers to
make payment for their Shares directly to a nominated bank account of the OMEGA
Fund by not later than 9:30 a.m. (New York time) on the Initial Closing Date and
the OMEGA Fund will provide details in writing to S.G. Warburg by not later than
10:00 a.m. (New York time) on the Initial Closing Date of any Subscriber that
has not made payment to the OMEGA Fund for the Shares for which it has agreed to
subscribe. With respect to any such Subscriber, S.G. Warburg may either cancel
the relevant allocation to such Subscriber on behalf of the OMEGA Fund or
accept, with the consent of the OMEGA Fund, such late payment with interest
thereon (for the account of the OMEGA Fund) at LIBOR plus one per cent in
respect of each day (or part thereof) from the due time for such payment to the
time when such payment is actually made.
(c) The OMEGA Fund shall procure that, at the cost of the OMEGA
Fund, as soon as reasonably practicable after allotment of the Shares allotted
pursuant to subsection (a) above, the register of shares of the OMEGA Fund shall
be made up by the transfer agent to reflect such allotments.
8. CONDITIONS.
The obligations of S.G. Warburg hereunder shall be subject to the accuracy in
all material respects of the representations and warranties of each other party
hereto contained herein as of the dates when made or deemed to have been made,
to the performance in all material respects by each other party hereto of its
obligations hereunder and to the following additional conditions:
(i) a Registration Statement meeting the requirements of the
Investment Company Act and the Rules and Regulations thereunder shall
have been filed with the Commission in respect of each of the OMEGA
Fund and the Master Trust prior to the
10
<PAGE> 12
Initial Closing Date, and no order suspending or revoking the
registration of the OMEGA Fund or the Master Trust under Section 8(e)
of the Investment Company Act shall have been issued and no proceedings
therefor initiated or threatened by the Commission;
(ii) Bowman Gilfillan Hayman Godfrey, South African legal
advisers to SBC Warburg, the Master Trust, the OMEGA Fund and the SAGA
Fund, shall have furnished to S.G. Warburg their legal opinion, dated
the Initial Closing Date, in form and substance satisfactory to S.G.
Warburg and its counsel, to the effect set forth in Annex B hereto;
(iii) Bingham, Dana & Gould, United States legal advisers to
the Master Trust, the OMEGA Fund and the SAGA Fund, shall have
furnished to S.G. Warburg their legal opinion, dated the Initial
Closing Date, in form and substance satisfactory to S.G. Warburg and
its counsel, to the effect set forth in Annex C hereto;
(iv) Conyers, Dill and Pearman, legal advisers in Bermuda to
the Master Trust, the OMEGA Fund and the SAGA Fund, shall have
furnished to S.G. Warburg their legal opinion, dated the Initial
Closing Date, in form and substance satisfactory to S.G. Warburg and
its counsel, to the effect set forth in Annex D hereto; and
(iv) the OMEGA Fund shall have procured the delivery to S.G.
Warburg as soon as reasonably practicable following the making of a
request in writing therefor by S.G. Warburg to the OMEGA Fund, of all
such further information and documents as S.G. Warburg may reasonably
request.
If any of the conditions set forth in this Section 8 is not fulfilled or
expressly waived in writing by S.G. Warburg or varied by written agreement of
the parties hereto, the provisions of Section 10(f) shall apply.
9. INDEMNIFICATION AND CONTRIBUTION.
(a) Each of the Warrantors, severally and not jointly, agrees to
indemnify and hold harmless S.G. Warburg, the directors, officers, employees and
agents of S.G. Warburg and each person who controls S.G. Warburg within the
meaning of either the Securities Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act, the
Investment Company Act or other federal or state statutory law or regulation, at
common law or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in the
Private Placement Memorandum or in any amendment thereof or supplement thereto,
(ii) the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, or (iii) any
breach or alleged breach of any of the representations, warranties or
undertakings by it (in the case of the
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<PAGE> 13
Master Trust or the OMEGA Fund) or by any Warrantor (in the case of Old Mutual,
OMAM and Old Mutual Bermuda), and agrees to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that no Warrantor shall
be liable in any such case to the extent that any such loss, claim, damage or
liability (or action in respect thereof) arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in the Private Placement Memorandum or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the OMEGA
Fund or Old Mutual by S.G. Warburg expressly for use therein. The parties agree
that Annex E sets forth all of the written information so furnished by S.G.
Warburg at the date of this Agreement. This indemnity agreement will be in
addition to any liability which the Warrantors may otherwise have.
(b) Promptly after receipt by an indemnified party under this Section 9
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 9, notify the indemnifying party in writing of the commencement thereof;
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under subsection (a) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification obligation provided in subsection (a)
above. An indemnified party will consult with the indemnifying parties regarding
the defense and possible settlement of any action to which the obligations
provided in this Section 9 apply, and will keep such indemnifying parties
apprised as to the progress of any such action. An indemnifying party will not,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding. No indemnifying party shall be liable under this Section 9
for any settlement or compromise entered into without its consent (provided that
such consent shall not be unreasonably withheld or delayed).
(c) In the event that the indemnity provided in subsection (a) above is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, each Warrantor agrees, severally and not jointly, to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which S.G. Warburg may be subject in such proportion
as is appropriate to reflect the relative benefits received by it (in the case
of the
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<PAGE> 14
Master Trust or the OMEGA Fund) or by the Warrantors generally (in the case of
Old Mutual, OMAM and Old Mutual Bermuda), on the one hand, and by S.G. Warburg,
on the other hand, from the Initial Offering. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, each Warrantor
shall contribute in such proportion as is appropriate to reflect not only such
relative benefits but also its relative fault (in the case of the Master Trust
or the OMEGA Fund) or that of the Warrantors generally (in the case of Old
Mutual, OMAM and Old Mutual Bermuda), on the one hand, and of S.G. Warburg, on
the other hand, in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Warrantors shall be deemed to be equal to the total net proceeds
from the Initial Offering (before deducting expenses), and benefits received by
S.G. Warburg shall be deemed to be equal to the amount received by it in
connection with the Initial Offering in accordance with Section 5 hereof.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Warrantors or by
S.G. Warburg. The Warrantors and S.G. Warburg agree that it would not be just
and equitable if contribution were determined by pro rata allocation or any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
subsection (c), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 9, each person who controls S.G.
Warburg within the meaning of either the Securities Act or the Exchange Act and
each director, officer, employee and agent of S.G. Warburg shall have the same
rights to contribution as S.G. Warburg.
(d) If a claim is made under this Agreement against a Warrantor other
than the OMEGA Fund or the Master Trust, such Warrantor shall not have, or
pursue, any claim or third party action to join, claim against, seek a
contribution from or otherwise claim or seek damages or compensation from the
OMEGA Fund or the Master Trust.
10. TERMINATION.
(a) The obligations of the OMEGA Fund and the Master Trust,
respectively, under this Agreement shall continue in effect for a
period beyond one year from the date hereof only so long as such
continuance is specifically approved at least annually in the manner
described in Rule 12b-1(b)(2) under the Investment Company Act, and if
not so approved shall be deemed terminated.
(b) The obligations of the OMEGA Fund and the Master Trust,
respectively, under this Agreement may be terminated at any time,
without the payment of any penalty, by (i) a majority of the members of
the board of trustees of the OMEGA Fund or the Master Trust (as the
case may be) who are not interested persons of the OMEGA Fund or the
Master Trust (as the case may be) and have no direct or indirect
financial interest in the operation of the OMEGA Fund 12b-1 Plan or the
Master Trust 12b-1 Plan (as the case may be) or in any agreements
related to such plan or (ii) the vote of a Majority of the Outstanding
Voting Securities of the OMEGA Fund or the Master Trust (as the case
may be) on 60 days' notice given to each other party hereto in
accordance with Section 11 hereof.
(c) This Agreement will automatically terminate in the event of
its assignment (as defined in the Investment Company Act) by S.G.
Warburg.
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<PAGE> 15
(d) If at any time prior to the Initial Closing Date it shall
come to the knowledge of any Warrantor or S.G. Warburg that:
(i) any statement contained in the Private Placement
Memorandum is or has become untrue, inaccurate or misleading;
or
(ii) any matter has arisen which would, if the Private
Placement Memorandum were issued at that time, constitute an
omission therefrom of a material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; or
(iii) any of the representations and warranties set
forth in Annex A hereto was untrue or inaccurate as at the date
hereof or would, if repeated by reference to the facts and
circumstances existing at any time prior to the Initial Closing
Date, be untrue or inaccurate; or
(iv) any Warrantor has not complied or cannot comply
with its obligations under this Agreement
and such fact or event is, of itself or taken together with any other
such fact or event, material in the context of the Initial Offering,
the relevant Warrantor or S.G. Warburg (as the case may be) shall
forthwith give notice thereof to the other parties to this Agreement
and S.G. Warburg shall have the right (exercisable in its absolute
discretion but after consultation with Old Mutual and the OMEGA Fund)
at any time prior to the Initial Closing Date by notice in writing to
the other parties to terminate this Agreement.
(e) This Agreement shall be immediately terminable by the OMEGA
Fund by written notice to S.G. Warburg in the event that S.G. Warburg
shall be in material breach of this Agreement.
(f) If at any time prior to the Initial Closing Date any
government regulation, crisis of international or national effect or
change in the conditions prevailing in any relevant financial market
occurs or comes into effect which is likely materially and adversely to
affect the OMEGA Fund and/or the Portfolio or which will make it
inadvisable or inexpedient to proceed with the Initial Offering, each
of S.G. Warburg and Old Mutual shall have the right (subject to the
prior consent of the other) at any time prior to the Initial Closing
Date by notice in writing to the other parties to this Agreement to
terminate this Agreement.
(g) In the event that this Agreement shall be terminated
pursuant to this Section 10, or if the provisions of this Section shall
apply by virtue of Section 8, all the outstanding obligations of S.G.
Warburg hereunder (and accordingly all obligations of Subscribers) and
any outstanding obligations of any Warrantor shall terminate and none
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<PAGE> 16
of the parties hereto shall have any claim against any other in respect
of any matter or thing arising out of or in connection with this
Agreement for compensation, costs, damages or otherwise, except as
provided in Section 12 of this Agreement and except that:
(i) Old Mutual shall be liable for the legal fees and
disbursements reasonably incurred by S.G. Warburg in connection
with the Initial Offering and its associated transactions and
all such costs, charges, fees and expenses as are referred to
in Section 5.(b) hereof;
(ii) such termination shall not prejudice any accrued
rights or claims by any party against any other party hereto
(including without limitation any right to make a claim under
Section 2 hereof in relation to any matter that gave rise to a
right to terminate this Agreement under subsection (c) above)
(it being understood that no claim for lost profits or
commissions will survive any such termination occurring prior
to the Initial Closing Date); and
(iii) if so requested in writing by S.G. Warburg, the
OMEGA Fund shall circulate such notice or other communication
as may be reasonably required by S.G. Warburg.
11. NOTICES. All statements, requests, notices and agreements hereunder
shall be in writing with copies to each party hereto, and shall be delivered or
sent by mail or facsimile transmission, as follows:
if to S.G. Warburg, to 277 Park Avenue, New York, New York, 10172, fax
no. 212 224 7521, to the attention of Bruce Watts;
if to the Master Trust, the OMEGA Fund, OMAM or Old Mutual Bermuda, to
Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda, fax no. 809
292 4720, to the attention of J.C.R. Collis; and
if to Old Mutual, to Mutualpark, Jan Smuts Drive, Pinelands 7405, PO
Box 66, Cape Town, South Africa, fax no. 2721 509 3899, to the
attention of William Langley.
Any such statements, requests, notices or agreements shall take effect upon
receipt thereof.
12. REPRESENTATIONS AND WARRANTIES TO SURVIVE.
The respective agreements, representations, warranties, indemnities and other
statements of the Warrantors and S.G. Warburg set forth in or made pursuant to
this Agreement will, to the extent permitted by applicable law, remain in full
force and effect regardless of any investigation made by or on behalf of any
Warrantor or S.G. Warburg or any of the officers directors or controlling
persons referred to in Section 10 hereof and will survive the offer of
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<PAGE> 17
the Shares. The provisions of Sections 5, 9 and 10 hereof shall, to the extent
permitted by law, survive the termination or cancellation of this Agreement.
13. GOVERNING LAW AND JURISDICTION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(b) Each Warrantor irrevocably (i) agrees that any legal suit,
action or proceeding against such Warrantor brought by S.G. Warburg or
by any officer or director of S.G. Warburg or by any Affiliate of S.G.
Warburg arising out of or based upon this Agreement or the transactions
contemplated herein may be instituted in the federal courts of the
United States or in the courts of England, (ii) waives, to the fullest
extent it may effectively do so, any objection which it may now or
hereafter have to the laying of venue of any such proceeding and (iii)
submits to the non-exclusive jurisdiction of such courts in any such
suit, action or proceeding. Each of the Warrantors agrees to maintain
an authorized agent in New York and in London, upon whom process may be
served in any such suit, action or proceeding and to take any and all
action, including the filing of any and all documents and instruments,
necessary to keep such appointments in full force and effect. Each of
the Warrantors (i) has appointed Norose Notices Limited, Kempson House,
Camomile Street, London EC3 7AN as its authorized agent for service of
any writ, decree or other document in the United Kingdom (the
"Authorized English Agent") and represents and warrants that the
Authorized English Agent has agreed to act as such and (ii) has
appointed Bingham, Dana & Gould, 150 Federal Street, Boston,
Massachusetts 02110, as its authorized agent for service of any writ,
decree or other document in the United States (the "Authorized U.S.
Agent") and represents and warrants that the Authorized U.S. Agent has
agreed to act as such. Service of process upon the Authorized English
Agent or upon the Authorized U.S. Agent (or any successor authorized
agent) and written notice of such service to any Warrantor shall be
deemed, in every respect, effective service of process upon such
Warrantor.
14. PROTECTION OF TRUSTEES.
This Agreement is executed and made by the trustees of the OMEGA Fund
not individually, but as trustees under the Declaration of Trust of the OMEGA
Fund dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of the shareholders of the OMEGA Fund individually, but
bind only the trust estate of the OMEGA Fund.
This Agreement is executed and made by the trustees of the Master Trust
not individually, but as trustees under the Declaration of Trust of the Master
Trust dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such trustees individually.
16
<PAGE> 18
15. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which will
be deemed to be an original, but all such counterparts will together constitute
one and the same instrument.
IN WITNESS whereof this Agreement has been entered into the day and
year first above written.
SIGNED by WILLIAM BOYAN
for and on behalf of
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
/s/ WILLIAM BOYAN
-------------------------
Duly authorized signatory
SIGNED by KENNETH WILLIAMS
for and on behalf of
OLD MUTUAL EQUITY GROWTH
ASSETS SOUTH AFRICA FUND
/s/ KENNETH WILLIAMS
-------------------------
Duly authorized signatory
SIGNED by MICHAEL LEVETT
for and on behalf of
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY
/s/ M. J. LEVETT
-------------------------
Duly authorized signatory
SIGNED by WILLIAM LANGLEY
for and on behalf of
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
/s/ WILLIAM LANGLEY
-------------------------
Duly authorized signatory
17
<PAGE> 19
SIGNED by MICHAEL LEVETT
for and on behalf of
OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED
/s/ M. J. LEVETT
-------------------------
Duly authorized signatory
SIGNED by BRUCE R. WATTS
for and on behalf of
S.G. WARBURG & CO. INC.
/s/ BRUCE R. WATTS
-------------------------
Duly authorized signatory
18
<PAGE> 20
SCHEDULE I
The following constitute the "Fund Agreements" as defined in this Agreement:
1. the Investment Advisory Agreement between the Master Trust and OMAM;
2. the Subscription and Portfolio Transfer Agreement among Old Mutual, Old
Mutual Bermuda, the Master Trust, the OMEGA Fund, the SAGA Fund, and
the Global Fund;
3. the Administrative Services Agreement between State Street Bank and
Trust Company and the OMEGA Fund;
4. the Administrative Services Agreement between State Street Cayman Trust
Company and the Master Trust;
5. Custodian Agreements between State Street Bank and Trust Company and
each of the OMEGA Fund and the Master Trust, respectively.
<PAGE> 21
ANNEX A
WARRANTIES
Each of Old Mutual, OMAM and Old Mutual Bermuda represents and warrants to and
agrees with, and each of the OMEGA Fund and the Master Trust represents and
warrants to and agrees with (but only for or as to itself, as the case may be),
S.G. Warburg as follows:
1. Each of the OMEGA Fund and the Master Trust meets the requirements for
use of Form N-1A under the Investment Company Act and the Rules and
Regulations thereunder.
2. The notification of registration on Form N-8A, as amended, by the OMEGA
Fund and the Master Trust will comply in all material respects with the
applicable requirements of the Investment Company Act and the Rules and
Regulations thereunder.
3. From and after the time each Registration Statement is filed with the
Commission through the Initial Closing Date, such Registration
Statement (as amended or supplemented from time to time) will conform,
in all material respects, with the Investment Company Act and the Rules
and Regulations thereunder and will not include any untrue statement of
a material fact or omit to state any material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that no
representation or warranty is given with respect to any statement
contained in any such Registration Statement that is made in reliance
upon and in conformity with written information furnished to the OMEGA
Fund or the Master Trust by S.G. Warburg expressly for use therein.
4. No person is, and no person at any time through the Initial Closing
Date will be, serving or acting as an officer or director of or
investment adviser to the OMEGA Fund or the Master Trust except in
accordance with the Investment Company Act and the Investment Advisers
Act of 1940, as amended, and the Rules and Regulations under each such
act.
5. The Private Placement Memorandum does not, and at all times through the
Initial Closing Date will not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading.
6. The OMEGA Fund has been duly created and is lawfully and validly
existing as a business trust, and the Master Trust has been duly
created and is lawfully and validly existing as a trust, under the laws
of the Commonwealth of Massachusetts, in each case with full power and
authority to enter into this Agreement and consummate the transactions
contemplated herein, and to own its properties and conduct its business
as described in its Registration Statement and in the Private Placement
Memorandum;
<PAGE> 22
each of the OMEGA Fund and the Master Trust is duly qualified to
transact business in each other state and every other jurisdiction in
which it is required to be so qualified; and the Declaration of Trust
and By-Laws of each of the OMEGA Fund and the Master Trust complies
and, from and after the time the OMEGA Fund's Registration Statement is
filed with the Commission will comply, in all material respects with
all applicable requirements of the Investment Company Act and the Rules
and Regulations thereunder.
7. The issuance of the Shares as contemplated by this Agreement and by the
Private Placement Memorandum has been duly and validly authorized by
the OMEGA Fund and the Shares, when issued and paid for as contemplated
herein and therein, will be validly issued and fully paid and
nonassessable and will conform in all material respects to the
description thereof contained in the Private Placement Memorandum. The
issuance and sale of beneficial interests in the Master Trust to the
OMEGA Fund and the SAGA Fund as contemplated by the Subscription and
Portfolio Transfer Agreement and the Private Placement Memorandum has
been duly and validly authorized by the Master Trust, and such
beneficial interests, when issued as contemplated therein, will be
validly issued and will conform in all material respects to the
description thereof contained in the Private Placement Memorandum.
8. Each of this Agreement and each of the Fund Agreements to which it is a
party has been duly authorized, executed and delivered by each of the
Warrantors, complies in all material respects with all applicable
provisions of the Investment Company Act and the Rules and Regulations
thereunder and, assuming its due authorization, execution and delivery
by each of the parties thereto other than such Warrantor, constitutes
the legal, valid, binding and enforceable obligation of such Warrantor,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity.
9. No consents, approvals, authorizations or orders are required to be
obtained under the Investment Company Act or the Rules and Regulations
thereunder in order to permit the solicitation by S.G. Warburg of
offers to purchase Shares pursuant to the Initial Offering as
contemplated by this Agreement and the Private Placement Memorandum;
and the solicitation by S.G. Warburg of offers to purchase Shares
pursuant to the Initial Offering as contemplated by this Agreement and
the Private Placement Memorandum will not result in a violation of the
provisions of the Investment Company Act or the Rules and Regulations
thereunder.
10. No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body
(including without limitation any consent, approval, authorization,
order, registration or qualification under the Investment Company Act
and the Rules and Regulations thereunder) is required for the
consummation by each Warrantor of the transactions contemplated in this
Agreement or the Fund Agreements to which it is a party, except the
registration of the OMEGA
A-2
<PAGE> 23
Fund and the Master Trust under the Investment Company Act and such as
have already been obtained and are in full force and effect or such as
may be required under state securities laws.
11. The execution and delivery by each Warrantor of this Agreement and the
Fund Agreements to which it is a party, and the compliance with and
consummation of the transactions contemplated in this Agreement and the
Fund Agreements to which it is a party by such Warrantor, will not
conflict with, result in a breach of, or constitute a default under,
the constitutive documents of such Warrantor or the terms of any other
agreement or instrument to which such Warrantor is a party or by which
it is bound, or any order or regulation applicable to such Warrantor of
any court, regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over such Warrantor or any of its
properties.
12. The execution and delivery by each Warrantor of this Agreement and the
Fund Agreements to which it is a party, and the compliance with and
consummation of the transactions contemplated in this Agreement and the
Fund Agreements to which it is a party by such Warrantor, will not
result in a violation of the Investment Company Act and Rules and
Regulations thereunder or any applicable law, rule or regulation of
Bermuda or the Republic of South Africa.
13. Except as stated or contemplated in the Private Placement Memorandum,
(i) neither the OMEGA Fund nor the Master Trust has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, whether or not in the ordinary course of business, that
are material to the OMEGA Fund or the Master Trust, (ii) there has not
been any material adverse change, or any development involving a
prospective material adverse change, in the condition (financial or
other) of the OMEGA Fund or the Master Trust (except that no
representation is made with respect to fluctuations in the value of the
Portfolio as a result of changes in the prices of the underlying
securities), (iii) there has been no dividend or distribution paid or
declared in respect of the OMEGA Fund or the Master Trust and (iv)
neither the OMEGA Fund nor the Master Trust has incurred any
indebtedness for borrowed money.
14. The OMEGA Fund will elect or has elected to be treated as a regulated
investment company as defined in Section 851(a) of the U.S. Internal
Revenue Code of 1986 for its first taxable year and will operate so as
to qualify as such in such first taxable year.
A-3
<PAGE> 24
15. No provision of the Declaration of Trust or By-Laws of the Master Trust
or of the Investment Company Act or the Rules and Regulations
thereunder and no other reason disqualifies the Master Trust from being
deemed resident in a jurisdiction other than the United States for U.S.
income tax purposes.
16. The OMEGA Fund does not own any securities or have any beneficial
interest in any other company or entity (other than the Master Trust)
and the OMEGA Fund has not entered into any binding commitment to
acquire any investment (other than beneficial interests in the Master
Trust) or to enter into any joint venture arrangement.
17. None of the Warrantors has taken or will take any action or actions
that, without more, would cause the offering of the Shares to be
subject to registration under the Securities Act.
18. None of the Warrantors has offered or will offer any Shares for sale
prior to the Initial Closing Date except as contemplated by this
Agreement.
19. Except as contemplated in the Private Placement Memorandum, on the
Portfolio Transfer Date and at all times subsequent thereto through the
Initial Closing Date, each of the OMEGA Fund and the Master Trust will
own all of its assets free and clear in all material respects of all
liens, security interests, pledges, mortgages, charges and other
encumbrances or defects and all governmental or other consents required
for the transfer of the Portfolio to the Master Trust will have been
obtained and will be in full force and effect.
20. On the Portfolio Transfer Date and at all times subsequent thereto
through the Initial Closing Date, the Global Fund will own all of the
assets to be transferred to it pursuant to the Portfolio Transfer and
Subscription Agreement free and clear in all material respects of all
liens, security interests, pledges, mortgages, charges and other
encumbrances or defects and all governmental or other consents required
for the transfer of such assets to the Global Fund will have been
obtained and will be in full force and effect.
In addition to the foregoing, each of Old Mutual, OMAM and Old Mutual Bermuda
represents, warrants and agrees as follows:
21. Neither the SAGA Fund nor any person acting on its behalf has offered
or sold or will offer or sell shares in the SAGA Fund in the United
States or to or for the account of a U.S. Person, as such term is
defined in Regulation S (except that no representation is made as to
the actions of SBC Warburg or any of its Affiliates).
22. Neither the SAGA Fund nor any person acting on its behalf has engaged
or will engage in directed selling efforts (as defined in Regulation S)
with respect to the shares of the
A-4
<PAGE> 25
SAGA Fund (except that no representation is made as to the actions of
SBC Warburg or any of its Affiliates).
A-5
<PAGE> 26
ANNEX B
Private and Confidential
[Letterhead of Bowman Gillfillan Hayman Godfrey Inc]
To: SBC Warburg
1 Finsbury Avenue
London EC2M 2PP
S.G. Warburg & Co. Inc.,
OMEGA Fund
[Address details]
SAGA Fund
[Address details]
Master Trust
[Address details]
Dear Sirs,
Old Mutual Equity Growth Assets South Africa Fund.
Old Mutual South Africa Growth Assets Fund
Placing of Shares
We refer to the proposed placings ("the Placings") by S.G. Warburg & Co. Inc.
(S.G. Warburg") of shares in the Old Mutual Equity Growth Assets South Africa
Fund Limited ("OMEGA Fund") and by Swiss Bank Corporation, acting through its
division SBC Warburg "SBC Warburg") of shares in Old Mutual South Africa Growth
Assets Fund ("SAGA Fund").
We have been asked to express an opinion on various legal aspects of the
proposed Placings under South Africa law. We are familiar with international
transactions involving South Africa and are qualified to give this opinion to
you.
This opinion is limited to the laws of the Republic of South Africa ("South
Africa"), as they are at the date of the opinion.
1 Definitions
Words and expressions defined in the Glossary in each of the Placement
Memoranda referred to in paragraphs 2.1(a) and 2.1(b) below, and which
are not defined in this opinion shall have the same meanings in this
opinion as those ascribed to them in those
<PAGE> 27
Glossaries.
2 Documents Examined
2.1 We examined the following documents in connection with the
Placings:-
(a) the draft Private Placement Memorandum dated September
15, 1995, prepared for the Initial Offering by the
Omega Fund of up to 10,000,000 Shares of beneficial
Interest at U.S.$100 per share;
(b) the draft Placement Memorandum dated 15 September,
1995 prepared for the Initial Offering by the Saga
Fund of up to 20,000,000 Shares at U.S.$50 per share;
(c) the South African Mutual Life Assurance Society
(Private) Act, 1966 (Act 52 of 1966), as amended by
Act 53 of 1980 and by the further amendments made in
terms of Section 73 of that Act, and confirmed by
orders of the Cape Provincial Division of the Supreme
Court of South Africa granted on 21 December 1966, 12
December 1968, 19 February 1974 and 17 December 1981
("the Old Mutual Act");
(d) the bye-laws of the Old Mutual made in terms of
Chapter 7 of the Old Mutual Act;
(e) the Resolutions of the Board of Directors of Old
Mutual passed on ________________ 1995;
(f) correspondence between the South African Reserve Bank
("the Reserve Band") as the representative of the
Treasury and Old Mutual, including the following:
letter dated 1 August 1995 from Old Mutual to the
Reserve Bank; letter dated 28 August 1995 from the
Reserve Bank to Old Mutual; letter dated 29 August
from Old Mutual to the Reserve Bank; letter dated 30
August 1995 from the Reserve Bank to Old Mutual;
letter dated 22 September 1995 from Old Mutual to the
Reserve Bank;
(g) a copy, certified to our satisfaction, of the
Portfolio Transfer and Description Agreement dated __
October 1995 ("the Transfer Agreement");
(h) a copy, certified to our satisfaction, of the Placing
Agreement relating to shares of the Omega Fund dated
as of ___________ 1995 ("the Omega Placing
Agreement");
B-2
<PAGE> 28
(i) a copy, certified to our satisfaction, of the
Agreement dated ___________ 1995 relating to the
placing of up to ___ shares of U.S.$____ each in the
Saga Fund ("the Saga Placing Agreement");
(j) a copy, certified to our satisfaction, of the letter
agreement dated 23 August 1995 between SBC Warburg and
Old Mutual read together with the separate letter of
the same date between the same parties (the
"Engagement Letters").
2.2 We have also made such other enquiries and examined such other
documents as we have considered appropriate for the purpose of
giving this opinion.
3 Assumptions
For the purposes of this opinion we have made the following
assumptions;
3.1 that all signatures on all documents are genuine;
3.2 that copies of all original documents submitted to us are
complete and conform with the originals;
3.3 that all Resolutions shown to us have been validly passed;
3.4 that all the amendments to the Old Mutual Act which were made
in terms of Section 73 of that Act and confirmed by orders of
the Cape Provincial Division of the Supreme Court of South
Africa, which are referred to above, were validly made and
confirmed;
3.5 that the approval of the Financial Services Board which is
referred to in the letter dated 28 August 1995 from the Reserve
Bank to Old Mutual and which is said in that letter to have
been obtained for Old Mutual's "original proposal" was in fact
obtained; and that such approval satisfies the requirements of
the Insurance Act 1943 (Act 27 of 1943) in so far as that Act
requires any approval from the Financial Services Board for the
transfer of the Portfolio to the Master Trust and the Global
Fund Portfolio to the Global Fund and for any of the other
transactions or arrangements mentioned or described in this
opinion;
3.6 that each of the four agreements referred to in paragraphs
2.1(g), 2.1(h), 2.1 (i) and 2.1(j) above, has been duly
authorised, executed and validly entered into by every party to
it other than Old Mutual.
4 Acknowledgement
We understand and acknowledge that in order for the Placings to proceed
in accordance
B-3
<PAGE> 29
with what is stated in the Placement Memoranda referred to in
paragraphs 2.1(a) and 2.1(b) above, it is intended that the following
will take place:
4.1 that Old Mutual will transfer, or will procure the transfer of
the Portfolio to the Master Trust, and of the Global Fund
Portfolio to the Global Fund, prior to the Initial Closing so
that ownership of the Portfolio and the Global Fund Portfolio
will be transferred to and become vested in the Master Trust
and the Global Fund respectively;
4.2 prior to the transfers of the Portfolio and the Global Fund
Portfolio, Old Mutual will have received the necessary
approvals required in terms of the Exchange Control
Regulations, 1961 ("Excon Regulations") made in terms of the
Currency and Exchanges Act 1933 (Act 9 of 1933), to effect
those transfers and arrange for the Placings;
4.3 prior to those transfers any approval required from the
Financial Services Board in terms of the Insurance Act 1943 for
those transfers will have been received;
5 Opinion
On the basis of and subject to the aforegoing, we are of the opinion
that:
5.1 Old Mutual is duly incorporated and exists as a body corporate
by virtue and in terms of the Old Mutual Act;
5.2 Old Mutual is also duly registered under the Insurance Act,
1943 to carry on in South Africa the following classes of
insurance business: Life business and sinking fund business.
5.3 Old Mutual has the requisite capacity to enter into each of the
agreements referred to in paragraphs 2.1(g), 2.1(h), 2.1(i) and
2.1(j) above and to perform its obligations under each of those
agreements.
5.4 Each of those agreements has been duly authorised and executed
by Old Mutual and is valid, legally binding and, subject to
what is stated below, enforceable against Old Mutual in
accordance with its terms;
5.5 The necessary approvals required from the Treasury (represented
by the Reserve Bank) in terms of the Excon Regulations, have
been obtained for the following obligations of Old Mutual under
the Transfer Agreement:
(a) the transfer of the Portfolio to the Master Trust;
B-4
<PAGE> 30
(b) the transfer of the Global Fund Portfolio to the
Global Fund;
(c) the payment of the amount of U.S.$5,000,000 by Old
Mutual to the Master Trust to meet initial costs.
5.6 If Old Mutual becomes liable under the Transfer Agreement to
pay any other monies to or in favour or on behalf of any party
who is not a resident of South Africa, the approval of the
Treasury would be required for such payment in terms of the
Excon Regulations; and that approval would have to be applied
for and decided upon by the Treasury at the time the obligation
to make the payment arises.
5.7 No approvals are required now from the Treasury in terms of the
Excon Regulations for any of Old Mutual's obligations under
either of the Placing Agreements referred to in paragraph
1.1(h) and 1.1(i) above. However, if Old Mutual becomes liable
under either of those two Agreements to pay any monies to, or
in favour or on behalf of any person resident outside the
Republic the approval of the Treasury would be required in
terms of the Excon Regulations for the payment; and that
approval would have to be applied for and decided upon by the
Treasury at the time the obligation to make the payment arises.
5.8 The entering into and the performance by Old Mutual of its
obligations under each of the four agreements referred to in
paragraphs 2.1(g), 2.1(h), 2.1(i) and 2.1(j) will not violate,
contravene or conflict with any law in force in South Africa,
or be unenforceable because it is contrary to public policy in
South Africa.
5.9 Subject to what is stated above no consent, permit, licence,
approval, authorisation or exemption under the laws of South
Africa is required for Old Mutual to enter into or perform any
of its obligations under any of those four agreements.
5.10 Neither SBC Warburg nor S.G. Warburg will be deemed to be
resident, domiciled or carrying on business, or will be subject
to taxation in South Africa by reason only of the negotiation,
preparation, execution, delivery, performance, observance,
enforcement of, or receipt of any payment or repayment pursuant
to the transfers of the Portfolio and the Global Fund Portfolio
or otherwise in connection with the effecting of the Placings.
5.11 Following the implementation of the Transfer Agreement, and the
proper transfer of the Portfolio to the Master Trust in terms
of and pursuant to that agreement, the Master trust would
become the owner of and have good and marketable title to all
the securities in the Portfolio.
B-5
<PAGE> 31
5.12 Following the implementation of the Transfer Agreement, and the
proper transfer of the Global Fund Portfolio to the Global Fund
in terms of and pursuant to that agreement, the Global Fund
would become the owner of and have good and marketable title to
all the securities in the Global Fund Portfolio.
5.13 Subject to what is stated in paragraphs 5.14 and 5.15 below the
transfer of the Portfolio to the Master Trust and of the Global
Fund Portfolio to the Global Fund Portfolio pursuant to the
Transfer Agreement will attract stamp duty in South Africa in
terms of the Stamp Duties Act, 1968 (Act 77 of 1968) at the
rate of 1% of the value of all the securities so transferred.
That value should be the value determined for the securities in
accordance with the relevant provisions of the Transfer
Agreement. It should be noted that if transfer of any of the
securities is registered after the expiry of a period of 6
months from the date of execution of the statutory instrument
of transfer which will be required for the registration, the
duty increases to three times the duty which would have been
payable if the transfer had been registered before the expiry
of that period of 6 months.
5.14 If the statutory instrument of transfer required to be executed
for the registration of transfer of any securities in the
Portfolio or in the Global Fund Portfolio is executed outside
South Africa and the registration of the transfer is executed
in any branch register kept by the issuer of the securities
outside South Africa the registration would be exempt from
stamp duty in South Africa, provided the branch register
satisfies certain requirements of the Stamp Duties Act, 1962.
5.15 If the transfer of any of those securities is effected through
a purchase by a stock broker where the transaction attracts
Marketable Securities Tax in terms of the Marketable Securities
Tax Act, 1948 (Act 32 of 1948), then that tax will be payable
in lieu of stamp duty. Any marketable securities tax so payable
on any of the securities will be 1% of the consideration for
which they are so purchased.
5.16 Save as mentioned above there is no stamp duty, marketable
security tax, capital duty or increase in capital duty or any
other documentary or registration tax or impost of any nature
which will be payable by any party in connection with the
transfer of the Portfolio to the Master Trust or the Global
Fund Portfolio to the Global Fund in terms of the Transfer
Agreement.
5.17 SBC Warburg will be entitled without limit or restriction and
without the need to obtain any consent, approval, licence or
permission of any person to exercise all or any of its rights
under the Saga Placing Agreement without having to establish a
place of business in South Africa or to carry out any other
requirement, save as stated in paragraph 5.19 below.
B-6
<PAGE> 32
5.18 The same applies to S.G. Warburg in relation to the exercise of
all or any of its rights under the Omega Placing Agreement.
5.19 A final judgment obtained against Old Mutual in any
jurisdiction outside South Africa will be recognised and
enforced in South Africa in accordance with and subject to the
principles of South African law applicable to the recognition
and enforcement of foreign judgments in civil matters. Very
briefly there are four essential requirements that need to be
fulfilled. First foreign court must have had international
competence to decide the case, as determined by South African
legal principles. Second the judgment must be final and
conclusive. Third the recognition and enforcement of the
judgment must not be against public policy in South Africa,
including observance of the rules of natural justice. Fourthly
if the Protection of Businesses Act, 1978 (Act 99 of 1978)
applies to the judgment the consent of the Minister of Trade
and Industry must be obtained. In our opinion it is not certain
that this Act would apply to any judgment of a foreign court
obtained against Old Mutual to enforce any of its obligations
under any of the agreements referred to in paragraphs 2.1(g),
2.1(h), 2.1(i) and 2.1(j) above. But if that Act were to apply
and if the consent of the Minister were required we are of the
opinion that it is unlikely that his consent would be refused.
Moreover if his consent were refused, it might be possible now
to challenge the validity of the Act in terms of the new
constitution which is the Constitution of the Republic of South
Africa Act, 1993 (Act 200 of 1993).
Yours faithfully,
B-7
<PAGE> 33
ANNEX C
[Form of Bingham, Dana & Gould Opinion]
<PAGE> 34
ANNEX D
November -, 1995
Swiss Bank Corporation
SBC Warburg
1 High Timber Street
London EC4V 3SB
Dear Sirs:
Re: Old Mutual South Africa Growth Assets Fund Limited ("SAGA Fund")
Old Mutual Asset Managers (Bermuda) Limited ("OMAM")
Old Mutual Fund Holdings (Bermuda) Limited ("OMB")
Old Mutual Global Assets Fund Limited ("Global Assets Fund")
all together (the "Companies")
Initial Offering of Shares of SAGA Fund
We have acted a special legal counsel in Bermuda to the Companies in
connection with the initial offering of up to 20,000,000 shares (the "Shares")
of SAGA Fund at US$50.00 per Share.
For the purposes of giving this opinion, we have examined the following
documents:
(i) [a draft of] an agreement among Old Mutual South Africa Equity
Trust (the "Master Trust"), SAGA Fund, South African Mutual Life
Assurance Society ("Old Mutual"), OMAM, OMB and Swiss Bank
Corporation dated -, 1995 relating to the placing of up to
20,000,000 shares of US$1.00 each in SAGA Fund (the "Placing
Agreement");
(ii) [a draft of] an agreement among the Master Trust, Old Mutual
Equity Growth Assets South Africa Fund ("OMEGA Fund"), Old
Mutual, OMAM, OMB and S.G. Warburg & Co. Inc. dated -, 1995
relating to the placing of up to 10,000,000 shares of OMEGA Fund
in a United States private placement (the "US Placing
Agreement");
(iii) [a draft of] the Portfolio Transfer and Subscription Agreement
among Old Mutual, OMB, OMAM, the Master Trust, OMEGA Fund, SAGA
Fund and Global Assets
<PAGE> 35
Page -2-
November -, 1995
Opinion to Swiss Bank Corporation
Fund dated -, 1995;
(iv) [a draft of] the Advisory Agreement between OMAM and the Master
Trust dated -, 1995;
(v) [a draft of] the [SAGA Custodian Agreement] between SAGA Fund
and State Street Bank and Trust Company dated -, 1995;
(vi) [a draft of] the SAGA Administrative Services Agreement between
SAGA Fund and State Street Cayman Trust Company, Ltd., dated -,
1995; and
(vii) [a draft of] the Investment Restrictions undertaking among the
Master Trust, OMEGA Fund and SAGA Fund dated -, 1995.
The Placing Agreement, the U.S. Placing Agreement, the Portfolio
Transfer and Subscription Agreement, the Advisory Agreement, the [SAGA Custodian
Agreement], the SAGA Administrative Agreement and the Investment Restrictions
Undertaking are herein sometimes collectively referred to as the "Documents".
We have also reviewed the memorandum of association and the bye-laws of
the Company, minutes of meetings of its directors and such other documents and
made such enquiries as to questions of law as we have deemed necessary in order
to render the opinion set forth below.
We have assumed (a) the genuineness and authenticity of all signatures
and the conformity to the originals of all copies of documents (whether or not
certified), (b) the capacity, power and authority of each of the parties to the
Documents, other than the Companies, (c) the due execution and delivery of the
Documents by each of the parties thereto, [other than the Companies], (d) the
accuracy and completeness of all factual representations made in the Documents
and other documents reviewed by us, (e) that there is no provision of the law of
any jurisdiction, other than Bermuda, which would have any implication in
relation to the opinions expressed herein, (f) the validity and binding effect
under the laws of England [or -, as the case may be] (the "Foreign Laws") of the
Documents which are expressed to be subject to such Foreign Laws in accordance
with their respective terms, (g) the validity under the Foreign Laws of the
submission by the Companies pursuant to the Documents to the non-exclusive
jurisdiction of the English courts [or -, as the case may be] (the "Foreign
Courts").
The obligations of the Companies under the Documents (a) will be
subject to the laws from time to time in effect relating to bankruptcy,
insolvency, liquidation, possessory liens, rights of set off, reorganisation,
amalgamation, moratorium or any other laws or legal procedures, whether of a
similar nature or otherwise, generally affecting the rights of creditors, (b)
will be subject to statutory limitation of the time within which proceedings may
be brought, (c) will be
D-2
<PAGE> 36
Page -3-
November -, 1995
Opinion to Swiss Bank Corporation
subject to general principles of equity and, as such, specific performance and
injunctive relief, being equitable remedies, may not be available, (d) may not
be given effect to by a Bermuda court, whether or not it was applying the
Foreign Laws, if and to the extent they constitute the payment of an amount
which is the nature of a penalty and not in the nature of liquidated damages.
We have made no investigation of an express no opinion in relation to
the laws of any jurisdiction other than Bermuda. This opinion is to be governed
by and construed in accordance with the laws of Bermuda and is limited to and is
given on the basis of the current law and practice in Bermuda. This opinion is
issued solely for your benefit and is not to be relied upon by any other person,
firm or entity or in respect of any other matter.
On the basis of and subject to the foregoing, we are of the opinion
that:
1. The Companies are duly incorporated and existing under the laws of
Bermuda.
2. Each Company has the necessary corporate power and authority to enter
into and perform its obligations under the Documents to which it is a
party. The execution and delivery by each Company of the Documents to
which it is a party and the performance by each Company of its
obligations thereunder will not violate the memorandum of association
or bye-laws of such Company nor any applicable law, regulation, order
or decree in Bermuda.
3. Each Company has taken all corporate action required to authorise its
execution, delivery and performance of the Documents to which it is a
party. [When duly executed and delivered by or on behalf of each
Company, the Documents will constitute]/[The Documents to which a
Company is a party have been duly executed and delivered by or on
behalf of the Company, and constitute] the valid binding obligations of
such Company in accordance with the terms thereof.
4. No order, consent, approval, licence, authorisation or validation of or
exemption by any government or public body or authority of Bermuda or
any sub-division thereof is required to authorise or is required in
connection with the execution, delivery, performance and enforcement of
the Documents or the allotment or issue of the Shares except such as
have been duly obtained in accordance with Bermuda law.
5. The Documents will not be subject to ad valorem stamp duty in Bermuda.
6. The SAGA Fund has the power under its memorandum of association and
bye-laws, and the directors of SAGA Fund are empowered, to allot and
issue the Shares without any sanction or consent by the members of the
SAGA Fund or any class of them.
D-3
<PAGE> 37
Page -4-
November -, 1995
Opinion to Swiss Bank Corporation
7. The choice of the Foreign Laws to govern the Documents is a valid
choice of law and the submission therein by each Company which is a
party to the non-exclusive jurisdiction of the Foreign Courts is valid
and binding upon such Company.
8. [With respect to the Placing Agreement, the Investment Restrictions
Undertaking and -, such final and conclusive judgment in the superior
court of the Foreign Courts against a Company under which a sum of
money is payable (not being in respect of multiple damages, or a fine,
penalty, tax or other charge of similar nature) would, on registration
in accordance with the provisions of The Judgments (Reciprocal
Enforcement) Act 1958 be enforceable in the Supreme Court of Bermuda
against such Company without the necessity of any retrial of the issues
subject of such judgment or any re-examination of the underlying
claims; however, where such foreign judgment is expressed in a currency
other than Bermuda dollars the registration will involve the conversion
of the judgment debt into Bermuda dollars on the basis of the exchange
rate prevailing at the date of such judgment as is equivalent to the
judgment sum payable. The present policy of the Bermuda Monetary
Authority is to give consent for the Bermuda dollar award made by the
Supreme Court of Bermuda to be paid in the original judgment currency.]
[With respect to the Portfolio Transfer and Subscription Agreement and
-, the courts of Bermuda would recognise as a valid judgment, a final
and conclusive judgment in personam obtained in the Foreign Courts
against a Company which is a party to such agreements based upon such
agreements under which a sum of money is payable (other than a sum of
money payable in respect of multiple damages, taxes or other charges of
a like nature or in respect of a fine or other penalty) and would give
a judgment based thereon provided that (a) such courts had proper
jurisdiction over the parties subject to such judgment, (b) such courts
did not contravene the rules of natural justice of Bermuda, (c) such
judgment was not obtained by fraud, (d) the enforcement of the judgment
would not be contrary to the public policy of Bermuda, (e) no new
admissible evidence relevant to the action is submitted prior to the
rendering of the judgment by the courts of Bermuda and (f) the due
compliance with the correct procedures under the laws of Bermuda.]
Yours faithfully,
CONYERS, DILL & PEARMAN
D-4
<PAGE> 38
ANNEX E
The following constitutes all of the written information furnished by
S.G. Warburg to the OMEGA Fund for inclusion in the Private Placement Memorandum
at the date of this Agreement:
<PAGE> 1
EXHIBIT 6(b)
CONFORMED COPY
DATED 27th October 1995
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED (2)
SOUTH AFRICAN MUTUAL LIFE (3)
ASSURANCE SOCIETY
OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED (4)
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (5)
and
SWISS BANK CORPORATION (6)
---------------------------------
AGREEMENT
relating to the Placing of up to 20,000,000 shares
of US$ 1 each in
Old Mutual South Africa Growth Assets Fund Limited
---------------------------------
Norton Rose
London
<PAGE> 2
CONTENTS
--------
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C>
1 Definitions and interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3 Delivery of documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4 Placing and subscription . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5 Application to the Irish Stock Exchange . . . . . . . . . . . . . . . . . . . . . . 11
6 Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7 Closing, allotment and settlement . . . . . . . . . . . . . . . . . . . . . . . . . 13
8 Registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
9 Remuneration and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
10 Representations, warranties and undertakings . . . . . . . . . . . . . . . . . . . 16
11 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
12 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
13 Effect of termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
14 Continuing obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
15 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
16 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
17 Protection of trustees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
18 Governing law and jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SCHEDULE
1 Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 3
DOCUMENTS IN THE AGREED FORM
"A" Formal Notice
"B" Placement Memorandum
"C" Placing Letter
"D" Portfolio Transfer and Subscription Agreement
"E" US Placement Agreement
"F" US Private Placement Memorandum
"G" Verification Notes
"H" Legal opinion of Bowman Gilfillan Hayman Godfrey
"I" Legal opinion of Bingham, Dana & Gould
"J" Legal opinion of Conyers, Dill and Pearman
<PAGE> 4
THIS AGREEMENT is made on 27TH October 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts trust
organised as an open-ended investment company of Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda (the "MASTER TRUST");
(2) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED, an open-ended
investment company incorporated under the laws of Bermuda of
Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA
FUND");
(3) SOUTH AFRICAN MUTUAL LIFE ASSURANCE SOCIETY, a mutual assurance
society incorporated under the laws of South Africa of Mutualpark,
Jan Smuts Drive, Pinelands 7405, PO Box 66, Cape Town, South Africa
("OLD MUTUAL);
(4) OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED, a company incorporated
under the laws of Bermuda of Richmond House, 12 Par-la-Ville Road,
Hamilton, Bermuda ("OMAM");
(5) OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED, a company incorporated
under the laws of Bermuda of Richmond House, 12 Par- la-Ville Road,
Hamilton, Bermuda ("OLD MUTUAL BERMUDA"); and
(6) SWISS BANK CORPORATION, a public company limited by shares
incorporated in Switzerland and registered in England and Wales
(under branch registration no. BR000326), whose principal place of
business in England is at 1 High Timber Street, London EC4V 3SB
acting through its division SBC Warburg ("SBC WARBURG").
WHEREAS:
(A) OMAM and Old Mutual Bermuda are respectively direct and indirect
wholly owned subsidiaries of Old Mutual;
(B) OMAM will be the investment adviser to the Master Trust and to Old
Mutual Global Assets Fund Limited (the "GLOBAL FUND"), an
open-ended investment company incorporated in Bermuda, which will
be a wholly owned subsidiary of Old Mutual Bermuda;
(C) the Master Trust, which is duly organised as a Massachusetts trust
and is to be registered as an open-end management company under the
Investment Company Act, has agreed to acquire a portfolio of South
African investments from Old Mutual in exchange for Old Mutual
Bermuda acquiring substantially all of the beneficial interest in
the Master Trust;
1
<PAGE> 5
(D) the SAGA Fund is duly incorporated in Bermuda with limited
liability under the Companies Act 1981 with the policy of investing
exclusively in the Master Trust;
(E) Old Mutual Equity Growth Assets South Africa Fund (the "OMEGA
FUND") is duly organised as a Massachusetts business trust and is
to be registered as an open-end management company under the
Investment Company Act with the policy of investing exclusively in
the Master Trust;
(F) the SAGA Fund was incorporated on 7th September 1995 with an
authorised share capital of US$12,000 divided into 12,000 manager's
shares of US$1 each, all of which were allotted and issued nil paid
to Old Mutual Bermuda and, at the date hereof, the authorised share
capital of the SAGA Fund is US$40,000,000 divided into 39,988,000
shares of US$1 each and 12,000 manager's shares all of which
manager's shares are beneficially owned by Old Mutual Bermuda;
(G) by resolution of the board of directors of the SAGA Fund passed on
23rd October 1995, it was resolved to offer up to 20,000,000 Shares
at a price of US$50 per Share payable in full on subscription
pursuant to the Initial Offering on and subject to the terms and
conditions set out herein and in the Placement Memorandum;
(H) the SAGA Fund is to make application, through NCB Stockbrokers
Limited, to the Irish Stock Exchange for all the Shares referred to
in recitals (F) and (G) to be admitted to the Official List;
(I) SG Warburg & Co., Inc. (the "US PLACING AGENT") has pursuant to a
Placing Agreement bearing even date herewith made with the OMEGA
Fund and others agreed (as agent of the OMEGA Fund) to use its best
efforts to solicit offers to purchase shares of the OMEGA Fund in
the United States of America; and
(J) on the terms and subject to the conditions set out herein, in
reliance on the various representations, warranties, undertakings
and indemnities contained herein SBC Warburg has agreed (as agent
for the SAGA Fund) to use its reasonable endeavours to procure
placees for Shares at US$50 per Share on and subject to the terms
set out in the Placement Memorandum but so that SBC Warburg is not
to be under any obligation whatsoever itself to subscribe for or to
underwrite any Shares in the Placing.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 In this Agreement (including its recitals), unless the context
otherwise requires or otherwise defined herein, terms defined in
the Placement Memorandum shall
2
<PAGE> 6
have the same meaning in this Agreement and the following words and
expressions shall have the respective meanings set opposite them:
"ACT" means the Companies Act 1981 of Bermuda (as amended)
"ADMISSION" means the admission of the Issued Capital to the
Official List
"AFFILIATE" means, in relation to SBC Warburg, any holding company
of such person and any subsidiary of any such holding company and
any body corporate in which any of those entities holds a
qualifying capital interest (within the meaning of paragraph 30 of
schedule 1 to the FSA) and the directors, officers and employees of
such person and of each of such entities
"APPLICATION" means the application made by the SAGA Fund to the
Irish Stock Exchange for up to 39,988,000 Shares to be admitted to
the Official List
"BUSINESS DAY" means any day which is not a day on which banking
institutions in London or New York are generally obligated or
authorised by law or executive order to close
"BROKERS" means NCB Stockbrokers Limited of Ferry House, 48/53
Lower Mount Street, Dublin 2, Ireland
"COMPLETION DAY" means the day on which Admission becomes effective
in accordance with the Listing Rules
"CONDITIONS" means the conditions set out in clause 2.1
"DIRECTORS" means the persons named as directors of the SAGA Fund
under the heading "MANAGEMENT - Directors and Trustees" in the
Placement Memorandum
"ENGAGEMENT LETTER" means two letters dated 1st September 1995 from
SBC Warburg to Old Mutual relating to, inter alia, the Placing
"FSA" means the Financial Services Act 1986
"FORMAL NOTICE" means the document in the agreed form marked "A"
"FUND" means the SAGA Fund and the Master Trust except as otherwise
indicated
"HOLDING COMPANY" has the meaning ascribed thereto by sections 736
and 736A. of the Companies Act 1985
"INITIAL CLOSING DATE" means 10th November 1995 or such earlier or
later business day (not being later than 10th December 1995) as SBC
Warburg may,
3
<PAGE> 7
in agreement with the SAGA Fund and Old Mutual determine on which
the closing of the Initial Offering is to occur
"INITIAL OFFERING" means the proposed placing with institutions and
other investors outside the United States of up to 20,000,000
Shares at the Placing Price and otherwise on the terms and
conditions set out in this Agreement and the Issue Documents
"INITIAL OFFERING TERMINATION DATE" means 7th November 1995 or such
earlier or later business day (not being later than 10th December
1995) as SBC Warburg may in agreement with the SAGA Fund and Old
Mutual determine by which Placing commitments are to be received
"INVESTMENT COMPANY ACT" means the United States Investment Company
Act of 1940 (as amended)
"IRISH COMPANIES ACT" means the Companies Act 1963 of the Republic
of Ireland
"IRISH STOCK EXCHANGE" means the Irish Unit of The International
Stock Exchange of the United Kingdom and the Republic of Ireland
Limited or any successor thereto for the time being
"ISSUE DOCUMENTS" means the Placement Memorandum and the relevant
Placing Letter
"ISSUED CAPITAL" means the Shares which fall to be issued pursuant
to the Initial Offering
"LIBOR" means the offered rate in the London Interbank Market
quoted at or about 11.00 a.m. on the Initial Closing Date for
overnight US dollar deposits on the page "LIBOR" of the Reuter
Monitor Money Rates Services or, if more than one rate is offered,
the arithmetic mean thereof
"LISTING RULES" means the listing rules of the Irish Stock Exchange
"MAJORITY OF OUTSTANDING VOTING SECURITIES" has the meaning
assigned thereto in the Investment Company Act
"MATERIAL CONTRACTS" means the agreements referred to in paragraph
7 under "Additional Information" in the Placement Memorandum
"OFFICIAL LIST" means the Official List of the Irish Stock Exchange
"PLACEES" means persons who agree (on the terms and subject to the
conditions set out or referred to in the Placing Letter) to acquire
Shares pursuant to the Initial Offering and "PLACEE" shall be
construed accordingly
4
<PAGE> 8
"PLACING" means the Initial Offering
"PLACEMENT MEMORANDUM" means the document proposed to be issued in
connection with the Application and the Initial Offering as
approved by the Irish Stock Exchange, which will comprise listing
particulars with regard to the SAGA Fund, a final proof of which is
in the agreed form marked "B"
"PLACING LETTER" means the letter in the agreed form marked "C"
and, where the context admits, any equivalent document in
substantially the same form used by any placing agent appointed
pursuant to clause 4.2
"PLACING PRICE" means the sum of US$50 per Share
"PORTFOLIO" means the portfolio of South African securities to be
transferred from Old Mutual to the Master Trust as stated in the
Placement Memorandum
"PORTFOLIO TRANSFER AND SUBSCRIPTION AGREEMENT" means an agreement
in the agreed form marked "D" dated 23rd October 1995 made between
Old Mutual (1), Old Mutual Bermuda (2), the Master Trust (3), the
OMEGA Fund (4), the SAGA Fund (5), the Global Fund (6) and OMAM (7)
"QUALIFYING SHARES" means Shares that are (1) sold in the Initial
Offering or, if they are sold to "Category C clients" as referred
to in the Engagement Letter, in the Second Offering and (2)
continuously outstanding during the period ending on the third
anniversary of the Initial Closing Date
"REGULATION S" means regulation S under the Securities Act
"SECOND OFFERING" means the offer for up to 6 months after the
Initial Closing Date of any remaining Shares at a price equal to
their net asset value plus a sales charge
"SECURITIES ACT" means the United States Securities Act of 1933 (as
amended)
"SHARES" means shares of US$1.00 each in the capital of the SAGA
Fund to be allotted and issued for the purposes of the Placing
"STATUTES" means the Act, the Irish Companies Act, the FSA and any
regulations made thereunder
"SUBSIDIARY" has the meaning ascribed thereto by sections 736 and
736A of the Companies Act 1985
"US DOLLARS", "US$" and "CENT" means the currency of the United
States of America
"US PERSON" means a person or entity defined as such in Rule 902(o)
under the Securities Act
5
<PAGE> 9
"US PLACEMENT AGREEMENT" means the final form of the placement
agreement between the OMEGA Fund and others and the US Placing
Agent relating to the placing of shares in the OMEGA Fund in the
United States which is in the agreed form marked "E"
"US PRIVATE PLACEMENT MEMORANDUM" means the document issued in
connection with the placing of shares in the OMEGA Fund which is in
the agreed form marked "F"
"VAT" means United Kingdom value added tax
"VATA" means the Value Added Tax Act 1983
"VERIFICATION NOTES" means the questions and answers thereto
contained in the three documents copies of which are in the agreed
form all marked "G" entitled "Verification Notes" and signed by or
initialled on behalf of each of the persons named therein as being
responsible for such answers, together with the supporting
documentation in relation thereto
"WARRANTIES" means the representations, warranties and undertakings
made and given pursuant to clause 10 and schedule 1
"WARRANTORS" means the Master Trust, the SAGA Fund, Old Mutual,
OMAM and Old Mutual Bermuda.
1.2 Any reference to a document being "in the agreed form" is to such
document in the form agreed between Old Mutual, the SAGA Fund and
SBC Warburg prior to the exchange of this Agreement and signed by
each of them or on their behalf for the purpose of identification,
with such amendments thereto (if any) as may be agreed between Old
Mutual, the SAGA Fund and SBC Warburg.
1.3 Words denoting the singular include the plural and vice versa.
Words importing any gender shall include every gender and words
denoting persons shall include corporations, unincorporated
associations, partnerships, trusts, joint ventures and other legal
entities.
1.4 The index and headings in this Agreement have been inserted for
convenience only and shall not affect the interpretation of this
Agreement. References to recitals, clauses and schedules are to the
recitals and clauses of and the schedules to this Agreement. The
contents of the schedules shall have as full effect as if the same
were incorporated herein and terms defined herein have the same
meaning in any schedule.
1.5 Except where otherwise stated, references in this Agreement to any
statute or statutory provision include any replacement,
re-enactment, modification or extension thereof (whether before, on
or after the date hereof), any statutory provision of which the
provision referred to is a re-enactment (whether with
6
<PAGE> 10
or without modification), and any orders, regulations, instruments
or other subordinate legislation made under the statutory provision
referred to.
1.6 Except where otherwise stated, reference in this Agreement to any
statute or statutory provision is to the relevant statute or
provision in Great Britain.
1.7 Reference in any form to the knowledge, information, belief or
awareness of any person shall be deemed to include any knowledge,
information, belief or awareness which such person would have had
if he had made all such enquiries as were reasonable to be made by
such person in the context of the Placing.
1.8 Unless otherwise expressly provided, all references in this
Agreement to time are to the time in London.
2 CONDITIONS
2.1 The obligations hereunder of SBC Warburg as placing agent of the
SAGA Fund for the purpose of placing Shares (except to the extent
that prior performance or observance of such obligations is
required hereunder) are conditional on:
(a) the document in the agreed form marked "B" (with such
amendments thereto, if any, as may be agreed between Old
Mutual, the SAGA Fund and SBC Warburg) having been approved
by the Committee of the Irish Stock Exchange as listing
particulars for the purposes of the Listing Rules not later
than 12 noon on 27th October 1995 and in any event prior to
its delivery to the Registrar of Companies in Dublin;
(b) the signing by the Chairman of the Directors and two other
Directors (or by their respective agents or attorneys duly
authorised in writing) of two copies of the Placement
Memorandum and the delivery of such signed copies, together
with, if applicable, such authorisation, to the Brokers not
later than 12 noon on 27th October 1995;
(c) one copy of the Placement Memorandum having been delivered
to the Registrar of Companies in Dublin for registration as
required by Section 364 of the Irish Companies Act not
later than 3.00 p.m. on 27th October 1995;
(d) the Formal Notice having been submitted to, and its
contents having been approved by, the Irish Stock Exchange
not later than 4.00 p.m. on 10th November 1995;
(e) a minimum of 24,000 Shares falling to be allotted pursuant
to the Initial Offering;
(f) Admission becoming effective in accordance with the Listing
Rules not later than 9.30 a.m. on 13th November 1995;
7
<PAGE> 11
(g) on or before the Initial Closing Date there having been
delivered to SBC Warburg legal opinions, in form and
substance satisfactory to SBC Warburg, dated as at the
Initial Closing Date, from (i) Bowman Gilfillan Hayman
Godfrey, legal advisers in South Africa to SBC Warburg, the
Master Trust, the OMEGA Fund and the SAGA Fund to the
effect set forth in the agreed form draft document marked
"H"(ii) Bingham, Dana & Gould, legal advisers in the United
States of America to the OMEGA Fund, the Master Trust and
the SAGA Fund to the effect set forth in the agreed form
draft document marked "I" and (iii) Conyers, Dill and
Pearman, legal advisers in Bermuda to the Master Trust, the
OMEGA Fund and the SAGA Fund to the effect set forth in the
agreed form draft document marked "J";
(h) none of the Warranties being or having become untrue,
inaccurate or misleading in any material respect at any
time before this Agreement becomes unconditional in all
other respects and no fact or circumstance having arisen
and nothing having been done or omitted to be done which
would render any of the Warranties untrue or inaccurate in
any material respect if it was repeated as at Admission
save to the extent that such breach has been waived by SBC
Warburg.
2.2 SBC Warburg shall, after consultation with Old Mutual, have power
in its absolute discretion, and on such terms as it shall in its
absolute discretion think fit, to waive fulfilment of all or any of
the Conditions (other than those set out in clauses 2.1(e) and (f))
and/or to extend the time provided for fulfilment of any of the
Conditions in respect of all or any part of the performance thereof
but so that such extension shall not go beyond 9.30 a.m. on 10th
December 1995.
2.3 If any of the Conditions is not fulfilled (or waived by SBC Warburg
in exercise of the power provided in clause 2.2 or varied by
agreement between the parties hereto) or shall have become
incapable of being fulfilled and is not so waived by the respective
time and/or date therein specified (or any later time and/or date
to which the time provided for fulfilment of such Condition is
extended in accordance with clause 2.2), the provisions of clause
13 shall apply.
2.4 Each party agrees to use all reasonable endeavours to procure that
each of the Conditions is fulfilled by the respective time and/or
date therein specified.
3 DELIVERY OF DOCUMENTS
3.1 As soon as practicable after execution of this Agreement and in any
event not later than 5.00 p.m. on 9th November 1995, the SAGA Fund
shall deliver, or procure that there are delivered, to SBC Warburg:
8
<PAGE> 12
(a) four copies of the Placement Memorandum signed by each of
the Directors (or by his agent or attorney duly authorised
in writing), together with a certified copy of any such
authorisations;
(b) one copy of the Verification Notes signed by or on behalf
of each of the persons named therein as being responsible
therefor, including, in the case of those relating to the
Placement Memorandum, each of the Directors;
(c) one certified copy of the minutes of the meeting of the
Directors (in, or substantially in, the form previously
approved by SBC Warburg) at which resolutions were passed,
inter alia, approving the Placement Memorandum and
authorising its issue and approving this Agreement, the
other Material Contracts and the making of the Application,
together with one copy of all documents referred to in such
minutes as being produced at such meeting to the extent not
otherwise provided to be supplied pursuant to this clause;
(d) one certified copy of each of the Memorandum and Articles
of Association and Bye-laws of the SAGA Fund and the
Declaration of Trust of the Master Trust;
(e) one certified copy of (i) the responsibility statement
given by each of the Directors in relation to the Placement
Memorandum and (ii) any power of attorney or other
authority granted by a Director pursuant to which any of
the documentation referred to in this clause 3.1 is signed;
(f) a copy of the memorandum prepared by Norton Rose explaining
to the Directors the nature of their responsibilities and
obligations in connection with the issue of the Placement
Memorandum;
(g) one certified copy of the certificate of incorporation of
the SAGA Fund;
(h) one certified copy of each of the Material Contracts other
than this Agreement.
In this clause 3.1 references to a certified copy shall mean a copy
of the relevant document certified by a Director or the Secretary
of the SAGA Fund as being a true copy of the original.
3.2 SBC Warburg may, in its absolute discretion, waive the requirement
that the SAGA Fund deliver to it any of the documents referred to
in clause 3.1 or may extend the time for delivery of any such
documents. Any waiver or extension may be granted by SBC Warburg
subject to such conditions as it shall in its absolute discretion
determine.
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3.3 As soon as reasonably practicable following the making of a request
in writing therefor by SBC Warburg to the SAGA Fund, the SAGA Fund
shall procure the delivery to SBC Warburg (or as SBC Warburg may
reasonably direct) of all such further information and documents as
SBC Warburg may reasonably require and which shall reasonably be
necessary for the purpose of SBC Warburg fulfilling its obligations
pursuant to this Agreement and in connection with the Initial
Offering.
4 PLACING AND SUBSCRIPTION
4.1 The SAGA Fund hereby irrevocably appoints SBC Warburg to act as the
sole lead agent of the SAGA Fund for the purpose of placing Shares
pursuant to the Initial Offering, which appointment SBC Warburg
hereby accepts. The SAGA Fund hereby confirms that the foregoing
appointment confers on SBC Warburg as agent as aforesaid all powers
(including the power to appoint placing agents subject as
hereinafter provided), authorities and discretions on behalf of the
SAGA Fund which are necessary for, or reasonably incidental to, the
performance of its duties hereunder on the terms and subject to the
conditions set out or referred to in this Agreement and the Issue
Documents, and the SAGA Fund hereby agrees to ratify and confirm
everything which SBC Warburg (and any placing agent appointed under
clause 4.2) shall lawfully do in the exercise of their respective
appointments, powers, authorities and discretions hereunder and
thereunder.
4.2 Without prejudice to the generality of clause 4.1, the SAGA Fund
hereby authorises SBC Warburg to appoint (on behalf of the SAGA
Fund) one or more placing agents approved in advance of their
appointment by Old Mutual and the SAGA Fund in connection with the
Placing, which agents shall be the agents of the SAGA Fund and not
of SBC Warburg. Such appointments shall be on such terms as the
SAGA Fund and Old Mutual shall approve, such approval not to be
unreasonably withheld or delayed. For the avoidance of any doubt,
SBC Warburg shall have no liability whatsoever for, or as a result
of, the acts or omissions of any placing agent appointed pursuant
to this clause 4.2 or for the negligence, fraud or default of any
such placing agent, unless such placing agent shall be an Affiliate
of SBC Warburg.
4.3 Pursuant to the appointment made by clause 4.1, on the terms and
subject to the conditions set out herein and in the Placement
Memorandum and in reliance on the Warranties and the indemnities
contained in clause 11, SBC Warburg hereby undertakes (as agent for
the SAGA Fund) to use its reasonable endeavours to procure placees
for Shares on the terms and subject to the conditions set out in
this Agreement and the Issue Documents, and the SAGA Fund approves
and adopts the issue by SBC Warburg of the Placing Letter for such
purpose.
4.4 For the avoidance of any doubt nothing in this Agreement or
otherwise shall oblige SBC Warburg to apply for or subscribe for
any Shares pursuant to the Placing or otherwise or impose an
absolute obligation on SBC Warburg to
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procure subscribers therefor (whether pursuant to the Placing or
otherwise), although SBC Warburg and its affiliates shall not be
debarred from participating in the Placing.
4.5 SBC Warburg represents and warrants and agrees with the SAGA Fund ,
the Master Trust and Old Mutual that (i) in marketing the Shares to
potential Placees under the Initial Offering, to the best of its
knowledge information and belief, SBC Warburg and any person
authorised to act on its behalf has acted and will act in
accordance with market practice and has not acted and will not act
in a manner which is likely to prejudice materially the interests
of the SAGA Fund (ii) this Agreement has been duly authorised and
executed on behalf of SBC Warburg and constitutes the legal, valid,
binding and enforceable obligation of SBC Warburg, subject to
applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and subject, as to enforceability, to
general principles of equity (iii) to the best of its knowledge
information and belief, neither SBC Warburg nor any person acting
on its behalf has engaged or will engage in any directed selling
efforts (as defined in Regulation S) with respect to the Shares in
the United States and (iv) to the best of its knowledge information
and belief, neither SBC Warburg nor any person acting on its behalf
has offered or sold and will not offer or sell the Shares in the
United States or for the account of a US Person.
4.6 If it should appear reasonably likely that less than
US$1,000,000,000 will be subscribed in aggregate for Shares under
the Initial Offering and shares of the OMEGA Fund under the Initial
Offering (as defined in the US Placement Agreement) the parties
hereto will, as soon as practicable after signature of this
Agreement, negotiate in good faith with each other and with Fleming
Martin and Rand International with a view to entering into a
separate agreement relating to the Second Offering as soon as
practicable. Such negotiations will be with a view to (a) SBC
Warburg, Fleming Martin and Rand International acting as agents for
the purpose of soliciting offers to subscribe for Shares pursuant
to the Second Offering and (b) the Second Offering being made on
substantially the terms and conditions described or referred to in
the Placement Memorandum and in the Engagement Letter.
5 APPLICATION TO THE IRISH STOCK EXCHANGE
5.1 The SAGA Fund hereby confirms to SBC Warburg that it has made
application through the Brokers to the Irish Stock Exchange for
approval of the Placement Memorandum as listing particulars and the
SAGA Fund hereby undertakes to SBC Warburg that it will proceed, at
its own expense, with the Application and the SAGA Fund shall, to
the extent that the same lies within its powers and it is lawful to
do so, take all such steps, execute all such documents, supply all
such information and documents, give all such undertakings, pay all
such fees and other expenses and do or procure to be done all such
things as may be properly required by the Irish Stock Exchange or
reasonably required by SBC Warburg in relation to the Application
and to obtain the approval of the Committee of the Irish Stock
Exchange to the admission of the Issued
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Capital to the Official List (subject only to allotment) so as to
enable Admission to become effective by 9.30 a.m. on 13th November
1995.
5.2 The SAGA Fund shall procure that:
(a) subject to the Placement Memorandum having been approved by
the Irish Stock Exchange, one copy thereof shall be
delivered to the Registrar of Companies in Dublin for
registration as required by Section 364 of the Irish
Companies Act by not later than 3.00 p.m. on 27th October
1995;
(b) subject to delivery of the Placement Memorandum for
registration as required by clause 5.2(a), the Placement
Memorandum shall be made available as required by the
Listing Rules and the Formal Notice shall be published in
the Irish Stock Exchange Daily Official List by not later
than 10th November 1995 or in such other manner or on such
other date as the SAGA Fund and SBC Warburg may agree,
subject, to the approval of the Irish Stock Exchange. If
for any reason such advertising of the Formal Notice as
aforesaid does not take place, such other advertising of or
other means of publicising the Placement Memorandum as
shall be practicable shall take place on such date(s) as
the SAGA Fund and SBC Warburg may agree subject to the
approval of the Irish Stock Exchange; and
(c) the documents stated in the Placement Memorandum as being
available for inspection shall be made so available at the
places mentioned therein as required by the Listing Rules.
5.3 Each of the SAGA Fund, the Master Trust and Old Mutual agrees with
SBC Warburg that if at any time after submission of the Placement
Memorandum to the Irish Stock Exchange and before Admission there
is a material change affecting any matter contained in the
Placement Memorandum the inclusion of which was required by the
Irish Companies Act or by the Listing Rules or by the Irish Stock
Exchange or a significant new matter arises the inclusion in the
Placement Memorandum of information in respect of which would have
been so required if it had arisen before the Placement Memorandum
was so submitted, each of the SAGA Fund, the Master Trust and Old
Mutual undertakes promptly to notify SBC Warburg thereof (with full
details) forthwith upon becoming aware of the same (but if one of
the SAGA Fund, the Master Trust or Old Mutual shall so notify, the
others shall not be obliged to make the same notification). In any
such case, without limitation or prejudice to the rights of SBC
Warburg under clause 13, SBC Warburg may require the SAGA Fund at
its own expense to make or cause to be made such announcement
and/or despatch such communication or supplement to the Placement
Memorandum as SBC Warburg shall, after consultation with the SAGA
Fund, reasonably consider necessary and the SAGA Fund and SBC
Warburg shall promptly consult regarding the form and contents, and
method of publication, of any further document which may be
required. For the
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avoidance of doubt the SAGA Fund shall not publish any such further
document unless and until it is approved by SBC Warburg (such
approval not to be unreasonably withheld or delayed) and by the
Irish Stock Exchange (through the Brokers).
5.4 SBC Warburg shall provide all reasonable and timely assistance to
the SAGA Fund in connection with the Application.
6 ANNOUNCEMENTS
6.1 The SAGA Fund hereby authorises and directs SBC Warburg to release
to the Irish Stock Exchange (through the Brokers) on the Completion
Day an announcement in the form required by the Irish Stock
Exchange in connection with the Listing of the Shares.
6.2 Save as provided in clauses 4.3, 5, 6.1 or 10.4 or as required by
law or by the Irish Stock Exchange, all announcements and circulars
by or on behalf of any of the parties hereto and relating to the
Placing and its associated transactions shall be in terms to be
agreed between Old Mutual, the SAGA Fund and SBC Warburg, such
agreement not to be unreasonably withheld or delayed.
7 CLOSING, ALLOTMENT AND SETTLEMENT
7.1 It is agreed that allocations of Shares under the Initial Offering
shall be determined by SBC Warburg at its discretion after
consultation with the SAGA Fund and Old Mutual and SBC Warburg
shall notify the SAGA Fund and Old Mutual if it wishes to reject
any proposed subscription in whole or in part. No allocation of
Shares under the Initial Offering shall be made to any single
investor (or any investor which together with its affiliates (as
defined in the US Placement Agreement)) which is proposing to
subscribe for 3,000,000 or more Shares without the consent of the
SAGA Fund and Old Mutual. The SAGA Fund shall, as soon as
practicable following fulfilment or waiver of the Conditions (other
than that set out in clause 2.1(f)) and in any event not later than
5.00 p.m. (Bermuda time) on the Initial Closing Date by resolution
of the board of directors of the SAGA Fund (or a duly authorised
committee thereof) allot fully paid to Placees the numbers of
Shares which they have agreed to acquire pursuant to the Initial
Offering in such proportions and such names as SBC Warburg shall
previously have notified to the SAGA Fund.
7.2 The Placing Letters will request Placees to make payment for their
Shares directly to a nominated bank account of the SAGA Fund by not
later than 9.30 a.m. (United States Eastern time) on the Initial
Closing Date and the SAGA Fund will give details in writing to SBC
Warburg by not later than 11 a.m. (United States Eastern time) on
the Initial Closing Date of any Placee which has not made payment
to the SAGA Fund for the Shares to be subscribed by it. If there is
any such Placee SBC Warburg may either cancel the relevant
allocation to such Placee on behalf of the SAGA Fund or accept,
with the consent of the SAGA Fund, such late payment with interest
thereon (for the
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account of the SAGA Fund) at LIBOR plus 1 per cent. in respect of
each day (or part thereof) from the due time for such payment to
the time when such payment is actually made.
7.3 The Shares to be allotted pursuant to clause 7.1 shall be allotted
subject to the Memorandum of Association and Bye- laws of the SAGA
Fund and on the terms set out or referred to in this Agreement and
the Placement Memorandum free from all liens, charges,
encumbrances, equities and other third party rights of any nature
whatsoever.
7.4 The resolution allotting Shares to be made pursuant to clause 7.1
shall be on terms directing the Secretary of the SAGA Fund to issue
Shares in the proportions and names referred to in clause 7.1 upon
and subject to Admission.
7.5 The SAGA Fund shall deliver to the Brokers a certified copy of the
resolutions of the board of directors of the SAGA Fund (or a duly
authorised committee thereof) allotting Shares pursuant to clause
7.1, if practicable, so as to permit the same to be delivered to
the Irish Stock Exchange by 9.00 a.m. on the day on which Admission
is expected to become effective.
8 REGISTRATION
8.1 The SAGA Fund shall procure that at the cost of the SAGA Fund:
(a) confirmations of ownership in respect of the Shares
allotted pursuant to the Initial Offering in the names of
the respective allottees shall be prepared and despatched
to such persons not later than 14th November 1995 provided
that no such confirmations shall be required to be
despatched in respect of Shares for which payment has not
been received; and
(b) as soon as reasonably practicable after Admission the
register of members of the SAGA Fund shall be made up to
reflect such allotments and transfers.
8.2 The SAGA Fund hereby undertakes to SBC Warburg that, as soon as
reasonably practicable following receipt of a late payment from a
Placee which has been allotted Shares pursuant to clause 7.2 it
shall notify SBC Warburg thereof and arrange for a confirmation of
ownership to be despatched to such Placee.
9 REMUNERATION AND EXPENSES
9.1 Subject to this Agreement becoming unconditional in all respects:
(a) the Master Trust shall pay to SBC Warburg, a placement fee
equal to 0.25 per cent of an amount determined by
multiplying the total number
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of Shares of the SAGA Fund placed in the Initial Offering
by SBC Warburg (or any agent appointed pursuant to clause
4.2) by the Placing Price;
(b) the SAGA Fund shall pay to SBC Warburg, an amount equal to
the out-of-pocket expenses (including but not limited to
legal and accountancy fees and disbursements in any
jurisdiction plus any VAT (or equivalent tax) charged
thereon to the extent that SBC Warburg is not entitled to a
credit therefor under sections 14 and 15 VATA or any
equivalent legislation) reasonably incurred by SBC Warburg
in connection with the Placing and the Application.
The amount payable pursuant to clause 9.1(a) shall become due and
payable by the Master Trust to SBC Warburg at 10 a.m. on the
Completion Day. The amount payable pursuant to clause 9.1(b) shall
be payable on demand by SBC Warburg.
9.2 Subject as provided in clause 13, the SAGA Fund hereby agrees with
and undertakes to SBC Warburg that it shall be liable for, and
shall promptly pay, all the preliminary costs and expenses of the
SAGA Fund, and all costs, charges, fees and expenses howsoever of,
or incidental to, the Initial Offering and the Application,
including without limitation, all fees of the Irish Stock Exchange,
all accountancy and legal expenses in any jurisdiction and public
relations consultants', design consultants' and other professional
fees, the costs of printing, advertising and circulating the Issue
Documents and any related documents, transfer agents' fees and
expenses and all costs of marketing the Initial Offering (including
without limitation the roadshows), together, in each case, if
appropriate, with any VAT thereon. In the event that any such
costs, charges, fees or expenses are in the first instance incurred
by SBC Warburg, the SAGA Fund shall promptly reimburse SBC Warburg
in respect of the same. The Master Trust agrees to pay all the
costs of its establishment.
9.3 All sums payable to SBC Warburg under this Agreement shall be paid
free and clear of all deductions or withholdings unless the
deduction or withholding is required by law, in which event the
party required to make the payment shall pay to SBC Warburg such
additional amount as shall be required to ensure that the net
amount retained by SBC Warburg is equal to the full amount which
would have been received by it had no such deduction or withholding
been made.
9.4 Where the SAGA Fund reimburses SBC Warburg in respect of any costs,
charges or expenses, the SAGA Fund shall in addition pay to SBC
Warburg in respect of VAT:
(a) if any reimbursement in respect of costs, charges or
expenses constitutes part of the consideration for any
supply of services to the SAGA Fund, such amount as equals
any VAT charged to SBC Warburg in respect of the said
costs, charges or expenses which is not
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recoverable by SBC Warburg by repayment or set-off,
together with any amount representing any VAT properly
chargeable in respect of the consideration for that supply
(including such irrecoverable VAT); and
(b) if any such costs, charges or expenses constitute
disbursements incurred by SBC Warburg as agent on behalf of
the SAGA Fund, any VAT charged thereon to SBC Warburg.
9.5 OMAM shall on the third anniversary of the Initial Closing Date,
pay or procure the payment to SBC Warburg for providing or
procuring the provision of ongoing services for shareholders a
servicing fee in respect of all Qualifying Shares of an amount
equal to 0.125 per cent per annum of the proportion of the Master
Trust's average daily net assets represented by Qualifying Shares
during the period ending on such third anniversary.
9.6 Each of OMAM and Old Mutual undertakes to SBC Warburg at its own
expense to take such steps as may be necessary and as shall be
reasonably satisfactory to SBC Warburg in order to ensure that
Qualifying Shares are at all times capable of being identified and
to ensure that the amount of the servicing fee payable to SBC
Warburg pursuant to clause 9.5 is capable of being determined. The
Master Trust and the SAGA Fund agree to facilitate the taking of
such steps by OMAM and Old Mutual to the extent practicable. For
the purpose of determining such servicing fee if a holder of both
Shares which are eligible to become Qualifying Shares ("Eligible
Shares") and other Shares redeems any Shares he shall be deemed not
to have redeemed any Eligible Shares until all such other Shares
have been redeemed by him. Any dispute or difference as to such
servicing fee shall be referred to the auditors of the Master Trust
for the time being who shall be deemed to be acting as experts and
not as arbitrators and whose certificate as to such servicing fee
shall be final and binding on the parties. The fees of such
auditors shall be borne by Old Mutual and SBC Warburg equally and
such parties shall undertake liability to such auditors for the
payment of their fees.
9.7 Any VAT properly chargeable in respect of any amount payable to SBC
Warburg pursuant to this Agreement (including without limitation
clause 9.1) shall be paid in addition to, and together with and at
the same time as, such amount.
9.8 OMAM shall provide or cause to be provided to the board of trustees
of the Master Trust such written reports regarding the amount and
purpose of any expenditures made pursuant to the Master Trust 12b-1
Plan as may be required by Rule 12b- 1(b)(3)(ii) under the
Investment Company Act.
10 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
10.1 In consideration of SBC Warburg entering into this Agreement the
Warrantors (other than the Master Trust) jointly and severally
represent, warrant and undertake and The Master Trust severally
represents, warrants and undertakes
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(but only for or as to itself, as the case may be) to SBC Warburg
in the terms set out in schedule 1.
10.2 (a) If a claim is made under this Agreement against a
Warrantor other than the SAGA Fund or the Master Trust,
such Warrantor shall not have, or pursue, any claim or
third party action to join, claim against, seek a
contribution from or otherwise claim or seek damages or
compensation from the SAGA Fund or the Master Trust.
(b) Each Warrantor other than the SAGA Fund and the Master
Trust hereby confirms to SBC Warburg that neither the
SAGA Fund nor the Master Trust has entered into any
agreement or arrangement concerning its liability for any
breach of the Warranties given by such Warrantor in
schedule 1 or its liability in relation to any other
covenant, term or condition set forth in this Agreement.
10.3 Each of the Warrantors severally undertakes to SBC Warburg:
(a) that it shall not do or procure or knowingly allow (so
far as it is within its power not to so allow) any act or
omission before Admission which would constitute a breach
of any of the Warranties or would make any of them untrue
or inaccurate or misleading if repeated by reference to
the facts and circumstances subsisting at any time prior
to Admission; and
(b) to notify SBC Warburg forthwith if it becomes aware at
any time up to Admission that any of the Warranties was
untrue or inaccurate or misleading in any material
respect or would, if repeated by reference to the facts
and circumstances subsisting at any time prior to
Admission, be untrue or inaccurate or misleading in any
material respect.
10.4 If at any time prior to Admission SBC Warburg shall receive
notification pursuant to clause 10.3(b) or shall otherwise become
aware that any of the Warranties is or has become or is likely to
become untrue, inaccurate or misleading in any material respect,
SBC Warburg may, without prejudice to its right to terminate its
obligations under this Agreement pursuant to clause 12, require the
SAGA Fund and/or the Master Trust and/or Old Mutual at its own
expense to make or cause to be made such announcement and/or
despatch such communication as SBC Warburg may reasonably require.
10.5 If supplementary listing particulars or a supplement to the
Placement Memorandum is required to be published, whether pursuant
to the Listing Rules or otherwise the Warranties shall,
notwithstanding any provision of this Agreement, be deemed to be
repeated on the date of publication of such supplementary listing
particulars or supplement to the Placement Memorandum and when so
repeated shall be read and construed as if the references therein
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to the Placement Memorandum meant the Placement Memorandum when
read together with such supplementary listing particulars or
supplement.
10.6 The Warranties shall remain in full force and effect
notwithstanding completion of this Agreement and the Placing.
10.7 Each Warrantor undertakes to SBC Warburg to comply with the
obligations undertaken by it under the Portfolio Transfer and
Subscription Agreement.
10.8 Old Mutual undertakes to ensure that each of Old Mutual Bermuda and
OMAM complies with its obligations under this Agreement.
10.9 The Master Trust undertakes to SBC Warburg and the SAGA Fund (i)
that it will not, within a period of 12 months from the Initial
Closing Date without prior consultation with SBC Warburg and the
SAGA Fund, issue any shares of beneficial interest in the Master
Trust to investors other than OMAM, the SAGA Fund, the OMEGA Fund
and Old Mutual Bermuda in accordance with the arrangements
described in the Placement Memorandum and the US Private Placement
Memorandum and (ii) that it will not so issue any shares of
beneficial interest if the result of such issue would be to
prejudice the interests of the SAGA Fund.
10.10 The SAGA Fund hereby confirms to SBC Warburg that each of the
Directors has received a copy of the memorandum referred to in
clause 3.1(f).
11 INDEMNITY
11.1 No claim shall be made against SBC Warburg or any of its affiliates
by any of the Warrantors to recover any loss, damage, liability,
cost, charge or expense which any Warrantor may suffer or incur by
reason of or arising out of the carrying out by (or on behalf of)
SBC Warburg of its obligations and services under this Agreement or
otherwise in connection with the Placing and its associated
transactions or the proper exercise of its rights in accordance
with any provision hereof (including without limitation, financial
advisory services) unless such loss, damage, liability, cost,
charge or expense shall have arisen by reason of the negligence,
fraud or wilful default of SBC Warburg or any of its agents or
affiliates or a breach by SBC Warburg of its obligations
representations or warranties under this Agreement.
11.2 The Warrantors (other than the Master Trust) hereby jointly and
severally undertake and the Master Trust severally undertakes to
SBC Warburg for itself and as agent or trustee on behalf of and for
the benefit of each and every other Indemnified Person (as defined
in clause 11.7) to keep each and every Indemnified Person fully and
effectively indemnified and held harmless from and against all or
any losses, claims (whether successful, compromised or not),
liabilities, actions, demands, proceedings, judgements and all
reasonable costs, charges and expenses which any Indemnified Person
may suffer or incur or which may be made, brought or established
against any Indemnified Person in
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<PAGE> 22
any jurisdiction whatsoever by a subscriber of Shares pursuant to
the Placing or by any subsequent purchaser or transferee of Shares
or by any other person, government, governmental agency or
regulatory body whatsoever, including without limitation all such
reasonable costs, charges and expenses which such Indemnified
Person suffers or incurs in determining the extent of any such loss
or in investigating, responding to, defending or disputing any such
claim, liability, action or demand (whether or not the same is
defended or disputed successfully) and the reasonable costs and
expenses of the Indemnified Person in enforcing its rights under
this clause 11, and which in any case is occasioned by or results
from or is attributable to or arises in connection with (whether
directly or indirectly) the arrangements referred to in or
contemplated by this Agreement and/or the Placement Memorandum,
including without limitation:
(a) any of the Warranties given pursuant to clause 10.1 being,
or being alleged to be, untrue, inaccurate or misleading in
any respect; and/or
(b) any breach by a Warrantor of any of its obligations under
this Agreement; and/or
(c) the creation, allotment and issue of the Shares; and/or
(d) the Placement Memorandum not containing, or being alleged
not to contain, all information required to be stated
therein by any law or regulation, or any statement therein
(whether of fact, opinion, expectation or intention,
including any forecast or estimate) being, or being alleged
to be, untrue, inaccurate, incomplete or misleading in a
material respect or (in the case of an opinion, expectation
or intention) not based on reasonable grounds or having
been made negligently or otherwise without the required
standard of skill and care; and/or
(e) any misrepresentation or alleged misrepresentation (by
whomsoever made) being contained, or being alleged to be
contained, in the Placement Memorandum; and/or
(f) the performance by or on behalf of SBC Warburg of its
obligations under this Agreement or otherwise in connection
with the Placing and the arrangements hereby contemplated;
and/or
(g) any breach or alleged breach of the laws or regulations of
any country resulting from the distribution of the Issue
Documents or any other marketing material relating to the
Placing or the Shares authorised for issue by the SAGA Fund
(including without limitation the Preliminary Placement
Memorandum dated 15th September 1995, a report entitled
"Overview of the South African Economy", a report prepared
by Messrs. Ivor Jones, Roy & Co. relating to the Portfolio,
a summary of the Placement Memorandum dated 4th September
1995 and the slides
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used during the roadshows) or the allotment and issue of
the Shares; and/or
(h) the transfer of the Portfolio to the Master Trust,
save to the extent that any such loss, claim, liability, action,
demand, proceeding, judgment, cost, charge or expense shall have
arisen by reason of the negligence, fraud or wilful default of SBC
Warburg or any of its affiliates or any breach by any Indemnified
Person of any of its duties or obligations hereunder.
11.3 If any claim is made, or alleged, against any Indemnified Person,
SBC Warburg shall, as soon as reasonably practicable after SBC
Warburg becomes aware thereof, notify the Warrantors. If a
Warrantor is notified of a claim made or threatened to be made
against any Indemnified Person, it shall provide such Indemnified
Person with all such information and assistance in relation thereto
as such Indemnified Person shall reasonably require. SBC Warburg
will, to the extent practicable, consult with any relevant
Warrantor regarding the defence and possible settlement of any
action to which the indemnity in clause 11.2 relates and will keep
such Warrantor apprised as to the progress of any such action.
11.4 All sums payable under any indemnity contained in this clause 11
shall be paid free and clear of all deductions or withholdings
whatsoever save only as may be required by law. If any such
deductions or withholdings are required by law or if the United
Kingdom Inland Revenue or any other taxing authority in any
jurisdiction brings into any charge to taxation (or into any
computation of income, profits or gains for the purposes of any
charge to taxation) any sum payable under any indemnity contained
in this clause 11, then the amount so payable shall be grossed up
by such amount as will ensure that after such deduction or
withholding or the deduction of such tax there shall remain a sum
equal to the amount which would otherwise be payable under such
indemnity (additional payments being made by the relevant Warrantor
as necessary from time to time).
11.5 Nothing in this clause 11 shall preclude SBC Warburg or any other
Indemnified Person from exercising any rights it may have at common
law or otherwise, including without limitation any right of
contribution. For the avoidance of doubt and without prejudice to
the generality of the foregoing, any indemnity contained in this
clause 11 is in addition to and not in substitution for any and all
indemnities to which SBC Warburg is entitled at law as agent of the
SAGA Fund, provided that nothing in this clause shall entitle SBC
Warburg to claim twice in respect of the same matter.
11.6 Any exclusion of liability on the part of SBC Warburg contained
herein shall take effect subject to any limitations imposed thereon
by the FSA or the Rules of the Securities and Futures Authority
Limited.
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<PAGE> 24
11.7 In this clause 11, "Indemnified Persons" shall mean SBC Warburg,
and each of its affiliates and "Indemnified Person" shall be
construed accordingly.
12 TERMINATION
12.1 If at any time prior to Admission it shall come to the knowledge of
any Warrantor or SBC Warburg that:
(a) any statement contained in the Placement Memorandum is or
has become untrue, inaccurate or misleading; or
(b) any matter has arisen which would, if the Placement
Memorandum were issued at that time, constitute an omission
therefrom of matters required to be included therein; or
(c) any of the Warranties was untrue or inaccurate or
misleading as at the date hereof or would, if repeated by
reference to the facts and circumstances subsisting at any
time prior to Admission, be untrue or inaccurate or
misleading; or
(d) any Warrantor has not complied or cannot comply with its
obligations under this Agreement,
and such fact or event is, of itself or taken together with any
other such fact or event, material in the context of the Placing,
the relevant Warrantor or SBC Warburg (as the case may be) shall
forthwith give notice thereof to the other parties to this
Agreement and SBC Warburg shall have the right (exercisable in its
absolute discretion but after consultation with Old Mutual and the
SAGA Fund) at any time prior to Admission by notice in writing to
other parties to this Agreement to terminate the obligations of SBC
Warburg hereunder, in which event the provisions of clause 13 shall
apply.
12.2 This Agreement shall be terminable by the SAGA Fund giving notice
to the other parties to this Agreement in the event that SBC
Warburg shall be in material breach of this Agreement.
12.3 If at any time prior to Admission any government regulation, crisis
of international or national effect or any change in the conditions
prevailing in any relevant financial market which is likely
materially and adversely to affect the SAGA Fund and/or the
Portfolio or which will make it inadvisable or inexpedient to
proceed with the Placing occurs or comes into effect, each of SBC
Warburg and Old Mutual shall have the right (subject to the prior
consent of the other) at any time prior to Admission by notice in
writing to the other parties to this Agreement to terminate this
Agreement.
12.4 The obligations of the Master Trust under this Agreement shall
continue in effect for a period beyond one year from the date
hereof only so long as such continuance is specifically approved at
least annually in the manner described
21
<PAGE> 25
in Rule 12b-1(b)(2) under the Investment Company Act, and if not so
approved shall be deemed terminated.
12.5 The obligations of the Master Trust under this Agreement may be
terminated at any time, without the payment of any penalty, by (i)
a majority of the members of the board of trustees of the Master
Trust who are not interested persons of the Master Trust and have
no direct or indirect financial interest in the operation of the
Master Trust 12b-1 Plan or in any agreements related to such plan
or (ii) the vote of a Majority of the Outstanding Voting Securities
of the Master Trust, in each case, on 60 days' notice given to each
of the other parties hereto.
12.6 This Agreement will automatically terminate in the event of its
assignment (as defined in the Investment Company Act) by SBC
Warburg.
12.7 If this Agreement is terminated prior to Admission pursuant to
clauses 12.2 or 12.3 the provisions of clause 13 shall apply.
13 EFFECT OF TERMINATION
In the event that SBC Warburg, Old Mutual or the SAGA Fund shall
exercise its right pursuant to clause 12 to terminate this
Agreement or the provisions of this clause shall apply by virtue of
clause 2.3, subject to the following provisions of this clause, all
the outstanding obligations of SBC Warburg hereunder (and
accordingly all obligations of Placees) and any outstanding
obligations of any Warrantor shall cease and determine and none of
the parties hereto shall have any claim against any other in
respect of any matter or thing arising out of or in connection with
this Agreement for compensation, costs, damages or otherwise
howsoever save that:
(a) Old Mutual shall, so long as no shares of the OMEGA Fund
shall have been subscribed under the Initial Offering as
defined in the US Placement Agreement, pay SBC Warburg a
fee of US$250,000 for its services in connection with the
Initial Offering and its associated transactions;
(b) Old Mutual shall be liable for the legal fees and
disbursements reasonably incurred by SBC Warburg in
connection with the Placing and its associated transactions
plus any VAT charged thereon and all such costs, charges,
fees and expenses as are referred to in clause 9.2;
(c) clause 11 (and any provision hereof necessary for the
purpose of interpretation thereof) shall continue in full
force and effect for all purposes;
(d) such termination shall not prejudice any accrued rights or
claims by any party against any other party hereto
(including without limitation any right to make a claim
under the Warranties in relation to any such
22
<PAGE> 26
matter as gave rise to a right to terminate this Agreement
under clause 12) (it being understood that no claim for
lost profits or commissions will survive such termination
if such termination occurs before Admission);
(e) the SAGA Fund and SBC Warburg shall take such steps as may
be necessary to withdraw the Application and, if so
requested in writing by SBC Warburg, the SAGA Fund shall
make a press announcement in a form reasonably required by
SBC Warburg;
(f) the SAGA Fund shall forthwith repay all amounts received
from Placees in respect of the subscription price of the
Shares.
14 CONTINUING OBLIGATIONS
14.1 The SAGA Fund (in so far as lies within its powers howsoever
arising) hereby undertakes to SBC Warburg that, except for the
release of the announcement referred to in clause 6.1 and the
publication of the Issue Documents or as may be required by the
Irish Stock Exchange or any other regulatory authority or under any
applicable laws or by any provision of this Agreement and except
for the issue of marketing material as part of the Second Offering
to institutional investors, neither the SAGA Fund nor any person on
its behalf will at any time prior to the publication of the SAGA
Fund's audited accounts for the period ending 30th June 1996 make
any public announcement, public statement or public communication
regarding the SAGA Fund which is material in relation to the
Placing and/or the Shares, whether in response to enquiries or
otherwise, without the prior consent of SBC Warburg, such consent
not to be unreasonably withheld or delayed.
14.2 Each of the SAGA Fund and the Master Trust undertake to SBC Warburg
that it will not between the date of this Agreement and the date on
which the SAGA Fund's audited accounts for the period ending 30th
June 1996 are published enter into any commitment or agreement or
arrangement or knowingly do or permit to be done any other act or
thing which, in any such case, constitutes a significant change in
a matter contained in the Placement Memorandum or a significant new
matter capable of affecting assessment of the Shares or which would
otherwise give rise to any obligation to make any announcement to
the Irish Stock Exchange in accordance with the Listing Rules
without the prior consent of SBC Warburg, such consent not to be
unreasonably withheld or delayed.
14.3 Each of the SAGA Fund and the Master Trust hereby undertakes to SBC
Warburg that it shall at all times during the period (the "Relevant
Period" ending on the date of publication of the report and
accounts of the SAGA Fund and the Master Trust for the period
ending 30th June 1996 (or any extended or shortened accounting
period substituted therefor):
23
<PAGE> 27
(a) notify SBC Warburg in advance of, and forward to SBC
Warburg for comment final proofs of, and discuss with SBC
Warburg the content, timing and manner of, any announcement
of profits or losses and dividends of the SAGA Fund and the
Master Trust and any other information which is, in the
reasonable opinion of the SAGA Fund or the Master Trust (as
the case may require), likely materially to affect the
general character or nature of the business of the SAGA
Fund and/or the Master Trust or which may be necessary to
be made known to the public in order to enable shareholders
and the public to appraise the position of the SAGA Fund;
(b) forward to SBC Warburg for comment the final proofs of all
documents to be sent by the SAGA Fund to the holders of the
SAGA Fund's securities and all press announcements to be
issued by the SAGA Fund to the Irish Stock Exchange; and
(c) not take any steps which in the reasonable opinion of SBC
Warburg would be materially inconsistent with any
expression of policy or intention in the Placement
Memorandum.
14.4 During the Relevant Period the SAGA Fund and the Master Trust shall
not alter, revise or amend the terms of, or terminate, any of the
Material Contracts or waive any condition thereof except as
previously agreed by SBC Warburg in writing (such agreement not to
be unreasonably withheld or delayed).
15 NOTICES
15.1 Any notice or other communication to be given or made under or in
connection with this Agreement shall be in writing for the
attention of the relevant person stated below and served personally
or sent by prepaid registered mail to the respective address set
out below or by fax to the relevant number set out below or
otherwise as the party required to receive the same may from time
to time notify to the other parties:
(a) the Master Trust, the SAGA Fund, OMAM and Old Mutual
Bermuda
Richmond House
12 Par-la-Ville Road
Hamilton, Bermuda
Fax no: 809 292 4720
Attention: J.C.R. Collis
(b) Old Mutual
Mutualpark
Jan Smuts Drive
Pinelands 7405
Cape Town
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<PAGE> 28
South Africa
Fax no: 00 2721 509 3899
Attention: M.J. Levett
(c) SBC Warburg
1 Finsbury Avenue
London EC2M 2PA
Fax no: 0171 247 4984
Attention: Howard Myles
15.2 Any such notice or other communication shall be deemed to have been
served:
(a) if delivered personally, at the time of delivery;
(b) if posted, at 10.00 a.m. on the fourth business day after
it was put into the post; and
(c) if sent by fax, upon transmission and the receipt of the
appropriate answerback at the end of such transmission.
15.3 In proving such service by post it shall be sufficient to prove
that the letter containing the notice was properly addressed and
delivered or put into the post as a prepaid registered letter. In
proving effective transmission by fax, it shall be sufficient to
prove that the fax containing such notice was sent to the
appropriate number and the appropriate answerback was received at
the end of the transmission in respect of the number of pages
comprised in the notice.
16 MISCELLANEOUS
16.1 No neglect, delay or indulgence on the part of any party hereto in
enforcing any term or condition hereof shall operate as a waiver
thereof. None of the parties hereto shall be entitled to assert
that any of its obligations has been waived unless the waiver was
granted in writing and any waiver granted shall not release that
party from performance of its remaining obligations. The exercise
of any right, power or remedy by any party hereto under this
Agreement shall not preclude any other or further exercise thereof
or the exercise of any other right, power or remedy howsoever
conferred. The rights, powers and remedies of any party hereto
herein provided are cumulative and are not exclusive of any rights,
powers or remedies provided by law or otherwise.
16.2 Any liability to SBC Warburg under this Agreement may in whole or
in part be released, compounded or compromised or time or
indulgence given by SBC Warburg in its absolute discretion as
regards any party under such liability without prejudicing or
affecting its rights against any other party in respect of the same
or a like liability, whether joint and several or otherwise.
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<PAGE> 29
16.3 The provisions of this Agreement (including without prejudice to
the generality of the foregoing obligations, warranties,
representations, undertakings, indemnities and covenants) which
shall not have been fully completed shall continue in full force
and effect notwithstanding the completion of all matters and
arrangements referred to in or contemplated by this Agreement.
16.4 In exercising any right or power as trustee hereunder SBC Warburg
shall be entitled to act in such manner as it shall in its absolute
discretion consider appropriate and shall not be responsible in any
way to any other person for so acting.
16.5 The illegality or unenforceability of any part of this Agreement
shall not affect the legality or validity or enforceability of the
remainder of this Agreement.
16.6 Any time, date or period mentioned in this Agreement may be
extended by mutual agreement between Old Mutual the SAGA Fund and
SBC Warburg but as regards any time, date or period originally
fixed or so extended as aforesaid, time shall be of the essence of
this Agreement.
16.7 This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same agreement
and any party may enter into this Agreement by executing any such
counterpart.
17 PROTECTION OF TRUSTEES
17.1 This Agreement is executed and made by the trustees of the Master
Trust not individually, but as trustees under the Declaration of
Trust of the Master Trust dated as of September 1, 1995, and the
obligations of this Agreement are not binding upon any of the such
trustees individually.
18 GOVERNING LAW AND JURISDICTION
18.1 This Agreement shall be governed by and construed in accordance
with the laws of England.
18.2 Each of the parties hereto hereby submits to the exclusive
jurisdiction of the English Courts for all purposes relating to
this Agreement.
18.3 Each Warrantor hereby appoints Norose Notices Limited at its
registered office for the time being (being at the date hereof
Kempson House, Camomile Street, London EC3A 7AN) to act as its
agent to accept service of process out of the English High Court in
relation to all matters arising out of this Agreement. If for any
reason such agent shall cease to be the agent of any such party for
the service of process, the relevant party shall forthwith notify
SBC Warburg and, on request of SBC Warburg, appoint a new agent for
service of process in England and deliver to SBC Warburg a copy of
the new agent's acceptance of that appointment within 30 days.
Nothing in this Agreement shall affect the right to serve process
in any other manner permitted by law.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
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<PAGE> 30
SCHEDULE 1
WARRANTIES
1 Recitals (A) to (H) (both inclusive) are true and accurate in all respects.
2 All factual information supplied in writing by any Warrantor or the Directors
to SBC Warburg for the purposes of the Placing and the Placement Memorandum
(including without limitation all material supplied for the purposes of any
marketing activity or presentation relating thereto and the answers to the
questions contained in the Verification Notes), was, to the best of the
knowledge, information and belief of such party, when given, and remains,
true and accurate in all material respects and not incomplete or misleading
in any material respect and all forecasts, projections and estimates so
supplied have been made after due and proper consideration, are fair and
honest and represent reasonable expectations based on facts known or which
ought on reasonable enquiry to have been known to such party or the
Directors.
3 The Placement Memorandum complies with all applicable laws and the Listing
Rules and, without prejudice to the generality of the foregoing, contains all
the information which investors in the SAGA Fund and their professional
advisers would reasonably require, and reasonably expect to find there, for
the purpose of making an informed assessment of the assets and liabilities,
financial position, profits and losses and prospects of the SAGA Fund and the
Master Trust and of the rights attaching to the Shares.
4 All statements of fact contained in the Placement Memorandum are true and
accurate in all material respects and are not misleading and there are no
facts known or which on reasonable enquiry ought to have been known to the
SAGA Fund, the Master Trust, Old Mutual or the Directors which are not
disclosed in the Placement Memorandum the omission of which could make any
statement therein misleading in a material respect or which in the
circumstances of the Initial Offering and its associated transactions might
affect the import of any information contained in the Placement Memorandum in
a material respect or be material for disclosure therein or to any
prospective subscriber for Shares under the Initial Offering.
5 All statements, forecasts, estimates and expressions of opinion, intention
and expectation contained in the Placement Memorandum have been made after
due and proper consideration, are fair and honest and are reasonably based on
facts known to the SAGA Fund, the Master Trust, Old Mutual or the Directors
and, to the extent that they are based on reasonable assumptions, have regard
to the facts which are known or which on reasonable enquiry ought to have
been known to such party or the Directors.
6 The Initial Offering and the transactions referred to or provided for by the
Material Contracts and the creation, allotment and issue of the Shares, to
the
27
<PAGE> 31
extent appropriate, comply with the Statutes, the Listing Rules and all other
applicable laws, rules and regulations of Bermuda, the Republic of South
Africa and the Republic of Ireland. Any issue or distribution of the
Placement Memorandum or any marketing material relating to the SAGA Fund by
any Warrantor (other than any issue or distribution by SBC Warburg on behalf
of such Warrantor) will, to the extent appropriate, comply with the Statutes,
the Listing Rules and all other applicable laws, rules and regulations of
each jurisdiction in or into which such issue or distribution is made.
7 The SAGA Fund has power under its Memorandum of Association and Bye-Laws, and
the Directors are duly authorised and empowered, to allot and issue the
Shares comprised in the Initial Offering without any further sanction or
consent by members of the SAGA Fund or any class of them and no consents are
required by the SAGA Fund or the Directors to allot and issue any such
shares, or by any Warrantor to enter into and perform this Agreement and any
other Material Contract entered into by such Warrantor or by any Warrantor to
pay all commissions, fees, costs and expenses provided for herein, which in
each case have not been unconditionally obtained.
8 Compliance has been or will be made with all other legal requirements
concerning the SAGA Fund, the Master Trust and its officers and relating to
the Placing, the SAGA Fund's and the Master Trust's statutory books and
minute books have been or will at the Initial Closing Date be properly
written up and the SAGA Fund has not received any application or request for
rectification of its register of members.
9 A true and up-to-date copy of the Memorandum of Association and Bye-Laws of
the SAGA Fund (together with copies of all resolutions required by law to be
annexed thereto) and of the Declaration of Trust relating to the Master Trust
have been supplied to SBC Warburg or its legal counsel prior to the date of
this Agreement.
10 Neither the SAGA Fund nor the Master Trust has ever carried on any business
and has not incurred any material liabilities other than those referred to in
the Placement Memorandum and (apart from a registrars' agreement with
Westbroke Limited) the only material contracts to which each of the SAGA Fund
and the Master Trust is a party or by which it is bound are those described
in the Placement Memorandum.
11 No petition has been filed, order made or effective resolution passed for the
liquidation or winding-up of the SAGA Fund.
12 Neither the Master Trust nor the SAGA Fund is engaged in any material
litigation or arbitration proceedings or in any material proceedings before
any governmental, quasi-governmental or regulatory body and no such
proceedings are threatened or pending and there are no circumstances known to
any Warrantor which are likely to give rise to any such proceedings.
28
<PAGE> 32
13 The Placement Memorandum contains all relevant information concerning any
actual or potential material conflicts of interest between the SAGA Fund or
the Master Trust on the one hand and the Directors or any Warrantor on the
other hand of which the Warrantors are aware having made all reasonable
enquiries.
14 The SAGA Fund does not have any subsidiaries nor does it own any securities
or have any beneficial interest in any other company or entity and the SAGA
Fund has not entered into any binding commitment to acquire any investment
(other than interests in the Master Trust) or to enter into any joint venture
arrangement.
15 Neither the SAGA Fund nor, to the best of the knowledge and belief of the
Warrantors, any person acting on its behalf has engaged or will engage in any
directed selling efforts (as defined in Regulation S) with respect to the
Shares in the United States (except that no representation is made as to the
actions of SBC Warburg or any of its affiliates).
16 The SAGA Fund has received advice from its US legal counsel, Bingham, Dana &
Gould, that on the Completion Day the SAGA Fund will not be an investment
company required to be registered under the Investment Company Act pursuant
to section 3(c)(i) of that Act.
17 Neither the SAGA Fund, nor any person acting on its behalf to the best of the
knowledge and belief of the SAGA Fund having made all reasonable enquiries,
has offered or sold or will offer or sell Shares in the United States or for
the account of a US Person (except that no representation is made as to the
actions of SBC Warburg or any of its affiliates).
18 The Master Trust has or will at the Initial Closing Date have good and
marketable title to the Portfolio free from all liens, charges, encumbrances,
equities and other third party rights; all governmental or other consents
required for the transfer of the Portfolio to the Master Trust will by the
date of its transfer have been obtained and be in full force and effect.
19 The Global Fund has or will at the Initial Closing Date have good and
marketable title to the Global Fund Portfolio (as defined in the Portfolio
Transfer and Subscription Agreement), free from all liens, charges,
encumbrances, equities and other third party rights; all governmental or
other consents required for the transfer of such Global Fund Portfolio to the
Global Fund will by the date of its transfer have been obtained and be in
full force and effect.
20 Each Warrantor has full power and authority to enter into and perform the
obligations imposed on it pursuant to the terms of, this Agreement and any
other Material Contract entered into by such Warrantor.
29
<PAGE> 33
21 The warranties numbered 1 to 4 (inclusive) in Annex A to the US Placement
Agreement are true and accurate in all respects in so far as they relate to
the Master Trust.
30
<PAGE> 34
SIGNED by WILLIAM BOYAN )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL )
WILLIAM BOYAN
Duly authorised signatory
SIGNED by KENNETH WILLIAMS )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL )
KENNETH WILLIAMS
Duly authorised signatory
SIGNED by MICHAEL LEVETT )
for and on behalf of )
SOUTH AFRICAN MUTUAL LIFE )
ASSURANCE SOCIETY )
in the presence of: ANDREW MITCHELL )
MICHAEL LEVETT
Duly authorised signatory
SIGNED by WILLIAM LANGLEY )
for and on behalf of )
OLD MUTUAL ASSET MANAGERS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL )
WILLIAM LANGLEY
Duly authorised signatory
SIGNED by MICHAEL LEVETT )
for and on behalf of )
OLD MUTUAL FUND HOLDINGS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL )
MICHAEL LEVETT
Duly authorised signatory
31
<PAGE> 35
SIGNED by HOWARD MYLES )
WILLIAM ROGERS )
for and on behalf of )
SWISS BANK CORPORATION )
in the presence of: ANDREW CORRIE )
WILLIAM ROGERS
HOWARD MYLES
Duly authorised signatory
32
<PAGE> 1
EXHIBIT 8a
CUSTODIAN CONTRACT
Between
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE> 2
CUSTODIAN CONTRACT
This Contract is made as of the 23rd day of October, 1995 by and
between OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a trust organized and existing
under the laws of The Commonwealth of Massachusetts with its registered office
at Richmond House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "Fund"), and
STATE STREET BANK AND TRUST COMPANY, a Massachusetts trust company with its
principal place of business at 225 Franklin Street, Boston, Massachusetts,
U.S.A. (the "Custodian").
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets,
including securities which it desires to be held in places within the United
States ("domestic securities") and securities it desires to be held outside the
United States ("foreign securities") pursuant to the provisions of the
Declaration of Trust of the Fund dated as of September 1, 1995 (the
"Declaration of Trust"). The Fund agrees to deliver to the Custodian all
securities and cash owned by it, and all payments of income, payments of
principal or capital distributions received by it with respect to all
securities owned by the Fund from time to time, and the cash consideration
received by it for such beneficial interests ("Beneficial Interests") of the
Fund as may be issued, increased or sold from time to time. The Custodian shall
not be responsible for any property of the Fund held or received by the Fund
and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Article
5), the Custodian shall from time to time employ one or more sub-custodians
located in the United States, but only in accordance with an applicable vote by
the Board of Trustees of the Fund, and provided that the Custodian shall have
no more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such
sub-custodian has to the Custodian. The foregoing provision shall not be
construed to limit the liability of the Custodian for the acts or omissions of
a sub-custodian to amounts actually recovered from such sub-custodians. The
Custodian may employ as sub-custodian for the Fund's foreign securities and
other assets the foreign banking institutions and foreign securities
depositories designated in Schedule A hereto but only in accordance with the
provisions of Article 3. The Custodian shall not be liable for losses arising
from the bankruptcy, insolvency or receivership of any sub-custodian, except to
the extent any such loss results from the negligence or wilful misconduct
<PAGE> 3
of the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By the
Custodian in the United States
2.1 Holding Securities. The Custodian shall hold and physically segregate for
the account of the Fund all non-cash property, to be held by it in the
United States including all domestic securities owned by the Fund, other
than (a) securities which are maintained pursuant to Section 2.10 in a
clearing agency which acts as a securities depository or in a book-entry
system authorized by the U.S. Department of the Treasury (each, a "U.S.
Securities System") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper System of
the Custodian (the "Direct Paper System") pursuant to Section 2.11.
Non-cash property of the Fund held by the Custodian hereunder shall be
segregated in such a manner that said property will not be subject to the
claims of creditors of the Custodian.
2.2 Delivery of Securities. The Custodian shall release and deliver domestic
securities owned by the Fund held by the Custodian or in a U.S. Securities
System account of the Custodian or in the Custodian's Direct Paper book
entry system account ("Direct Paper System Account") only upon receipt of
Proper Instructions, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
3) In the case of a sale effected through a U.S. Securities System, in
accordance with the provisions of Section 2.10 hereof;
4) To the depository agent in connection with tender or other similar
offers for securities of the Fund;
5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
2
<PAGE> 4
6) To the issuer thereof, or its agent, for transfer into the name of the
Fund or into the name of any nominee or nominees of the Custodian or into
the name or nominee name of any agent appointed pursuant to Section 2.9 or
into the name or nominee name of any sub-custodian appointed pursuant to
Article 1; or for exchange for a different number of bonds, certificates or
other evidence representing the same aggregate face amount or number of
units; provided that, in any such case, the new securities are to be
delivered to the Custodian;
7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such case,
the Custodian shall have no responsibility or liability for any loss
arising from the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own negligence or
willful misconduct;
8) For exchange or conversion pursuant to any plan of merger, consolidation,
recapitalization, reorganization or readjustment of the securities of the
issuer of such securities, or pursuant to provisions for conversion
contained in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash, if any, are
to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar securities or
the surrender of interim receipts or temporary securities for definitive
securities; provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
10) For delivery in connection with any loans of securities made by the Fund,
but only against receipt of adequate collateral as agreed upon from time to
time by the Custodian and the Fund, which may be in the form of cash or
obligations issued by the United States government, its agencies or
instrumentalities, except that in connection with any loans for which
collateral is to be credited to the Custodian's account in the book-entry
system authorized by the U.S. Department of the Treasury, the Custodian
will not be held liable or responsible for the delivery of securities owned
by the Fund prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowings by the Fund
requiring a pledge of assets by the Fund, but only against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under the Securities
Exchange Act of
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<PAGE> 5
1934 (the "Exchange Act") and a member of The National Association of
Securities Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any registered
national securities exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in connection
with transactions by the Fund;
13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Fund;
14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of Beneficial Interests in connection with distributions in
kind, as may be described from time to time in the Fund's currently
effective registration statement under the Investment Company Act of
1940 (the "Registration Statement"), in satisfaction of requests by
holders of Beneficial Interests for repurchase, decrease or
redemption; and
15) For any other proper trust purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive Committee signed by an
officer and certified by the Secretary or an Assistant Secretary,
specifying the securities of the Fund to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper trust purpose, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Domestic securities held by the Custodian
(other than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund, unless
the Fund has authorized in writing the appointment of a nominee to be used
in common with other registered investment companies having the same
investment adviser as the Fund, or in the name or nominee name of any
agent appointed pursuant to Section 2.9 or in the name or nominee name of
any sub-custodian appointed pursuant to Article 1. All securities
accepted by the Custodian on behalf of the Fund under the terms of this
Contract shall be in "street name" or other good delivery form. If,
however, the Fund directs the Custodian to maintain securities in "street
name", the Custodian shall utilize its best efforts only to timely collect
income due the Fund on such
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<PAGE> 6
securities and to notify the Fund on a best efforts basis only of
relevant corporate actions including, without limitation, pendency of
calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the United States in the name of the Fund,
subject only to draft or order by the Custodian acting pursuant to
the terms of this Contract, and shall hold in such account or accounts,
subject to the provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by the Fund in a
bank account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian for the
Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies as
it may in its discretion deem necessary or desirable; provided, however,
that every such bank or trust company shall be qualified to act as a
custodian under the Investment Company Act of 1940 and that each such
bank or trust company and the funds to be deposited with each such bank
or trust company shall be approved in writing by vote of a majority of
the Board of Trustees of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be withdrawable by the
Custodian only in that capacity.
2.5 Availability of Federal Funds. Upon mutual agreement between the Fund
and the Custodian, the Custodian shall, upon the receipt of Proper
Instructions, make federal funds available to the Fund as of specified
times agreed upon from time to time by the Fund and the Custodian in the
amount of checks received in payment for Beneficial Interests of the
Fund which are deposited into the Fund's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other payments
with respect to United States registered securities held hereunder to
which the Fund shall be entitled either by law or pursuant to custom in
the securities business, and shall collect on a timely basis all income
and other payments with respect to United States bearer domestic
securities if, on the date of payment by the issuer, such securities
are held by the Custodian or its agent thereof and shall credit such
income, as collected, to the Fund's custodian account. Without
limiting the generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest
when due on securities held hereunder. Income due the Fund on United
States securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Fund. The Custodian will have no duty
or responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.
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<PAGE> 7
2.7 Payment of Fund Monies. Upon receipt of Proper Instructions, which may
be continuing instructions when deemed appropriate by the parties, the
Custodian shall pay out monies of the Fund in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of the
Fund but only (a) against the delivery of such securities or
evidence of title to such options, futures contracts or options
on futures contracts to the Custodian (or any bank, banking firm
or trust company doing business in the United States or abroad
which is qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by the
Custodian as its agent for this purpose pursuant to Section 2.9)
registered in the name of the Fund or in the name of a nominee
of the Custodian referred to in Section 2.3 hereof or in proper
form for transfer; (b) in the case of a purchase effected
through a U.S. Securities System, in accordance with the
conditions set forth in Section 2.10 hereof; (c) in the case of
a purchase involving the Direct Paper System, in accordance with
the conditions set forth in Section 2.11; (d) in the case of
repurchase agreements entered into between the Fund and the
Custodian, or another bank, or a broker-dealer which is a member
of NASD, (i) against delivery of the securities either in
certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund
of securities owned by the Custodian along with written evidence
of the agreement by the Custodian to repurchase such securities
from the Fund or (e) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such transfer
may be effected prior to receipt of a confirmation from a broker
and/or the applicable bank pursuant to Proper Instructions as
defined in Article 5;
2) In connection with conversion, exchange or surrender of
securities owned by the Fund as set forth in Section 2.2
hereof;
3) For payment of the amount of dividends received in respect of
securities sold short;
4) For any other proper trust purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a
resolution of the Board of Trustees or of the Executive
Committee of the Fund signed by an officer of the Fund and
certified by its Secretary or an Assistant Secretary,
specifying the amount of such payment, setting forth the purpose
for which such payment is to be made, declaring such purpose to
be a proper trust purpose, and naming the person or persons to
whom such payment is to be made;
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<PAGE> 8
In connection with the following type of expenses, the Custodian shall
make payments upon Proper Instructions from the Fund from an account
of the Fund controlled from outside of the United States:
5) For the redemption, decrease or repurchase of Beneficial Interests
issued by the Fund as set forth in Section 4 hereof;
6) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer
agent and legal fees, and operating expenses of the Fund whether
or not such expenses are to be in whole or part capitalized or
treated as deferred expenses; and
7) For the payment of any dividends or distributions declared pursuant
to the governing documents of the Fund.
2.8 Liability for Payment in Advance of Receipt of Securities Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of domestic securities for the
account of the Fund is made by the Custodian in advance of receipt of
securities in the absence of specific written instructions from the
Fund to so pay in advance, the Custodian shall be absolutely liable
to the Fund for such securities to the same extent as if the securities
had been received by the Custodian.
2.9 Appointment of Agents. With the prior consent of the Fund, the
Custodian may at any time or times in its discretion appoint (and may
at any time remove) any other bank or trust company which is itself
qualified under the Investment Company Act of 1940, as amended, to act
as a custodian, as its agent to carry out such of the provisions of
this Article 2, as may be agreed between the Custodian and the Fund
from time to time; provided, however, that the appointment of any
agent shall not relieve the Custodian of its responsibilities
hereunder. The Custodian shall be responsible for the fees and
expenses of any such agent, except as otherwise provided in the
written fee schedule between the Custodian and the Fund.
2.10 Deposit of Fund Assets in U.S. Securities Systems. The Custodian may
deposit and/or maintain domestic securities owned by the Fund in a
clearing agency registered with the Securities and Exchange Commission
under Section 17A of the Securities Exchange Act of 1934, which acts
as a securities depository, or in the book-entry system authorized by
the U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "U.S. Securities System" in
accordance with applicable Federal Reserve Board and
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<PAGE> 9
Securities and Exchange Commission rules and regulations, if any, and subject
to the following provisions:
1) The Custodian may keep domestic securities of the Fund in a U.S.
Securities System provided that such securities are represented in an
account ("Account") of the Custodian in the U.S. Securities System which
shall not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
2) The records of the Custodian with respect to domestic securities of the
Fund which are maintained in a U.S. Securities System shall identify by
book-entry those securities belonging to the Fund;
3) The Custodian shall pay for domestic securities purchased for the
account of the Fund in a U.S. Securities System upon (i) receipt of
advice from the U.S. Securities System that such securities have been
transferred to the Account, and (ii) the making of an entry on the
records of the Custodian to reflect such payment and transfer for the
account of the Fund. The Custodian shall transfer domestic securities
sold for the account of the Fund in a U.S. Securities System upon (i)
receipt of advice from the U.S. Securities System that payment for such
securities has been transferred to the Account, and (ii) the making of an
entry on the records of the Custodian to reflect such transfer and
payment for the account of the Fund. Copies of all advices from the U.S.
Securities System of transfers of domestic securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request, the
Custodian shall furnish the investment adviser to the Fund (the
"Investment Adviser"), and if requested by the Fund, the Fund
confirmation of each transfer to or from the account of the Fund in the
form of a written advice or notice and shall furnish to the Investment
Adviser, and if requested by the Fund, the Fund copies of daily
transaction sheets reflecting each day's transactions in the U.S.
Securities System for the account of the Fund;
4) The Custodian shall provide the Investment Adviser, and if requested by
the Fund, the Fund with any report obtained by the Custodian on the U.S.
Securities System's accounting system, internal accounting control and
procedures for safeguarding securities deposited in the U.S. Securities
System;
5) The Custodian shall have received the initial or annual certificate, as
the case may be, required by Article 14 hereof;
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<PAGE> 10
6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the U.S. Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or any of
its agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the U.S. Securities System; at the election of the
Fund, it shall be entitled to be subrogated to the rights of the
Custodian with respect to any claim against the U.S. Securities
System or any other person which the Custodian may have as a
consequence of any such loss or damage if and to the extent that the
Fund has not been made whole for any such loss or damage.
2.11 Fund Assets Held in the Custodian's Direct Paper System. The Custodian
may deposit and/or maintain securities owned by the Fund in the Direct
Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;
4) The Custodian shall pay for securities purchased for the account of
the Fund in the Direct Paper System upon the making of an entry on
the records of the Custodian to reflect such payment and transfer of
securities to the account of the Fund. The Custodian shall tranfer
securities sold for the account of the Fund in the Direct Paper
System upon the making of an entry on the records of the Custodian to
reflect such transfer and receipt of payment for the account of the
Fund;
5) The Custodian shall furnish the Investment Adviser, and if requested
by the Fund, the Fund confirmation of each transfer to or from the
account of the Fund, in the form of a written advice or notice, of
Direct Paper on the next business day following such transfer and
shall furnish to the Investment Adviser, and if requested by the
Fund, the Fund copies of daily transaction sheets reflecting each
day's transaction in the U.S. Securities System for the account of
the Fund;
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<PAGE> 11
6) The Custodian shall provide the Fund with any report on its system
of internal accounting control as the Fund may reasonably request
from time to time.
2.12 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts for
and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained in
an account by the Custodian pursuant to Section 2.10 hereof, (i) in
accordance with the provisions of any agreement among the Fund, the
Custodian and a broker-dealer registered under the Exchange Act and a
member of the NASD (or any futures commission merchant registered under
the Commodity Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national securities
exchange (or the Commodity Futures Trading Commission or any registered
contract market), or of any similar organization or organizations,
regarding escrow or other arrangements in connection with transactions by
the Fund, (ii) for purposes of segregating cash or government securities
in connection with options purchased, sold or written by the Fund or
commodity futures contracts or options thereon purchased or sold by the
Fund, (iii) for the purposes of compliance by the Fund with the
procedures required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange Commission
relating to the maintenance of segregated accounts by registered
investment companies and (iv) for other proper trust purposes, but only,
in the case of clause (iv), upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer of the Fund and
certified by the Secretary or an Assistant Secretary, setting forth the
purpose or purposes of such segregated account and declaring such
purposes to be proper trust purposes.
2.13 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and state
tax purposes in connection with receipt of income or other payments with
respect to domestic securities of the Fund held by it and in connection
with transfers of securities.
2.14 Proxies. The Custodian shall, with respect to the domestic securities held
hereunder, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver
to the Investment Adviser, and if requested by the Fund, the Fund such
proxies, all proxy soliciting materials and all notices relating to such
securities.
2.15 Communications Relating to Fund Securities. Subject to the provisions of
Section 2.3, the Custodian shall transmit promptly to the Investment
Adviser, and if requested by the Fund, the Fund all written information
(including, without limitation, pendency of calls and
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<PAGE> 12
maturities of domestic securities and expirations of rights in connection
therewith and notices of exercise of call and put options written by the
Fund and the maturity of futures contracts purchased or sold by the Fund)
received by the Custodian from issuers of the domestic securities being
held for the Fund. With respect to tender or exchange offers, the Custodian
shall transmit promptly to the Investment Adviser, and if requested by the
Fund, the Fund all written information received by the Custodian from
issuers of the domestic securities whose tender or exchange is sought and
from the party (or his agents) making the tender or exchange offer. If the
Fund desires to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall procure that the
Custodian is notified at least three business days prior to the date on
which the Custodian is to take such action.
3. Duties of the Custodian with Respect to Property of the Fund Held Outside
of the United States
3.1 Appointment of Foreign Sub-Custodians. The Fund hereby authorizes and
instructs the Custodian to employ as sub-custodians for the Fund's
securities and other assets maintained outside the United States the
foreign banking institutions and foreign securities depositories designated
on Schedule A hereto ("foreign sub-custodians"). Upon receipt of "Proper
Instructions", as defined in Section 5 of this Contract, together with a
certified resolution of the Fund's Board of Trustees, the Custodian and the
Fund may agree to amend Schedule A hereto from time to time to designate
additional foreign banking institutions and foreign securities depositories
to act as sub-custodian. Upon receipt of Proper Instructions, the Fund may
instruct the Custodian to cease the employment of any one or more such
sub-custodians for maintaining custody of the Fund's assets.
3.2 Assets to be Held. The Custodian shall limit the securities and other
assets maintained in the custody of the foreign sub-custodians to: (a)
"foreign securities", as defined in paragraph(c)(1) of Rule 17f-5 under the
Investment Company Act of 1940, and (b) cash and cash equivalents in such
amounts as the Custodian or the Fund may determine to be reasonably
necessary to effect the Fund's foreign securities transactions. The
Custodian shall identify on its books as belonging to the Fund, the foreign
securities of the Fund held by the Custodian and each foreign
sub-custodian.
3.3 Foreign Securities Systems. Except as may otherwise be agreed upon in
writing by the Custodian and the Fund, assets of the Funds shall be
maintained in a clearing agency which acts as a securities depository or in
a book-entry system for the central handling of securities located outside
of the United States (each a "Foreign Securities System") only through
arrangements implemented by the Custodian or by the foreign banking
institutions serving
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<PAGE> 13
as sub-custodians pursuant to the terms hereof (Foreign Securities Systems
and U.S. Securities Systems are collectively referred to herein as the
"Securities Systems"). Where possible, such arrangements shall include
entry into agreements containing the provisions set forth in Section 3.5
hereof.
3.4 Holding Securities. The Custodian may hold securities and other non-cash
property for all of its customers, including the Fund, with a Foreign
Sub-custodian in a single account that is identified as belonging to the
Custodian for the benefit of its customers, provided however, that (i) the
records of the Custodian with respect to securities and other non-cash
property of the Fund which are maintained in such account shall identify by
book-entry those securities and other non-cash property belonging to the
Fund and (ii) the Custodian shall require that securities and other
non-cash property so held by the Foreign Sub-custodian be held separately
from any assets of the Foreign Sub-custodian or of others.
3.5 Agreements with Foreign Banking Institutions. Each agreement with a
foreign banking institution shall be substantially in the form set forth in
Exhibit 1 hereto and shall provide that: (a) the Fund's assets will not be
subject to any right, charge, security interest, lien or claim of any kind
in favor of the foreign banking institution or its creditors or agent,
except a claim of payment for their safe custody or administration; (b)
beneficial ownership of the Fund's assets will be freely transferable
without the payment of money or value other than for custody or
administration; (c) adequate records will be maintained identifying the
assets as belonging to the Fund; (d) officers of or auditors employed by,
or other representatives of the Custodian, including to the extent
permitted under applicable law the independent public accountants for the
Fund, will be given access to the books and records of the foreign banking
institution relating to its actions under its agreement with the Custodian;
and (e) assets of the Fund held by the foreign sub-custodian will be
subject only to the instructions of the Custodian or its agents.
3.6 Access of Independent Accountants of the Fund. Upon request of the Fund,
the Custodian will use its best efforts to arrange for the independent
accountants of the Fund to be afforded access to the books and records of
any foreign banking institution employed as a foreign sub-custodian insofar
as such books and records relate to the performance of such foreign banking
institution under its agreement with the Custodian.
3.7 Reports by Custodian. The Custodian will supply to the Investment
Adviser, and if requested by the Fund, the Fund from time to time, as
mutually agreed upon, statements in respect of the securities and other
assets of the Fund held by foreign sub-custodians, including but not
limited to an identification of entities having possession of the Fund's
securities and other assets and advices or notifications of any transfers
of securities to or
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<PAGE> 14
from each custodial account maintained by a foreign banking institution for
the Custodian on behalf of the Fund indicating, as to securities acquired
for the Fund, the identity of the entity having physical possession of such
securities.
3.8 Transactions in Foreign Custody Account. (a) Except as otherwise provided
in paragraph (b) of this Section 3.8, the provision of Sections 2.2 and 2.7
of this Contract shall apply, mutatis mutandis to the foreign securities of
the Fund held outside the United States by foreign sub-custodians.
(b) Notwithstanding any provision of this Contract to the contrary,
settlement and payment for securities received for the account of the Fund
and delivery of securities maintained for the account of the Fund may be
effected in accordance with the customary established securities trading or
securities processing practices and procedures in the jurisdiction or
market in which the transaction occurs, including, without limitation,
delivering securities to the purchaser thereof or to a dealer therefor (or
an agent for such purchaser or dealer) against a receipt with the
expectation of receiving later payment for such securities from such
purchaser or dealer.
(c) Securities maintained in the custody of a foreign sub-custodian may be
maintained in the name of such entity's nominee to the same extent as set
forth in Section 2.3 of this Contract, and the Fund agrees to hold any such
nominee harmless from any liability as a holder of record of such
securities, except for liabilities resulting from the negligence or
misfeasance of such sub-custodian or nominee.
3.9 Liability of Foreign Sub-Custodians. Each agreement pursuant to which the
Custodian employs a foreign banking institution as a foreign sub-custodian
shall require the institution to exercise reasonable care in the
performance of its duties and to indemnify, and hold harmless, the
Custodian and the Fund from and against any loss, damage, cost, expense,
liability or claim arising out of or in connection with the institution's
performance of such obligations. At the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with respect to
any claims against a foreign banking institution as a consequence of any
such loss, damage, cost, expense, liability or claim if and to the extent
that the Fund has not been made whole for any such loss, damage, cost,
expense, liability or claim.
3.10 Liability of Custodian. The Custodian shall be liable for the acts or
omissions of a foreign banking institution to the same extent as set forth
with respect to sub-custodians generally in this Contract and, regardless
of whether assets are maintained in the custody of a foreign banking
institution, a foreign securities depository or a branch of a U.S. bank as
contemplated by paragraph 3.13 hereof, the Custodian shall not be liable
for any loss,
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<PAGE> 15
damage, cost, expense, liability or claim resulting from nationalization,
expropriation, currency restrictions, or acts of war or terrorism or any
loss where the sub-custodian has otherwise exercised reasonable care.
Notwithstanding the foregoing provisions of this paragraph 3.10, in
delegating custody duties to State Street London Ltd., the Custodian shall
not be relieved of any responsibility to the Fund for any loss due to such
delegation, except such loss as may result from (a) political risk
(including, but not limited to, exchange control restrictions,
confiscation, expropriation, nationalization, insurrection, civil strife
or armed hostilities) or (b) other losses (excluding a bankruptcy or
insolvency of State Street London Ltd. not caused by political risk) due
to Acts of God, nuclear incident or other losses under circumstances where
the Custodian and State Street London Ltd. have exercised reasonable care.
3.11 Reimbursement for Advances. If the Fund requires the Custodian to advance
cash or securities for any purpose including the purchase or sale of
foreign exchange or of contracts for foreign exchange, or in the event
that the Custodian or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with
the performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the Fund
shall be security therefor and should the Fund fail to repay the Custodian
promptly after written request, the Custodian shall be entitled to utilize
available cash and to dispose of such Funds assets to the extent necessary
to obtain reimbursement.
3.12 Monitoring Responsibilities. The Custodian shall furnish annually to the
Fund, during the month of June, information concerning the foreign
sub-custodians employed by the Custodian. Such information shall be
similar in kind and scope to that furnished to the Fund in connection with
the initial approval of this Contract. In addition, the Custodian will
promptly inform the Fund in the event that the Custodian learns of a
material adverse change in the financial condition of a foreign
sub-custodian or any material loss of the assets of the Fund or in the
case of any foreign sub-custodian not the subject of an exemptive order
from the Securities and Exchange Commission is notified by such foreign
sub-custodian that there appears to be a substantial likelihood that its
shareholders' equity will decline below $200 million (U.S. dollars or the
equivalent thereof) or that its shareholders' equity has declined below
$200 million (in each case computed in accordance with generally accepted
U.S. accounting principles).
3.13 Branches of U.S. Banks. (a) Except as otherwise set forth in this
Contract, the provisions hereof shall not apply where the custody of the
Funds assets are maintained in a foreign branch of a banking institution
which is a "bank" as defined by Section 2(a)(5) of the Investment Company
Act of 1940 meeting the qualification set forth in Section 26(a) of said
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<PAGE> 16
Act. The appointment of any such branch as a sub-custodian shall be
governed by paragraph 1 of this Contract.
(b) Cash held for the Fund in the United Kingdom shall be maintained
in an interest bearing account established for the Fund with the
Custodian's London branch, which account shall be subject to the
direction of the Custodian, State Street London Ltd. or both.
3.14 Tax Law. The Custodian shall have no responsibility or liability for
any obligations now or hereafter imposed on the Fund or the Custodian
as custodian of the Fund by the tax law of the United States of
America or any state or political subdivision thereof (except taxes
attributable to the domicile of the Custodian in Massachusetts and in
such case the Custodian shall notify the Fund). It shall be the
responsibility of the Fund to notify the Custodian of the obligations
imposed on the Fund or the Custodian as custodian of the Fund by the
tax law of jurisdictions other than those mentioned in the above
sentence, including responsibility for withholding and other taxes,
assessments or other governmental charges, certifications and
governmental reporting. The sole responsibility of the Custodian with
regard to such tax law shall be to use reasonable efforts to assist the
Fund with respect to any claim for exemption or refund under the tax law
of jurisdictions for which the Fund has provided such information.
4. Payments for Repurchases or Redemptions and Sales of Beneficial
Interests of the Fund
From such funds as may be available for the purpose but subject to the
limitations of the Declaration of Trust and any applicable votes of the Board of
Trustees of the Fund pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available to the Fund at an
account of the Fund controlled from outside of the United States for payment to
holders of Beneficial Interests who have delivered to the Transfer Agent a
request for redemption, decrease or repurchase of their Beneficial Interests. In
connection with the redemption, decrease or repurchase of Beneficial Interests
of the Fund, the Custodian is authorized upon receipt of instructions from the
Transfer Agent to wire funds to or through a commercial bank designated by the
redeeming Beneficial Interest holders. In connection with the redemption,
decrease or repurchase of Beneficial Interests of the Fund, the Custodian shall
honor checks drawn on the Custodian by a holder of Beneficial Interests, which
checks have been furnished by the Fund to the holder of Beneficial Interests,
when presented to the Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the Fund and the
Custodian.
The Custodian shall receive from the placement agent for the Fund's
Beneficial Interests or from the Transfer Agent of the Fund and deposit into
the Fund's account such payments as are
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<PAGE> 17
received for Beneficial Interests of that Fund issued, increased or sold from
time to time by the Fund. The Custodian will provide timely notification to the
Fund and the Transfer Agent of any receipt by it of payments for Beneficial
Interests of the Fund.
5. Proper Instructions
Proper Instructions as used herein means a writing signed or initialled
by one or more person or persons as the Board of Trustees shall have from time
to time authorized. Each such writing shall set forth the specific transaction
or type of transaction involved, including a specific statement of the purpose
for which such action is requested. Oral instructions will be considered
Proper Instructions if the Custodian reasonably believes them to have been given
by a person authorized to give such instructions with respect to the transaction
involved. The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an Assistant
Secretary as to the authorization by the Board of Trustees of the Fund
accompanied by a detailed description of procedures approved by the Board of
Trustees, Proper Instructions may include communications effected directly
between electro-mechanical or electronic devices provided that the Board of
Trustees and the Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian pursuant to
any three-party agreement which requires a segregated asset account in
accordance with Section 2.12. The Fund may by written notice to the Custodian
remove the right of the Investment Adviser to give Proper Instructions.
Following receipt of such notice the Custodian shall act only upon the
instruction of the Fund and such other persons as may be specified from time
to time by Proper Instructions.
6. Actions Permitted without Express Authority
The Custodian may in its discretion, without express authority from the
Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under
this Contract, provided that all such payments shall be
accounted for to the Fund;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of the Fund, checks, drafts
and other negotiable instruments; and
16
<PAGE> 18
4) in general, attend to all non-discretionary details in
connection with the sale, exchange, substitution,
purchase, transfer and other dealings with the
securities and property of the Fund except as otherwise
directed by the Board of Trustees of the Fund.
7. Evidence of Authority
The Custodian shall be protected in acting upon any instructions,
notice, request, consent, certificate or other instrument or paper reasonably
believed by it to be genuine and to have been properly executed by or on behalf
of the Fund. The Custodian may receive and accept a certified copy of a vote
of the Board of Trustees of the Fund as conclusive evidence (a) of the
authority of any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Trustees pursuant to the
Declaration of Trust as described in such vote, and such vote may be considered
as in full force and effect until receipt by the Custodian of written notice to
the contrary.
8. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to
the entity or entities appointed by the Board of Trustees of the Fund to keep
the books of account of the Fund and/or compute the book capital accounts of
the outstanding Beneficial Interests of the Fund.
9. Records and Reports
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet the
obligations of the Fund under the Investment Company Act of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder. All such records shall be the property of the Fund and shall at
all times during the regular business hours of the Custodian be open for
inspection by duly authorized officers, employees or agents of the Fund and
employees and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of securities
owned by the Fund and held by the Custodian and shall, when requested to do so
by the Fund and for such compensation as shall be agreed upon between the Fund
and the Custodian, include certificate numbers in such tabulations.
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<PAGE> 19
10. Opinion of Fund's Independent Accountant
The Custodian shall take all reasonable action, as the Fund may from
time to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder in
connection with the preparation of the Fund's Form N-1A, and Form N-SAR or
other annual reports to the Securities and Exchange Commission and with respect
to any other requirements of such Commission, provided that the books and
records of the Fund shall be audited outside of the United States.
11. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
domestic securities deposited and/or maintained in a Securities System,
relating to the services provided by the Custodian under this Contract; such
reports, shall be of sufficient scope and in sufficient detail, as may
reasonably be required by the Fund to provide reasonable assurance that any
material inadequacies would be disclosed by such examination, and, if there are
no such inadequacies, the reports shall so state.
12. Compensation of Custodian
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time between
the Fund and the Custodian.
13. Responsibility of Custodian
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it or
delivered by it pursuant to this Contract and shall be held harmless in acting
upon any notice, request, consent, certificate or other instrument reasonably
believed by it to be genuine and to be signed by the proper party or parties,
including any futures commission merchant acting pursuant to the terms of a
three-party futures or options agreement. The Custodian shall exercise
reasonable care in carrying out the provisions of this Contract, but shall be
kept indemnified by and shall be without liability to the Fund for any action
taken or omitted by it in good faith without negligence. It shall be entitled
to rely on and may act upon advice of
18
<PAGE> 20
outside counsel (who may be counsel for the Fund) on all matters, and shall be
without liability for any action reasonably taken or omitted pursuant to such
advice.
Except as may arise from the Custodian's own negligence or willful
misconduct or the negligence or willful misconduct or a sub-custodian or agent,
the Custodian shall be without liability to the Fund for any loss, liability,
claim or expense resulting from or caused by; (i) events or circumstances
beyond the reasonable control of the Custodian or any sub-custodian or
Securities System or any agent or nominee of any of the foregoing, including,
without limitation, nationalization or expropriation, imposition of currency
controls or restrictions, the interruption, suspension or restriction of
trading on or the closure of any securities market, power or other mechanical
or technological failures or interruptions, computer viruses or communications
disruptions, acts of war or terrorism, riots, revolutions, work stoppages
(except a work stoppage by employees of the Custodian which is not part of a
more general labor stoppage), natural disasters or other similar events or
acts; (ii) errors by the Fund or the Investment Adviser in their instructions
to the Custodian provided such instructions have been in accordance with this
Contract; (iii) the insolvency of or acts or omissions by a Securities System;
(iv) any delay or failure of any broker, agent or intermediary, central bank or
other commercially prevalent payment or clearing system to deliver to the
Custodian's sub-custodian or agent securities purchased or in the remittance or
payment made in connection with securities sold; (v) any delay or failure of
any company, corporation, or other body in charge or registering or
transferring securities in the name of the Custodian, the Fund, the Custodian's
sub-custodians, nominees or agents or agents or any consequential losses
arising out of such delay or failure to transfer such securities including
non-receipt of bonus, dividends and rights and other accretions or benefits;
(vi) delays or inability to perform its duties due to any disorder in market
infrastructure with respect to any particular security or Securities System;
and (vii) any provision of any present or future law or regulation or order of
the United States of America, or any state thereof, or any other country, or
political subdivision thereof having appropriate jurisdiction or of any court
of competent jurisdiction.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment by the Custodian of its own money
or which action may, in the reasonable opinion of the Custodian, result in the
Custodian or its nominee assigned to the Fund being liable for the payment of
money or incurring liability of some other form, the Fund upon request of the
Custodian, as a prerequisite to requiring the Custodian to take such action,
shall provide indemnity to the Custodian in an amount and form satisfactory to
it.
If the Fund requires the Custodian, its affiliates, subsidiaries or
agents, to advance cash or securities for any purpose (including but not
limited to securities settlements, foreign exchange contracts and assumed
settlement) or in the event that the Custodian or its nominee shall incur or be
assessed any taxes, charges, expenses, assessments, claims or liabilities in
connection with the
19
<PAGE> 21
performance of this Contract, except such as may arise from its or its
nominee's own negligent action, negligent failure to act or willful misconduct,
any property at any time held for the account of the Fund shall be security
therefor and should the Fund fail to repay the Custodian promptly after written
request, the Custodian shall be entitled to utilize available cash and to
dispose of the Fund assets to the extent necessary to obtain reimbursement.
In no event shall the Custodian be liable for indirect, special or
consequential damages.
14. Computerized Reporting Services.
14.1 Protection of Equipment, Confidential or Proprietary Programs
and Information. The Fund agrees to use the equipment, computer programs
and other information supplied by the Custodian under this Agreement solely for
its own internal use and benefit and not for resale or other transfer or
disposition to, or use by or for the benefit of, any other person or
organization without the prior written approval of the Custodian.
The Fund acknowledges that the data bases, computer programs, screen
formats, screen designs, report formats, interactive design techniques, and
other information furnished to the Fund by the Custodian constitute copyrighted
trade secrets or proprietary information of substantial value to the Custodian.
Such data bases, programs and other information are collectively referred to
below as "Proprietary Information". The Fund agrees that it shall treat all
Proprietary Information as proprietary to the Custodian and that it shall not
divulge any Proprietary Information to any person or organization except as
expressly permitted hereunder. Without limiting the foregoing, the Fund agrees
for itself and its employees and agents:
(1) to use such programs and data bases (i) solely on the
Custodian's computers, (ii) solely from equipment at Fund
locations agreed to between the Fund and the Custodian and (iii)
solely in accordance with the Custodian's applicable user
documentation;
(2) to use equipment supplied by the Custodian solely with programs
supplied by the Custodian and no other programs or software;
(3) to refrain from copying or duplicating in any way (other than in
the normal course of performing processing on Custodian's
computers) any part of any Proprietary Information, provided,
however, that the Fund may copy or duplicate Proprietary
Information to the extent incorporated in any computer generated
print-out or other written report containing Customer Data for
internal use consistent with this
20
<PAGE> 22
Agreement but only to the extent necessary to copy or duplicate
such Customer Data;
(4) to refrain from obtaining unauthorized access to any programs,
data or other information not owned by the Fund, and if such
access is accidentally obtained, to respect and safeguard the
same as Proprietary Information;
(5) to refrain from causing or allowing information transmitted
from the Custodian's computer to the Fund's terminals to be
retransmitted to another computer, terminal or other device;
(6) that the Fund shall have access to only those authorized
transactions as agreed to between the Fund and the Custodian;
and
(7) to honor reasonable written requests made by the Custodian to
protect at the Custodian's expense the rights of the Custodian
in Proprietary Information at common law, under the Federal
copyright statutes and under other Federal and state statutes.
Notwithstanding anything in this Section 14 to the contrary, the Fund
may disclose Proprietary Information, (i) if and to the extent required to do so
by applicable law or pursuant to an order of a court of competent jurisdiction
or other governmental agency having appropriate authority, in which case the
Fund shall, to the extent possible, provide the Custodian with timely notice
prior to any such disclosure and (ii) if and to the extent such information has
become public other than as a result of a breach of this Agreement by the Fund
or any officer, trustee, employee or agent of the Fund.
14.2 Fund Acknowledgement. The Fund hereby acknowledges that the data
and information it may access from the Custodian utilizing the computerized
reporting services will be unaudited and may not be accurate due to inaccurate
pricing of securities, delays of a day or more in updating account information
and other causes for which Custodian will not be liable to the Fund.
15. Effective Period, Termination and Amendment
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or mailed,
postage prepaid to the other party, such termination to take effect not sooner
than thirty (30) days after the date of such delivery or mailing by the Fund and
not sooner than one hundred
21
<PAGE> 23
twenty (120) days after the date of such delivery or mailing by the Custodian;
provided, however that the Custodian shall not act under Section 2.10 hereof in
the absence of receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees of the Fund has approved the
initial use of a particular Securities System, as required by Rule 17f-4 under
the Investment Company Act of 1940, as amended and that the Custodian shall not
act under Section 2.11 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees has approved the initial use of the Direct Paper System; provided
further, however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any provision
of the Declaration of Trust, and further provided, that the Fund may at any
time by action of its Board of Trustees (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the Custodian,
or (ii) immediately terminate this Contract in the event of the appointment of
a conservator or receiver for the Custodian by the Comptroller of the Currency
or upon the happening of a like event at the direction of an appropriate
regulatory agency or court of competent jurisdiction. Notwithstanding the
foregoing, the Fund may terminate this Agreement with immediate effect by
written notice to the Custodian in the event that the Initial Closing (as such
term is defined in the Registration Statement) is cancelled without
postponement to a later date.
Upon termination of the Contract, the Fund shall pay to the Custodian
such compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and disbursements, as
provided in the written fee schedule between the Fund and the Custodian.
16. Successor Custodian
If a successor custodian shall be appointed by the Board of Trustees of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form for
transfer, all securities then held by it hereunder and shall transfer to an
account of the successor custodian all of the Fund's securities held in a
Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board of
Trustees of the Fund, deliver at the office of the Custodian and transfer such
securities, funds and other properties in accordance with such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Trustees shall have been delivered to
the Custodian on or before the date
22
<PAGE> 24
when such termination shall become effective, then the Custodian shall have the
right to deliver to a bank or trust company, which is a "bank" as defined in
the Investment Company Act of 1940, of its own selection, having an aggregate
capital, surplus, and undivided profits, as shown by its last published report,
of not less than $200,000,000, all securities, funds and other properties held
by the Custodian and all instruments held by the Custodian relative thereto and
all other property held by it under this Contract and to transfer to an account
of such successor custodian all of the Fund's securities held in any Securities
System. Thereafter, and until a successor custodian shall be named by the
Fund, such bank or trust company shall be the successor of the Custodian under
this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to or of
the Board of Trustees to appoint a successor custodian, the Custodian shall be
entitled to fair compensation for its services during such period as the
Custodian retains possession of such securities, funds and other properties and
the provisions of this Contract relating to the duties and obligations of the
Custodian shall remain in full force and effect.
17. Interpretive and Additional Provisions
In connection with the operation of this Contract, the Custodian and
the Fund, may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion be
consistent with the general tenor of this Contract. Any such interpretive or
additional provisions shall be in a writing signed by both parties and shall be
annexed hereto, provided that no such interpretive or additional provisions
shall contravene any applicable federal or state regulations or any provision
of the Declaration of Trust of the Fund. No interpretive or additional
provisions made as provided in the preceding sentence shall be deemed to be an
amendment of this Contract.
18. Massachusetts Law to Apply
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of The Commonwealth of Massachusetts, without
regard for any choice of law rules that would require application of the laws
of another jurisdiction.
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<PAGE> 25
19. Prior Contracts
This Contract supersedes and terminates, as of the date hereof, all
prior contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.
20. Assignment
This Contract may not be assigned by the Custodian without the written
consent of the Fund.
21. Confidentiality
None of the parties hereto shall, unless compelled to do so by any
court of competent jurisdiction either before or after the termination of this
Agreement, disclose to any person not authorized by the relevant party to
receive the same any non-public information relating to such party and to the
affairs of such party of which the party disclosing the same shall have become
possessed in connection with this Agreement and each party shall use its best
endeavors to prevent any such disclosure as aforesaid.
22. Notices
Any notice, instruction or other instrument required to be given
hereunder may be delivered in person to the offices of the parties as set forth
herein during normal business hours or delivered prepaid registered mail or by
telex, cable or telecopy to the parties at the following addresses or such other
addresses as may be notified by any party from time to time.
To the Fund: Old Mutual South Africa Equity Trust
Richmond House
12 Par-la-Ville Road
Hamilton, HM 11
Bermuda
Attention: J.C.R. Collis
Telephone: 809-295-1422
Telecopy: 809-295-4720
24
<PAGE> 26
To the Custodian: State Street Bank and Trust Company
1776 Heritage Drive
North Quincy, Massachusetts, U.S.A.
Attention: Thomas Muscarella
Telephone: 617-985-9808
Telecopy: 617-537-5173
Such notice, instruction or other instrument shall be deemed to have
been served in the case of a registered letter at the expiration of five
business days after posting, in the case of cable twenty-four hours after
dispatch and, in the case of telex, immediately on dispatch and if delivered
outside normal business hours it shall be deemed to have been received at the
next time after delivery when normal business hours commence and in the case of
cable, telex or telecopy on the business day after the receipt thereof.
Evidence that the notice was properly addressed, stamped and put into the post
shall be conclusive evidence of posting.
23. Limitation on Liability of Trustees
This Agreement is executed and made by the Trustees of the Fund not
individually, but as trustees under the Declaration of Trust of the Fund dated
as of September 1, 1995, and the obligations of this Agreement are not binding
upon any of such Trustees individually.
24. Shareholder Communications Election
Securities and Exchange Commission Rule 14b-2 requires banks which hold
securities for the account of customers to respond to requests by issuers of
securities for the names, addresses and holdings of beneficial owners of
securities of that issuer held by the bank unless the beneficial owner has
expressly objected to disclosure of this information. In order to comply with
the rule, the Custodian needs the Fund to indicate whether it authorizes the
Custodian to provide the Fund's name, address, and share position to requesting
companies whose securities the Fund owns. If the Fund tells the Custodian "no",
the Custodian will not provide this information to requesting companies. If the
Fund tells the Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting to disclosure
of this information for all securities owned by the Fund or any funds or
accounts established by the Fund. For the Fund's protection, the Rule prohibits
the requesting company from using the Fund's name and address for any purpose
other than corporate communications. Please indicate below whether the Fund
consents or objects by checking one of the alternatives below.
25
<PAGE> 27
YES / / The Custodian is authorized to release the Fund's name, address, and
share positions.
NO / / The Custodian is not authorized to release the Fund's name,
address, and share positions.
26
<PAGE> 28
SIGNATURE PAGE
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the day and year first written above.
ATTEST OLD MUTUAL SOUTH AFRICA EQUITY TRUST
M.J. Levett By William Langley
- -------------------------------- ---------------------------------
Its: Treasurer
ATTEST STATE STREET BANK AND TRUST COMPANY
Glenn Francis By K.C. Cuocolo
- -------------------------------- ---------------------------------
Its: Senior Vice President
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<PAGE> 29
Schedule A
The following foreign banking institutions and foreign securities
depositories have been approved by the Board of Trustees of Old Mutual South
Africa Equity Trust for use as sub-custodians for the Fund's securities and
other assets:
(Insert banks and securities depositories)
Certified:
- --------------------------
Fund's Authorized Officer
Date:_____________________
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<PAGE> 30
EXHIBIT 1
SUBCUSTODIAN AGREEMENT
AGREEMENT made this ____ day of __________________, 19 __, between
State Street Bank and Trust Company, a Massachusetts trust company (hereinafter
referred to as the "Custodian"), having its principal place of business at 225
Franklin Street, Boston, MA, and __________________________ (hereinafter
referred to as the "Subcustodian"), a _____________________ organized under the
laws of ________________________ and having an office at _____________________.
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Account (the "Account") with the
Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Account and to hold and
maintain all Property in the Account in accordance with the terms and
conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
A. Establishment of the Account. Custodian hereby requests that
Subcustodian establish for each client of the Custodian an Account which shall
be composed of:
1. A Custody Account for any and all Securities (as
hereinafter defined) from time to time received by Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter
defined) from time to time received by Subcustodian therefor.
B. Use of the Account. The Account shall be used exclusively
to hold, acquire, transfer or otherwise care for, on behalf of Custodian as
custodian and the customers of Custodian and not for Custodian's own interest,
Securities and such Cash or cash equivalents as are transferred to Subcustodian
or as are received in payment of any transfer of, or as payment on, or
interest on, or dividend from, any such Securities (herein collectively called
"Cash").
<PAGE> 31
C. Transfer of Property in the Account. Beneficial ownership of the
Securities and Cash in the Account shall be freely transferable without payment
of money or value other than for safe custody and administration.
D. Ownership and Segregation of Property in the Account. The
ownership of the property in the Account, whether Securities, Cash or both, and
whether any such property is held by Subcustodian in an Eligible Depository,
shall be clearly recorded on Subcustodian's books as belonging to Custodian on
behalf of Custodian's customers, and not for Custodian's own interest and, to
the extent that Securities are physically held in the Account, such Securities
shall also be physically segregated from the general assets of Subcustodian,
the assets of Custodian in its individual capacity and the assets of
Subcustodian's other customers. In addition, Subcustodian shall maintain such
other records as may be necessary to identify the property hereunder as
belonging to each Account.
E. Registration of Securities in the Account. Securities which are
eligible for deposit in a depository as provided for in Paragraph III may be
maintained with the depository in an account for Subcustodian's customers.
Securities which are not held in a depository and that are ordinarily held in
registered form will be registered in the name of Subcustodian or in the name of
Subcustodian's nominee, unless alternate Instructions are furnished by
Custodian.
II. Services to Be Provided By the Subcustodian
The services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.
A. Services Performed Pursuant to Instructions. All transactions
involving the Securities and Cash in the Account shall be executed solely in
accordance with Custodian's Instructions as that term is defined in Paragraph
VI hereof, except those described in paragraph B below.
B. Services to Be Performed Without Instructions. Subcustodian will,
unless it receives Instructions from Custodian to the contrary:
1. Collect Cash. Promptly collect and receive all dividends,
income, principal, proceeds from transfer and other payments with respect to
property held in the Account, and present for payment all Securities held in
the Account which are called, redeemed or retired or otherwise become payable
and all coupons and other income items which call for payment upon
presentation, and credit Cash receipts therefrom to the Deposit Account.
2. Exchange Securities. Promptly exchange Securities where
the exchange is purely ministerial including, without limitation, the exchange
of temporary Securities for those in definitive form and the exchange of
warrants, or other documents of entitlement to Securities, for the Securities
themselves.
2
<PAGE> 32
3. Sale of Rights and Fractional Interests. Whenever
notification of a rights entitlement or a fractional interest resulting from a
rights issue, stock dividend or stock split is received for the Account and such
rights entitlement or fractional interest bears an expiration date, Subcustodian
will promptly endeavor to obtain Custodian's Instructions, but should these not
be received in time for Subcustodian to take timely action, Subcustodian is
authorized to sell such rights entitlement or fractional interest and to credit
the Account.
4. Execute Certificates. Execute in Custodian's name for the
Account, whenever Subcustodian deems it appropriate, such ownership and other
certificates as may be required to obtain the payment of income from the
Securities held in the account.
5. Pay Taxes and Receive Refunds. To pay or cause to be paid
from the Account any and all taxes and levies in the nature of taxes imposed on
the property in the Account by any governmental authority, and to take all steps
necessary to obtain all tax exemptions, privileges or other benefits, including
reclaiming and recovering any foreign withholding tax, relating to the Account
and to execute any declaration, affidavits, or certificates of ownership which
may be necessary in connection therewith.
6. Prevent Losses. Take such steps as may be reasonably
necessary to secure or otherwise prevent the loss of, entitlements attached to
or otherwise relating to property held in the Account.
C. Additional Services.
1. Transmission of Notices of Corporate Action. By such means
as will permit Custodian to take timely action with respect thereto,
Subcustodian will promptly notify Custodian upon receiving notices or reports,
or otherwise becoming aware, of corporate action affecting Securities held in
the Account (including, but not limited to, calls for redemption, mergers,
consolidations, reorganizations, recapitalizations, tender offers, rights
offerings, exchanges, subscriptions and other offerings) and dividend, interest
and other income payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements.
Upon request by Custodian, Subcustodian will promptly deliver, or cause any
Eligible Depository authorized and acting hereunder to deliver, to Custodian
all notices, proxies, proxy soliciting materials and other communications that
call for voting or the exercise of rights or other specific action (including
material relative to legal proceedings intended to be transmitted to security
holders) relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting
instruments to be executed by the registered holder of the Securities, but
without indicating the manner in which such Securities are to be voted.
3
<PAGE> 33
3. Monitor Financial Service. In furtherance of its obligations under
this Agreement, Subcustodian will monitor a leading financial service with
respect to announcements and other information respecting property held in the
Account, including announcements and other information with respect to
corporate actions and dividend, interest and other income payments.
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian, maintain all or
any part of the Securities in the Account with a securities depository or
clearing agency which is incorporated or organized under the laws of a country
other than the United States of America and is supervised or regulated by a
government agency or regulatory authority in the foreign jurisdiction having
authority over such depositories or agencies, and which operates (a) the
central system for handling of designated securities or equivalent book entries
in , or (b) a transnational system for the central handling of
securities or equivalent book entries (herein called "Eligible Depository"),
provided however, that, while so maintained, such Securities shall be subject
only to the directions of Subcustodian, and that Subcustodian duties,
obligations and responsibilities with regard to such Securities shall be the
same as if such Securities were held by Subcustodian on its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge, security
interest, lien or claim of any kind (collectively "Charges") in favor of
Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment for such property's safe
custody or administration in accordance with the terms of this Agreement.
Subcustodian will immediately notify Custodian of any attempt by any party to
assert any Charge against the property held in the Account and shall take all
lawful actions to protect such property from such Charges until Custodian has
had a reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian represents and warrants that:
(A) It is a branch of a "qualified U.S. bank" or an "eligible foreign
custodian" as those terms are defined in Rule 17f-5 of the Investment Company
Act of 1940, a copy of which is attached hereto as Attachment A (the "Rule"),
and Subcustodian shall immediately notify Custodian, in writing or by other
authorized means, in the event that there appears to be a substantial
likelihood that Subcustodian will cease to qualify under the Rule as currently
in effect or as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United
States Securities and Exchange Commission which order permits Custodian to
employ Subcustodian notwithstanding the fact that Subcustodian fails to qualify
under the terms of the Rule, and Subcustodian shall
4
<PAGE> 34
immediately notify Custodian, in writing or by other authorized means, if for
any reason it is no longer covered by such exemptive order.
Upon receipt of any such notification required under (A) or (B) of this
section, Custodian may terminate this Agreement immediately without prior
notice to Subcustodian.
VI. Definitions
A. Instructions. The term "Instructions" means:
1. instructions in writing signed by authorized individuals
designated as such by Custodian;
2. telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable form as
shall customarily be used for the transmission of like information, and
4. such other forms of communication as from time to time may
be agreed upon by Custodian and Subcustodian, which Subcustodian believes in
good faith to have been given by Custodian or which are transmitted with proper
testing or authentication pursuant to terms and conditions which Custodian may
specify.
Unless otherwise expressly provided, all Instructions shall continue in full
force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practice.
B. Account. The term "Account" means collectively the Custody
Account, and the Deposit Account.
C. Securities. The term "Securities" includes, without limitation,
stocks, shares, bonds, debentures, debt securities (convertible or
non-convertible), notes, or other obligations or securities and any
certificates, receipts, futures contracts, foreign exchange contracts, options,
warrants, scrip or other instruments representing rights to receive, purchase
or subscribe for the same, or evidencing or representing any other rights or
interests therein, or in any property or assets.
VII. Miscellaneous Provisions
5
<PAGE> 35
A. Statements Regarding the Account. Subcustodian will supply
Custodian with such statements regarding the Account as Custodian may request,
including the identity and location of any Eligible Depository authorized and
acting hereunder. In addition, Subcustodian will supply Custodian an advice or
notification of any transfers of Securities to or from the Account indicating,
as to Securities acquired for the Account, if applicable, the Eligible
Depository having physical possession of such Securities.
B. Examination of Books and Records. Subcustodian agrees that its
books and records relating to the Account and Subcustodian's actions under this
Agreement shall be open to the physical, on-premises inspection and audit at
reasonable times by officers of, auditors employed by or other representatives
of Custodian including (to the extent permitted under the law of _____________)
the independent public accountants for any customer of Custodian whose property
is being held hereunder and such books and records shall be retained for such
period as shall be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian will
furnish its auditor's reports on its system of internal controls, and
Subcustodian will use its best efforts to obtain and furnish similar reports of
any Eligible Depository authorized and acting hereunder.
C. Standard of Care. In holding, maintaining, servicing and disposing
of Property under this Agreement, and in fulfilling any other obligations
hereunder, Subcustodian shall exercise the same standard of care that it
exercises over its own assets, provided that Subcustodian shall exercise at
least the degree of care and maintain adequate insurance as expected of a
prudent professional Subcustodian for hire and shall assume the burden of
proving that it has exercised such care in its maintenance of Property held by
Subcustodian in its Account. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as
if it had itself retained physical possession of them. Subcustodian shall also
indemnify and hold harmless Custodian and each of Custodian's customers from
and against any loss, damage, cost, expense, liability or claim (including
reasonable attorney's fees) arising out of or in connection with the improper
or negligent performance or the nonperformance of the duties of Subcustodian.
Subcustodian shall be responsible for complying with all provisions of the law
of _________________, or any other law, applicable to Subcustodian in connection
with its duties hereunder, including (but not limited to) the payment of all
transfer taxes or other taxes and compliance with any currency restrictions and
securities laws in connection with its duties as Subcustodian.
D. Loss of Cash or Securities. Subcustodian agrees that, in the event
of any loss of Securities or Cash in the Account, Subcustodian will use its
best efforts to ascertain the circumstances relating to such loss and will
promptly report the same to Custodian and shall use every legal means available
to it to effect the quickest possible recovery.
6
<PAGE> 36
E. Compensation of Subcustodian. Custodian agrees to pay to
Subcustodian from time to time such compensation for its services and such
out-of-pocket or incidental expenses of Subcustodian pursuant to this Agreement
as may be mutually agreed upon in writing from time to time.
F. Operating Requirements. The Subcustodian agrees to follow such
Operating Requirements as the Custodian may establish from time to time. A copy
of the current Operating Requirements is attached as Attachment B to this
Agreement.
G. Termination. This Agreement may be terminated by Subcustodian or
Custodian on 60 days' written notice to the other party, sent by registered
mail, provided that any such notice, whether given by Subcustodian or
Custodian, shall be followed within 60 days by Instructions specifying the
names of the persons to whom Subcustodian shall deliver the Securities in the
Account and to whom the Cash in the account shall be paid. If within 60 days
following the giving of such notice of termination, Subcustodian does not
receive such Instructions, Subcustodian shall continue to hold such Securities
and Cash subject to this Agreement until such Instructions are given. The
obligations of the parties under this Agreement shall survive the termination
of this Agreement.
H. Notices. Unless otherwise specified in this Agreement, all notices
and communications with respect to matters contemplated by this Agreement shall
be in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to
such other address as either party hereto may from time to time designate by
notice duly given in accordance with this paragraph):
To Subcustodian:
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, MA 02105
I. Confidentiality. Subcustodian and Custodian shall each use its best
efforts to maintain the confidentiality of the property in the Account and the
beneficial owners thereof, subject, however, to the provisions of any laws,
requiring disclosure. In addition, Subcustodian shall safeguard any test keys,
identification codes or other security devices which Custodian shall make
available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
7
<PAGE> 37
J. Assignment. This Agreement shall not be assignable by either
party but shall bind any successor in interest of Custodian and Subcustodian
respectively.
K. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of ____________. To the extent inconsistent with
this Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
CUSTODIAN: STATE STREET BANK AND TRUST COMPANY
By:____________________
Date:__________________
AGREED TO BY SUBCUSTODIAN
_______________________
By:____________________
Date:__________________
8
<PAGE> 38
SCHEDULE A
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Argentina Citibank, N.A. Caja de Valores S.A.
Australia Westpac Banking Austraclear Limited;
Corporation
Reserve Bank Information and
Transfer System (RITS)
Austria GiroCredit Bank Oesterreichische
Aktiengesellschaft Kontrollbank AG
der Sparkassen
Bangladesh Standard Chartered Bank None
Belgium Generale Bank Caisse Interprofessionnelle
de Depots et de Virements
de Titres S.A. (CIK);
Banque Nationale de Belgique
Botswana Barclays Bank of Botswana Limited None
Brazil Citibank, N.A. Bolsa de Valores de Sao Paulo
(Bovespa);
Banco Central do Brasil,
Systema Especial de Liquidacao
e Custodia (SELIC)
Canada Canada Trustco The Canadian Depository
Mortgage Company for Securities Limited (CDS)
Chile Citibank, N.A. None
</TABLE>
<PAGE> 39
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
China The Hongkong and Shanghai Shanghai Securities Central
Banking Corporation Limited Clearning and Registration
Corporation (SSCCRC);
Shenzhen Securities Registrars
Co., Ltd. and it designated
agent banks
Colombia Cititrust Colombia S.A. None
Sociedad Fiduciaria
Cyprus Barclays Bank PLC None
Czech Republic Ceskoslovenska Obchodni Stredisko Cennych Papiru (SCP);
Banka A.S.
Czech National Bank (CNB)
Denmark Den Danske Bank Vaerdipapircentralen -
The Danish Securities
Center (VP)
Egypt National Bank of Egypt None
Finland Kansallis-Osake-Pankki The Central Share Register of
Finland
France Banque Paribas Societe Interprofessionnelle
pour la Compensation des
Valeurs Mobilieres (SICOVAM);
Banque de France,
Saturne System
Germany Berliner Handels- The Deutscher Kassenverein AG
und Frankfurter Bank
Ghana Barclays Bank of Ghana Limited None
</TABLE>
<PAGE> 40
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
- ------- ------------ ------------------
<S> <C> <C>
Greece National Bank of The Central Securities Depository
Greece S.A. (Apothetirio Titlon A.E.)
Hong Kong Standard Chartered Bank The Central Clearing and
Settlement System (CCASS)
Hungary Citibank Budapest Rt. None
India The Hongkong and Shanghai None
Banking Corporation Limited
Indonesia Standard Chartered Bank None
Ireland Bank of Ireland None;
The Central Bank of Ireland,
The Gilt Settlement Office (GSO)
Israel Bank Hapoalim B.M. The Clearing House of the
Tel Aviv Stock Exchange
Italy Morgan Guaranty Trust Monte Titoli S.p.A.;
Company
Banca d'Italia
Japan Sumitomo Trust None;
& Banking Co., Ltd.
Bank of Japan Net System
Jordan The British Bank of the Middle East None
Kenya Barclays Bank of Kenya Limited None
Korea Bank of Seoul Korea Securities Depository (KSD)
</TABLE>
<PAGE> 41
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Malaysia Standard Chartered Bank None
Malaysia Berhad
Mexico Citibank, N.A. S.D. INDEVAL, S.A. de C.V.
(Instituto para el Deposito
de Valores);
Banco de Mexico
Morocco Banque Commerciale du Maroc None
Netherlands MeesPierson N.V. Nederlands Centraal
Instituut voor Giraal
Effectenverkeer B.V.
(NECIGEF)
New Zealand ANZ Banking Group None:
(New Zealand) Limited
The Reserve Bank of
New Zealand,
Austraclear NZ
Norway Christiania Bank og Verdipapirsentralen -
Kreditkasse The Norwegian Registry
of Securities (VPS)
Pakistan Deutsche Bank AG None
Peru Citibank, N.A. Caja de Valores (CAVAL)
Philippines Standard Chartered Bank None
Poland Citibank Poland S.A. The National Depository
of Securities (Centrum
Krajowego Depozytu
Papierow Wartos ciowych)
</TABLE>
<PAGE> 42
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUND CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
Portugal Banco Comercial Portugues Central de Valores
Mobiliarios (Central)
Singapore The Development Bank The Central Depository
of Singapore Ltd. (Pte) Limited (CDP)
South Africa Standard Bank of None
South Africa Limited
Spain Banco Santander, S.A. Servicio de Compensacion y
Liquidacion de Valores (SCLV);
Banco de Espana,
Anotaciones en Cuenta
Sri Lanka The Hongkong and Shanghai The Central Depository
Banking Corporation Limited System (Pvt) Limited
Sweden Skandinaviska Enskilda Vardepapperscentralen -
Banken The Swedish Securities Register
Center (VPC)
Switzerland Union Bank of Switzerland Schweizerische Effekten -
Giro AG (SEGA)
Taiwan Central Trust of China The Taiwan Securities
Central Depository
Company, Ltd. (TSCD)
Thailand Standard Chartered Bank The Share Depository Center
(SDC)
Turkey Citibank, N.A. Istanbul Stock Exchange
Settlement and Custody Co. Inc.
(I.M.K.B. Takas ve Saklama A.S.)
</TABLE>
<PAGE> 43
STATE STREET BANK AND TRUST COMPANY
GLOBAL CUSTODY NETWORK
FOR MUTUAL FUNDS CLIENTS
1995
<TABLE>
<CAPTION>
COUNTRY SUBCUSTODIAN CENTRAL DEPOSITORY
<S> <C> <C>
United Kingdom State Street Bank and None;
Trust Company
The Bank of England,
The Central Gilts Office (CGO);
The Central Moneymarkets Office (CMO)
Uruguay Citibank, N.A. None
Venezuela Citibank, N.A. None
Zambia Barclays Bank of Zambia Limited None
Zimbabwe Barclays Bank of Zimbabwe Limited None
</TABLE>
<PAGE> 1
EXHIBIT 8(b)
SUBCUSTODIAN AGREEMENT
AGREEMENT made this November 29, 1993, between State Street Bank and
Trust Company, a Massachusetts Trust Company (hereinafter referred to as the
"Custodian"), having its principal place of business at 225 Franklin Street,
Boston, MA, and Standard Bank of South Africa Limited (hereinafter referred to
as the "Subcustodian"), a bank organized under the laws of the Republic of South
Africa and having its registered office at 46 Marshall Street, Johannesburg,
2001 Republic of South Africa.
WHEREAS, Custodian has been appointed to act as Trustee, Custodian or
Subcustodian of securities and monies on behalf of certain of its customers
including, without limitation, collective investment undertakings, investment
companies subject to the U.S. Investment Company Act of 1940, as amended, and
employee benefit plans subject to the U.S. Employee Retirement Income Security
Act of 1974, as amended;
WHEREAS, Custodian wishes to establish Accounts (the "Accounts") with
the Subcustodian to hold and maintain certain property for which Custodian is
responsible as custodian; and
WHEREAS, Subcustodian agrees to establish the Accounts and to hold and
maintain all Property in the Accounts in accordance with the terms and
conditions herein set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the Custodian and the Subcustodian agree as follows:
I. The Account
A. Establishment of the Account
Custodian hereby requests that Subcustodian establish for each client
of the Custodian an Account which shall be composed of:
1. A Custody Account for any and all Securities (as
hereinafter defined) from time to time received by
Subcustodian therefor, and
2. A Deposit Account for any and all Cash (as hereinafter
defined) from time to time received by Subcustodian
therefor.
<PAGE> 2
-2-
B. Use of the Account
The Account shall be used exclusively to hold, acquire, transfer or
otherwise care for, on behalf of Custodian as custodian and the customers of
Custodian and not for Custodian's own interest, Securities, and such Cash or
cash equivalents as are transferred to Subcustodian or as are received in
payment of any transfer of, or as payment on, or interest on, or dividend from,
any such Securities (herein collectively called "Cash").
C. Transfer of Property in the Account
Beneficial ownership of the Securities and Cash in the Account shall be
freely transferable without payment of money or value other than for safe
custody and administration.
D. Ownership and Segregation of Property in Account
The ownership of the property in the Account, whether Securities, Cash
or both, and whether any such property is held by Subcustodian in an Eligible
Depository, shall be clearly recorded on Subcustodian's books as belonging to
Custodian on behalf of Custodian's customers, and not for Custodian's own
interest and, to the extent that Securities are physically held in the Account,
such Securities shall also be physically segregated from the general assets of
Subcustodian, the assets of Custodian in its individual capacity and the assets
of Subcustodian's other customers. In addition, Subcustodian shall maintain such
other records as may be necessary to identify the property hereunder as
belonging to each Account.
E. Registration of Securities in the Account
Securities which are eligible for deposit in a depository as provided
for in Paragraph III may be maintained with the depository in an account for
Subcustodian's customers. Securities which are not held in a depository and that
are ordinarily held in registered form will be registered in the name of the
Subcustodian or in the name of Subcustodian's nominee, unless alternate
Instructions are furnished by Custodian.
II. Services to be Provided by the Subcustodian
The Services Subcustodian will provide to Custodian and the manner in
which such services will be performed will be as set forth below in this
Agreement.
A. Services Performed Pursuant to Instructions
All transactions involving the Securities and Cash in the Account shall
be executed solely in accordance with Custodian's Instructions as
<PAGE> 3
-3-
that term is defined in Paragraph VI hereof, except those described in Paragraph
B below.
B. Services to be Performed without Instructions
Subcustodian will, unless it receives Instructions from Custodian to
the contrary:
1. Collect Cash
Promptly collect and receive all dividends, income, principal, proceeds
from transfer and other payments with respect to property held in the Account,
and present for payment all Securities held in the Account which are called,
redeemed or retired or otherwise become payable and all coupons and other income
items which call for payment upon presentation, and credit Cash receipts
therefrom to the Deposit Account.
2. Exchange Securities
Promptly exchange Securities where the exchange is purely
administrative including, without limitation, the exchange of temporary
Securities for those in definitive form and the exchange of warrants, or other
documents of entitlement to Securities, for the Securities themselves.
3. Sale of Rights and Fractional Interests
Whenever notification of a rights entitlement or a fractional interest
resulting from a rights issue, stock dividend or stock split is received for the
Account and such rights entitlement or fractional interest bears an expiration
date, Subcustodian will promptly endeavor to obtain Custodian's Instructions,
but should these not be received in time for Subcustodian to take timely action,
Subcustodian is authorized to sell such rights entitlement or fractional
interest and to credit the Account.
4. Execute Certificates
Execute in Custodian's name for the Account, whenever Subcustodian
deems it appropriate, such ownership and other certificates as may be required
to obtain the payment of income from the Securities held in the Account.
5. Pay Taxes and Receive Refunds
To pay or cause to be paid from the Account any and all taxes and
levies in the nature of taxes imposed on the property in the Account by any
governmental authority, and to take all steps necessary to obtain all tax
exemptions, privileges or other benefits, including reclaiming and recovering
any withholding tax, relating to the Account and to execute
<PAGE> 4
-4-
any declarations, affidavits, or certificates of ownership which may be
necessary in connection therewith.
6. Prevent Losses
Take such steps as may be reasonably necessary to secure, or otherwise
prevent the loss of, entitlements attached to or otherwise relating to property
held in the Account.
C. Additional Services
1. Transmission of Notices of Corporate Action
By such means as will permit Custodian to take timely action with
respect thereto, Subcustodian will promptly notify Custodian upon receiving
notices or reports, or otherwise becoming aware, of corporate actions affecting
Securities held in the Account (including, but not limited to, calls for
redemption, mergers, consolidations, reorganizations, recapitalizations, tender
offers, rights offerings, exchanges, subscriptions and other offerings) and
dividend, interest and other income payments relating to such Securities.
2. Communications Regarding the Exercise of Entitlements
Upon request by Custodian, Subcustodian will promptly deliver, or cause
any Eligible Depository authorized and acting hereunder to deliver, to Custodian
all notices, proxies, proxy soliciting materials and other communications that
call for voting or the exercise of rights or other specific action (including
material relative to legal proceedings intended to be transmitted to security
holders) relating to Securities held in the Account to the extent received by
Subcustodian or said Eligible Depository, such proxies or any voting instruments
to be executed by the registered holder of the Securities, but without
indicating the manner in which such Securities are to be voted.
3. Monitor Financial Service
In furtherance of its obligations under this Agreement, Subcustodian
will use its best endeavors to monitor a leading financial information service
with respect to announcements and other information respecting property held in
the Account, including announcements and other information with respect to
corporate actions and dividend, interest and other income payments.
<PAGE> 5
-5-
III. Use of Securities Depository
Subcustodian may, with the prior written approval of Custodian,
maintain all or any part of the Securities in the Account with a securities
depository or clearing agency which is incorporated or organized under the laws
of a country other than the United States of America and is supervised or
regulated by a government agency or regulatory authority in the foreign
jurisdiction having authority over such depositories or agencies, and which
operates (a) the central system for handling of designated securities or
equivalent book entries in South Africa or (b) a transnational system for the
central handling of securities or equivalent book entries (herein called
"Eligible Depository"), provided however, that, while so maintained, such
Securities shall be subject only to the directions of Subcustodian, and that
Subcustodian duties, obligations and responsibilities with regard to such
Securities shall be the same as if such Securities were held by Subcustodian on
its premises.
IV. Claims Against Property in the Account
The property in the account shall not be subject to any right, charge,
security interest, lien or claim of any kind (collectively "Charges") in favor
of Subcustodian or any Eligible Depository or any creditor of Subcustodian or of
any Eligible Depository except a claim for payment by Subcustodian for such
property's safe custody or administration in accordance with the terms of this
Agreement. Subcustodian will immediately notify Custodian of any attempt by any
party to assert any Charge against the property held in the Account and shall
take all lawful actions to protect such property from such Charges until
Custodian has had reasonable time to respond to such notice.
V. Subcustodian's Warranty
Subcustodian Represents and Warrants that:
(A) It is a branch of a "qualified U.S. bank" or it is an "eligible
foreign custodian" as those terms are defined in Rule 17f-5 of the Investment
Company Act of 1940, a copy of which is attached hereto as Attachment A (the
"Rule"), and Subcustodian shall immediately notify Custodian, in writing or by
other authorized means, in the event that there appears to be a substantial
likelihood that Subcustodian will cease to qualify under the Rule as currently
in effect or as hereafter amended, or
(B) It is the subject of an exemptive order issued by the United States
Securities and Exchange Commission which order permits Custodian to employ
Subcustodian notwithstanding the fact that
<PAGE> 6
-6-
Subcustodian fails to qualify under the terms the Rule, and Subcustodian shall
immediately notify Custodian, in writing or by other authorized means, if for
any reason it is no longer covered by such exemptive order.
Upon receipt of any such notification required under (A) or (B)
of this section, Custodian may terminate this Agreement immediately without
prior notice to Subcustodian.
VI. Definitions
A. Instructions
The term "Instructions" means
1. instructions in writing signed by authorized individuals designated
as such by Custodian;
2. SWIFT, telex or tested telex instructions of Custodian;
3. other forms of instructions in computer readable from as shall
customarily be used for the transmission of like information; and
4. such other forms of communication as from time to time may be
agreed upon by Custodian and Subcustodian, which Subcustodian
believes in good faith to have been given by Custodian or which are
transmitted with proper testing or authentication pursuant to terms
and conditions which Custodian may specify.
Unless otherwise expressly provided, all Instructions shall continue in
full force and effect until canceled or superseded. Subcustodian shall act in
accordance with Instructions and shall not be liable for any act or omission in
respect of any Instruction except in the case of willful default, negligence,
fraud, bad faith, willful misconduct, or reckless disregard of duties on the
part of Subcustodian. Subcustodian in executing all Instructions will take
relevant action in accordance with accepted industry practice and local
settlement practices. Where Instructions are incomplete or deficient in any
respects, the Subcustodian may act in accordance with the current market
practice governing that transaction at the time of its completion in supplying
any administrative or other non-discretionary details regarding such transaction
and may act in accordance with such details.
B. Account
The term "Account" means collectively the Custody Account, and the
Deposit Account.
<PAGE> 7
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C. Securities
The term "Securities" includes, without limitation, stocks, shares,
bonds, debentures, debt securities (convertible or non-convertible), or other
obligations or securities and any certificates, receipts, futures contracts,
foreign exchange contracts, options, warrants, scrip or other instruments
representing rights to receive, purchase or subscribe for the same, or
evidencing or representing any other rights or interest therein, or in any
property or assets.
VII Miscellaneous Provisions
A. Statements Regarding the Account
Subcustodian will supply Custodian with such statements regarding the
Account as Custodian may request, including the identity and location of any
Eligible Depository authorized and acting hereunder. In addition, Subcustodian
will supply Custodian with an advice or notification of any transfer of
Securities to or from the Account indicating, as to Securities acquired for the
Account, if applicable, the Eligible Depository having physical possession of
such securities.
B. Examination of Books and Records
Subcustodian agrees that its books and records relating to the Account
and Sub-custodian's actions under this agreement shall be open to the physical,
on-premises inspection and audit at reasonable times by officers of, auditors
employed by, or other representatives of Custodian including (to the extent
permitted under the laws of the Republic of South Africa) the independent public
accountants for any customer of Custodian whose property is being held
hereunder) and such books and records shall be retained for such period as shall
be agreed upon by Custodian and Subcustodian.
As Custodian may reasonably request from time to time, Subcustodian
will furnish its auditor's reports on its system of internal controls, and
Subcustodian will use its best efforts to obtain and furnish similar reports of
any Eligible Depository authorized and acting hereunder.
C. Standard of Care
In holding, maintaining, servicing and disposing of Property under this
Agreement and in fulfilling any other obligations hereunder, Subcustodian shall
exercise the same standard of care that it exercises over its own assets,
provided that Subcustodian shall exercise at least the degree of care and
maintain adequate insurance as expected of a prudent professional Subcustodian
for hire and shall assume the burden of proving
<PAGE> 8
-8-
that it has exercised such care in its maintenance of Property held by
Subcustodian in its Accounts. The maintenance of the Property in an Eligible
Depository shall not affect Subcustodian's standard of care, and Subcustodian
will remain as fully responsible for any loss or damage to such securities as if
it had itself retained physical possession of them. Subcustodian shall indemnify
and hold harmless Custodian and each of Custodian's customers from and against
any loss, damage, cost, expense, liability or claim (including reasonable
attorney's fees) arising out of or in connection with the improper or negligent
performance or the nonperformance of the duties of Subcustodian.
The Subcustodian will take due care but will not be responsible for any
loss, damage or costs arising from any tainted or fraudulent securities which
may be delivered to the Subcustodian by or on behalf of the Custodian unless the
Subcustodian, its agents or employees act fraudulently or in bad faith
themselves. The Subcustodian will, however assist in investigations when tainted
or fraudulent securities are delivered to the Subcustodian.
Subcustodian shall be responsible for complying with all provisions of
the laws of the Republic of South Africa, or any other law, applicable to
Subcustodian in connection with its duties hereunder, including (but not limited
to) the payment of all transfer taxes or other taxes and compliance with any
currency restrictions and securities laws in connection with its duties as
Subcustodian.
D. Loss of Cash or Securities
Subcustodian agrees that, in the event of any loss of Securities or
Cash in the Account, Subcustodian will use its best efforts to ascertain the
circumstances relating to such loss and will promptly report the same to
Custodian and shall use every legal means available to it to effect the quickest
possible recovery.
E. Compensation of Subcustodian
Custodian agrees to pay to Subcustodian from time to time such
compensation for its services and such out-of-pocket or incidental expenses of
Subcustodian pursuant to this Agreement as may be mutually agreed upon in
writing from time to time.
F. Operating Requirements
The Subcustodian agrees to follow such Operating Requirements as the
Custodian may establish from time to time, provided that such Requirements
conform with local market, exchange, and regulatory
<PAGE> 9
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procedures in South Africa. A copy of the current Custodian Operating
Requirements is attached as Attachment B to this Agreement.
G. Termination
This Agreement may be terminated by Subcustodian or Custodian on 60
days' written notice to the other party, sent by registered mail, provided that
any such notice, whether given by Subcustodian or Custodian, shall be followed
within 60 days by Instructions specifying the names of the persons to whom
Subcustodian shall deliver the Securities in the Account and to whom the Cash in
the Account shall be paid. If within 60 days following the giving of such notice
of termination, Subcustodian does not receive such Instructions, Subcustodian
shall continue to hold Securities and Cash subject to this Agreement until such
Instructions are given. The obligations of the parties under this Agreement
shall survive the termination of this Agreement.
H. Notices
Unless otherwise specified in this Agreement, all notices and
communications with respect to matters contemplated by this Agreement shall be
in writing, and delivered by mail, postage prepaid, telex, SWIFT, or other
mutually agreed telecommunication methods to the following addresses (or to such
other address as either party hereto may from time to time designate by notice
duly given in accordance with this paragraph):
To Subcustodian: The Standard Bank of South Africa Limited
46 Marshall Street
Johannesburg 2001
R.S.A.
Telex: 487367
SWIFT: SBZAZAJJ
To Custodian: State Street Bank and Trust Company
Securities Operations/
Network Administration
P.O. Box 1631
Boston, Massachusetts 02105
U.S.A.
I. Confidentiality
Subcustodian and Custodian shall each use its best efforts to maintain
the confidentiality of the property in the Account and the beneficial owners
thereof, subject however, to the provisions of any laws requiring disclosure. In
addition, Subcustodian shall safeguard any test keys, identification codes or
other security devices which Custodian shall
<PAGE> 10
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make available to it. The Subcustodian further agrees it will not disclose the
existence of this Agreement or any current business relationship unless
compelled by applicable law or regulation or unless it has secured the
Custodian's written consent.
J. Assignment
This Agreement shall not be assignable by either party but shall bind
any successor in interest of Custodian and Subcustodian respectively.
K. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the Republic of South Africa. To the extent inconsistent with this
Agreement or Custodian's Operating Requirements as attached hereto,
Subcustodian's rules and conditions regarding accounts generally or custody
accounts specifically shall not apply.
CUSTODIAN: STATE STREET BANK
AND TRUST COMPANY
By: James B. Lathrop
-------------------------
James B. Lathrop, Vice President
Date: November 29, 1993
AGREED TO BY SUBCUSTODIAN: STANDARD BANK OF SOUTH
AFRICA LIMITED
By: J.C. Moggee
-------------------------
Date:03 December 1993
<PAGE> 1
EXHIBIT 8(c)
CUSTODIAN AGREEMENT
To: State Street London Limited
State Street House
12 Nicholas Lane
London EC4N 7BN
Great Britain
Gentlemen:
The undersigned State Street Bank and Trust Company ("State Street") hereby
requests that State Street London Limited (the "Trust Company") establish a cash
account at State Street's licensed London branch (or at such other
deposit-taking institution in the United Kingdom as State Street may designate)
and a custody account for each custody customer and employee benefit plan
account identified in the Schedule attached to this Agreement and each
additional account which is or may hereafter be identified to this Agreement.
Such customers and accounts are referred to herein as the "Customer" or
"Customers." Each such cash account and each such custody account so established
will be referred to herein as the "Cash Account" and "Custody Account,"
respectively, and will be subject to the following terms and conditions:
1. The Trust Company shall hold in trust as agent for State
Street and shall physically segregate in the Cash Account and
Custody Account, respectively, such cash, bullion, coin,
stocks, shares, bonds, debentures, notes and other securities
and other property which is delivered to the Bank for those
State Street Accounts (the "Property").
2. a. Upon the prior approval of State Street the Trust
Company may deposit Securities, as hereafter defined,
in a securities depository or utilize a clearing
agency, incorporated or organized under the laws of a
country other than the United States;
b. When securities held for a Customer are deposited in
a securities depository or clearing agency by the
Trust Company, the Trust Company shall identify on
its books as belonging to State Street as agent for
the Customer, the securities so deposited.
3. Upon the written instructions of State Street, in accordance
with Paragraph 7, the Trust Company is authorized to direct
<PAGE> 2
the payment of cash from the Cash Account and to sell, assign,
transfer, deliver or exchange, or to purchase for the Custody
Account, any and all stocks, shares, bonds, debentures, notes
and other securities ("Securities"), bullion, coin and any
other property, but only as provided in such written
instructions. So long as and to the extent that it exercises
reasonable care, the Trust Company shall not be responsible
for the title, validity or genuineness of any Property or
evidence of title thereto received by it or delivered by it
and shall be held harmless in acting upon any written
instruction reasonably believed by it to be genuine and to be
signed by the proper party or parties.
4. Unless the Trust Company receives written instructions of
State Street to the contrary, the Trust Company is authorized:
a. To promptly receive and collect all income and
principal with respect to the Property and to deposit
cash receipts in the Cash Account;
b. To promptly exchange securities where the exchange is
purely ministerial (including, without limitation,
the exchange of temporary securities for those in
definitive form and the exchange of warrants, or
other documents of entitlement to securities, for the
securities themselves);
c. To promptly surrender securities at maturity or when
called for redemption upon receiving payment
therefor;
d. Whenever notification of a rights entitlement or a
fractional interest resulting from a rights issue,
stock dividend or stock split is received for
securities in the Custody Account and such rights
entitlement or fractional interest bears an
expiration date, the Trust Company will endeavor to
obtain State Street Bank's instructions, but should
these not be received in time for the Trust Company
to take timely action, the Trust Company is
authorized to sell such rights entitlement or
fractional interest and to credit the Custody
Account;
<PAGE> 3
e. To hold registered in the name of the nominee of the
Trust Company or its agents such Securities as are
ordinarily held in registered form;
f. To execute in State Street's name for the Customer,
whenever the Trust Company deems it appropriate, such
ownership and other certificates as may be required
to obtain the payment of income from the Property;
and
g. To pay or cause to be paid, from the Cash Account any
and all taxes and levies in the nature of taxes
imposed on such assets by any governmental authority
and shall use reasonable efforts, to promptly reclaim
any foreign withholding tax relating to the Cash
Account.
5. If the Trust Company shall receive any proxies, notices,
reports, or other communications relative to any of the
Securities of the Custody Account in connection with tender
offers, reorganization, mergers, consolidations, or similar
events which may have an impact upon the issuer thereof, the
Trust Company shall promptly transmit any such communication
to State Street by means as will permit State Street to take
timely action with respect thereto.
6. The Trust Company is authorized in its discretion to appoint
brokers and agents in connection with the Trust Company's
handling of transactions relating to the Property provided
that any such appointment shall not relieve the Trust Company
of any of its responsibilities or liabilities hereunder.
7. Written instructions shall include (i) instructions in writing
signed by such persons as are designated in writing by State
Street; (ii) telex or tested telex instructions of State
Street; (iii) other forms of instruction in computer readable
form as shall be customarily utilized for the transmission of
like information; and (iv) such other forms of communication
as from time to time shall be agreed upon by State Street and
the Trust Company.
8. The Trust Company shall supply periodic reports with respect
to the safekeeping of assets held by it under this Agreement.
The content of such reports shall include but not be limited
to any transfer to or from any account held by the Trust
<PAGE> 4
Company hereunder and such other information as State Street
may reasonably request.
9. In addition to its obligations under Section 2b hereof, the
Trust Company shall maintain such other records as may be
necessary to identify the assets hereunder as belonging to
each Customer.
10. The Trust Company agrees that its books and records relating
to its actions under this Agreement shall be opened to the
physical, on-premise inspection and audit at reasonable times
by officers of, auditors employed by, or other representatives
of State Street (including to the extent permitted under
applicable law the independent public accountants of any
Customer) and shall be retained for such period as shall be
agreed by State Street and the Trust Company.
11. The Trust Company shall be entitled to reasonable compensation
for its services and expenses as custodian under this
Agreement, as agreed upon from time to time by the Trust
Company and State Street.
12. a. The Trust Company shall exercise reasonable care in
carrying out the provisions of this Agreement, but
shall be kept indemnified by and shall be without
liability for any action taken or omitted by it in
good faith without negligence. It shall be entitled
to rely on and may act upon advice of counsel (who
may be counsel for the Trust Company, State Street or
both) on all matters, and shall be without liability
for any action reasonably taken or omitted pursuant
to such advice.
b. If State Street requires the Trust Company to take
action with respect to the Securities, which action
involves the payment of money or which action may, in
the opinion of the Trust Company, result in the Trust
Company being liable for the payment of money or
incurring liability of some other form, State Street,
as a prerequisite to requiring the Trust Company to
take action, shall provide indemnity to the Trust
Company in an amount and form satisfactory to it.
13. The Trust Company shall not be liable for any loss resulting
from political risks such as exchange control restrictions,
<PAGE> 5
expropriation, nationalization, insurrection, civil strife,
armed hostilities or other similar events or any loss
resulting from Acts of God, nuclear incident and the like
under circumstances where the Trust Company has exercised
reasonable care.
14. The Trust Company agrees (i) the property held hereunder is
not subject to any right, charge, security interest, lien or
claim of any kind in favor of the Trust Company or any of its
agents or its creditors except a claim of payment for their
safe custody and administration and (ii) the beneficial
ownership of the Property shall be freely transferable without
the payment of money or other value other than for safe
custody or administration.
15. This Agreement may be terminated by the Trust Company or State
Street by 60 days' written notice to the other, sent by
registered mail or express courier. The Trust Company, upon
the date this Agreement terminates pursuant to notice which
has been given in a timely fashion, shall deliver the Property
to the Customer unless the Trust Company has received written
instructions of State Street specifying the name(s) of the
person(s) to whom the Property shall be delivered.
16. The Trust Company and State Street shall each use its best
efforts to maintain the confidentiality of the Property in
each Cash Account and Custody Account, subject, however, to
the provisions of any laws requiring the disclosure of the
Property.
17. Unless otherwise specified in this Agreement, all notices with
respect to matters contemplated by this Agreement shall be
deemed duly given when received in writing or by confirmed
telex by the Trust Company or State Street at their respective
addresses set forth below, or at such other address as be
specified in each case in a notice similarly given:
To State Street Master Trust Division, Global Custody
STATE STREET BANK AND TRUST
COMPANY
P.O. Box 1713
Boston, Massachusetts 02105
U.S.A.
<PAGE> 6
To the Trust Company ATTN: ___________________________________
STATE STREET LONDON LIMITED
State Street House
12 Nicholas Lane
London EC4N 7BN
Great Britain
18. This Agreement shall be governed by and construed in
accordance with the laws of the United Kingdom except to the
extent that such laws are preempted by the laws of the United
States of America.
Please acknowledge your agreement to the foregoing by executing a copy
of this letter.
Very truly yours,
STATE STREET BANK AND
TRUST COMPANY
By:________________________________
Title:_____________________________
Date:______________________________
Agreed to by: STATE STREET LONDON LIMITED
By:_______________________________________
Title:____________________________________
Date:_____________________________________
<PAGE> 1
EXHIBIT 9(a)
ADMINISTRATIVE SERVICES AGREEMENT
THIS AGREEMENT is made as of the 23rd day of October, 1995 by and
between OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts common law trust
(the "FUND"), and STATE STREET CAYMAN TRUST COMPANY, LTD., a Cayman Islands
trust company (the "ADMINISTRATIVE AGENT").
W I T N E S S E T H:
WHEREAS, the Fund desires to retain the Administrative Agent to perform
certain accounting, registrar, transfer agency and administrative services and
the Administrative Agent is willing to perform such services upon the terms and
conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto do hereby agree
as follows:
Section 1. APPOINTMENT AS ADMINISTRATIVE AGENT.
The Fund hereby appoints the Administrative Agent to act as registrar,
transfer agent and accounting and administrative agent for the Fund, and the
Administrative Agent hereby accepts such appointment, in each case upon the
terms and conditions set forth below and subject to the control, supervision
and direction of the Fund and the review and comment by the Fund's auditors and
legal counsel.
Section 2. DELIVERY OF DOCUMENTS.
The Fund shall promptly deliver to the Administrative Agent certified
copies of each of the following documents and all future amendments and
supplements thereto, if any:
(a) The Declaration of Trust and by-laws of the Fund (as the same
may be amended or supplemented from time to time, the "Charter
Documents");
(b) The Fund's currently effective Registration Statement under the
Investment Company Act of 1940, as amended (the "1940 Act") (as
the same may be amended or supplemented from time to time, the
"Registration Statement" and together with the Charter
Documents, the "Constitutive Documents");
(c) Certified copies of the resolutions of the Board of Trustees of
the Fund (the "Board of Trustees") authorizing (1) the Fund to
enter into this Agreement and (2) certain individuals on behalf
of the Fund (a) to give instructions to the
<PAGE> 2
Administrative Agent pursuant to this Agreement and (b) to
sign checks and pay expenses on behalf of the Fund;
(d) A copy of the investment advisory agreement between the Fund
and its investment adviser; and
(e) Such other certificates, documents or opinions which the
Administrative Agent may, in its reasonable discretion, request
in connection with the performance of its duties hereunder.
Section 3. ACCOUNTING SERVICES.
The Administrative Agent shall maintain the books of account of the
Fund and shall perform the following duties in the manner prescribed by the
Constitutive Documents and further in accordance with written procedures
adopted by the Fund from time to time:
(a) Record general ledger entries;
(b) Calculate daily net income;
(c) Reconcile activity to the trial balance;
(d) Calculate book capital account balances;
(e) Calculate and publish daily net asset value; and
(f) Prepare account balances.
The Fund shall provide timely prior written notice to the
Administrative Agent of any modification in the manner in which such
calculations are to be performed. For purposes of calculating the net asset
value of the Fund, the Administrative Agent shall value the Fund's portfolio
securities utilizing prices obtained from sources designated by the Fund on the
Price Source Authorization form attached hereto as Exhibit A, as the same may
be amended by the Fund and the Administrative Agent from time to time, or
otherwise designed by means of Proper Instructions (as such term is defined in
Section 9 below) (collectively, the "Authorized Price Sources"). The
Administrative Agent shall not be responsible for any revisions to the methods
of calculation prescribed by the Constitutive Documents or the Fund unless and
until such revisions are communicated in writing to the Administrative Agent.
Section 4. REGISTRAR AND TRANSFER AGENCY SERVICES.
The Administrative Agent shall act as registrar and transfer agent for
the beneficial interests (the "Beneficial Interests") of the Fund as may be
authorized and issued from time to time, as dividend disbursing agent, and as
relevant agent in connection with accumulation, open account or similar plans,
including without limitation any periodic investment plan or periodic
withdrawal program, in each case in accordance with the provisions of the
-2-
<PAGE> 3
Constitutive Documents and further in accordance with written procedures
adopted by the Fund from time to time.
In the foregoing capacity, the Administrative Agent shall perform the
following services:
(a) In accordance with procedures set forth in the Constitutive
Documents and established from time to time by agreement between
the Fund and the Administrative Agent, the Administrative Agent
shall:
(i) Receive for acceptance, orders for the purchase of
Beneficial Interests authorized pursuant to the Charter
Documents of the Fund and promptly deliver payment and
appropriate documentation therefor to the entity acting
as custodian of the Fund from time to time (the
"Custodian");
(ii) Pursuant to purchase orders, issue and increase
Beneficial Interests and hold such Beneficial Interests
in the appropriate Interestholder account;
(iii) Receive for acceptance redemption and decrease requests
and redemption decrease directions and deliver the
appropriate documentation therefor to the Custodian;
(iv) In respect to the transactions in items (i), (ii) and
(iii) above, the Administrative Agent shall be
authorized to execute such transactions directly with
Interestholders and with broker-dealers acting on behalf
of the Fund or a placement agent or distributor who
shall thereby be deemed to be acting on behalf of the
Fund;
(v) At the appropriate time as and when it receives monies
paid to it by the Custodian with respect to any
redemption or decrease, pay over or cause to be paid
over in the appropriate manner such monies as instructed
by the redeeming Interestholders;
(vi) Subject to the Charter Documents of the Fund, effect
transfers of Beneficial Interests by the registered
owners thereof upon receipt of appropriate instructions;
(vii) Prepare and transmit payments for distributions declared
by the Fund;
(viii) Issue replacement certificates for those certificates
alleged to have been lost, stolen or destroyed upon
receipt of indemnification satisfactory to the
Administrative Agent and protecting the Administrative
Agent and the Fund, and, at its option, issue
replacement certificates in place of
-3-
<PAGE> 4
mutilated stock certificates upon presentation thereof
and without such indemnity;
(ix) Maintain records of account for and advise the Fund and
its Interestholders as to the foregoing; and
(x) Maintain the Register of Interestholders of the Fund in
accordance with applicable law and the Charter Documents
of the Fund; record issuances, increases, decreases and
redemptions of Beneficial Interests of the Fund and
maintain a record of the total number of Beneficial
Interests of the Fund which are authorized (based upon
data provided to it by the Fund) and issued and
outstanding and the percentage interests of the Fund
represented by such Beneficial Interests. The
Administrative Agent shall also provide the Fund and its
designated agents on a regular basis with a record of
the total number of Beneficial Interests which are
authorized and issued and outstanding and shall have no
obligation, when recording the issuance of Beneficial
Interests, to monitor the issuance of such Beneficial
Interests or to take cognizance of any laws relating to
the issue or sale of such Beneficial Interests, which
functions shall be the sole responsibility of the Fund.
(b) In addition to and neither in lieu nor in contravention of the
services set forth in the above paragraph (a), the
Administrative Agent shall: perform the customary services of a
transfer agent, dividend disbursing agent, and, as relevant,
agent in connection with accumulation, open-account or similar
plans (including without limitation any periodic investment plan
or periodic withdrawal program), including but not limited to:
maintaining all Interestholder accounts, preparing
Interestholder meeting lists, mailing proxies, mailing
Interestholder reports to current Interestholders and
prospective investors, preparing and mailing confirmation forms
and statements of account to Interestholders for all purchases
and redemptions of Beneficial Interests and other confirmable
transactions in Interestholder accounts, preparing and mailing
activity statements for Interestholders, and providing
Interestholder account information. All proxies, reports,
confirmation forms, statements of account, activity statements
and other materials will be mailed by the Administrative Agent
from locations outside of The United States of America (the
"U.S.").
The Administrative Agent shall provide such additional transfer agency
services on behalf of the Fund as may be agreed upon in writing from time to
time by the Fund and the Administrative Agent.
-4-
<PAGE> 5
Section 5. GENERAL ADMINISTRATIVE SERVICES.
The Administrative Agent shall provide all administrative services
necessary or convenient for the efficient conduct of the Fund as may be agreed
upon from time to time (excluding services provided by the Fund's investment
adviser, Custodian, legal counsel or independent accountants) in each case in
accordance with procedures established by the Fund and the Administrative
Agent, including, without limitation, the following services:
(a) Oversee the publication of the Fund's net asset value in
accordance with the policy of the Fund as adopted from time to
time by the Board of Trustees;
(b) Oversee the maintenance by the Custodian of certain books and
records of the Fund as required under Rule 31a-1(b) of the 1940
Act;
(c) Prepare the Fund's U.S. federal, state and local income tax
returns for review by the Fund's independent accountants and
filing by the Fund's treasurer;
(d) Prepare the Fund's expense budget and submit for approval by
officers of the Fund and arrange for payment of the Fund's
expenses;
(e) Prepare for review and approval by officers of the Fund
financial information for the Fund's semi-annual and annual
reports, proxy statements and other communications required
or otherwise to be sent to Fund Interestholders, and arrange
for the printing and dissemination of such reports and
communications to Interestholders;
(f) Prepare for review by an officer of and legal counsel for the
Fund the periodic financial reports required to be filed by the
Fund with the Securities and Exchange Commission ("SEC") on Form
N-SAR and financial information required by Form N-1A and such
other reports, forms or filings as may be mutually agreed upon;
(g) Prepare reports relating to the business and affairs of the Fund
as may be mutually agreed upon and not otherwise prepared by the
Fund's investment adviser, Custodian, legal counsel or
independent accountants;
(h) Make such reports and recommendations to the Board of Trustees
concerning the performance of the independent accountants as the
Board may reasonably request;
(i) Make such reports and recommendations to the Board of Trustees
concerning the performance and fees of the Fund's Custodian as
the Board may reasonably request or deems appropriate;
-5-
<PAGE> 6
(j) Oversee and review calculations of fees paid to the Fund's
investment adviser and Custodian;
(k) Consult with the Fund's officers, independent accountants,
legal counsel and Custodian in establishing the accounting
policies of the Fund;
(l) Review implementation of any dividend reinvestment programs
authorized by the Board of Trustees;
(m) Respond to, or refer to the Fund's officers, Interestholder
inquiries relating to the Fund;
(n) Provide such periodic testing of portfolios as may be mutually
agreed upon to assist the Fund's investment adviser in complying
with the mandatory qualification requirements of the Internal
Revenue Code of 1986, as amended (the "Code") and the require-
ments of the 1940 Act;
(o) Perform the functions specified in such compliance procedures
memorandum as may be mutually agreed upon from time to time
by the Administrative Agent and the Fund; and
(p) Prepare materials for Board of Trustees meetings and make
presentations where appropriate.
Section 6. COMPLIANCE WITH GOVERNMENTAL RULES AND REGULATIONS; RECORDS.
The Fund assumes full responsibility for complying with all securities,
tax, commodities and other laws, rules and regulations applicable to it.
The Administrative Agent shall create and maintain all records relating
to the services provided hereunder in a manner which shall meet the obligations
of the Fund under the Constitutive Documents and applicable law. All such
records shall be the property of the Fund and shall at all times during the
regular business hours of the Administrative Agent be open for inspection
by duly authorized officers, employees or agents of the Fund and employees and
agents of the regulatory agencies having jurisdiction over the Fund. The
Administrative Agent shall preserve the records required to be maintained
hereunder for the period required by law unless such records are earlier sur-
rendered in connection with the termination of this Agreement or otherwise
upon written request.
-6-
<PAGE> 7
Section 7. APPOINTMENT OF AGENTS.
The Administrative Agent may at its own expense employ agents in the
performance of its duties and the exercise of its rights under this Agreement,
provided that the employment of such agents shall not reduce the Administrative
Agent's obligations or liabilities hereunder. The Fund acknowledges that
certain duties of the Administrative Agent will be performed by certain
affiliates and agents of the Administrative Agent in Toronto, Canada.
Section 8. PROVISION OF INFORMATION.
The Fund shall provide, or shall cause a third party to provide,
certain data to the Administrative Agent as a condition to the Administrative
Agent's obligations under Section 3 above. The data required to be provided
pursuant to this Section is set forth on Schedule A hereto, which schedule may
be separately amended or supplemented by agreement between the Fund and the
Administrative Agent from time to time.
The Administrative Agent is authorized and instructed to rely upon the
information it receives from the Fund or any third party authorized in writing
by the Fund (a "Third Party Agent") to provide such information to the
Administrative Agent. The Administrative Agent shall have no responsibility to
review, confirm or otherwise assume any duty with respect to the accuracy or
completeness of any information supplied to it by the Fund or any Third Party
Agent.
Section 9. INSTRUCTIONS AND ADVICE.
The term "Proper Instructions" shall mean instructions received by the
Administrative Agent from the Fund or Old Mutual Asset Managers (Bermuda)
Limited (the "Investment Adviser") or any person duly authorized by them in
writing. Such instructions may be in writing signed by the authorized person or
may be in a tested communication or in a communication utilizing access codes
effected between electro-mechanical or electronic devices or may be by such
other means as may be agreed upon from time to time by the Administrative Agent
and the party giving such instructions (including, without limitation, oral
instructions). All oral instructions shall be promptly confirmed in writing.
The Fund and the Investment Adviser shall each cause its duly authorized
representative to certify to the Administrative Agent in writing the names and
specimen signatures of persons authorized to give Proper Instructions. The
Administrative Agent shall be entitled to rely upon the identity and authority
of such persons until it receives written notice from the Fund or the
Investment Adviser, as the case may be, to the contrary. The Administrative
Agent may rely upon any Proper Instruction reasonably believed by it to be
genuine and to have been properly issued by or on behalf of the Fund or the
Investment Adviser, as the case may be. The Fund shall give,
-7-
<PAGE> 8
or cause to be given, timely Proper Instructions to the Administrative Agent as
necessary in regard to matters affecting its duties under this Agreement.
At any time, the Administrative Agent may apply to any officer of the
Fund for instructions and may consult with its own outside legal counsel or
outside counsel for the Fund or the independent accountants for the Fund at the
expense of the Fund, with respect to any matter arising in connection with the
services to be performed by the Administrative Agent under this Agreement,
provided that the Administrative Agent shall obtain the prior approval of the
Fund for any expenditure in excess of $5,000 in connection with seeking such
advice. The Administrative Agent shall not be liable, and shall be indemnified
by the Fund, for any action taken or omitted by it in good faith in reliance
upon any such instructions or advice or upon any paper or document believed by
it to be genuine and to have been signed by the proper person or persons. The
Administrative Agent shall not be held to have notice of any change of
authority of any person until receipt of written notice thereof from the Fund.
Nothing in this paragraph shall be construed as imposing upon the
Administrative Agent any obligation to seek such instructions or advice, or to
act in accordance with such advice when received.
Section 10. STANDARD OF CARE; LIMITATION ON LIABILITY.
The Administrative Agent shall at all times exercise reasonable care
and diligence and act in good faith in the performance of its duties hereunder,
provided, however, that the Administrative Agent shall assume no responsibility
and shall be without liability for any loss, liability, claim or expense
suffered or incurred by the Fund unless caused by its own fraud, willful
default, gross negligence or willful misconduct or that of its agents or
employees. The Administrative Agent shall be responsible for the performance of
only such duties as are set forth in this Agreement and, except as otherwise
provided under Section 7, shall have no responsibility for the actions or
activities of any other party, including other service providers to the Fund.
In any event, the Administrative Agent's liability under this Agreement shall
be limited to $5,000,000 for any liability or loss suffered by the Fund arising
from or in connection with the services rendered by the Administrative Agent
pursuant to subsections (a), (b), (c), (e), (f), (n) and (o) of Section 5
hereof, including, but not limited to, any liability relating to qualification
of the Fund as a regulated investment company in the U.S. or any liability
relating to the Fund's compliance with any applicable tax or securities
statute, regulation or ruling of any jurisdiction. The foregoing limitation
shall not apply to any liability for losses or damages arising under other
sections of this Agreement.
The Administrative Agent shall exercise reasonable care so that no
action is taken or omitted by it under this Agreement which will result in the
Fund becoming resident for tax purposes in any jurisdiction where the
Administrative Agent performs its duties under this Agreement, provided that
the Administrative Agent shall have no responsibility or liability for
-8-
<PAGE> 9
the Fund becoming resident for tax purposes in any jurisdiction where the Fund
or its agents carry out activities.
Without in any way limiting the generality of the foregoing, the
Administrative Agent shall in no event be liable for any loss or damage arising
from causes beyond its reasonable control, including, without limitation, delay
or cessation of services hereunder or any damages to the Fund resulting
therefrom as a result of any work stoppage (except a work stoppage by employees
of the Administrative Agent which is not part of a more general labor
stoppage), power or other mechanical failure, computer virus, natural disaster,
governmental action, communications disruption or other impossibility of
performance. The Administrative Agent shall not be liable for any special,
indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys' fees) in any way due to the Fund's
use of the services provided hereunder or the performance of or failure to
perform the Administrative Agent's obligations under this Agreement.
The Fund and any Third Party Agents or Authorized Price Sources from
which the Administrative Agent shall receive or obtain certain records, reports
and other data included in the accounting services provided hereunder are
solely responsible for the contents of such information, including, without
limitation, the accuracy thereof. The Administrative Agent shall have no
responsibility to review, confirm or otherwise assume any duty with respect to
the accuracy or completeness of any such information and shall be without
liability for any loss or damage suffered by the Fund as a result of the
Administrative Agent's reasonable reliance on and utilization of such
information, except as otherwise required by the terms of the Price Source
Authorization form attached hereto as Exhibit A with respect to the use of data
obtained from Authorized Price Sources. The Administrative Agent shall have no
responsibility and shall be without liability for any loss or damage caused by
the failure of the Fund or any Third Party Agent to provide it with the
information required by Section 8 hereof.
The Administrative Agent shall have no liability and shall be kept
indemnified by the Fund against any loss, liability, claim or expense resulting
from the offer or sale of Beneficial Interests in violation of any requirement
under any applicable securities laws or regulations including, but not limited
to, the laws of the U.S.
Section 11. INDEMNIFICATION.
The Fund hereby agrees to indemnify and hold harmless the
Administrative Agent from and against any loss, liability, claim or expense
(including reasonable attorney's fees and disbursements but excluding overhead
expenses) suffered or incurred by the Administrative Agent in connection with
the performance of its duties hereunder, including, without limitation, any
liability or expense suffered or incurred as a result of the acts or omissions
of the Fund or any Third Party Agent or Authorized Price Source whose data or
services,
-9-
<PAGE> 10
including records, reports and other information, the Administrative Agent must
rely upon in performing its duties hereunder or as a result of acting upon any
instructions reasonably believed by it to have been duly authorized by the
Fund; provided, however, that such indemnity shall not apply to any liability
or expense occasioned by or resulting from the fraud, willful default, gross
negligence or willful misconduct of the Administrative Agent in the performance
of its duties hereunder.
The Fund will be entitled to participate at its own expense in the
defense, or, if it so elects, to assume the defense of any suit brought to
enforce any liability subject to the indemnification provided above. In the
event the Fund elects to assume the defense of any such suit and retain
counsel, the Administrative Agent or any of its affiliated persons, named as
defendant or defendants in the suit, may retain additional counsel but shall
bear the fees and expenses of such counsel unless (i) the Fund shall have
specifically authorized the retaining of such counsel or (ii) the
Administrative Agent shall have determined in good faith that the retention of
such counsel is required as a result of a conflict of interest.
Section 12. REPRESENTATION AND WARRANTIES OF THE ADMINISTRATIVE AGENT.
The Administrative Agent represents and warrants to the Fund that:
(a) It is a Cayman Islands trust company, duly organized, existing
and in good standing under the laws of the Cayman Islands;
(b) It has the corporate power and authority to carry on its business
in the Cayman Islands and to perform and observe the terms and
conditions of the Agreement;
(c) All requisite corporate proceedings have been taken to authorize
it to enter into and perform this Agreement. This Agreement has
been duly executed on behalf of the Administrative Agent and
constitutes its legal, valid and binding agreement enforceable in
accordance with its terms; and
(d) Its entrance into this Agreement shall not cause a material breach
or be in material conflict with any other agreement or obligation
of the Administrative Agent or any law or regulation applicable to
it.
Section 13. REPRESENTATIONS AND WARRANTIES OF THE FUND.
The Fund represents and warrants to the Administrative Agent that:
(a) It is a common law trust, duly organized and existing and in good
standing under the laws of the Commonwealth of Massachusetts;
-10-
<PAGE> 11
(b) It has the trust power and authority under applicable laws and by
its Charter Documents to enter into and perform this Agreement;
(c) All requisite proceedings have been taken to authorize it to
enter into and perform this Agreement;
(d) It is an investment company which shall be properly registered
under the 1940 Act prior to the date of the Initial Closing (as
such term is defined in the Registration Statement);
(e) A registration statement under the 1940 Act with respect to the
Fund shall be filed and will be effective and remain effective
during the term of this Agreement. The Fund also warrants to the
Administrative Agent that all necessary filings, if any, under the
securities laws of the jurisdictions in which the Fund offers or
sells its Beneficial Interests will have been made and will be
current during the term of this Agreement;
(f) No legal or administrative proceedings have been instituted or
threatened which would impair the Fund's ability to perform its
duties and obligations under this Agreement; and
(g) Its entrance into this Agreement shall not cause a material breach
or be in material conflict with any other agreement or obligation
of the Fund or any law or regulation applicable to it.
Section 14. DATA ACCESS AND PROPRIETARY INFORMATION.
The Fund acknowledges that the data bases, computer programs, screen
formats, report formats, interactive design techniques, and documentation
manuals which may be furnished to the Fund by the Administrative Agent as part
of the Fund's ability to access certain Fund-related data ("Customer Data")
maintained by the Administrative Agent on data bases under the control and
ownership of the Administrative Agent ("Data Access Services") constitute
copyrighted, trade secret, or other proprietary information (collectively,
"Proprietary Information") of substantial value to the Administrative Agent.
The Fund agrees to treat all Proprietary Information as proprietary to the
Administrative Agent and further agrees that it shall not divulge any
Proprietary Information to any person or organization except as may be provided
hereunder. Without limiting the foregoing, the Fund agrees for itself and its
employees and agents:
(a) to access Customer Data solely from locations as may be designated
in writing by the Administrative Agent and solely in accordance
with the Administrative Agent's applicable user documentation;
11
<PAGE> 12
(b) to refrain from copying or duplicating in any way the
Proprietary Information, provided, however, that the Fund and
the Investment Adviser may copy or duplicate Proprietary
Information to the extent incorporated in any computer generated
print-out or other written report containing Customer Data for
internal use consistent with this Agreement but only to the
extent necessary to copy or duplicate such Customer Data;
(c) to refrain from obtaining unauthorized access to any portion of
the Proprietary Information, and if such access is inadvertently
obtained, to inform the Administrative Agent in a timely manner
of such fact and dispose of such information in accordance with
the Administrative Agent's instructions;
(d) to refrain from causing or allowing third-party data acquired
hereunder from being retransmitted to any other computer
facility or other location, except with the prior written
consent of the Administrative Agent;
(e) that the Fund shall have access only to those authorized
transactions agreed upon by the parties; and
(f) to honor all reasonable written requests made by the
Administrative Agent to protect at the Administrative Agent's
expense the rights of the Administrative Agent in Proprietary
Information at common law, under U.S. federal copyright law
and under other U.S. federal or state law.
Each party shall take reasonable efforts to advise its employees and
agents of their obligations pursuant to this Section 14. The obligations of
this Section shall survive any earlier termination of this Agreement.
Notwithstanding anything in this Section 14 to the contrary, the Fund
and the Investment Adviser may disclose Proprietary Information, (i) if and to
the extent required to do so by applicable law or pursuant to an order of a
court of competent jurisdiction or other governmental agency having appropriate
authority, in which case the Fund or the Investment Adviser, as the case may
be, shall, to the extent possible, provide the Administrative Agent with timely
notice prior to any such disclosure and (ii) if and to the extent such
information has become public other than as a result of a breach of this
Agreement by the Fund or the Investment Adviser or any officer, director,
trustee, employee or agent of either of them.
The Fund hereby acknowledges that the data and information it may
access from the Administrative Agent utilizing the Data Access Services will be
unaudited and may not be accurate due to inaccurate pricing of securities,
delays of a day or more in updating the Fund's account and other causes for
which the Administrative Agent will not be liable to the Fund.
-12-
<PAGE> 13
If the transactions available to the Fund include the ability to
originate electronic instructions to the Administrative Agent in order to (i)
effect the transfer or movement of cash or Beneficial Interests or (ii)
transmit Interestholder information or other information (such transactions
constituting a "COEFI"), then in such event the Administrative Agent shall be
entitled to rely on the validity and authenticity of such instruction without
undertaking any further inquiry as long as such instruction is undertaken in
conformity with security procedures established by the Administrative Agent
from time to time.
Section 15. SUCCESSOR AGENT.
If a successor Administrative Agent shall be appointed by the Fund, the
Administrative Agent shall upon termination of this Agreement deliver to such
successor agent at the office of the Administrative Agent all books and records
of account of the Fund maintained by the Administrative Agent hereunder. In the
event this Agreement is terminated by either party without the appointment of a
successor agent, the Administrative Agent shall, upon receipt of Proper
Instructions, deliver such properties in accordance with such instructions.
In the event that no written order designating a successor agent or
Proper Instructions shall have been delivered to the Administrative Agent on or
before the effective date of such termination, then the Administrative Agent
shall have the right to deliver to a bank or a trust company of its own
selection all property of the Fund held by the Administrative Agent hereunder,
provided that such bank or trust company is organized and located outside of
the U.S. and that it or its direct or indirect parent company has aggregate
capital, surplus and undivided profits, as shown by its last published report,
of not less than $200,000,000. Thereafter, and until a successor administrative
agent shall be named by the Fund, such bank or trust company shall be the
successor of the Administrative Agent under this Agreement.
Section 16. TERM OF AGREEMENT.
This Agreement shall be effective from the date first stated above and
shall remain in full force and effect until terminated as hereinafter provided.
Either party may, in its discretion, terminate this Agreement for any reason by
giving the other party at least sixty (60) days prior written notice of
termination. Notwithstanding the foregoing, the Fund may terminate this
Agreement with immediate effect by written notice to the Administrative Agent
in the event that the Initial Closing is cancelled without postponement to a
later date.
Section 17. FEES AND EXPENSES.
The Fund agrees to pay the Administrative Agent such reasonable
compensation for its services and expenses as may be agreed upon from time to
time in a written fee schedule.
-13-
<PAGE> 14
approved by the Fund and the Administrative Agent. The fees shall be accrued
daily and billed monthly and shall be due and payable upon receipt of the
invoice. Upon the termination of this Agreement before the end of any month,
the fee for the part of the month before such termination shall be prorated
according to the proportion which such part bears to the full monthly period
and shall be payable upon the date of termination of this Agreement. In
addition, the Fund shall reimburse the Administrative Agent for its
out-of-pocket costs incurred in connection with this Agreement, in accordance
with the terms of the written fee schedule.
The Fund agrees promptly to reimburse the Administrative Agent for any
equipment and supplies specially ordered by or for the Fund through the
Administrative Agent and for any other expenses not contemplated by this
Agreement that the Administrative Agent may incur on the Fund's behalf at the
Fund's request or with the Fund's consent.
The Fund will bear all expenses that are incurred in its operation and
not specifically assumed by the Administrative Agent. Expenses to be borne by
the Fund, include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel
(including such counsel's review of the Fund's registration statement, proxy
materials, U.S. federal and state tax qualification as a regulated investment
company and other reports and materials prepared by the Administrative Agent
under this Agreement); cost of any services contracted for by the Fund directly
from parties other than the Administrative Agent; cost of trading operations
and brokerage fees, commissions and transfer taxes in connection with the
purchase and sale of securities for the Fund; investment advisory fees; taxes,
insurance premiums and other fees and expenses applicable to its operation;
costs incidental to any meetings of Interestholders including, but not limited
to, legal and accounting fees, proxy filing fees and the costs of preparation,
printing and mailing of any proxy materials; costs incidental to Board of
Trustees meetings, including fees and expenses of Board members; the salary and
expenses of any officer, trustee or employee of the Fund; costs incidental to
the preparation, printing and distribution of the Fund's registration
statements and any amendments thereto and Interestholder reports; cost of
preparation and filing of the Fund's tax returns, if any, Form N-1A and Form
N-SAR, and all notices, registrations and amendments, if any, associated with
any applicable U.S. federal and state tax and securities laws; all applicable
registration fees and filing fees, if any, required under U.S. federal and
state securities laws; fidelity bond and Trustees' and officers' liability
insurance; and cost of independent pricing services used in computing the
Fund's net asset value.
Section 18. CONFIDENTIALITY.
The Administrative Agent agrees on behalf of itself and its employees
to treat confidentially all records and other information related to the Fund,
except where required to be disclosed by law or where the Administrative Agent
has received the prior written consent of the Fund, which consent shall not be
unreasonably withheld.
-14-
<PAGE> 15
Section 19. NOTICES.
All notices shall be in writing and shall be deemed given when delivered
in person, by facsimile, by overnight delivery through a commercial courier
service, or by registered or certified mail, return receipt requested. Notices
shall be addressed to each party at its address set forth below, or such other
address as the recipient may have specified by earlier notice to the sender.
If to the Administrative
Agent: STATE STREET CAYMAN TRUST COMPANY, LTD.
P.O. Box 2508 GT
Grand Cayman, Cayman Islands
B.W.I.
Attention: Jacqueline Henning
Telephone: 809-949-6644
Telecopy: 809-949-3181
With a copy to: STATE STREET FUND SERVICES TORONTO INC.
100 King Street, West
Suite 3500
Toronto, Ontario M5X 1A9
Canada
Attention: Mike Larkin
Telephone: 416-956-2987
Telecopy: 416-956-2900
If to the Fund: OLD MUTUAL SOUTH AFRICA EQUITY TRUST
Richmond House
12 Par-la-Ville Road
Hamilton, HM 11
Bermuda
Attention: J.C.R. Collis
Telephone: 809-295-1422
Telecopy: 809-295-4720
Section 20. ASSIGNMENT; SUCCESSORS.
This Agreement shall not be assigned by either party without the prior
written consent of the other party, except that either party may assign its
rights and obligations hereunder to a party controlling, controlled by, or
under common control with such party, provided that any such assignment does
not prejudice the tax status or operation of the Fund.
-15-
<PAGE> 16
Section 21. ENTIRE AGREEMENT.
This Agreement (including all schedules and attachments hereto and the
separate written fee schedule) constitutes the entire Agreement between the
parties with respect to the subject matter hereof.
Section 22. AMENDMENTS.
No amendment to this Agreement shall be effective unless it is in
writing and signed by a duly authorized representative of each party. The term
"Agreement", as used herein, includes all schedules and attachments hereto and
any future written amendments, modifications, or supplements made in accordance
herewith.
Section 23. HEADINGS NOT CONTROLLING.
Headings used in this Agreement are for reference purposes only and
shall not be deemed a part of this Agreement.
Section 24. SURVIVAL.
All provisions regarding indemnification, warranty, liability and
limits thereon shall survive following the expiration or termination of this
Agreement.
Section 25. SEVERABILITY.
In the event any provision of this Agreement is held illegal, void or
unenforceable, the balance shall remain in effect.
Section 26. COUNTERPARTS.
This Agreement may be executed in several counterparts, each of which
shall be deemed to be an original, and all such counterparts taken together
shall constitute but one and the same Agreement.
<PAGE> 17
Section 27. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts, without regard for any choice of
law rules that would require application of the laws of another jurisdiction.
Section 28. LIMITATION ON LIABILITY OF TRUSTEES.
This Agreement is executed and made by the Trustees of the Fund not
individually, but as trustees under the Declaration of Trust of the Fund dated
as of September 1, 1995, and the obligations of this Agreement are not binding
upon any of such Trustees individually.
<PAGE> 18
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
STATE STREET CAYMAN TRUST COMPANY, LTD.
By: K.C. Cuocolo
------------------------------------
Its: Authorized Signatory
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
By: William Langley
------------------------------------
Its: Treasurer
<PAGE> 19
EXHIBIT A
ADMINISTRATIVE SERVICES AGREEMENT
October 23, 1995
by and between
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
(the "Fund")
and
STATE STREET CAYMAN TRUST COMPANY, LTD.
(the "Administrative Agent")
Pursuant to the terms of the Administrative Services Agreement, the
Fund has directed the Administrative Agent to, inter alia, calculate the net
asset value of the Fund and to perform certain other accounting services in
accordance with the Constitutive Documents of the Fund (as such term is defined
therein). The Fund hereby authorizes and instructs the Administrative Agent to
utilize the pricing sources specified on the attached forms as sources for
securities prices in calculating the net asset value of the Fund and
acknowledges and agrees that the Administrative Agent shall have no liability
for any incorrect data provided by pricing sources selected by the Fund or
otherwise authorized by Proper Instructions (as such term is defined in the
Administrative Services Agreement), except as may arise from the Administrative
Agent's lack of reasonable care in performing the agreed-upon tolerance checks
as to the data furnished and calculating the net asset value of the Fund in
accordance with the data furnished and the Administrative Agent's performance
of the agreed-upon tolerance checks.
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
By: William Langley
--------------------------------
Title: Treasurer
Date: ______________________________
<PAGE> 20
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
FUND: SIGNATURE:
--------------------------------- -----------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SECURITY TELEKURS OPTIONS PRICE (3) (2) (1) (1)
TYPE NYSE NASDAQ REPORTING AUTHORITY MANUAL BACK-UP TOLERANCE
AMEX BID MEAN LS/BID LS/MEAN TELEKURS LS BID LS/MEAN QUOTES SOURCE INDEX PERCENTAGE
-------- ------ ---- ------ ------- -------- --------- --------- ------ ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I. LISTED
EQUITIES
II. OTC
EQUITIES
III. FOREIGN
EQUITIES
IV. EQUITY
OPTIONS
V. FUTURES
N/A
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS: For each security type, allowed by the Fund prospectus, please
indicate the primary price source and a back-up source to be used in
calculating Net Asset Value for the Fund identified above. Also, please
indicate a published market index and tolerance range (in terms of percent) to
be used for reasonability testing. If you do not wish to use a published index
please indicate N/A but do not leave blank.
(1) * INDEX/TOLERANCE CHECK: The price movement for a particular security is
compared to the index movement. If the security price movement exceeds the
index movement by more than the percentage authorized on this form, then the
security price will be verified using the back-up source authorized. The index
and tolerance information authorized here will be the basis for this
reasonability test.
(2) BACK-UP SOURCE: The following sources are available for back-up, price
verification and historical price and yield information: Bloomberg, Bridge,
Reuters, and Telerate. Please do not leave blank.
(3) MANUAL QUOTES AND PRIVATE PLACEMENTS: Please specify the source for private
placements or manual quotes as necessary. See page 3 to list additional
information if needed.
Page 1 of 3
<PAGE> 21
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
SECURITY TYPE MERRILL INTERACTIVE
LYNCH STANDARD MULLER DATA KENNY (3) (2) (1) (1)
CAPITAL & POORS DATA SERVICES INFORMATION IDC/ MANUAL BACK-UP TOLERANCE
MARKETS MEAN BID MEAN BID MEAN BID SYSTEMS EXTEL QUOTES QUOTES INDEX PERCENTAGE
------- -------- --- ------ --- ----------- --- ----------- ----- ------ ------- ----- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
VI. LISTED BONDS
IS LAST SALE
REQUIRED
WHEN
AVAILABLE
YES ___
NO ___
VII. CORPORATE
BONDS
VIII. U.S.
GOVERNMENT
OBLIGATIONS
IX. MORTGAGE-
BACKED
SECURITIES
X. MUNICIPAL
BONDS
XI. FIXED INCOME
OPTIONS
XII. FOREIGN BONDS
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Page 2 of 3
<PAGE> 22
STATE STREET BANK AND TRUST COMPANY
PRICE SOURCE AUTHORIZATION
XII. Private Placements and Other Manual Quotes Information
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
ADDITIONAL INFORMATION:
SECURITY TYPE ADVISOR BROKER OTHER CONTACT NAME, TELEPHONE NUMBER
- ------------- ------- ------ ----- ------------------------------
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------
</TABLE>
INSTRUCTIONS: For all securities types which require manual quotes, please
list the source of the quotes and any additional information needed to obtain
these quotes.
Page 3 of 3
<PAGE> 23
SCHEDULE A
REQUIRED INFORMATION RESPONSIBLE PARTY
Portfolio Trade Authorizations Investment Adviser
Currency Transactions Investment Adviser
Cash Transaction Report Custodian
Portfolio Prices Third Party Vendors/Investment Adviser
Exchange Rates Third Party Vendors/Investment Adviser
Dividend/Distribution Schedule Fund
Dividend/Distribution Declaration Fund
Corporate Actions Third Party Vendors/Custodian
Service Provider Fee Schedules Fund
Authorized Expense Budget Fund
Amortization Policy Fund
Accounting Policy/Complex Investments Fund
Audit Management Letter Auditor
Annual Interestholder Letter Fund
Annual/Semi-Annual Reports Fund
<PAGE> 24
SCHEDULE B
[Authorized Shares]
<PAGE> 1
EXHIBIT 9(b)
CONFORMED COPY
DATED 23rd OCTOBER 1995
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (2)
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (3)
and
INTERNATIONAL FINANCE CORPORATION (4)
----------------------
STRUCTURING ENGAGEMENT
AGREEMENT
----------------------
Norton Rose
London
<PAGE> 2
THIS AGREEMENT is made on 23RD October 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(2) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND");
(3) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND"); and
(4) INTERNATIONAL FINANCE CORPORATION whose principal office is at 1818 H.
St. NW, Washington 20433 (the "IFC").
WHEREAS the Master Trust is being established as a fund investing in South
Africa and investors are being invited to participate in the Master Trust
through, in the case of US investors, the OMEGA Fund and through, in the case of
non-US investors, the SAGA Fund, this Agreement describes the structuring
services which the IFC has agreed to provide in return for a fee.
NOW IT IS HEREBY AGREED as follows:
1 IFC SERVICES
1.1 The IFC has provided and agrees to continue to provide consultation and
advisory services in connection with the establishment of the Master
Trust, the OMEGA Fund and the SAGA Fund (together the "FUNDS") in the
following areas:
(a) advice on the continuing development of the transaction
structure in relation to marketing, legal, accounting and
taxation issues;
(b) assisting in the preparation of the principal documentation
for the establishment of the Funds;
(c) advice on the form and constitution of the Funds;
(d) advice on the operational charging structure for the Funds,
including the level of management and other fixed charges; and
(e) assistance in the identification and appointment of suitable
directors and trustees.
1
<PAGE> 3
1.2 The IFC agrees with the Funds to act in the interests of the Funds and
to exercise reasonable care in providing the services described in
clause 1.1.
2 REMUNERATION
2.1 In consideration for the consultation and advisory services provided by
the IFC, the Master Trust agrees, subject to clause 2.2, to pay to the
IFC a fee of US$250,000.
2.2 The fee in clause 2.1 shall become due and payable on the first date by
which the US Placing Agreement and the Non-US Placing Agreement have
become fully unconditional.
2.3 In this Agreement, "NON-US PLACING AGREEMENT" means the agreement to be
entered into between the Master Trust, the SAGA Fund, South African
Mutual Life Assurance Society, Old Mutual Asset Managers (Bermuda)
Limited, Old Mutual Fund Holdings (Bermuda) Limited and Swiss Bank
Corporation and "US PLACING AGREEMENT" means the agreement to be
entered into between the Master Trust, the OMEGA Fund, South African
Mutual Life Assurance Society, Old Mutual Asset Managers (Bermuda)
Limited, Old Mutual Fund Holdings (Bermuda) Limited and SG Warburg &
Co. Inc. The IFC acknowledges that it understands the Swiss Bank
Corporation and SG Warburg & Co. Inc. will be the exclusive placement
agents for shares of the SAGA Fund and the OMEGA Fund, respectively,
subject to the terms of the Non-US Placing Agreement and the US Placing
Agreement, respectively.
3 GENERAL
3.1 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust of the Master Trust and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
Master Trust individually.
3.2 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
3.3 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
2
<PAGE> 4
4 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
English law and each of the parties hereby submits to the non-exclusive
jurisdiction of the High Court of Justice in England.
IN WITNESS whereof this Agreement has been entered into as a DEED the day and
year first above written.
Executed and delivered )
as a Deed by )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) WILLIAM BOYAN
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) KENNETH WILLIAMS
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
Trustee
MICHAEL LEVETT
Trustee
Executed and delivered )
as a Deed by )
INTERNATIONAL FINANCE )
CORPORATION )
) JAYANT S. TATA
Duly authorised signatory
3
<PAGE> 1
EXHIBIT 9(c)
DATED 23rd OCTOBER 1995
SOUTH AFRICAN MUTUAL LIFE
ASSURANCE SOCIETY (1)
OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (2)
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (3)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (4)
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (5)
OLD MUTUAL GLOBAL ASSETS FUND LIMITED (6)
- and -
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED (7)
-------------------------
PORTFOLIO TRANSFER AND
SUBSCRIPTION AGREEMENT
-------------------------
Norton Rose
London
<PAGE> 2
CONTENTS
<TABLE>
<CAPTION>
CLAUSE HEADING PAGE
<S> <C>
1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2 Transfer of the Portfolio and OMAM contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3 Transfer of the Global Fund Portfolio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4 Representations and warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
5 Completion of transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
7 Initial offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8 Establishment of the OMEGA Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9 Establishment of the SAGA Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
10 Equalisation payments to OMB . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11 Further issues of shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
12 Ring fencing of Master Trust and Global Fund and liquidity facility . . . . . . . . . . . . . . . . . . . . . . . . 10
14 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
15 Conditions precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
16 Name . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
17 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
18 General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
19 Governing law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
<PAGE> 3
THIS AGREEMENT is made on 23rd October 1995 BETWEEN:
(1) SOUTH AFRICAN MUTUAL LIFE ASSURANCE SOCIETY (incorporated in terms of
the South Africa Mutual Life Assurance (Private) Act, 1966 and
registered in South Africa as a long-term insurer in terms of the
Insurance Act, 1943) whose registered address is at Mutualpark, Jan
Smuts Drive, Pinelands 7405, Republic of South Africa ("OLD MUTUAL");
(2) OLD MUTUAL FUND HOLDINGS (BERMUDA) LIMITED (registered in Bermuda with
number EC21093) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda ("OMB");
(3) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(4) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND");
(5) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND");
(6) OLD MUTUAL GLOBAL ASSETS FUND LIMITED (registered in Bermuda with
number EC21103) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda (the "GLOBAL FUND"); and
(7) OLD MUTUAL ASSET MANAGERS (BERMUDA) LIMITED (registered in Bermuda with
number EC21049) whose registered address is at Richmond House, 12
Par-la-Ville Road, Hamilton, Bermuda ("OMAM").
WHEREAS:
(A) Old Mutual is promoting the establishment of the Master Trust, the
OMEGA Fund and the SAGA Fund as funds investing in South Africa as
described in the Placement Memoranda;
(B) the Master Trust currently has no outstanding beneficial interest;
(C) the Global Fund currently has an issued share capital of US$12,000
divided into 12,000 shares of US$1 each, all of which are held (nil
paid) by OMB;
(D) Old Mutual is to transfer South African equity securities to the Master
Trust and to the Global Fund in exchange for OMB acquiring
substantially all of the
6 1
<PAGE> 4
beneficial interest in the Master Trust and for the paying up of the
12,000 shares and the issue of additional shares in the Global Fund
respectively;
(E) the Global Fund is to be established as part of the arrangements under
which liquidity is to be provided to the Master Trust to fund
redemptions as described in the Placement Memoranda;
(F) this Agreement provides, amongst other things, for the establishment of
the Funds, the transfer of the South African equity securities and the
provision of liquidity to the Master Trust;
(G) State Street Bank and Trust Company has been appointed as custodian and
State Street Cayman Trust Company, Ltd. has been appointed as
administrator to the Master Trust;
(H) OMB is an indirect and OMAM is a direct wholly owned subsidiary of Old
Mutual.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement (including its Recitals), unless the context
otherwise requires, the following expressions have the following
meanings:
"ADMINISTRATOR" means State Street Cayman Trust Company, Ltd., as
administrator of the Master Trust
"ADMISSION" means the admission to listing on the Irish Stock Exchange
of shares in the SAGA Fund
"ADVISORY AGREEMENT" means the investment advisory agreement dated 23rd
October 1995 between the Master Trust and OMAM
"BOOK CAPITAL ACCOUNT" has the meaning given in the Declaration of
Trust
"BUSINESS DAY" has the meaning given in the Placement Memoranda
"COMPLETION" means the completion of the steps set out in clause 5
"CUSTODIAN" means State Street Bank and Trust Company, as custodian of
the Master Trust
"DECLARATION OF TRUST" means the declaration of trust of the Master
Trust dated as of 1st September 1995
"FUNDS" means the Master Trust, the OMEGA Fund and the SAGA Fund
2
<PAGE> 5
"GLOBAL FUND PORTFOLIO" means the securities on the list provided under
clause 3.1 subject to adjustment under clause 3.4
"GLOBAL FUND PROSPECTUS" means the first prospectus issued for the
Global Fund
"INITIAL CLOSING DATE" means 10th November 1995
"INITIAL OFFERING" has the meaning given in the Placement Memoranda
"INITIAL OFFERING TERMINATION DATE" means 7th November 1995
"JSE" means The Johannesburg Stock Exchange
"MANAGEMENT FEE" means the fee payable to OMAM under the Advisory
Agreement
"NON-US PLACING AGREEMENT" means the agreement to be entered into
between the Master Trust, the SAGA Fund, Old Mutual, OMAM, OMB and
Swiss Bank Corporation relating to the placing of shares in the SAGA
Fund
"PLACEMENT MEMORANDA" means the private placement memorandum relating
to the OMEGA Fund dated 15th September 1995 (as amended by any
subsequent published supplements) and the draft placement memorandum
relating to the SAGA Fund dated 15th September 1995
"PORTFOLIO" means the securities on the list provided under clause 2.1
subject to adjustment under clause 2.7
"US PLACING AGREEMENT" means the agreement to be entered into between
the Master Trust, the OMEGA Fund, Old Mutual, OMAM, OMB and SG Warburg
& Co. Inc. relating to the placing of shares in the OMEGA Fund
"TRANSFER DATE" means 3rd November 1995
"VALUATION RULES" means the rules for the valuation of the assets of
the Master Trust as adopted at the meeting of its trustees held on 22nd
and 23rd October 1995.
1.2 The headings to clauses and schedules shall not affect their
interpretation.
1.3 Reference to clauses and schedules are reference to clauses of and
schedules to this Agreement.
3
<PAGE> 6
2 TRANSFER OF THE PORTFOLIO AND OMAM CONTRIBUTION
2.1 Old Mutual shall on 1st November 1995 provide to the Master Trust in
writing a list of securities. That list shall include the specified
types of securities issued by each of the issuers listed in schedule 1
(and no others). The percentage of the entire listed Portfolio which
each holding represents shall (when rounded to the nearest 0.1%) be
that specified in the third column of schedule 1. The list provided to
the Master Trust shall specify the aggregate value in US dollars of the
listed securities (based on the closing ruling prices on the JSE on
31st October 1995 and exchange rates prevailing at that close) and Old
Mutual shall procure that such value is within US$200,000 of
US$1,000,000,000. Old Mutual shall procure that that valuation is
carried out substantially in accordance with the Valuation Rules.
2.2 Old Mutual shall, on the Transfer Date, sell and transfer or procure
the sale and transfer of the Portfolio to the Master Trust free from
all liens, charges, encumbrances and equitable interests and with all
rights attached to the Portfolio as at the Transfer Date.
2.3 Old Mutual and the Master Trust shall procure that the Portfolio is
valued in US Dollars by the Administrator as at 10.00 a.m. (US Eastern
Time) on the Transfer Date in accordance with the Valuation Rules.
2.4 Old Mutual shall, on the Transfer Date, make a capital contribution of
US$4,750,000 to the Master Trust.
2.5 In consideration for the sale and transfer of the Portfolio and the
capital contribution under clause 2.4, the Master Trust shall on the
Transfer Date register OMB as a holder of beneficial interest in the
Master Trust and shall credit its Book Capital Account with the
aggregate of the value determined by the Administrator in accordance
with clause 2.3 and the amount of the capital contribution under clause
2.4.
2.6 Old Mutual shall procure that, on the Transfer Date, OMAM makes a
capital contribution to the Master Trust of US$100. In consideration
for such capital contribution, the Master Trust shall on the Transfer
Date register OMAM as a holder of beneficial interest in the Master
Trust and shall credit its Book Capital Account with the amount of such
capital contribution.
2.7 If between the close of the JSE on 31st October 1995 and the Transfer
Date Old Mutual shall determine that the value of the Portfolio has
increased or decreased by 5% or more, it may on or prior to Completion
with the prior consent of the Master Trust remove securities from the
Portfolio (as far as possible pro rata) or increase the number of
securities within the Portfolio holdings (as far as possible pro rata)
such that the value of the Portfolio on the Transfer Date approximates
more closely to US$1,000,000,000.
4
<PAGE> 7
3 TRANSFER OF THE GLOBAL FUND PORTFOLIO
3.1 Old Mutual shall on 1st November 1995 provide to the Global Fund in
writing a list of securities. That list shall include the specified
types of securities issued by each of the issuers listed in schedule 2
(and no others). The percentage of the entire listed Global Fund
Portfolio which each holding represents shall (when rounded to the
nearest 0.01%) be that specified in the third column of schedule 2. The
list provided to the Global Fund shall specify the aggregate value in
US dollars of the listed securities (based on the closing ruling prices
on the JSE on 31st October 1995 and exchange rates prevailing at that
close) and Old Mutual shall procure that such value is within
US$100,000 of US$500,000,000.
3.2 Old Mutual shall, on the Transfer Date, sell and transfer or procure
the sale and transfer of the Global Fund Portfolio to the Global Fund
free from all liens, charges, encumbrances and equitable interests and
with all rights attached to the Global Fund Portfolio as at the
Transfer Date.
3.3 In consideration for the sale and transfer of the Global Fund
Portfolio, the 12,000 shares in the Global Fund shall be paid up as to
their nominal value and a premium of US$49 and the Global Fund shall
allot and issue to OMB credited as fully paid such number of additional
shares of US$1 each in the Global Fund as is equal to the result of
dividing (a) the value in US dollars (based on the closing ruling
prices on the JSE on the Transfer Date and exchange rates prevailing at
that close) of the Global Fund Portfolio on the Transfer Date less
US$600,000 by (b) US$50.
3.4 If between the close of the JSE on 31st October 1995 and the Transfer
Date Old Mutual shall determine that the value of the Global Fund
Portfolio has increased or decreased by 5% or more, it may on or prior
to Completion remove securities from the Global Fund Portfolio (as far
as possible pro rata) or increase the number of securities within the
Global Fund Portfolio holdings (as far as possible pro rata) such that
the value of the Global Fund Portfolio on the Transfer Date
approximates more closely to US$500,000,000.
4 REPRESENTATIONS AND WARRANTIES
4.1 Old Mutual represents and warrants to each of the Funds as follows:
(a) Old Mutual has the power to execute, deliver and perform its
obligations under this Agreement;
(b) the execution and delivery of, and the performance of the
obligations of Old Mutual under, this Agreement have been duly
authorised by all necessary action on the part of Old Mutual
whether under its constitution or otherwise;
5
<PAGE> 8
(c) this Agreement constitutes, and the other documents which are
to be delivered by Old Mutual at Completion will, when
executed, constitute, legal, valid and binding obligations
enforceable in accordance with their respective terms;
(d) Old Mutual is or will be entitled at Completion to sell and
transfer to the Master Trust the full legal and beneficial
ownership of the Portfolio free from all liens, charges,
encumbrances and equitable interests and with all rights
attached thereto;
(e) all necessary consents and approvals (whether from any
governmental or administrative body or authority, the policy
holders of Old Mutual or from any other person or entity where
applicable) to or for the sale and transfer of the Portfolio
under this Agreement have been obtained and are and will be at
Completion in full force and effect, including (without
prejudice to the generality of the foregoing) the consent of
the South African Reserve Bank and of the South African
Registrar of Insurance;
(f) the Master Trust will, at Completion, acquire the Portfolio
free from any exchange control or other restrictions imposed by
any South African governmental or administrative body or
authority such that the Master Trust will be free to dispose of
the securities comprised in the Portfolio, to exchange any S.A.
Rand proceeds for US dollars and to remit those US dollars out
of South Africa.
4.2 Old Mutual agrees to indemnify and at all times to keep indemnified
each of the Funds against any liabilities, expenses (including legal
expenses), demands, proceedings or judgements whatsoever which may be
made, incurred, brought or established against any of the Funds which
result from any breach of the representations and warranties contained
in clause 4.1.
5 COMPLETION OF TRANSFERS
5.1 Completion of the transfers and the capital contributions provided for
in clause 2 and clause 3 shall take place in Johannesburg at the
offices of Standard Bank of South Africa Limited (as South African
sub-custodian to the Master Trust), in London at the branch offices of
the Custodian and in Bermuda at the offices of Conyers, Dill & Pearman
(Bermuda counsel to the Master Trust) (or at such other place or places
as may be agreed between Old Mutual and the Master Trust) on the
Transfer Date when all (but not part only unless Old Mutual and the
Master Trust shall so agree) of the following business shall be
transacted:
(a) Old Mutual shall deliver to the Master Trust (or as it shall
direct) transfers in respect of the Portfolio duly completed
and executed in favour of the Master Trust (or as it may
direct) together with the certificates therefor and such other
documents as may be reasonably required to give the Master
Trust a good title to the Portfolio and to
6
<PAGE> 9
enable the Master Trust or its or its custodian or sub-custodian's
nominee to become the registered holder thereof;
(b) Old Mutual shall pay the capital contribution under clause 2.4
and OMAM shall pay US$100 by telegraphic transfer to the
account of the Master Trust with the Custodian as notified by
the Master Trust to Old Mutual prior to the Transfer Date;
(c) the Master Trust shall deliver to Old Mutual a certified copy
of the resolution of the board of trustees of the Master Trust
(or a duly authorised committee thereof) directing that:
(i) OMB be registered as a holder of beneficial interest
in the Master Trust as described in clause 2.5;
(ii) OMAM be registered as a holder of beneficial interest
in the Master Trust as described in clause 2.6;
(d) Old Mutual shall deliver to the Global Fund (or as it shall
direct) transfers in respect of the Global Fund Portfolio duly
completed and executed in favour of the Global Fund (or as it
may direct) together with the certificates therefor and such
other documents as may be reasonably required to give the
Global Fund a good title to the Global Fund Portfolio and to
enable the Global Fund or its or its custodian or
sub-custodian's nominee to become the registered holder
thereof;
(e) the Global Fund shall credit as paid up the shares, and allot
and issue to OMB the consideration shares, as referred to in
clause 3.3.
5.2 Without prejudice to Old Mutual's obligations under clause 2.2, it is
agreed and understood between the Master Trust and Old Mutual that some
or all of the transfers provided for in clause 2.2 may be effected on
duly established branch registers of members of the relevant companies
outside South Africa and that, although Old Mutual will be the legal
and beneficial holder of all securities, the named transferor on
transfers delivered and the named holder on certificates delivered
pursuant to clause 5.1(a) may not be Old Mutual.
6 INDEMNITY
6.1 Old Mutual agrees with the Master Trust:
(a) to pay any stamp duty, transfer duty or other similar tax,
whether in South Africa, the United Kingdom or elsewhere
(including any late payment or other penalty or fine and any
duty levied under section 15(5) or 23(17) of the South African
Stamp Duties Act, 1968), due in respect of the transfers of the
Portfolio to be delivered by Old Mutual to the Master Trust at
Completion;
7
<PAGE> 10
(b) to indemnify and at all times keep indemnified the Master Trust
against any liabilities, expenses (including legal expenses),
demands, proceedings, judgements, penalties or fines whatsoever
which may be made, incurred, brought, established or imposed
against the Master Trust or its assets which result from any
breach of Old Mutual's obligations under this clause 6.
6.2 Old Mutual shall not be liable under clause 6.1(a) in repect of any
stamp duty, transfer duty or other similar tax incurred as a result of
a delay in the registation of the transfers referred to in that clause
by more than 6 months after the date of the transfers.
7 INITIAL OFFERING
7.1 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMB
shall submit a request to the Master Trust that OMB's interest in the
Master Trust be reduced by a capital withdrawal of an amount in US
dollars equal to the aggregate amount received by the OMEGA Fund in
respect of the Initial Offering by 9.30 a.m. (US Eastern time) on the
Initial Closing Date.
7.2 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMB
shall submit a request to the Master Trust that OMB's interest in the
Master Trust be reduced by a capital withdrawal of an amount in US
dollars equal to the aggregate amount received by the SAGA Fund in
respect of the Initial Offering by 9.30 a.m. (US Eastern time) on the
Initial Closing Date.
7.3 Prior to 10.00 a.m. (US Eastern time) on the Initial Closing Date, OMAM
shall submit a request to the Master Trust that OMAM's interest in the
Master Trust be redeemed (as defined in the Declaration of Trust) and
the Master Trust shall immediately following the capital contributions
in clauses 8.2 and 9.2 effect that redemption.
7.4 The Master Trust shall procure that its assets are valued by the
Administrator in US dollars as at 10.00 a.m. (US Eastern time) on the
Initial Closing Date in accordance with the Valuation Rules. The Master
Trust shall procure that the Administrator provides Old Mutual with
written notice of such valuation.
7.5 The maximum number of shares in the OMEGA Fund available in the Initial
Offering shall be determined by dividing the value of the assets of the
Master Trust determined pursuant to clause 7.4 (rounded down to the
nearest 100) by 100.
7.6 The maximum number of shares in the SAGA Fund available in the Initial
Offering shall be determined by dividing the value of the assets of the
Master Trust determined pursuant to clause 7.4 (rounded down to the
nearest 50) by 50.
8
<PAGE> 11
8 ESTABLISHMENT OF THE OMEGA FUND
8.1 The OMEGA Fund shall (a) prior to 10.00 a.m. (US Eastern time) on the
Initial Closing Date apply for an interest in the Master Trust of an
amount in US dollars equal to the aggregate amount received by the
OMEGA Fund in respect of the Initial Offering by 9.30 a.m. (US Eastern
time) on the Initial Closing Date; and (b) on the Initial Closing Date
apply the proceeds of the Initial Offering received by the OMEGA Fund
(without deduction or withholding) in making a capital contribution to
the Master Trust. The proportionate interest in the Master Trust
obtained by the OMEGA Fund by virtue of such capital contribution shall
be determined on the basis of the valuation carried out pursuant to
clause 7.4.
8.2 On receipt of the capital contribution from the OMEGA Fund, the Master
Trust shall with effect from the Initial Closing Date reduce the Book
Capital Account balance of OMB by an amount equal to that capital
contribution and shall within 7 days of such reduction pay to OMB an
amount in US dollars equal to that capital contribution.
9 ESTABLISHMENT OF THE SAGA FUND
9.1 The SAGA Fund shall (a) prior to 10.00 a.m. (US Eastern time) on the
Initial Closing Date apply for an interest in the Master Trust of an
amount in US dollars equal to the aggregate amount received by the SAGA
Fund in respect of the Initial Offering by 9.30 a.m. (US Eastern time)
on the Initial Closing Date; and (b) on the date of Admission apply the
proceeds of the Initial Offering received by the SAGA Fund (without
deduction or withholding) in making a capital contribution to the
Master Trust. The proportionate interest in the Master Trust obtained
by the SAGA Fund by virtue of such capital contribution shall be
determined on the basis of the valuation carried out pursuant to clause
7.4.
9.2 On receipt of the capital contribution from the SAGA Fund, the Master
Trust shall with effect from the date of Admission reduce the Book
Capital Account balance of OMB by an amount equal to that capital
contribution and shall within 7 days of such reduction pay to OMB an
amount in US dollars equal to that capital contribution.
10 EQUALISATION PAYMENT TO OMB
At 10.00 a.m. (United Kingdom time) on 13th November 1995 the Master
Trust shall become liable to pay to OMB an amount equal to 0.25% of the
value of the interest in the Master Trust which OMB retains or will
retain following the reductions in its Book Capital Account balance
made or to be made pursuant to clause 8.2 and 9.2.
9
<PAGE> 12
11 FURTHER ISSUES OF SHARES
If, on any Business Day when OMB is the holder of a beneficial interest
in the Master Trust, the aggregate of any capital contributions made to
the Master Trust by the OMEGA Fund and the SAGA Fund exceed the
aggregate of any capital withdrawals from the Master Trust made by the
OMEGA Fund and the SAGA Fund, the Master Trust shall procure that the
Administrator notifies OMB of the amount of such excess (the
"Contribution Excess") on such Business Day. OMB hereby submits a
standing request to the Master Trust that OMB's interest in the Master
Trust be reduced with effect from that Business Day by a capital
withdrawal of the lesser of the value of OMB's interest in the Master
Trust on that Business Day and the Contribution Excess, provided that
in no case shall OMB's Book Capital Account balance be reduced to less
than US$100.
12 RING FENCING OF MASTER TRUST AND GLOBAL FUND AND LIQUIDITY FACILITY
12.1 OMB agrees with each of the Funds:
(a) not to make any withdrawal from the Master Trust except
pursuant to clauses 8.2, 9.2, 11 or 15.4 or following the
termination or dissolution of the Master Trust;
(b) to apply the proceeds of any withdrawal from the Master Trust
made pursuant to clause 8.2, 9.2 or 11 in subscribing at net
asset value for shares in the Global Fund,
save that this clause 12.1 will not apply to any withdrawls
made by OMB from the Master Trust in respect of income or
realised capital gains.
12.2 OMB agrees with each of the Funds:
(a) not to redeem shares in the Global Fund or to receive any form
of income or capital distribution from the Global Fund except
for (i) redemptions made to comply with OMB's obligations
under clause 12.3 and (ii) dividend distributions made by the
Global Fund to OMB which comply with clause 12.5(g);
(b) to apply the proceeds of any redemption of shares in the
Global Fund in making capital contributions to the Master
Trust.
12.3 OMB undertakes to each of the Funds to apply, on request by or on
behalf of the Master Trust (which may be a standing request), the
amount to which OMB is entitled on the redemption of shares in the
Global Fund in making capital contributions to the Master Trust in US
dollars of an amount equal to that required by the Master Trust to fund
capital withdrawals requested on any Business Day by the OMEGA Fund or
the SAGA Fund (to the extent such
10
<PAGE> 13
capital withdrawals are not offset on such Business Day (the "relevant
Business Day") by capital contributions to the Master Trust by the
OMEGA Fund or the SAGA Fund).
12.4 OMB shall comply with its obligations under clause 12.3 as soon as is
practicable and in any event within 3 Business Days of the relevant
Business Day.
12.5 Old Mutual and OMB agree to procure that, without the prior written
consent of the Master Trust, the OMEGA Fund and the SAGA Fund:
(a) OMB remains the sole beneficial owner of shares in the Global
Fund;
(b) the management or other fees payable by the Global Fund do not
exceed those referred to in the Global Fund Prospectus;
(c) OMB does not borrow money of an amount exceeding US$1,000,000;
(d) the Global Fund does not incur borrowings of an amount
exceeding 5% of its net assets provided that, for this
purpose, "borrowings" shall not include short term borrowing
to fund redemptions;
(e) the investment objective and policies of the Global Fund do
not change materially from those described in the Global Fund
Prospectus and are complied with by the Global Fund;
(f) the Global Fund does not go into voluntary liquidation,
reorganise, reduce or repurchase its share capital or make any
form of capital distribution;
(g) in any calendar year, the amount per share distributed by the
Global Fund does not exceed 10 per cent. of its net asset
value per share at the end of that calendar year provided that
this restriction shall not apply to distributions made in
order to enable Old Mutual to ensure compliance with the
requirements of the South African Reserve Bank;
(h) the Global Fund does not dispose of its assets other than for
a fair value on arms' length terms.
12.6 The obligations of OMB under clause 12.3 do not apply for any period
during which the SAGA Fund and the OMEGA Fund have suspended or the
Master Trust has suspended the calculation of net asset value.
11
<PAGE> 14
13 REDEMPTION FEE AND MANAGEMENT FEE REBATE
13.1 For so long as OMB's obligations under clause 12 continue and are
complied with:
(a) the OMEGA Fund shall pay to OMB an amount equal to 1.75 per
cent. of the amount which becomes payable by the OMEGA Fund to
a redeeming shareholder on the redemption of shares of
beneficial interest in the OMEGA Fund (without, for the
purposes of this calculation, deducting any redemption fee
charged by the OMEGA Fund);
(b) the SAGA Fund shall pay to OMB an amount equal to 1.75 per
cent. of the amount which becomes payable by the SAGA Fund to a
redeeming shareholder on the redemption of shares in the SAGA
Fund (without, for the purposes of this calculation, deducting
any redemption fee charged by the SAGA Fund).
13.2 The amounts referred to in clause 13.1 shall be paid to OMB within 7
days of the date of the relevant redemption.
13.3 No amount shall be payable to OMB under clause 13.1(b) in respect of a
redemption of shares by the SAGA Fund pursuant to bye-law 10(7) of its
Bye-laws.
13.4 Following a termination of OMB's obligations under clause 12, any
redemption fee collected by the SAGA Fund or the OMEGA Fund shall be
paid to the Master Trust.
13.5 OMAM undertakes to rebate a portion of the Management Fee to the Master
Trust or to reduce the Management Fee accepted by OMAM (so as to allow
the Master Trust to make compensatory payments to the OMEGA Fund and/or
the SAGA Fund) so that the ordinary operating expenses accrued for by
each of the OMEGA Fund and the SAGA Fund do not exceed 1.00% per annum
of the average of the daily net assets of such Funds during any month
(or part of a month) for which the Management Fee is payable. Ordinary
operating expenses includes, without limitation, the Management Fee and
administration and custody fees and expenses but does not include (a)
extraordinary expenses (such as the cost of litigation), (b) placement
fees and amounts payable to OMB under clause 8.2, 9.2, 10 or 11, (c)
sales charges on shares in the OMEGA Fund or the SAGA Fund, (d)
brokerage expenses or (e) the redemption fee due to OMB under clause
13.1. If any dispute shall arise as to the amount of the rebate or
reduction of the Management Fee or as to what constitutes ordinary
operating expenses the matter shall be referred to the auditors of the
Master Trust for the time being whose determination shall be final and
binding, who shall act as experts not arbitrators and whose costs shall
be borne equally by the Master Trust and Old Mutual.
12
<PAGE> 15
14 TERMINATION
14.1 OMB's and Old Mutual's obligations under clause 11 and clause 12 shall
terminate with effect from 120 days after the service of written notice
by OMB on the holders of shares in the SAGA Fund and the OMEGA Fund
notifying them of the termination of the liquidity facility (and so
that requests received by OMB from the Master Trust under clause 12.3
on or before that 120th day shall be complied with by OMB pursuant to
that clause). OMAM's obligations under clause 13.5 shall terminate with
effect from 120 days after the service of written notice by OMAM on the
holders of shares in the SAGA Fund and the OMEGA Fund notifying them of
the termination of the undertaking in that clause. The Bye-laws of the
SAGA Fund and the By-laws of the OMEGA Fund shall apply for the
purposes of determining the effective date for the service of such
notices.
14.2 OMB may terminate OMB's and Old Mutual's obligations under clause 11
and clause 12 with immediate effect on service of written notice on the
Master Trust (specifying this clause of this Agreement) at any time
after OMAM ceases to be investment adviser to the Master Trust (other
than by reason of the voluntary termination of the Advisory Agreement
by OMAM).
14.3 OMAM may terminate its obligations under clause 13.5 with immediate
effect on service of written notice on the Master Trust (specifying
this clause of this Agreement) at any time after OMAM ceases to be the
sole investment adviser to the Master Trust.
15 CONDITIONS PRECEDENT
15.1 The transfer of the Portfolio pursuant to clause 2 and the transfer of
the Global Fund Portfolio pursuant to clause 3 shall not be subject to
any conditions precedent.
15.2 Clause 8, and the request submitted by OMB pursuant to clause 7.1, are
conditional on the US Placing Agreement becoming fully unconditional.
15.3 Clause 9, and the request submitted by OMB pursuant to clause 7.2, are
conditional on the Non-US Placing Agreement becoming fully
unconditional.
15.4 If the Initial Offering of the OMEGA Fund and/or the Initial Offering
of the SAGA Fund shall be terminated, OMB may make a capital withdrawal
or withdrawals from the Master Trust in accordance with the Declaration
of Trust so as to fund any expenses of the Initial Offering for which
Old Mutual is liable.
15.5 If, following Completion, neither clause 15.2 nor clause 15.3 become
unconditional on or before 10th December 1995 each party to this
Agreement (other than Old Mutual), if requested by Old Mutual, agrees
to take all lawful steps within its power for its dissolution or
winding up.
13
<PAGE> 16
16 NAME
In the event that OMAM ceases for any reason to serve as investment
adviser of the Master Trust:
(a) the OMEGA Fund shall forthwith on request by Old Mutual change
the OMEGA Fund's name so that it does not include the words
"Old Mutual" or "OMEGA" or any variation or combination
thereof;
(b) the SAGA Fund shall forthwith on request by Old Mutual procure
that a general meeting of the SAGA Fund is convened and held
within a period of 30 days of such request at which a
resolution is proposed for the change in the name of the SAGA
Fund to one not including the words "Old Mutual" or "SAGA" or
any variation or combination thereof. On and with effect from
the expiry of such 30 day period, pending such change of name
becoming effective, the SAGA Fund shall pay to Old Mutual a
licence fee for the use of those words, monthly in advance, of
an amount equal to 0.01 per cent. of the SAGA Fund's gross
asset value on the date of such request.
17 NOTICES
17.1 Any notice or demand given under this Agreement shall be in writing
and, without prejudice to any other effective mode of making the same,
be deemed to have been properly served if delivered or sent by letter,
telex or telefax:
(a) if to Old Mutual, to the registered office for the time being
of Old Mutual (attention M.J. Levett) (fax no (2721) 509 3899)
(or to such other address, person or number as may be notified
by Old Mutual to the Master Trust, the OMEGA Fund and the SAGA
Fund);
(b) if to OMB, to the registered office for the time being of OMB
(attention W. Langley) (fax no (809) 292 4720) (or to such
other address, person or number as may be notified by OMB to
the Master Trust, the OMEGA Fund and the SAGA Fund);
(c) if to the Master Trust, to its principal office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the Master Trust to the other parties);
(d) if to the OMEGA Fund, to its principal office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the OMEGA Fund to the other parties);
14
<PAGE> 17
(e) if to the SAGA Fund, to its registered office for the time
being (attention J.C.R. Collis) (fax no. (809) 292 4720) (or
to such other address, person or number as may be notified by
the SAGA Fund to the other parties).
17.2 Any such notice shall be deemed to be served (in the case of a letter)
when delivered and (in the case of a telefax) when transmitted.
17.3 Any notice to be served on the Master Trust or the OMEGA Fund shall be
copied to Bingham, Dana & Gould of 150 Federal Street, Boston,
Massachusetts (or any replacement address) attention Roger Joseph.
18 GENERAL
18.1 Any time, date or period mentioned in this Agreement may be varied or
extended by agreement between Old Mutual and the Master Trust but not
to beyond 10th December 1995.
18.2 This Agreement sets forth the entire agreement and understanding
between the parties in connection with the matters described and
provided for in this Agreement.
18.3 Neither this Agreement nor any of the rights of the parties may be
assigned in whole or in part by any party except with the prior written
consent of each other party.
18.4 Old Mutual shall procure that each of OMB and OMAM complies with its
obligations under this Agreement.
18.5 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the trustees or officers of the Master Trust
individually.
18.6 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but, as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
18.7 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
15
<PAGE> 18
19 GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the Commonwealth of Massachusetts without regard to any
choice of law principles that would require application of the laws of
any other jurisdiction. The parties hereto absolutely and irrevocably
consent to the jurisdiction of the courts of the Commonwealth of
Massachusetts and of any Federal court located in said Commonwealth in
connection with any actions or proceedings arising out of or relating
to this Agreement and waive any objection to the convenience of any
such court.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
16
<PAGE> 19
SCHEDULE 1
PORTFOLIO
<TABLE>
<CAPTION>
Name of Company Type of security % holding to represent
- --------------- ---------------- ----------------------
of Portfolio (rounded
---------------------
to nearest 0.1%)
----------------
<S> <C> <C>
Anglo American Corporation of SA Ltd. Ordinary Shares 5.0
Barlow Ltd. Ordinary Shares 5.0
C.G. Smith Ltd. Ordinary Shares 5.0
De Beers Consolidated Mines Ltd. Ordinary Shares 5.0
Nedcor Ltd. Ordinary Shares 5.0
South African Breweries Ltd. Ordinary Shares 5.0
Safmarine and Rennies Holdings Ltd. Ordinary Shares 5.0
Standard Bank Investment Corp. Ltd. Ordinary Shares 5.0
Sasol Ltd. Ordinary Shares 4.8
Rembrandt Group Ltd. Ordinary Shares 4.3
Anglovaal Ltd. "N" Ordinary Shares 4.2
Wooltru Ltd. "N" Ordinary Shares 3.4
Gencor Ltd. Ordinary Shares 3.0
Anglovaal Industries Ltd. Ordinary Shares 2.8
Reunert Ltd. Ordinary Shares 2.4
Gold Fields of SA Ltd. Ordinary Shares 2.2
Lydenburg Platinum Ltd. Ordinary Shares 2.0
Sappi Ltd. Ordinary Shares 1.9
Rand Mines Ltd. Ordinary Shares 1.9
Iscor Ltd. Ordinary Shares 1.8
Trencor Ltd. Ordinary Shares 1.6
Foschini Ltd. Ordinary Shares 1.6
Anglo American Coal Corp. Ltd. Ordinary Shares 1.6
Johnnies Industrial Corporation Ltd. Ordinary Shares 1.5
African Oxygen Ltd. Ordinary Shares 1.1
JCI Ltd. Ordinary Shares 1.0
Anglo American Platinum Corporation Ltd. Ordinary Shares 1.0
Driefontein Consolidated Ltd. Ordinary Shares 0.8
Genbel Investments Ltd. Ordinary Shares 0.8
Liberty Life Association of Africa Ltd. Ordinary Shares 0.7
Middle Witwatersrand (Western Areas) Ltd. Ordinary Shares 0.7
Engen Ltd. Ordinary Shares 0.7
Samancor Ltd. Ordinary Shares 0.7
J.D. Group Ltd. Ordinary Shares 0.7
C.G. Smith Foods Ltd. Ordinary Shares 0.7
Impala Platinum Holdings Ltd. Ordinary Shares 0.7
Anglo Alpha Ltd. Ordinary Shares 0.6
</TABLE>
17
<PAGE> 20
<TABLE>
<S> <C> <C>
Bidvest Group Ltd. Convertible Debenture Stock 0.6
AECI Ltd. Ordinary Shares 0.6
Mutual & Federal Insurance Co. Ltd. Ordinary Shares 0.6
Murray & Roberts Holdings Ltd. Ordinary Shares 0.5
Tiger Oats Ltd. Ordinary Shares 0.5
Allied Electronics Corporation Ltd. Ordinary Shares 0.5
Nampak Ltd. Ordinary Shares 0.4
Omni Media Corporation Ltd. Ordinary Shares 0.4
Investec Holdings Ltd Ordinary Shares 0.4
Everite Holdings Ltd. Ordinary Shares 0.4
Malbak Ltd. Ordinary Shares 0.4
Sentrachem Ltd. Ordinary Shares 0.4
Imperial Holdings Ltd. Ordinary Shares 0.4
Metropolitan Life Ltd. Ordinary Shares 0.4
Associated Ore and Metal Corp. Ltd. Ordinary Shares 0.3
Amalgamated Banks of SA Ltd. Ordinary Shares 0.3
IBM South Africa Group Ltd. Ordinary Shares 0.3
Grintek Ltd. Ordinary Shares 0.3
Southvaal Holdings Ltd. Ordinary Shares 0.3
Vaal Reefs Exploration and Mining Co. Ltd. Ordinary Shares 0.2
Forward Corporation Ltd. Ordinary Shares 0.2
First National Bank Holdings Ltd. Ordinary Shares 0.2
Independent Newspapers Holdings Ltd. Ordinary Shares 0.2
</TABLE>
18
<PAGE> 21
SCHEDULE 2
GLOBAL FUND PORTFOLIO
<TABLE>
<CAPTION>
Name of Company Type of security % holding to represent of
- --------------- ---------------- -------------------------
Global Assets Portfolio
-----------------------
<S> <C> <C>
Anglo American Corporation of SA Ltd. Ordinary Shares 8.00
De Beers Consolidated Mines Ltd. Ordinary Shares 8.00
South African Breweries Ltd. Ordinary Shares 8.00
Barlow Ltd. Ordinary Shares 8.00
Gencor Ltd. Ordinary Shares 5.00
Liberty Life Association of Africa Ltd. Ordinary Shares 5.00
Anglovaal Ltd. Ordinary Shares 5.00
Genbel Investments Ltd. Ordinary Shares 5.00
Sasol Ltd. 8.5% Convertible Debentures 4.00
Anglovaal Industries Ltd. 5.5% Convertible Debentures 4.00
Tiger Oats Ltd. Ordinary Shares 4.00
Bidvest Group Ltd. Convertible Debentures 3.00
Imperial Holdings Ltd. Ordinary Shares 3.00
Trencor Ltd. 6% Convertible Debentures 3.00
Nedcor Ltd. Ordinary shares 2.00
Gold Fields of SA Ltd. Ordinary Shares 2.00
JCI Ltd. Ordinary Shares 2.00
Lyndenburg Platinum Ltd. Ordinary Shares 2.00
Johnnies Industrial Corporation Ltd. Ordinary Shares 2.00
Sappi Ltd Ordinary Shares 2.00
Safmarine and Rennies Holdings Ltd. Ordinary Shares 1.50
Rand Mines Ltd. Ordinary Shares 1.50
Anglo American Coal Corp. Ltd. Ordinary Shares 1.50
Rembrandt Group Ltd. Ordinary Shares 1.00
Wooltru Ltd. "N" Ordinary Shares 0.60
Reunert Ltd. Ordinary Shares 1.00
C.G. Smith Foods Ltd. Ordinary Shares 1.00
Standard Bank Investment Corp. Ltd. Ordinary Shares 1.00
Iscor Ltd. Ordinary Shares 1.00
Vaal Reefs Exploration and Mining Co. Ltd. Ordinary Shares 1.00
Middle Witwatersrand (Western Areas) Ltd. Ordinary Shares 1.00
Richemont Ltd. Ordinary Shares 1.00
Impala Platinum Holdings Ltd. Ordinary Shares 0.50
Fidelity Ltd. Convertible Loan stock 0.50
Citylodge Ltd. 11% Convertible Debentures 0.50
CNA Gallo Ltd. Ordinary Shares 0.40
</TABLE>
19
<PAGE> 22
SIGNED by MICHAEL LEVETT )
for and on behalf of )
SOUTH AFRICAN MUTUAL LIFE )
ASSURANCE SOCIETY )
in the presence of: ANDREW MITCHELL ) /s/ MICHAEL LEVETT
------------------
SIGNED by MICHAEL LEVETT )
for and on behalf of )
OLD MUTUAL FUND HOLDINGS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL ) /s/ MICHAEL LEVETT
------------------
/
SIGNED by WILLIAM BOYAN )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) /s/ WILLIAM BOYAN
-----------------
SIGNED by KENNETH WILLIAMS )
for and on behalf of )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) /s/ KENNETH WILLIAMS
--------------------
20
<PAGE> 23
SIGNED by MICHAEL DREW )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
------------
SIGNED by WILLIAM LANGLEY )
for and on behalf of )
OLD MUTUAL GLOBAL ASSETS )
FUND LIMITED )
in the presence of: ANDREW MITHCELLL ) WILLILAM LANGLEY
----------------
SIGNED by WILLIAM LANGLEY )
for and on behalf of )
OLD MUTUAL ASSET MANAGERS )
(BERMUDA) LIMITED )
in the presence of: ANDREW MITCHELL ) WILLIAM LANGLEY
---------------
21
<PAGE> 1
EXHIBIT 9(d)
CONFORMED COPY
DATED 23rd OCTOBER 1995
OLD MUTUAL SOUTH AFRICA EQUITY TRUST (1)
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND (2)
- and -
OLD MUTUAL SOUTH AFRICA
GROWTH ASSETS FUND LIMITED (3)
-----------------------------------
INVESTMENT RESTRICTIONS UNDERTAKING
-----------------------------------
Norton Rose
London
<PAGE> 2
THIS AGREEMENT is made on 23RD October 1995 BETWEEN:
(1) OLD MUTUAL SOUTH AFRICA EQUITY TRUST (organised as a Massachusetts
trust) whose principal office is at Richmond House, 12 Par-la-Ville
Road, Hamilton, Bermuda (the "MASTER TRUST");
(2) OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND (organised as a
Massachusetts business trust) whose principal office is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "OMEGA FUND"); and
(3) OLD MUTUAL SOUTH AFRICA GROWTH ASSETS FUND LIMITED (registered in
Bermuda with number EC2110) whose registered address is at Richmond
House, 12 Par-la-Ville Road, Hamilton, Bermuda (the "SAGA FUND").
WHEREAS:
(A) application has been made for shares in the SAGA Fund to be admitted to
listing on the Irish Stock Exchange;
(B) this Agreement sets out undertakings of the Master Trust as to changes
in its investment objective, policies and restrictions given in
connection with that application.
NOW IT IS HEREBY AGREED as follows:
1 DEFINITIONS
1.1 In this Agreement, unless the context otherwise requires, the following
expressions have the following meanings:
"DECLARATION OF TRUST" means the declaration of trust of the OMEGA Fund
dated as of 1st September 1995
"HOLDERS" means holders of beneficial interest in the OMEGA Fund
"PLACEMENT MEMORANDUM" means the placement memorandum relating to the
SAGA Fund dated 1st November 1995
"SHAREHOLDERS" means the registered holders of shares in the SAGA Fund.
1.2 The headings to clauses and schedules shall not affect their
interpretation.
1.3 Reference to clauses and schedules are reference to clauses of and
schedules to this Agreement.
1
<PAGE> 3
2 MASTER TRUST UNDERTAKINGS
2.1 The Master Trust hereby irrevocably undertakes to the OMEGA Fund and
the SAGA Fund that:
(a) the Master Trust will not make any material change in its
investment objective described under the heading "Investment
Objective" in the Placement Memorandum or to its investment
policies described under the heading "Investment Policies" in
the Placement Memorandum except in unforeseen circumstances and
with the approval of a majority vote of Shareholders and a
majority vote of Holders;
(b) the Master Trust will comply with the investment restrictions
set out in the schedule and will not change those restrictions
for so long as shares in the SAGA Fund are listed on the Irish
Stock Exchange.
2.2 If the Master Trust wishes to effect a change requiring approval under
clause 2.1(a), the SAGA Fund and the OMEGA Fund agree to procure the
holding of a meeting of Shareholders and Holders respectively at which
a resolution is put seeking such approval.
3 GENERAL
3.1 This Agreement is conditional on the SAGA Fund acquiring an interest in
the Master Trust and on shares in the SAGA Fund being admitted to
listing on the Irish Stock Exchange.
3.2 This Agreement shall cease to have effect on the earlier of the SAGA
Fund ceasing to hold an interest in the Master Trust and the shares in
the SAGA Fund ceasing to be listed on the Irish Stock Exchange.
3.3 The undersigned trustee or officer of the Master Trust has executed
this Agreement not individually but as trustee or officer under the
Declaration of Trust and the obligations of this Agreement are not
binding upon any of the trustees or officers of the Master Trust
individually.
3.4 The undersigned trustee or officer of the OMEGA Fund has executed this
Agreement not individually but as trustee or officer under the
declaration of trust of the OMEGA Fund and the obligations of this
Agreement are not binding upon any of the trustees or officers of the
OMEGA Fund individually but as to the OMEGA Fund bind only the Trust
Estate (as defined in the declaration of trust of the OMEGA Fund).
3.5 This Agreement may be executed in two or more counterparts, each of
which shall constitute an original but which, when taken together,
shall constitute one agreement.
4 GOVERNING LAW
2
<PAGE> 4
This Agreement shall be governed by and construed in accordance with
English law and each of the parties hereby submits to the non-exclusive
jurisdiction of the High Court of Justice in England.
IN WITNESS whereof this Agreement has been entered into the day and year first
above written.
SCHEDULE 1
IRISH STOCK EXCHANGE INVESTMENT RESTRICTIONS
(i) No more than 20% of the gross assets of the Master Trust may be
lent to or invested in the securities of any one issuer;
(ii) the Master Trust will not take legal or management control of
investments in its portfolio;
(iii) not more than 10% of the gross assets of the Master Trust will
be invested in physical commodities;
(iv) not more than 10% of the gross assets of the Master Trust will
be invested in real estate;
(v) the Master Trust will not engage in any property development
activity;
(vi) the Master Trust will adhere to the principle of
diversification in relation to any derivative investments;
(vii) the Master Trust will not make any investment which would
expose it to unlimited liability, including participation in an
unlimited partnership;
(viii) the Master Trust will only enter into underwriting or
sub-underwriting contracts to a limited extent and incidental
to the investment activities of the Master Trust; and
(ix) the Master Trust will not have a net exposure to a single
financing counterparty that exceeds 20% of its gross assets.
3
<PAGE> 5
SIGNED by WILLIAM BOYAN )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
EQUITY TRUST )
in the presence of: ANDREW MITCHELL ) WILLIAM BOYAN
SIGNED by KENNETH WILLIAMS )
for and on behalf of )
OLD MUTUAL EQUITY GROWTH )
ASSETS SOUTH AFRICA FUND )
in the presence of: ANDREW MITCHELL ) KENNETH WILLIAMS
SIGNED by MICHAEL DREW )
for and on behalf of )
OLD MUTUAL SOUTH AFRICA )
GROWTH ASSETS FUND LIMITED )
in the presence of: ANDREW MITCHELL ) MICHAEL DREW
4
<PAGE> 1
EXHIBIT 9(e)
November 3, 1995
Old Mutual South Africa Equity Trust
Richmond House
12 Par-la-Ville Road
Hamilton, Bermuda
Ladies and Gentlemen:
The undersigned has today made a capital contribution of U.S.$4,750,000
to Old Mutual South Africa Equity Trust, a Massachusetts trust (the "Master
Trust"), and U.S.$100,000 of such capital contribution has been designated as
"seed capital" for purposes of Section 14(a) of the Investment Company Act of
1940, as amended.
This will confirm that, in the event the undersigned redeems or
decreases its beneficial interest in the Master Trust in respect of such "seed
capital", the proceeds of such redemption or decrease shall be reduced by a pro
rata portion of the then unamortized organization expenses of the Master Trust,
such pro rata portion to be determined by multiplying the unamortized
organization expenses by a fraction the numerator of which is the amount to be
redeemed or decreased and the denominator of which is the amount, at the time of
the redemption or decrease, of the book capital account of the beneficial
interest attributable to the "seed capital". Unless otherwise specified by the
undersigned, any redemption or decrease of the undersigned's beneficial interest
in the Master Trust shall, to the fullest extent possible, be presumed to apply
to investments of the undersigned in the Master Trust other than the "seed
capital".
Very truly yours,
OLD MUTUAL FUND HOLDINGS
(BERMUDA) LIMITED
By:______________________________
William Langley
Director
<PAGE> 1
EXHIBIT 9(f)
AGREEMENT RELATING TO INSURANCE
THIS AGREEMENT RELATING TO INSURANCE made as of November __, 1995 (this
"Agreement") by and among OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a Massachusetts
trust (the "Master Trust"), OLD MUTUAL EQUITY GROWTH ASSETS SOUTH AFRICA FUND, a
Massachusetts business trust (the "OMEGA Fund"), OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED, a Bermuda mutual fund (the "SAGA Fund"), and OLD MUTUAL
ASSET MANAGERS (BERMUDA) LIMITED, a Bermuda company (the "Adviser");
W I T N E S S E T H:
WHEREAS, the Master Trust invests in a portfolio consisting primarily
of South African securities;
WHEREAS, each of the OMEGA Fund and the SAGA Fund invests substantially
all of its investable assets in the Master Trust;
WHEREAS, the Adviser acts as investment adviser to the Master Trust and
may, from time to time hereafter, act in the same capacity with respect to other
clients, including other investment companies;
WHEREAS, all the parties hereto are named insureds under an errors and
omissions liability policy (as it may be amended and/or restated from time to
time, collectively the "E&O Policy") issued by Gulf Insurance Company, or such
other insurers as from time to time may provide the E&O Policy (the "E&O
Insurer");
WHEREAS, the Master Trust, the OMEGA Fund, and the SAGA Fund
(collectively, the "Funds" or the "Fund Parties") are named insureds under a
fidelity bond (as it may be amended and/or restated from time to time,
collectively the "Bond", and collectively with the E&O Policy, the "Policy")
issued by Gulf Insurance Company, or such other insurers as from time to time
may provide the Bond (together with the E&O Insurer as appropriate, the
"Insurer"); and
WHEREAS, the parties desire to establish (a) the criteria by which the
premium for the Policy shall be allocated among the parties and (b) the criteria
by which claims in excess of the applicable coverage limits of the Policy shall
be allocated among the parties.
<PAGE> 2
NOW, THEREFORE, it is agreed as follows:
1. ALLOCATION OF PREMIUMS.
(a) One half of the annual premium for each policy year with respect to
the E&O Policy shall be borne by the Adviser and the other half of such annual
premium (the "Funds Premium") shall be borne by the Funds.
(b) Each of the Funds shall for each policy year pay a portion of the
annual premium for the Bond and the Funds Premium that shall be determined as
follows: (i) for the initial policy year such premiums shall be allocated fifty
percent (50%) to the Master Trust and twenty-five percent (25%) to each of the
OMEGA Fund and the SAGA Fund, and (ii) for each following policy year such
premiums shall be allocated proportionately according to the respective net
asset value of each of the Funds on the last business day of the next preceding
policy year.
(c) Promptly after the determination of the annual Policy premium for
each policy year, the Adviser shall prepare a schedule (the "Allocation
Schedule") setting forth in reasonable detail the proposed allocation of the
premium for such year in accordance with this Section 1. The Adviser shall
promptly provide the Allocation Schedule to the administrator of each of the
Funds for review. If within ninety (90) days of provision of the Allocation
Schedule to the administrator of each of the Funds, none of the Funds has
objected to the Allocation Schedule, the allocation of the premium set forth
therein shall, absent manifest error, be conclusive and binding among the
parties.
2. ALLOCATION OF COVERAGE.
(a) The Adviser shall not with respect to any policy year collect
insurance payments under the E&O Policy (whether in respect of related or
unrelated claims) totaling more than fifty percent (50%) of the policy limit for
such policy year of the E&O Policy.
(b) In the event that the claims of loss of two or more insureds under
the E&O Policy are so related that the Insurer is entitled to assert that the
claims must be aggregated with the result that the claims exceed the applicable
coverage limits for such claims, or in the event that at any time the claims of
two or more insureds under the E&O Policy for any other reason exceed the
applicable coverage limits for such claims, the
-2-
<PAGE> 3
following rules for determining, as among such insureds, the priority of
satisfaction of the claims under the E&O Policy shall apply:
(i) All claims of the Adviser which have been duly proved and
established under the E&O Policy shall be satisfied in full
subject to the limit under Section 2(a). All claims of the
Funds which have been duly proved and established under the
E&O Policy shall be satisfied in full subject (as to not more
than fifty percent (50%) of the policy limit for the current
policy year) to any established or pending claims of the
Adviser, provided that, if any such pending claim is
subsequently disallowed, any claims of the Funds subject to
such pending claim shall, if permitted under the terms of the
E&O Policy, thereupon be reinstated.
(ii) If the claims of the Funds which have been duly proved and
established under the E&O Policy exceed the coverage of the
E&O Policy available to the Funds, the insurance proceeds
shall be applied to those claims, subject to any requirements
of the 1940 Act or other applicable laws or regulations, on a
ratable basis according to the allocation of premiums among
the Fund Parties as provided in Section 1 of this Agreement
with respect to the current policy year.
(c) In no case shall any Fund with respect to any policy year collect
payments under the Bond (whether in respect of related or unrelated claims)
totaling more than its ratable share of the coverage under the Bond determined
according to the allocation of premiums among the Fund Parties as provided in
Section 1 of this Agreement with respect to the current policy year. In the
event that the claims of loss of two or more Funds under the Bond are so related
that the Insurer is entitled to assert that the claims must be aggregated with
the result that the claims exceed the applicable coverage limits for such
claims, or in the event that at any time the claims of two or more Funds under
the Bond for any other reason exceed the applicable coverage limits for such
claims, the following rules for determining, as among such insureds, the
priority of satisfaction of the claims under the Bond shall apply:
(i) first, to each Fund such that it receives an amount at least
equal to the amount that it would have received had it
maintained a separate fidelity bond with the minimum coverage
required by paragraph (d)(1) of Rule 17g-1 under the 1940 Act
(or, if such Fund is not registered under the
-3-
<PAGE> 4
1940 Act, the amount that would be required were such Fund so
registered); and
(ii) second, subject to any requirements of the 1940 Act or other
applicable laws or regulations, on a ratable basis according
to the allocation of premiums among the Fund Parties as
provided in Section 1 of this Agreement with respect to the
current policy year.
3. RENEWAL AND TERMINATION.
(a) The Adviser shall at least thirty (30) days prior to the end of
each policy year of each of the E&O Policy and the Bond make a proposal to the
Funds regarding insurance arrangements for the next policy year with respect
thereto (including the coverage amount, the quoted premium, and the proposed
Insurer).
(b) Any party to this Agreement that is party to either the E&O Policy
or the Bond may cease to participate in the E&O Policy or the Bond, as the case
may be, and accordingly cease to be bound by the terms of this Agreement with
respect thereto, with effect from the end of any policy year applicable to the
E&O Policy or the Bond, as the case may be, on the giving of written notice to
each other party to this Agreement not less than fifteen (15) days prior to the
end of such policy year. Such notice shall have no effect with respect to the
allocation of premiums or coverage payable under or in respect of insurance in
force prior to the end of such policy year.
4. PRIOR AGREEMENTS. This Agreement hereby supersedes all prior
or contemporaneous agreements among the parties hereto (or any two or more of
them) (which other agreements may include other parties) relating to the subject
matter hereof.
5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of The Commonwealth of Massachusetts.
6. AMENDMENTS. This Agreement may be amended or modified with the
prior written consent of the parties hereto.
7. HEADINGS. The section references in this Agreement are for
convenience of reference only and shall not affect the meaning or interpretation
of this Agreement.
-4-
<PAGE> 5
8. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be an original and all of which shall constitute one and the
same instrument. In proving this Agreement it shall not be necessary to submit
more than one counterpart executed by each party hereto.
9. PROTECTION OF TRUSTEES.
(a) This Agreement is executed by the Trustees of the Master Trust
not individually, but as Trustees under the Declaration of Trust of the Master
Trust dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such Trustees individually.
(b) This Agreement is executed by the Trustees of the OMEGA Fund
not individually, but as Trustees under the Declaration of Trust of the OMEGA
Fund dated as of September 1, 1995, and the obligations of this Agreement are
not binding upon any of such Trustees or on the shareholders of the OMEGA Fund
individually, but bind only the trust estate of the OMEGA Fund.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as a sealed instrument by their officers hereunto duly authorized all
as of the day and year first above written.
OLD MUTUAL SOUTH AFRICA
EQUITY TRUST
By: _______________________________
Michael John Levett
Chairman of the Board of Trustees
OLD MUTUAL EQUITY GROWTH ASSETS
SOUTH AFRICA FUND
By: _______________________________
Michael John Levett
Chairman of the Board of Trustees
-5-
<PAGE> 6
OLD MUTUAL SOUTH AFRICA GROWTH
ASSETS FUND LIMITED
By: _______________________________
Michael John Levett
Chairman of the Board of Directors
OLD MUTUAL ASSET MANAGERS
(BERMUDA) LIMITED
By: _______________________________
William Langley
President
-6-
<PAGE> 1
EXHIBIT 15
PLACEMENT PLAN
OLD MUTUAL SOUTH AFRICA EQUITY TRUST
WHEREAS, OLD MUTUAL SOUTH AFRICA EQUITY TRUST, a trust organized and
existing under the laws of the Commonwealth of Massachusetts (the "Trust"),
engages in business as an open-end management investment company and is or is to
be registered as such under the United States Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, Old Mutual Equity Growth Assets South Africa Fund, a business
trust organized and existing under the laws of the Commonwealth of Massachusetts
(the "U.S. Feeder Fund") is authorized to issue an unlimited number of shares of
beneficial interest; and
WHEREAS, Old Mutual South Africa Growth Assets Fund Limited, a mutual
fund organized under the laws of Bermuda (the "Non- U.S. Feeder Fund,"
collectively with the U.S. Feeder Fund to be referred to as, the "Feeder Funds")
is authorized to issue shares its capital stock (together with the shares of
beneficial interest in the U.S. Feeder Fund, the "Feeder Shares"); and
WHEREAS, the Feeder Funds invest (or are to invest) all of their
investable assets in the Trust; and
WHEREAS, the trustees of the Trust as a whole, and the trustees who are
not interested persons of the Trust (as defined in the 1940 Act) and who have no
direct or indirect financial interest in the operation of this Plan or in any
agreement relating hereto (the "Non-Interested Trustees"), having determined, in
the exercise of reasonable business judgment and in light of their fiduciary
duties under state law and under Section 36(a) and (b) of the 1940 Act, that
there is a reasonable likelihood that this Plan will benefit the Trust and its
investors, have approved this Plan by votes cast at a meeting called for the
purpose of voting hereon and on any agreements related hereto; and
NOW, THEREFORE, the Trust hereby adopts this Plan in accordance with
Rule 12b-1 under the 1940 Act, on the following terms and conditions:
<PAGE> 2
-2-
1. Placement and Servicing Activities. Subject to the supervision of
the trustees of the Trust, the Trust may, directly or indirectly, engage in any
activities primarily intended to result in the sale of Feeder Shares, which
activities may include, but are not limited to, the following: (a) employment of
(i) SBC Warburg (a division of Swiss Bank Corporation) and S.G. Warburg & Co.,
Inc. (collectively, "Warburg") as placement agents to the Non-U.S. Feeder Fund
and the U.S. Feeder Fund, respectively, for the initial offering of Feeder
Shares, (ii) Warburg and/or one or more other brokerage firms as placement
agents for further offerings of Shares and (iii) International Finance
Corporation as structuring agent to each of the Feeder Funds; (b) payments to
the Feeder Funds' placement agents and structuring agent and to securities
dealers and others in respect of the sale of Feeder Shares; (c) payments to the
Feeder Funds' placement agents, structuring agent and other parties of
reimbursement for or fees in respect of marketing expenses incurred in
connection with the placement of Feeder Shares; (d) payment of compensation to
and expenses of personnel (including personnel of organizations with which the
Trust has entered into agreements related to this Plan) who engage in or support
placement of Feeder Shares or who render investor support services not otherwise
provided by the Feeder Funds' transfer agents, administrators, or custodians,
including but not limited to, answering inquiries regarding the Trust and Feeder
Funds, processing investor transactions, providing personal services and/or the
maintenance of investor accounts, providing other investor liaison services,
responding to investor inquiries, providing information on investments in the
Feeder Shares, and providing such other investor services as the Trust or the
Feeder Funds may reasonably request; (e) formulation and implementation of a
private placement strategy for shares of the U.S. Feeder Fund in compliance with
Regulation D under the United States securities laws and a non-U.S. placement
strategy for shares of the Non-U.S. Feeder Fund in compliance with Regulation S
under the United States securities laws and applicable laws of other
jurisdictions; (f) preparation, printing and distribution of sales literature;
(g) preparation, printing and distribution of private placement memoranda and
statements of additional information and reports of the Trust or the Feeder
Funds for recipients other than existing investors in the Trust or the Feeder
Funds; and (h) obtaining such information, analyses and reports with respect to
marketing and promotional activities as the Trust may, from time to time, deem
advisable. The Trust is authorized to engage in the activities listed above, and
in any other activities primarily intended to result in the sale of Feeder
Shares, either directly or through other persons with which the Trust has
entered into agreements related to this Plan. The Trust is also authorized to
engage International Finance Corporation as structuring agent.
<PAGE> 3
-3-
2. Maximum Expenditures. The expenditures to be made by the Trust
pursuant to this Plan and the basis upon which payment of such expenditures will
be made shall be determined by the trustees of the Trust subject to the
limitations of this Section 2. The Trust may pay a placement fee to Warburg, at
the closing of the initial offering of Feeder Shares (the "Initial Closing") not
to exceed 0.25% of the initial offering price of Feeder Shares sold in the
initial offering of Feeder Shares. In addition, the Trust may pay to Old Mutual
Fund Holdings (Bermuda) Limited ("Old Mutual Bermuda") an amount not to exceed
0.25% of the value of the interest Old Mutual Bermuda retains in the Trust
immediately following the Initial Closing. The Trust may pay a structuring fee
at the Initial Closing to International Finance Corporation, the structuring
agent for each of the Feeder Funds, not to exceed U.S.$250,000. The Trust may
reimburse Old Mutual Asset Managers (Bermuda) Limited, the investment adviser to
the Trust (the "Adviser"), or another party for certain marketing expenses
incurred (or advanced to Warburg or others) in the placement of Feeder Shares,
provided the amount of such reimbursements in any year will not exceed 0.05% of
the average daily net assets of the Trust for such year. The Trust may pay fees
in connection with the placement of Feeder Shares as determined by the Trustees,
provided such fees for any year shall not, together with any reimbursement of
expenses under the next preceding sentence for such year, exceed 0.05% of the
average daily net assets of the Trust for such year.
3. Term and Termination.
(a) This Plan shall become effective as of the date the registration
statement of the Trust is filed under the 1940 Act. Unless terminated as herein
provided, this Plan shall continue in effect for one year from the date hereof
and shall continue in effect for successive periods of one year thereafter, but
only so long as each such continuance is specifically approved by votes of a
majority of both (i) the trustees of the Trust and (ii) the Non-Interested
Trustees, cast at a meeting called for the purpose of voting on such approval.
(b) This Plan may be terminated at any time by a vote of a majority of
the Non-Interested Trustees or by a vote of a majority of the outstanding voting
securities of the Trust, as defined in the 1940 Act.
4. Amendments. This Plan may not be amended to increase
materially the maximum expenditures permitted by Section 2 hereof unless such
amendment is approved by a vote of the majority of the
<PAGE> 4
-4-
outstanding voting securities of the Trust, as defined in the 1940 Act, with
respect to which a material increase in the amount of expenditures is proposed,
and no material amendment to this Plan shall be made unless approved in the
manner provided for annual renewal of this Plan in Section 3(a) hereof.
5. Selection and Nomination of Trustees. While this Plan is in effect,
the selection and nomination of the Non- Interested Trustees of the Trust shall
be committed to the discretion of the disinterested trustees of the Trust (as
defined in the 1940 Act).
6. Quarterly Reports. The Treasurer of the Trust shall provide to the
trustees of the Trust and the trustees shall review quarterly a written report
of the amounts expended pursuant to this Plan and any related agreement and the
purposes for which such expenditures were made.
7. Recordkeeping. The Trust shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Section 6 hereof, for a
period of not less than six years from the date of this Plan. Any such related
agreement or such reports for the first two years will be maintained in an
easily accessible place.
8. Limitation of Liability. Any obligations of the Trust hereunder
shall not be binding upon any of the trustees of the Trust personally. The term
"Old Mutual South Africa Equity Trust" means and refers to the trustees from
time to time serving under the Declaration of Trust of the Trust, a copy of
which is on file with the Secretary of State of the Commonwealth of
Massachusetts. This Plan has been authorized by the trustees, acting as such and
not individually, and such authorization by such trustees shall not be deemed to
have been made by any of them individually or to impose any liability on any of
them personally.
<TABLE> <S> <C>
<ARTICLE> 6
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> NOV-03-1995
<PERIOD-END> NOV-03-1995
<INVESTMENTS-AT-COST> 1,010,889,970
<INVESTMENTS-AT-VALUE> 1,010,889,970
<RECEIVABLES> 0
<ASSETS-OTHER> 6,550,100
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,017,440,070
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1,800,000
<TOTAL-LIABILITIES> 1,800,000
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,015,640,070
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 1,015,640,070
<DIVIDEND-INCOME> 0
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<EXPENSES-NET> 0
<NET-INVESTMENT-INCOME> 0
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<NET-CHANGE-FROM-OPS> 0
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 0
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 0
<AVERAGE-NET-ASSETS> 1,015,640,070
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
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<PER-SHARE-DISTRIBUTIONS> 0
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<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
